The Committee met at 7:00 p.m. in the Legislative Chamber of the Colonial Building.

MR. CHAIRMAN (Langdon): Order, please!

I would like to thank the minister and his officials for coming to appear before the Estimates Committee, and for the officials who are here, I would like to introduce the members:

Mr. Tom Murphy, the Member for St. John's South; Mr. Danny Dumaresque, the Member for Eagle River; Mr. Harold Small, the Member for Baie Verte - White Bay; Mr. Alvin Hewlett, the Member for Green Bay; and I am your Chairman, Oliver Langdon. We are expecting a couple more people for the Estimates who will probably be coming in late.

As is the normal procedure for the Estimates, we allow the minister to make an opening presentation, then the members of the Committee may ask questions of the minister and so on. So, at this time, we ask the minister if he would begin, and introduce his officials, as well.

MR. CARTER: Thank you, Mr. Chairman.

I want, first of all, to introduce members of the staff of the Department of Fisheries:

To my far right, is Mr. Brian Bursey, Chairman of the Fisheries Loan Board; Mr. David Vardy, Deputy Minister; Mr. Harold Murphy, Assistant Deputy Minister; Mr. Reg Kingsley, Assistant Deputy; and Mr. Garland Mouland, Administrative Officer of my department. I have a statement and maybe I could read it into the record:

Mr. Chairman and Committee members, I am pleased today to present to this Committee the Budget Estimates of the Department of Fisheries for the fiscal year 1992-1993. While we are in a period of restraint, I feel that the level of total expenditures for my department in 1992 and 1993 continues to demonstrate the commitment of this government to our most important resource sector.

Gross expenditures in 1992 and 1993 are projected at $43.6 million, an increase of almost $2.8 million or 7 per cent over 1991-1992. Revenues, both current and capital, will total $15.6 million, consisting of $6.3 million through federal/provincial cost-shared programs; $6 million through Fisheries Loan Board repayments and $3.3 million from other provincial sources. My department will, in total, spend $29.2 million on current account and $14.3 million on capital account in this fiscal year; our previous year's estimate called for expenditures of $23.8 million on current account and $17 million on capital account.

I would like to take a moment to place the fishing industry in perspective. The fishing industry is the largest goods-producing employer in Newfoundland and Labrador, producing approximately 20 per cent of gross domestic product in the goods-producing sector in 1990. It provides employment for approximately 30,000 people who depend directly on the fishing industry for employment for all or part of the year including 12,500 plant workers at peak and approximately 14,000 full-time fishermen. Sea fish landings in 1988 totalled 558,000 metric tons with a landed value of $287 million. In 1991, landings totalled 384,000 metric tons with a value of $213.3 million.

Typically, groundfish landings make up, on average, 65 per cent to 70 per cent of total sea fish landings; cod makes up in excess of 40 per cent of groundfish landings. Catch reductions in the Gulf and along the South Coast and the impacts which these declines have had on families in rural communities are no less important to my department than the situation in which we find ourselves on the East Coast and Labrador. We expect the managers of our marine resources to manage such resources on the basis of sustainable harvest, that tonnages of fish allocated to be harvested are set at levels which protect the biomass ensuring that those who earn a livelihood through the fishery may continue to do so.

In recent months, media, public and government attention has focused on Northern cod, particularly measures necessary to prevent further deterioration of this resource. Northern cod is, by far, the largest single stock, providing 70 per cent of total cod landings and on which 60 per cent of registered fishermen depend for all or part of their livelihood.

Canada, on behalf of fishermen, manages the 2J+3KL cod resource inside its 200-mile economic zone. Other straddling stocks are managed by NAFO, of which Canada is a member. Over the four-year period, 1988 to 1991, foreign fleets have taken 142,000 metric tons of Northern cod, 135,000 metric tons in excess of allocations. Of that amount, 126,000 metric tons, or 93 per cent, have been taken by the European community. The EC does not hold a cod allocation in the NAFO management area.

In addition to the exploitation of Northern cod, foreign fleets, in the same period, have taken 80,000 metric tons of flounder, 50,000 metric tons of redfish, and 22,000 metric tons of cod from the Tail of the Grand Banks in excess of NAFO allocations. In total, during the four-year period, 1988 to 1991, foreign fleets have removed 287,000 metric tons of stocks in excess of their allocation. These stocks are of critical importance to both the inshore and offshore sectors of the Newfoundland industry.

Let us consider for a moment, Mr. Chairman, the impact which these excesses have had on landings in both Newfoundland and Labrador. Landings in this Province of 2J-3KL cod have decreased from 217,000 metric tons in 1988 to 127,000 metric tons in 1991. In other words, fishermen landed 90,000 metric tons less in 1991 than they did in 1988. Newfoundland landings of southern Grand Bank groundfish stocks, identified as being overfished, were 17,000 metric tons less in 1991 than in 1988. Cumulatively, Newfoundland landings of these southern Grand Bank stocks decreased by 48,000 metric tons over the period. Newfoundland landings of Northern cod, plus critical Grand Bank groundfish stocks, decreased 107,000 metric tons in 1991 over 1988 levels, resulting in the loss of 3,000 person-years of employment and economic loss approximated at $220 million.

Overfishing, particularly by EC countries, has created an environmental disaster in respect to groundfish stocks in the northwest Atlantic. The consequences of overfishing are to be found in varying degrees in 400 communities on the East and Northeast Coasts, and in the families which reside in these communities. The fishery provides the economic and social base of these rural communities. Much of that has been removed. The reality of today has replaced the confidence of yesterday with uncertainty and question. The Province is attempting to raise international awareness and, hopefully, condemnation against the idea that any nation or fleet has the right to fish areas of the sea without regard to international covenants which regulate such activity.

Furthermore, we must convince the Government of Canada that its obligation to protect and conserve fish stocks within the 200-mile management zone also carries with it the obligation to protect those fish whose annual migratory patterns have for centuries taken them back and forth across this 200-mile limit. Canadian law in this situation is not effective. Finally, the Government of Canada, as manager of the resource, has absolute responsibility to assist financially those individuals and families deprived of their livelihood. Deprived of their livelihood - alright, 'Bill'?

Returning to the Budget at hand, I am pleased to indicate that an amount of $300,000 has been set aside to mount a campaign against overfishing in this fiscal year. We look forward to the full participation of all segments of the industry in this initiative.

Mr. Chairman, I wish to take advantage of this opportunity to mention a few positive developments in the fishing industry. On many occasions in the past I have indicated the potential for developing some of the underutilized resources which we have available to us. Icelandic scallops are one of these resources. I am pleased to report that we now have two fish processing establishments in Grand Bank, which, between them, will employ over 300 people in 1992.

Mr. Chairman, it was only last week that I attended the official opening of the newest of these establishments operated by Clearwater Fine Food Limited in the fish plant formerly operated by FPI. I am also very pleased to report that we have a new fish processing operation in Cottlesville, in my own district, based on value added processing of female caplin for the Japanese market. The fish plant in Cottlesville was processing caplin all winter and it certainly indicates that we still have considerable potential to further utilize our marine resources.

Mr. Chairman, we are experiencing a significant growth and interest in the aquaculture industry in Newfoundland and many of the technical problems originally experienced by some of our early participants in the industry are being overcome. For example, the salmon and trout farmers in Bay d'Espoir have demonstrated quite conclusively that they can successfully raise both salmon and rainbow trout in the marine environment in Bay d'Espoir. In 1991 the growers were able for the first time in the Province to culture and market Atlantic salmon. We look forward to a continued growth from this sector of the industry, as well as further growth in the shellfish growing activities. In 1992, for example, the Province will be in a position, also for the first time, to harvest commercial quantities of farm-raised sea scallop. Meanwhile, interesting mussel farming continues to increase. Again, in 1992, I look forward to working with the Minister of Fisheries and Oceans with the objective of resolving many of the issues which prevent the full realization of the benefits the industry has to offer.

Specific budget activity: The Regional Services Branch, formerly Facility Services, has allocated $11.6 million in support of the development, maintenance and utilization of fisheries infrastructure. These include marine service centres, fishermen's community stages, fish processing and handling facilities, fisheries access roads, and the operation of the Northern Labrador fish plants. Funding is also provided for the administration cost for the newly created Regional Services Division in Labrador. In addition, funding is provided for the development of infrastructure through a cost-shared agreement with the Canada/Newfoundland Inshore Fisheries Development Subsidiary Agreement - NIFDA, and the Canada/Newfoundland Comprehensive Co-operation Agreement. The development and operation of marine service centres remain a significant program, and during the coming year, my department will complete the construction of repair sheds at the centres in L'Anse-au-Diable, Labrador, and Wesleyville, Bonavista Bay at a cost of $2 million. Funding for these two projects will be provided under the Canada/Newfoundland Inshore Fisheries Development Agreement. In addition, $730,000 is allocated for other capital repair and upgrading. The sum of $2.5 million is provided for the operation of these centres in 1992 and 1993. Over the past year, the department, with the assistance of a consultant, conducted a comprehensive review of the Marine Service Centre program. A total of thirty-three recommendations were presented to government, providing for an efficient and responsive program dedicated to serving fishermen and other marine clientele. A relatively new initiative involves the leasing of marine service centres to private operators. To date, centres located at Fermeuse, Port de Grave and Bonne Bay have been leased. I wish to add, Mr. Chairman, that basic service rates charged by the centres have not changed in recent years. My department is continuing efforts to divest government-owned fish processing plants. While the current fishery condition is a constraining factor, progress is being made. To date, a total of fifteen plants have been sold, with sale action ongoing for thirteen other facilities.

Mr. Chairman, given the increasing competitiveness in the industry, it is becoming less and less justifiable for government to own fish plants. With the possible exception of some plants in the North, we are confident that all plants can be privatized within the next three years. An expenditure of $763,300 is included for the operation of the processing plant at Nain. A further $346,000 is provided towards the operation of the Makkovik fish plant by the Torngat Co-operative. The new Regional Services Division is working closely with the Torngat Co-operative and the Labrador Innuit Development Corporation to further develop the fishery in this area.

The 1992-1993 Estimates provide approximately $2.7 million for capital projects under the Canada-Newfoundland Inshore Fisheries Development agreement. This is the last year of a five-year agreement. Projects are listed in Appendix 1. The capital program also includes grant funding to community-sponsored projects totalling $200,000 to assist with the purchase of materials.

The department will also continue to co-ordinate the fisheries component of the Coastal Labrador Development agreement. This federal-provincial agreement, signed in July, 1989, calls for expenditures of $7 million over the 1990 to 1994 period. In 1992-1993 approximately $2.3 million will be spent under the Coastal Labrador Development agreement on fisheries initiatives in Labrador. This will complement the expanded Department of Fisheries presence in Labrador, as announced last year.

The second major operational branch of my department, in fisheries and aquaculture development, has been formally named Industry Support Services. We changed the name of the branch to better reflect the function of the branch which is a developmental arm of the department. The branch will spend $9 million in 1992-1993. Under the Harvesting Operations Division of this branch, activities include: aquaculture development, resource utilization, harvesting technology and initiatives associated with vessel development. Funding in the amount of $1.2 million is provided towards the provision of technical and financial assistance to aquaculture developments and to research and development initiatives. In addition, this division administers Newfoundland's aquaculture legislation, which provides the legal framework for the industry. Expenditures of $1.4 million will be directed towards resource utilization, harvesting technology and vessel development, which include fish quality initiatives relating to catching, storage and fish handling practices at sea.

A capital expenditure of $2.2 million is also provided in respect to the financing and insurance cost of the four middle-distance vessels which were built at Marystown Shipyard in the 1987 to 1990 period. Gross expenditures of $2.8 million will be made by the Processing Operation Division of this branch. These funds will be directed towards improved processing technology, management information systems for processing plants, improved quality control procedures, development of secondary and value-added fish products, and development initiatives for the sealing industry. These funds also provide for administration of the Fish Inspection Act.

The Marketing Division will spend $1.2 million in support of market development activities directed towards the expansion of markets for Newfoundland seafood. The primary focus of these activities is marketing support to industry for the development of underutilized species, value-added products and aquaculture products.

The Policy Planning branch will have estimated expenditures in 1992 of $9.7 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, significant attention will be focused on the resource difficulties facing the industry, in particular, on foreign overfishing as the major contributor to resource decline. The branch is also responsible for field services activities, co-ordinating the activities of six regional field offices. In addition, the branch undertakes the fisheries science and resource analysis activities of the department. The branch will deliver the Province's share of the Atlantic Salmon Management agreement amounting to $11.7 million over two years. Some $7.6 million of that amount will be spent in 1992-1993.

The projects and programs of the Canada-Newfoundland Inshore Fishery Development agreement are also co-ordinated by the Policy Planning branch. Some $6.7 million will be spent under this program in 1992 and 1993. The Fisheries Loan Board is projecting expenditures in 1992-1993 of $11.6 million in support of the Province's inshore fleet. Expenditures will be directed towards interest subsidy payments under the bank loan guarantee program, loans under the Board's direct loan fund, and assistance under all three bounty programs.

In conclusion, the fishing industry faces severe resource constraints over the foreseeable future and performance will be impaired by quota and catch reductions. In the interim, a course must be charted which minimizes the impact of quota reductions, achieves our objectives with respect to resource management, and which will result in the rebuilding of a strong and resilient industry. My department will continue to develop policies and programs through which these objectives can be achieved for the overall benefit of our provincial economy and the fishing industry at large. I welcome any questions which you may have on my department's 1992-1993 estimates.

Thank you very much, gentlemen.

MR. CHAIRMAN: Thank you, Mr. Minister, for a very thorough report on the Department of Fisheries. As is customary, we will ask the Vice-Chair if he wants to respond.

MR. WOODFORD: Mr. Chairman, I will give leave to my colleague, the critic, the Member for Grand Bank. I can have a few comments later on.

MR. CHAIRMAN: Mr. Matthews.

MR. MATTHEWS: Thank you very much, Mr. Chairman, members of the Committee, and the minister, in particular. It is a privilege to be here this evening to scrutinize the estimates of the provincial Department of Fisheries. I was listening in great detail to the minister give his overview and so on. I guess there is not much more one can add to it all except that we all recognise we are going through a very difficult period - a resource crisis, higher unemployment, fewer fish plants operating, and on and on the story goes.

There is one thing that has come to my mind while listening to the minister and, I guess, before. With the resource steadily declining, it would seem that we certainly need more emphasis on greater utilization of the resource available to us, regardless of the species, and value-added products and so on. I think if we are not going to have the volume, then we certainly have to promote and try to develop a greater concentration for higher value products for obvious reasons. We have to maximize the employment opportunities for our people and as well, try, I guess, at the same time, to hopefully keep as many of our fish companies alive as possible and help the economy of the Province. So as we go through this tonight we will certainly have questions pertaining to different subheads and so on, in the Budget, and there will be specific questions that I want to ask the minister.

I must say that I was a little surprised today, in discussions in the House in Question Period and so on - and the minister was there to witness it - when I questioned the Premier on alleged statements made pertaining to his visit to Europe and discussing the moratorium outside the 200-mile limit particularly, which the EC has not honoured for the last number of years, I guess, hasn't honoured it since the moratorium was established or imposed by NAFO.

I was a little taken aback, really, and surprised - I don't know if the minister would have an opportunity to talk about it tonight - to hear the suggestion that in order to get the European Community to abide by the moratorium outside of 200, perhaps we should consider a moratorium for Canada on, particularly, offshore deep-sea direct fishing vessels.

Looking at the problems we have right now in the industry, if such a moratorium is imposed inside of 200 then there is going to be greater fallout for our people. There would have to be a very significant and substantial plan by both levels of government to address that. I am not for one minute trying to diminish the importance of protecting and conserving our fish stocks and taking action that will see the regeneration of those stocks. But I think what is very important is that there must be a plan put in place to deal with the impact, to keep the people of our Province alive while this regeneration, hopefully, will take place.

There are those who would suggest that the infrastructure in the various communities should be kept in place to avail of the regenerated resource, whenever that occurs. Just having spent a couple of days in my own area of the Province, I find there is great concern about the resource, great concern about the statements coming out of Fishery Products International over the last couple of days, especially on the heels of what has happened in the last couple of years. There is great concern that we may see the elimination, I guess, the eroding of very valuable fisheries infrastructure in a lot of the communities around our Province now. So I think there has to be a plan by both levels of government to try to address that. And I guess, tonight, I can't express enough the importance of that because, you know, I picked it up before, but over the last couple of days it has been brought to me in spades that a plan has to be developed for that.

With respect to the provincial Department of Fisheries, in light of the crisis and all of the attention that has been focused on the fishing industry over the past while, with the federal government receiving, by far, the brunt of the criticism - and there is not one of us here who would say it is not justifiably so - with the attention given to foreign overfishing, the need for assistance and the consistent calls for aid packages, I think a fair criticism out and about the fishing communities of the Province is, What, really, are the functions of the provincial Department of Fisheries? What role are they going to play for us in this whole crisis, in this resource issue? That has come to the forefront again. Time and time again, people are asking that question.

It is fine for me, I mean, I have been a member of the Legislature for ten years and a member of government for seven or so of those, and understand the different divisions and makeup of the Department of Fisheries. But a lot of people out and about our Province are really asking: What function does the provincial Department of Fisheries really fulfill? I guess that probably is because of the media attention, the great emphasis on foreign overfishing, the resource crisis, and so on, and I want to say that tonight, because it is a real concern out there in the Province.

It is fine, as I said, for people who understand. It is fine for me, as a Member of the House of Assembly, but not for people out around the Province, who are very frustrated and very cynical about politicians, who think that we, regardless of political stripe, don't do anything; they think they are paying us too much, and on and on it goes. It is all part of the frustration out there in the Province, and I guess, to a degree, you can understand where they are coming from when they say they don't know what the future holds for them. There is great uncertainty out there.

Mr. Chairman, if I had a copy of the statement I could have probably responded to more of the minister's points, but if I am permitted, there are some questions that I would like to ask on various issues as we go through. I don't intend to belabour the point or go on for any long period of time. It is dreadfully warm here. I don't know if we could do anything to control the temperature. I will conclude and hopefully have an opportunity to ask questions of the minister and his officials as we go through the various subheads of the department.

MR. CHAIRMAN: Mr. Murphy.

MR. MURPHY: Just a few short comments, Mr. Chairman.

I listened attentively to the Member for Grand Bank and I know where he is coming from on some aspects of his statements. I don't know if people realize how serious a problem this Province faces because of its greatest resource - I know the Vice-Chair has a specific interest in forest products. We dealt with minerals and mining here the other night, all wonderful things that employ a lot of Newfoundlanders, but there is no industry by which this Province can hope to survive if we don't have some kind of a viable fishery.

I want to congratulate the minister. I don't know if people understand, at this time, the amount of flak that the minister takes provincially and federally because the problem is before us now. I remember when I was an employee of Fishery Products International in 1987, when it was really a bumper year, I suppose, a great year. Everybody was telling us, from scientists to politicians, what a great time we were going to have. That has done a complete 360, a complete about-face.

I have listened to politicians, community leaders and industry folk in the last couple of years condemning the provincial Minister of Fisheries. I don't hear too much about condemning the staff - it is very, very rare. It seems that the minister always takes the brunt. But I think what has finally come home to roost is the sins of many, many yesterdays, the concern I had, and addressed some years ago, about running over the grounds in 3K and 3J on the Northern cod joint spawning season, what have you, and the issuing of licensing for caplin offshore. Somebody might say: Well, what do you know, as a townie? Well, I had an interest that is beyond me personally, as my forefathers were all Labrador fishermen. That is why I feel so comfortable sitting next to the Member for Eagle River.

MR. DUMARESQUE: You shouldn't feel comfortable.

SOME HON. MEMBERS: Hear, hear!

MR. MURPHY: I suppose not. His brother told me not to feel comfortable.

But, in reality, I think it is time for all of us to stop pointing fingers. I know the Member for Grand Bank wants to ask some questions and I would be extremely surprised if the Member for Green Bay didn't have some comment or want to ask some questions. But I say to you, I think it is time to stop pointing, shouting, and blaming. I think it is time to come together and see if we can salvage what is left, and we will not do that if we fight from within - and I say 'from within' in the sense of Newfoundlanders - for a house divided will always fall. We can play petty politics or get on with those kinds of scenarios if we so desire and try to gain some points, but I think that day is over. Mr. Chairman, I hope that is a tone we all might enhance here this evening.

Thank you.

MR. CHAIRMAN: Mr. Hewlett.

MR. HEWLETT: Thank you, Mr. Chairman.

I guess I should make a general remark. Unlike the hon. gentleman, I was born with an axe in hand rather than a jigger, Green Bay being predominately forestry. One thing I have noticed throughout my experience as an employee of the Crown and since becoming an elected member, the question has occurred as my colleague from Grand Bank has said, Why a provincial Department of Fisheries if, for the most part, fisheries is a federal responsibility? You could have an agency, I suppose, to license fish plants, and technically speaking, that would meet provincial responsibilities, or whatever, but I think the reason we have to answer the sort of question that was posed rhetorically by my colleague from Grand Bank as to why a provincial Department of Fisheries, is that it is a raison d'etre for our existence on this rock for the last several hundred years.

What I find disturbing these days with regard to the current administration, in the general area of fisheries - and I would like the minister to comment: I know times are tough and money is tight but when I worked for the Crown the provincial Crown was always trying to seek unto itself a greater role, or whatever, in fisheries and now we seem to be the other way around, saying it is a federal responsibility. But I think the very fact that we have this large department with several pages in this book and umpteen million dollars shows that over the years a recognition has grown up that this is one of the key industries in the existence of this Province and the provincial Crown can't really afford not to be involved in fisheries since it is so important to our well-being as an economy and as a society.

I find it disturbing that there tends to be a pass the buck mentality developing now where everybody is broke and we are in trouble so it is now Ottawa's baby. God knows, Ottawa has made a mess of it, and I will be the first to admit that. I think one of our biggest mistakes when we entered Confederation was not insisting on holding on to the fishery in one of our Terms of Union.

Wouldn't the minister think that there is an onus, because of the absolute dire crisis we are in and the absolute essential nature of our geography, our economy and our people, that a more pro-active role on the part of the provincial Fisheries Department, not only in terms of public relations but, if necessary - as my colleague mentioned earlier, this is a crisis of monumental proportions, and I think everybody has to pull together in this one, the union, the federal government and the provincial government. I think people are going to have to put monies forward, plans forward, and so on.

I am somewhat disturbed, in the same way as I made the point to the Minister of Energy the other night, that the provincial government, under its current leadership, has - what? - a 'laissez-faire' attitude towards certain economic matters, be it Hibernia and/or the fishery. I was wondering if the minister could address that. Isn't there an onus on the Province to sort of wade into this thing up to your eyeballs? Because, let's face it, the fishery is being run by the mainlanders and, I mean, we can't depend on mainlanders to look out for us. If we don't look out for us nobody will. I was wondering if the minister would care to address that general comment.

MR. CARTER: I'd be very happy to. I don't think anybody can take issue with at least some of the things you've said. There are other things you've said that certainly I will have to take issue with.

First of all, the present government, or the previous government, or the next government can't be held responsible for a decision that was made, rightly or wrongly, in 1949, at which time in Newfoundland, the Fathers of Confederation rightly or wrongly agreed to hand over to the federal government just about the entire jurisdiction of the fishing industry, certainly, the fish while it is in the water. We did retain certain powers having to do with processing plant operations, licensing, Fisheries Loan Board and a few other minor jurisdictions. But, certainly, the main thrust of fisheries and the policies relating thereto were ceded or handed over to the federal government.

In retrospect - and I suppose, 20-20 vision is always good - I think it was a tragedy in 1949 for the people who negotiated the Terms of Union to have done that and I think we are paying for it, and unless some action is taken soon to correct it we will continue to pay for it. But, to the Province's credit, we are not dillydallying or drifting or oblivious to what needs to be done. Just recently, we tabled in the House of Assembly and released publicly our position paper, discussion paper, on joint management. Now, while the paper might not have been perfect - it had, I'm sure, some flaws, as most such documents do - certainly, I think it formed a basis for putting together some kind of a joint management regime which would have addressed some of the problems we now have to cope with because of the present makeup of the jurisdiction over fisheries. Unfortunately, that paper did not get the support I hoped it would get from the Opposition and from certain other people, but the Province is going to pursue that. In fact, we are actively pursuing it and, hopefully, before too long we might be able to put together some kind of a viable plan that will see the Province at least sitting at the table and being part of the decision-making process.

You, and, I think, your colleague, Mr. Matthews, talked about the game plan. What plan does the Province have in mind? He talked about the Premier's comments on a moratorium within the 200-miles. Maybe I should explain that to the Committee. When the Minister of Fisheries and Oceans came to Newfoundland about a month-and-a-half ago, to announce his revised management plan, wherein he revised it from 185,000 metric tons down to 120,000, the Province then felt that he didn't go far enough because in that 120,000 metric ton TAC, the minister made no allowance whatever for foreign overfishing. In 1991, of course, we know that 42,000 metric tons of fish were caught by foreigners, without quotas, so, in the absence of some kind of firm action on the part of our government, we have no reason to believe that that amount will be any less this year. Therefore, when the minister said 120,000 metric tons, in effect, what he said is the TAC this year shall be up around 165,000 metric tons, and we all know that is far, far in excess of what it should be. Last year, even though we had a total allowable catch of 190,000 tons, the total harvest was only 127,000, so this year, even at best, his TAC was only slightly below that which we harvested last year. So the TAC that was set for this year, in our view, is unrealistic and certainly will do nothing towards helping the stocks rebuild.

In his announcement, the minister did, in effect, announce a moratorium, not in as many words, but what he announced was that there would be a moratorium placed on Canadian Offshore Fishing for Northern cod inside the 200-mile limit. Now, he didn't say a moratorium, but what he did say is that the quotas were all reduced, leaving that only which is required as a by-catch quota, to enable FPI to harvest a species on which they depend largely for their existence, probably more so now than ever, namely flatfish, American plaice, yellowtail and flounder. In order to catch that fish in the quotas they have, and on which they depend so heavily, they needed a nominal Northern Cod by-catch quota.

Now, if the minister had - and this is the point the Premier was trying to make. The Premier went to Europe two weeks ago and was very critical of NAFFO for not enforcing their own moratorium. As you all know, in 1986, NAFFO, very wisely, placed a moratorium on Northern cod on the Nose of the Grand Banks. The moratorium, as well-intentioned as it was, was never respected. The European community exercising certain rights that they have, set their own quotas. What was it they called it?

AN HON. MEMBER: The Objection.

MR. CARTER: The Objection Procedure, which enables any member nation of NAFEL to object to NAFEL's allocation or TAC, they exercise the Objection Procedure and, of course, set their own quotas, only to have their own quotas exceeded many times by certain countries, principally Spain and Portugal.

Now, the Premier in his European trip made a great deal of fuss over the fact that the NAFEL moratorium in not being upheld and I think his hand would have been strengthened if he could have said: Look, we Canadians have now placed a moratorium on all of our deep-sea fishing within the 200-mile, now surely, is it asking too much to expect you to enforce your moratorium, but the Premier could not say that, even though, in effect, that is what happened; because the way that John Crosbie announced it, for whatever reason - I don't attribute any devious or machiavellian motives to what he did or why he did it, but he didn't refer to it as a moratorium, he just said: 'a reduction in quota, leaving only enough to act as a by-catch quota'. That, 'Bill', is precisely what the Premier meant, and the Premier having said maybe that moratorium will have to be extended, quite possibly it will be.

You know, the advice we are getting is that the fish stocks are in terrible shape, probably worse than we thought they were, and I don't think Newfoundlanders should be too surprised if we find that maybe a moratorium will be necessary on the offshore fleet, as devastating as it will be. None of us look forward to the devastation that will impose on Newfoundlanders and on Newfoundland, but if it has to be done, it has to be done, if the future of the fishery is at stake.

Getting back to 'Alvin's' comments about the Province and what provision we are making, well, I can refer you to a letter here that the Premier sent the then Minister of Fisheries, Bernard Valcourt, on April 3, 1990, in which the Premier made reference to previous meetings and a plan that was put together by what was then known as the Stein Committee on which my deputy minister was a prominent member, as were other deputies, and provincial officials along with certain other federal officials, I think.

The committee operated under the direction of a federal Cabinet committee that was struck by the Prime Minister and headed by the Right Hon. Joe Clark. The Premier and I met that committee, and I think the deputy was there, at which time we gave certain undertakings followed up subsequently in a letter to Valcourt in which we set forth our thoughts on a response program. We talked about revitalization of the Newfoundland fishery for which we estimated $97.5 million. We talked about an economic diversification fund which we thought would cost $250 million and we also made reference here to education, training and learning, another $200 million, for a sum total of $547.5 million. Half a billion dollars was the package we put together, done by a committee headed by a senior federal bureaucrat, on which senior provincial civil servants worked for about six months day and night. That was the package that was put together. The Province offered, even with our limited resources, to cost-share that program. We offered to put up 20 per cent. First, we offered 90/10 but they came back and hedged on it and said maybe 70/30. We went back and said, 'Let's try 80/20, we will put up 20 per cent,' and 20 per cent of that would have meant, over a five-year period, well over $100 million. Now, you know the state of the Province's economy and our treasury, so that was stretching it, believe me.

Having done all that and having spent months working on a good program, without even a warning, the federal government suddenly lost interest. They refused to answer the phone calls that were being made by my deputy and others. The meetings started to taper off. All of a sudden, of course, the message became clear, that they weren't willing to have anything to do with the Province, that they wanted to go alone. Subsequent to that, Valcourt came to Newfoundland and the Premier and I met him at the Premier's house, at which time he announced what they were going to do.

The Province was quite prepared to put up over $100 million into that kind of a program. So, to say that we have been drifting and doing nothing - but the fact remains, Mr. Chairman, and gentlemen, that the Province can't go it alone. I don't want to be political tonight. We can have our little bits of fun in the House of Assembly but tonight let's be serious. Whether we care to admit it or not, this is a problem for which the federal government must accept just about full responsibility. I suppose we Newfoundlanders have done things here and there once in a while that have contributed. Harold Small, I suppose, has probably thrown away a few small fish once in a while and we have put a few liners in traps and so on but, by and large, it is the federal government's responsibility. Now, to suggest that the Province should undertake the massive task of finding a solution to that problem is doing the Province a great disservice because the government just doesn't have the money, and I think it is incumbent on all of us, as good Newfoundlanders, as people who are elected to serve the people, to keep the pressure on Ottawa where it belongs and to try to get from Ottawa the best possible deal, the deal that will cost the Province as little as possible, because God knows we have enough uses for the few dollars we have.

I am taking up too much time, Mr. Chairman, so I should probably stop and let somebody else ask another question.

MR. HEWLETT: I want to make another interjection. My point, Mr. Minister, is simply the fact that its being federal jurisdiction, to a great extent, is the problem. Vic Young told me of a trip he went on with a bunch of Canadian businessmen to Europe and when they got into Spain and Portugal, the boys got him in the suite one night and basically said: We want you to stay out of sight for the next couple of days. Because the Bombardier people were trying to flog a subway system to Barcelona for the Olympics, and the Canadair people were trying to flog water bombers to the Portuguese forest service. So they didn't want a Newfoundlander bitching about the fishery, upsetting their applecart.

The bottom line is simply that with regard to the offshore, I am talking about an approach, an attitude, with regard to a major important resource for this Province. The bottom line is that the mainlanders control our being, and that, we can't afford to have happen. We should be after power - P-O-W-E-R. On offshore oil, even though they have this Canada-Newfoundland board and all the rest of it, we have a veto on mode. We have the right to collect revenues as if the oil were on land, as if it were a normal provincial mineral resource and so on.

Herein lies my sort of philosophical difference with the current administration, and probably with prior administrations of all sorts, too: It's that I think Canada took Newfoundland mainly because, with it, it would get the Northwest Atlantic Ocean and that was the prize, not 500,000 starving peasants. I think the 500,000 starving peasants have to take back what's theirs, and the thrust of a provincial government is to look out for the society called Newfoundland and Labrador.

Therefore, sure, go for the feds and what you can get out of them in the way of money and all the rest of it. But I still make the point, or am of the view, that power is what we need so that we can tell them all to go shag off and, if necessary, put out our own police force and put shots across people's bows, or whatever.

The fishery in Ottawa is nothing. Joe Clark in charge of any fishery-related committee means that the fishery is going to be minor on that committee, even if it's called the fishery committee. Because External Affairs runs everything in Ottawa having to do with foreign countries. Unfortunately, the fishery is entangled enormously with foreign countries, but it is so insignificant in the agenda of the foreign affairs department it's not funny.

The bottom line is that we, as a province, I think, need our fishery back. We need power. Sure, we need help in the interim in terms of cost-shared relief programs and so on. I don't debate that. The mainlanders have taken us for everything we had, there's no harm in us taking them for everything they have. I'm not shy about that at all. But one of the things we need to be ripping off them is what they ripped off us in 1949, and that is power - power over a resource which is crucial to the existence of this society.

The Premier has alluded a number of times that we really can't afford to exercise the power. My point of view is that we really can't afford not to. Just the general attitude of the administration of which you are part - and I know you are not the leader, you're one minister in the Cabinet. I feel obligated - I'm no expert in fishery, but I just have the general concept that there is no one able to look out for our interests as well as ourselves. As long as we keep saying: it's Ottawa's thing - sure, bureaucrats are going to be bureaucrats. Ottawa bureaucrats will take unto themselves all the power and jurisdiction under the sun that they can get, because that is the nature of bureaucracies. But we can't afford to have them doing this; it's too important to us. We want it back. We need it back. We have to have it back. That is my point of view. I yield to other people who might -

MR. CARTER: The member for Naskaupi (inaudible) support for discussion on our paper on joint management.

MR. HEWLETT: Joint management versus split jurisdiction are two different things. As I said with regard to offshore oil, out of the agreements we signed with Ottawa, we got powers.

MR. CARTER: We also got an Offshore Petroleum Board.

MR. HEWLETT: We got a board but we also had powers; we had a veto on mode; we have a right, a right to collect revenues. There is a subtle difference, that's all I am trying to point out.

MR. CHAIRMAN: Okay, Mr. Hewlett.

Mr. Dumaresque.

MR. HEWLETT: I yield to whomever wishes to speak.

MR. DUMARESQUE: I wanted to get in on this because it is one of the more interesting aspects of the fishery. In the seven years that I studied political science, power was a concept in which I took a great interest, and Canadian politics certainly offers that opportunity. The power you are talking about, Mr. Hewlett, is obvious power that you gain either by the constitution or by the will of the House of Commons, and the power that you are obviously asking for requires money to implement.

There is no discussion about having the Premier saying: Well, we get the power, we cannot enforce it or cannot implement it. It is not that the Premier is saying that once we get the power we don't have the will to enforce it, or the jurisdiction, the ability or the human resources to do it, he is obviously saying we don't have the money to do it. And I find it ironic, I suppose, that you would set yourself to pursue the extreme concept of power transfer when you won't go midway. Because you must acknowledge, it is much easier, in any kind of political terms, to get an agreement between governments outside of a constitutional change which would have to be required. And you know what has happened in the constitution debate the last ten years; you can't get Quebec to come to the table, let alone get an agreement, so your chances of getting a constitutional amendment to transfer power over the fisheries, you would have to agree -

MR. HEWLETT: (Inaudible) agreement. I mean, one of the last items in the phased-in thing was the constitutionalization of this power.

MR. DUMARESQUE: - you would have to agree that that is almost next to nothing. But we have put forward, I think, a very reasonable proposal. With any kind of political will in Ottawa, we would be able to get the concept of joint management working and it would perform, I am sure, as well as the joint board on the offshore. I think what we are asking for is very reasonable, and for the Opposition not to appreciate the value of that approach, and also the impact that that can have on decision-making that you seek, I mean, I just had to make that comment. I know that people do not get always pursued or pushed by raw politics and that you have a philosophical difference, but I find that really interesting.

MR. HEWLETT: As a Labradorian, you should relate versus your area, and the Island, us versus Ottawa.

MR. DUMARESQUE: No. As I said, I find it very interesting, ironic that you would be going after the extreme position when we have put out a very reasonable middle-of-the-road position, that you just don't want to touch. So I think the minister and his department should be quite happy with the proposal that we have put forward, keeping in mind the interest that we are set up to protect. I mean, it is just unbelievable that you wouldn't support that concept and rally around Mr. Crosbie to see this done. Because, you know, I was impressed, as everybody was, on opening day and the Throne Speech, when your leader got up and said he was going to take politics away from the fishery in the interest of all Newfoundland and Labrador.

If you take politics away from the fishery, surely, with a consensus in fishery circles these days, you would have to agree that you could get joint management without the constitutional wrangle and without the financial implications that would come from having constitutional jurisdiction. So why you wouldn't do that, I just find interesting.

MR. HEWLETT: It is a laudable goal, I do not disagree, but the thing is, there are twenty-odd billion mainlanders who are not going to give it up to us very easily, you know.

MR. DUMARESQUE: But that is my point and that is why we should maybe meet them halfway. I mean, we would be giving up something too, everybody agrees with that. But, you know, if we met them halfway and tried that, maybe if it didn't work in our best interest, at least then we might be able to say: Look, you know, we gave what we could, but instead of that, the federal minister comes back with an Atlantic-wide agency.

MR. HEWLETT: Well, I mean, the problem with the federal Minister of Fisheries is that that minister is a minor minister in the Ottawa scheme of things and it is almost like being made Finance Minister. A Newfoundlander being made Minister of Fisheries is almost the kiss of death.

MR. CARTER: Well, the offshore oil - that did not require an amendment to the Constitution, did it?

MR. HEWLETT: No.

MR. CARTER: There's no constitutional arrangement.

MR. HEWLETT: No, but (inaudible). But one of the steps in the evolution was the constitutionalization of the Accord and so on and so forth. That hasn't been achieved yet, obviously. But the point that I was making, quite simply, is that through the negotiations, the arguments and the fights over the years, we acquire power - veto power, revenue collection power, and I think the ultimate solution, vis-à-vis Newfoundland and the fishery, is that we have to reacquire power of some sort.

MR. CARTER: Yes, but the will must be there on the part of both parties, the federal government and the provincial government.

MR. HEWLETT: I totally agree. Therein lies the stumbling block.

MR. MATTHEWS: How else can you get it if it's not?

MR. CHAIRMAN: Harold, do you have anything to add?

MR. SMALL: I would just like to thank Mr. Carter for his overview of the Estimates of the Budget for the coming year. Reading down through it, I think he has done a marvellous job. Being a Minister of Fisheries, I guess, in this day in Newfoundland is not a very easy task. I suppose I'll take it when 'Clyde' offers it to me but -

SOME HON. MEMBERS: Hear, hear!

MR. SMALL: The fishery, being spread all around Newfoundland, every time you turn on a radio you have all kinds of different advice - you should do this and you should do something else. I guess, for a minister and his officials to be able to set a course and stay on track is not very easy to do when we have advisors coming out of our ears, making statements and so on. It is not a very easy task.

I thank the minister and his officials for the good job I think they have done on the estimates for the coming year and, with the state our industry is in now, I think they're doing the very best they can.

I was involved in the fishing industry every summer for nineteen years and I have seen a lot of changes. We might blame it all on our government sometimes, but if the Department of Fisheries on both levels gave the fishermen every fish that was out there to catch, tomorrow morning they'd be back looking for more. It's not very often that we take a bit of the blame for what's happening in our fishery. I think if we all worked together we might have a better fishery. Thank you, Mr. Chairman.

MR. MURPHY: Well said, Mr. Small, well said.

MR. CARTER: Harold, I can describe being Minister of Fisheries, I guess, being like, if you can visualise it, a long-tailed cat in a room full of rocking chairs. Again, you can't please everybody, and everybody's an expert. That's probably one of the big problems we have to face, that it is difficult for the government to set a course and stay on it without having sometimes - and sometimes your own colleagues, trying to nudge you off course, make statements that are embarrassing. It happens quite frequently, not only now, but I'm sure in previous governments as well. I served as the minister in another government where we had similar situations. I suppose there isn't an industry in Newfoundland where we have so many armchair experts as in the fishery.

MR. MATTHEWS: About the expert bit, just to relate - you're so right, you know. It is amazing how quickly we become experts. Just to tell you a little story - I don't want to bore you or anything: I had a call on Sunday from a gentleman who said: 'I wonder if you'd come down and talk to me.' I was down in the district for a couple of days. He said: 'You'll find me down by the wharf, tied up inside the old Senator Penney. We're doing a bit of work on our boat.' I didn't get down Monday, I got down Tuesday about eleven o'clock, not realizing - naive, haven't been around long enough. Soon as I hit the wharf, God, they came out! Whew! They wanted to talk about the new scallop fishery. Of course, the Clearwater plant is here across the harbour and here is the GNF fisheries, the two you refer to. These are the smaller boat operators, quite incensed with what is going on at Clearwater. On and on they went. They knew all about the scallop resource. They knew not only where it was located but what sizes the Clearwater boat was catching and how much they were shovelling off the deck after the boat was full, and on and on. It was a great lecture they gave me about the scallop industry, which I appreciated, to be very honest with you. Now, I don't know if it is all correct. But that's the kind of people we are.

It struck home to me then that we are a very different breed. I've said that a thousand times. But they're all experts now in the scallop fishery and very quickly. It makes me wonder where that's all going to end. I don't know if any of your people have heard any of it, but I was floored by it, to be very honest with you, floored by it all. And I asked: 'How can what you're telling me be taking place with such close monitoring by DFO?' Because we know how cautious they were with the resource, and so on, with what's happened to our groundfish. I said: Certainly to God, they won't let anything like this happen to this new scallop industry.

It's all (inaudible) for what it's worth, tied in to what Harold said. It's amazing. Here they were in the same community looking at both plants, the one people working in both and catching both, or catching the same resource. It's amazing, boy! I was totally floored by it all. So I can readily identify with how difficult it is out there trying to deal with it. It really floored me. I came away from it, not knowing what to say.

MR. CHAIRMAN: It is not customary for a chairman to make a comment. I would like to make one comment and then go to Mr. Woodford. I was in Harbour Breton on the weekend, where they have probably one of the best plants on the Island right now, profit-wise, and it is doing well. I understand, talking to the boys in Gaultois - I think it was Roy Ingraham who told me - that there are no observers on the boat that is taking the redfish. They just go in and load and if, for example, they had 200,000 pounds in two drags and in the next drag you only need 20,000 pounds, then there's no way of knowing that they dump the other 80,000 pounds. There are no observers. There's nobody monitoring it.

So how long will the redfish last if that is the type of situation we have? I found that very difficult to believe, but if that is the case, then how long is that resource going to be there? So I think, in that sense, we should be probably putting some pressure on the feds. Because if that doesn't last and the scallop industry doesn't last, then -

AN HON. MEMBER: We should be doing (inaudible) should do that.

MR. CHAIRMAN: Monitoring it, put monitors on the boats just to see what is happening. There are no monitors on the boats.

MR. MURPHY: Conservation officers.

AN HON. MEMBER: (Inaudible).

MR. CHAIRMAN: Conservation officers, whatever you want to call them.

I just thought I'd make that point. But go ahead (inaudible).

MR. MATTHEWS: Someone told me in January - I mean, there are observers on the offshore boats, the trawlers and so on.

AN HON. MEMBER: Not all of them.

MR. CHAIRMAN: Not on the redfish.

MR. MATTHEWS: No, I'm not saying that, I'm talking about the other ones. They told me there was a boat landed in Fortune with an observer on it. We know certain species are more lucrative than others, and while the observer slept, they did things they shouldn't be doing - in January, you know what I mean? They had a certain amount of fish of a species that wasn't as lucrative, some by-catch, and other stuff, and one wasn't as lucrative as the other. I was told - and I have reason to believe it - that they let it go while the observer had a few hours sleep, because the skipper had said, 'We want the other stuff.'

So, even with this crisis - which ties in to what the Member for Baie Verte - White Bay said. It is very popular and right to attack foreign overfishing, but it brings you right back to the fact that we've done a lot of damage ourselves whether we believe it or not.

MR. CHAIRMAN: We're still doing it.

MR. MATTHEWS: It seems to support the story they told me, along with what you said, as well, that we're still at it. So my God -

MR. MURPHY: That was going on twenty-four hours a day, Bill.

MR. MATTHEWS: Yes, I know. I just wanted to say that.

MR. CARTER: The thing is, you can hardly say that in these times publicly, although I suppose it is among ourselves.

MR. MATTHEWS: No, you can't do it. I am just saying that here. There is no press here and whatever goes on here is, I hope, between us as people interested in the fishery. But I'm just saying what kind of a struggle it is if you have people who are -anyway, sorry, Mr. Chairman.

MR. SMALL: It is good to be talking about this among ourselves because I think we have to start doing our homework. If we hide our heads in the sand and don't discuss this, even among our own Canadians, I think we're out to lunch.

MR. CARTER: There is another problem, by the way, with which I should acquaint you, and maybe solicit your help. The federal government has now pretty well put the axe to dockside monitoring, and unless the fishermen or the - (inaudible) probably have it on a user-pay basis. Now that's like asking the bank robbers to pay for police protection for the bank, you know, really, it is. I think it is a terrible step backward and we've said as much. I notice the Province of New Brunswick has objected to it, and I believe Nova Scotia, and we have objected, to the minister. Because that is hardly a good way of keeping things under control, is it? - to remove the one policeman we have on the wharf to keep an eye on things. So Bill, you wouldn't do any harm, maybe, to make representation to your friends up along to - seriously.

MR. MATTHEWS: Yes, it is like the bank robbers saying you hire security for the bank, as far as I am concerned.

MR. MURPHY: One thing, I think, Mr. Chairman -

MR. CHAIRMAN: Okay, you may make one comment.

MR. MURPHY: Yes, just one quick comment, before I know that the hon. members opposite might want to get into subheadings for a few minutes.

MR. CHAIRMAN: Mr. Woodford.

Oh! Did you want to speak?

MR. MURPHY: Just in the context of what has been said so far; I think it only underlines how important it is that the people in this Province, through the department, have much, much more control. I am not talking about looking after the high seas. We don't have the capability of looking after the high seas. What do we have? Three water bombers and - well, the Norma and Gladys, she's on the bottom. We have nothing, absolutely nothing now. We can't look after the high seas.

But there are an awful lot of jurisdictional things we can do within this Province, and we know it only too well. Harold Small knows and Bill, you know what's going on out in the grounds. I have some idea because of yesterday's experience of what went on out there, and if we don't monitor it ourselves, nobody sitting behind a desk in Ottawa gives a hoot in a hammock about it.

That's why it is so important what the minister is saying and what his officials are doing, and Mr. Vardy, and all the rest of these gentlemen who have for years been answering the politicians, and knowing full well that we are not going to preserve what's left out there unless there is some provincial say. Thank you, Mr. Chairman.

MR. CHAIRMAN: Okay, Mr. Woodford.

MR. WOODFORD: Just a few comments on what has been said. I suppose everybody is talking philosophically, and it's too bad you can't talk this way in the House of Assembly.

The gentleman from St. John's South mentioned finger-pointing. The finger-pointing has to stop, I agree. I agree with every comment that has been made here tonight. But you aren't going to get fifty-two members in this House of Assembly, or the other three hundred and some-odd, on the national level, to do just that. If we can't take politics out of the fishery you can forget it. It is not going to get better, it is going to get worse. The trouble with the fishery, ever since Cabot landed and put his basket down, has been politics. The Spaniards had fun with it, the Portuguese have fun with it, the French, the English, fought wars over it.

AN HON. MEMBER: They weren't (inaudible).

MR. WOODFORD: Weren't even allowed - you know. Our ancestors right down through were fighting, and today we're fighting with each other. When we can go out and set quotas on something we can't see - because we can't. Scientists can't see it, they're only making a stab at it. They're only putting down a basket and picking it up here, and putting down another over there, and saying: 'Great stuff!'

But fish has been so plentiful, especially to this Province, that everybody played politics with it, the Liberals, the PCs -

regardless of political stripe. Election after election was won or lost on the fishery and a few other things, except for the latter years with regard to Hibernia - oil, all of a sudden.

Maybe we want a system something like the Northwest Territories, is it? They govern by consensus. Everybody goes out, forgets the political stripe and gets elected, and then they come in. After three or four terms like that we'd probably have fish trying to get up Water Street and up the sewer drains of St. John's, the same as the seals are now. But until you get the politics out of it I don't think we're going anywhere.

We can see the trees, we can tell Kruger how much to cut. We can go out and give fellows quotas on how much acreage of land to clear. We know how many people are around so that we can sell X number of gallons of milk a day, we know how many tourists visit the Province, because we see them. They are not under the water swimming over. They come over on a boat or by 'plane, getting off at the airport. We can see all those things, but the fishery is different in many ways. Everybody else gave a philosophical view of the fishery so I thought I would just make a few comments.

Mr. Chairman, I would like to get to some of the headings. The first is Regional Services, 2.2.06.05, if the minister would look at the Estimates on Page 111.

AN HON. MEMBER: What is the subhead?

MR. WOODFORD: 2.2.06.

MR. CARTER: .05.

MR. WOODFORD: Start at .04. There was nothing in the Budget there for supplies. It was revised at $30,000 and now it is up to $65,000 for this year. There was nothing there and then all of a sudden you are - I know whose initials are going to be on it. There is nothing budgeted for those three, Supplies, Professional Services and Purchased Services. How could you revise them?

MR. CARTER: That has to do with implementing Labrador development. This is the second year that some of these things are getting geared up and that is what that $65,000 is for. As you can see, there is an expenditure for the past two years, for certain things, on the Labrador Development Agreement.

MR. WOODFORD: But there was nothing budgeted for them and then they were shown as revised.

MR. HEWLETT: Was that a new agreement coming on stream and starting the same (inaudible)?

MR. CARTER: Exactly, setting up and getting geared up in Labrador.

MR. WOODFORD: But why would there not be anything budgeted for it last year? It wasn't even budgeted, was it, in those three particular categories? How could you revise something that is not budgeted?

MR. CHAIRMAN: If the minister would like to have his officials answer that it would be fine.

MR. CARTER: My deputy tells me this was an amount that is proposal-driven. We didn't know how much money would be needed until the proposals came in. Is that correct, Dave? Maybe you can explain it?

MR. VARDY: Yes. Mr. Chairman, this is basically a federal/provincial agreement we started to implement last year. We got into the implementation of it not really knowing what the take-up was going to be for the various components of the program, so it was not until we were into the year that we actually had to establish the breakdown. The breakdown, apart from salaries and transportation, wasn't made until midway through the year, and that is why that $30,000 was put in place. It was not until we actually started implementing the program that we knew what the requirements were going to be for supplies.

MR. WOODFORD: We have no quarrel with the program or the implementation of the program. What baffles me about it is why everything else is there. Salaries are there, Transportation and Communications, Grants and Subsidies, but yet, the other three weren't even put in the Budget. It is obvious someone must have been thinking about the program if Salaries was put in. It was budgeted $35,000 for Salaries, which was pretty well dead-on at $36.900.

MR. CARTER: I think we should probably take that under advisement, if it is alright with you, Mr. Chairman, and we can get back with a full explanation either tonight or tomorrow. I guess it will have to be tomorrow.

MR. WOODFORD: Mr. Minister, under Fisheries Initiatives - ERDA - 2.3.07.06, on Page 112, was budgeted for $4,300,000 for Purchased Services, revised at $3 million and now, a rebudgetary figure for 1992-1993 Estimates at $2.5 million. What would that comprise of?

MR. VARDY: Again, this a situation where we are into construction of fishing facilities and there is a multiyear program involved here. And, you know, the amount you actually spend in a given year depends on the progress you make with the capital facility. We budgeted $4.3 million, we only spent $3 million, but with the (inaudible) of the program, in terms of that capital program was 1991-1992 and the multiyear program for 1992-1993 called for $2.5 million. It is a program where most of the work is done, the capital part of it, in the early part of the agreement, so it is not unusual; this is in many federal-provincial agreements for the program to taper out. These are not level. They tend to go up to peak and come down again, so it is not unusual that the amount of money this year is less than it was in the previous years.

MR. WOODFORD: No, I am not -

AN HON. MEMBER: (Inaudible) by the consultant.

MR. WOODFORD: My point with regard to total is one thing. My other point is, why would capital then be put under Purchased Services when you always have a separate capital program, in any case, for the Estimates?

MR. VARDY: This would be contractors and consultants, work that is -

MR. WOODFORD: That is right, so that is contractors and consultants.

MR. VARDY: Yes.

MR. WOODFORD: It has nothing to do with capital as such; you are talking about capital in dollars, are you?

MR. VARDY: No, this is capital cost; this is actually capital cost that we purchased.

MR. HEWLETT: Lumber and brains, one or the other?

MR. VARDY: No, both. Both the design and the actual nails and wood and the whole thing, so that is a combination, you know, that is actual construction.

AN HON. MEMBER: By contractors?

MR. VARDY: By contractors.

MR. WOODFORD: By contractor or consultant?

MR. HEWLETT: Lumber and brains both.

MR. WOODFORD: ERDA.

MR. VARDY: No, well, in this case, it is NIFDA, this is the -

AN HON. MEMBER: (Inaudible) into ERDA.

MR. WOODFORD: Yes.

MR. VARDY: Yes, that's what it is.

MR. DUMARESQUE: Capital - a very large part of that is the L'Anse-au-Diable Marine Centre. It is over a million dollars, I think.

MR. WOODFORD: The L'Anse-au-Diable Marine Centre?

MR. DUMARESQUE: The L'Anse-au-Diable Marine Centre, yes.

MR. CARTER: It is an extension to the (inaudible) that is being built in Wesleyville.

MR. DUMARESQUE: The L'Anse-au-Diable job on the Marine Centre was $2 million.

MR. CARTER: Does it include the service centre in L'Anse-au-Diable, as well?

AN HON. MEMBER: Yes.

MR. WOODFORD: 3.1.02, under Grants and Subsidies for Fisheries and Aquaculture Development, a budgetary estimate of $52,200, yet over $800,000 was spent. What would come up that would make such a -

MR. CARTER: Last year's program where we overspent, the revised $823,200 involved the herring subsidy program that we initiated last fall, as you might recall -

MR. WOODFORD: Yes, so that is the Province's share.

MR. CARTER: - part of a job creation or response to the crises in the fishery. This year we are not anticipating that kind of a program, so the budget is back to what it was budgeted for in the previous year, $52,200.

MR. HEWLETT: Will that be (inaudible).

MR. CARTER: Pardon?

MR. HEWLETT: (Inaudible) the need for a -

MR. CARTER: Well, yes. I am sure there will be a need, but the herring subsidy program might not be part of the response; it depends on a number of factors, you know. Last year, luckily, it was an attractive program by virtue of the fact that there was lots of herring out there and there was a need for it in Russia. I think that is where most of the herring went, didn't it?

AN HON. MEMBER: Yes.

MR. CARTER: It might well be, this year we will have the same program, and if we do, then we will have to find funds elsewhere to cover it. We couldn't budget for it.

MR. WOODFORD: Yes, fair enough. Still under Aquaculture, 3.1.05: I know it is under an ERDA which was budgeted under Supplies and Purchased Services - under Supplies first, $10,000; spent $82,000, revised at $82,000 and again, budgeted this year for $80,000. What would be the supplies there in that particular case, would it be all to do with aquaculture programs?

MR. CARTER: This amount was to cover the program never initiated by the department to purchase supplies to undertake these programs. We switched the money out of Grants into Supplies for things such as nets, did you say, Reg?

MR. KINGSLEY: Nets and feed costs and all the supplies necessary.

MR. CARTER: Yes, various supplies to undertake certain initiatives in aquaculture.

MR. WOODFORD: Would that be for the private aquaculturist, someone in the private sector, or would it be a government program?

MR. CHAIRMAN: You may answer, Sir.

MR. CARTER: Reg, you may add, too, over there. This is informal.

MR. CHAIRMAN: Just state your name for the record and you can go ahead and answer for the minister.

MR. KINGSLEY: They would have been supplies bought by the department but they could have been then made available to a private aquaculture operator for experimental purposes, so they would have been purchased directly by the department.

MR. WOODFORD: And supplies would be what, to be used by the private sector, did you say nets?

MR. KINGSLEY: Well, it could have been gear for deployment, for collecting seed, for example, cages for holding fish; there may have been some feed costs. All those sorts of consumables would be included in supplies.

MR. WOODFORD: I am familiar with an Arctic char operation in my area and the information I am getting is there was very little available from the provincial government with regard to supplies, in any case. The operator has talked about cages, some of the same things you just mentioned, so that is why it struck me he was having a tough time of it, and one of the questions I put to him was just that. So this will be a great help, even if he had two cages, because of the cost of building them, you know. What would be available for a private entrepreneur like that starting off in the aquaculture business? If there are supplies available like this to a private individual, it would be a great help, even if it were a couple of thousand dollars. It is obvious that someone had spent some.

MR. KINGSLEY: Well, most of the funding there is in grants and subsidies. In many cases, the farmer would have had a grant directly; then he could purchase whatever he needed for his operation. This is under the ERDA - is it 3.1.05 we are talking about here?

MR. WOODFORD: Yes.

MR. KINGSLEY: That is under the NIFDA program, much of which is proposal-driven, so that is why the bulk of the money is there in grants and subsidies.

MR. WOODFORD: That would be the same for Professional Services. So you really don't know who is coming in; if three or four people interested in aquaculture came in, that would drive it up, that's why that figure would be up? Do the consultant services and so on -

MR. KINGSLEY: Yes, we really have no way, at the beginning of the year, of knowing exactly what funding we would need in each of these subheads. Depending on, then, the proposals that came into the department, more money may be needed in one subhead than was originally proposed or perhaps there would be less; so it is not uncommon to move it around from one to the other during the year.

MR. WOODFORD: I realize that, but when you look at the total budgetary process, the budgeted figures, I should say, and when you look at the revised figure and at an actual budget for this year and there is such discrepancy - you know, I can understand if the total budget say, were $800,000 and you had to move around from Purchased Services to Supplies to Salaries, and so on, I could understand that, but when you see the totals under, shall we say, $823,700 budgeted for the previous year and $658,300 revised or now, this year, only $159,900, what would be an explanation for that? Is the program out or are you not expecting it back?

MR. KINGSLEY: This is the last year of the program so that any money in 1992-1993 estimates would be the residual amounts left from the agreement.

MR. WOODFORD: You wanted to have a copy?

MR. CHAIRMAN: Yes. I want to probably have ten minutes where people can get coffee and relax. We're doing very well so far.

MR. CHAIRMAN: Order, please!

I believe Mr. Woodford has a few more points on the subhead and so on that he wants to discuss. Mr. Woodford.

MR. WOODFORD: Yes. There is more under the aquacultural part of it. A couple of them there under the ERDA which is in the agreement. You say that is one you couldn't budget for it. But anyway, I'll try another one, and that's on salaries with regards to Operations, 3.2.02, under Fisheries and Aquaculture Development. 3.2.02.01, Salaries, $93,000 budgeted, $140,000 spent. Pretty well the same thing budgeted for this year. What would that have to do with aquaculture? Would it have anything to do with any fish doctors?

MR. KINGSLEY: 3.2.02 is processing operations. It's not related to aquaculture.

MR. WOODFORD: Oh. But it says Fisheries and Aquaculture Development on top of the heading. You take it for granted.

MR. KINGSLEY: Yes, that's within my branch.

MR. HEWLETT: (Inaudible) budgeted ninety-odd dollars, you spent $140,000, and now you're budgeting ninety-odd again. Was this more people required than anticipated or is this experimental processing?

MR. KINGSLEY: Quite frankly, I don't know the answer to that at the moment. I would assume it is additional temporary staff we're taking on for inspections, perhaps during the caplin fishery and so on. But I'd have to check the exact answer for that.

MR. WOODFORD: The other one, 3.3.02, under Market Development, $165,700 and revised to $305,700, and back to $115,700 for this year. 3.3.02.10, under Grants and Subsidies. Strictly for market development of an aquaculture product?

MR. KINGSLEY: That would be market development for all the activities basically related to the fishery.

MR. CARTER: Mussels, the (Inaudible) mussel promotion and all that?

MR. KINGSLEY: Yes, mussel promotion, participation in trade shows for all our seafood products. It is not specific to aquaculture but aquaculture is certainly included.

MR. WOODFORD: The same thing would be applicable under your 3.3.03 heading, same thing, Grants and Subsidies, only thing about it that's under the agreement, was it? Would that be the only difference? 3.3.03.10.

MR. KINGSLEY: Again, these are estimates which we make in preparing the budget. We have no way of knowing if we will actually get proposals or requests for the grants as budgeted. Again, during the year it is necessary for us to move funding from one subhead to the other.

MR. WOODFORD: At 4.1.01, under Administration, 4.1.01.05. Budgeted at $92,000, revised at $215,000, and then really up this year, almost $400,000. What would be the big...? 4.1.01.05.

MR. VARDY: You're referring to 4.1.05, Professional Services.

MR. WOODFORD: Yes, sir.

MR. VARDY: There were a number of studies included in this... let's see now. I was wondering whether this is where we have the foreign overfishing. Yes, I think that's it. That's the foreign overfishing. Because that is included, $300,000 for foreign overfishing.

AN HON. MEMBER: Three hundred and fifty thousand dollars, isn't it?

MR. WOODFORD: That would be the exact figure that was budgeted in the Throne Speech.

MR. VARDY: There are other components. There is provision for other professional services so there is $300,000, plus $92,000. There is $300,000 for foreign overfishing plus $92,000 for other professional services. That is why the increase.

MR. WOODFORD: I can understand the $300,000 but why would it go from a budgetary figure of $92,000 and be revised at $215,000. I can understand the final figure but what would be the revised one at $215,000?

MR. VARDY: Mr. Chairman, we will have to get the answer to that. I cannot tell you offhand why that went from $92,000 to $215,000.

MR. WOODFORD: Then you will get that information for me?

MR. VARDY: Yes.

MR. WOODFORD: I only have a couple more so I might as well finish, then somebody else can have it. 4.3.01 (06), again under administration, a fairly large Budget revised at pretty well the Budget but this year way down to $64,500, under Purchase Services on Page 118, 4.3.01 (06).

MR. VARDY: Mr. Chairman, I believe one of the reasons for this reduction here is that we have transferred some of our field services from the Policy and Planning Division into our regional division. Essentially we have re-organized the department over the last year and in the process of doing that we took a component of the department out of the Field Services Division and put it in regional services, so basically the main component we moved into regional services is the Labrador division so that reflects the reduction and that is one of the reasons why the purchase services component is down in 1992-93 from the previous year. There may be other reasons why it is down but I believe I will have to get back to you with a more detailed answer.

MR. WOODFORD: 5.l.02 (10), Grants and Subsidies under Incentives and Assistance. You saw a need to budget $3,200,000 in 1991-92. There was $1 million less spent so now you have less budgeted, almost half the budgeted figure.

MR. CARTER: That is because of the drop in interest rates on our loans. The rates, as you know, have gone down considerably over the past six months and that is reflected in the amount we are budgeting here.

MR. WOODFORD: Under Grants and Subsidies 5.l.02?

MR. CARTER: Yes, that would be interest.

MR. VARDY: We provide a subsidized interest rate here which is basically 3 per cent below the prime and what happens is that as that rate declines the Province ends up paying a lower rate but the fishermen are locked into an agreement with the Province so we make a saving. The Province actually makes a saving because we borrow at the current rate because we are locked into a term. In the case of an agreement we enter into with a fishermen to purchase a boat, where we finance a vessel under the Fisheries Loan Board, that is entered into for fifteen or twenty years and the interest rate is locked in but the department or the government borrows that on a floating rate which changes. The rates over the last year have been much lower and as a result we have saved money because we have not needed as much money for interest subsidy. That reflects the fact that current interest rates are down but if interest rates went up then that amount would simply go up to reflect the pattern.

AN HON. MEMBER: (Inaudible)

MR. VARDY: No, it does not. That is one of the things we are looking at now because a fixed rate protects the fishermen against an increase in the rate but it does not provide the fishermen with the advantage of a reduction. What we are looking at right now is a move to a floating rate for fishermen who are taking out new loans so they can take advantage of low rates when rates are low. Obviously, the penalty associated with floating rates is that when the rates go up the fishermen are not protected.

MR. WOODFORD: Is that something that was always in there under the Fisheries Loan Board? There was never a floating rate, it was always locked? Or was that changed the last couple of years?

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: It was always (Inaudible) that way, yes.

MR. WOODFORD: Always locked. Because you mentioned the 3 percentage points below prime. That I think came from the old Rural Development Authority. I think that they used the same scheme. Anything to do with forestry, fishery or agriculture or anything like that. The Farm Loan Board operated under the same scheme. The only thing about it, they floated for six months. Say for instance you got a loan in January, at the end of June they'd look at it again every six months. Then you would either go up or down, say, but it would still be at 3 percentage points below prime. So what you're saying here is that they lock you in and your interest rates go up....

AN HON. MEMBER: They go up.

MR. WOODFORD: They go up?

MR. VARDY: That's right. This has always been -

MR. WOODFORD: But it can't go back.

MR. VARDY: No. Under the present system the rate is locked in for the fishermen.

MR. WOODFORD: So you lock it at 3 percentage points below prime at that time and then that's it.

MR. VARDY: That's it. For the term.

MR. WOODFORD: The minister should take a look at that.

MR. CARTER: We are, we are having a look at (Inaudible).

MR. WOODFORD: Because it is obvious here, just looking at one heading, what it can do for a department. Just imagine what it could do for the fishermen in the Province. I know that it has worked well for the farming community and the forestry industry.

MR. CARTER: Yes. But don't forget now, the case will be reversed if and when the rates go back up.

MR. WOODFORD: Yes.

SOME HON. MEMBERS: (Inaudible).

MR. CARTER: (Inaudible) then the fishermen will pay.

MR. WOODFORD: I suppose it may be a little different, because you are talking about much larger loans too, as well. That would probably be the problem.

MR. CARTER: Yes, but the fishermen would gain if and when the rates go back up. But now when they go down the Department gains.

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: No, not if it went back up.

MR. MATTHEWS: (Inaudible) did I understand that if they go up, the fishermen's going up, but if they go down they stay?

AN HON. MEMBER: No, no, the fishermen (Inaudible).

MR. MATTHEWS: So that whatever that is, that (Inaudible) point, for the duration of the loan.

MR. VARDY: For the duration of the loan, whether the rate goes up or the rate goes down, so the fisherman is protected against a rate increase. But he doesn't get the benefit of a rate reduction.

MR. MATTHEWS: Of going down.

MR. WOODFORD: Rate reduction, yes.

MR. HEWLETT: It's like mortgages used to be in the old days where you could get a twenty-year mortgage fixed rate, rather than now (Inaudible) years (Inaudible).

MR. WOODFORD: Another thing about it, you're talking about much bigger loans too. You're talking about -

MR. CARTER: (Inaudible) explain it (Inaudible) if a fisherman comes in and gets a loan, and if the bank rate is 12 per cent -

AN HON. MEMBER: They get it at 9 per cent.

MR. WOODFORD: Yes, you get it at 9 per cent.

MR. CARTER: Or if it's 1.5 percentage points above prime, brings it up to 12 percentage points, we subsidize it by 3 per cent, so the fisherman pays 9 per cent, isn't it? Nine, or 8.5 per cent, or 9 per cent, whatever. Now then, if the rates drop the spread between the preferred rate and what the fisherman normally would have paid narrows. But if it goes the other way then it's to the fisherman's advantage, isn't it? I don't know if I'm making myself clear or not, but....

MR. WOODFORD: Well, it's - go ahead.

MR. MURPHY: If the fisherman comes in for fifteen years at 9 per cent, he understands exactly where he is when he initiates that loan and he must feel that he can handle that. If it goes to 18 per cent, then the Province must absorb the difference. If it goes below then the fisherman knows where he was for those fifteen years and the Province benefits in some way. But you must protect yourself if it goes the other way.

MR. WOODFORD: If that's the case that must have changed in the last couple of years. Because that rate, under the Rural Development Authority, floated. If that prime changed the rate changed and the maximum you had was six months.

MR. VARDY: Mr. Chairman, I'm not sure whether the Fisheries Loan Board operates under the same policy guidelines as the Rural Development Authority. It may well be different.

MR. WOODFORD: (Inaudible), it did.

MR. VARDY: I'm not familiar with how that worked. But the way it works with the Fisheries Loan Board is that the government borrows at 1.5 per cent or 1 per cent above - just let's take the simple case where it is 1.5 per cent above prime. The government borrows at 1.5 per cent above prime. Government makes the money available 3 per cent below prime. So that represents a subsidy of 4.5 per cent. So the effective subsidy is 4.5 per cent. In terms of the people on the staff of the Board, our recollection in recent years - now, I can't make a definitive statement that twenty years ago it may have been some different approach - but in recent years it has been the way it is now, that is to say on a fixed term.

MR. BURSEY: Mr. Chairman, I think there may be some confusion with the rate itself and the way it is set. Basically the rate is set twice yearly at a rate which is 3 per cent below prime.

MR. WOODFORD: That is right. That is my point.

MR. BURSEY: That rate may vary from one year to the next, depending on what happens to the prime in the interim, but once the rate is set, be it set at 5 per cent, 8 per cent, or whatever, that is fixed until the loan matures which could be ten or twenty years. I believe that is the same arrangement as under the Farm Development Loans.

MR. WOODFORD: No. No. You signed a rate as such but after the six months if that should change there is a possibility yours could change, if the prime changed.

AN HON. MEMBER: (Inaudible)

MR. WOODFORD: I mean within the term of the loan. Say if you were locked in for five years and they looked at it at the end of six months and if that prime changed then yours would change. That is the point I was trying to make. Is it changing now?

MR. BURSEY: Once the fisherman locks in, be it for 7 per cent, 10 per cent, or whatever, he is locked in then for five or ten years, or whatever, but over a period of time our rate may change to new applicants because the rate itself is set twice yearly. If the rate goes up one percentage point at the bank in the meantime then our rate goes up as well.

MR. WOODFORD: In one year you could have two different rates.

MR. BURSEY: In one year you could have two different rates.

MR. CHAIRMAN: Do you have any more questions?

MR. WOODFORD: That is all for me. Danny has no questions. The minister should have put DD after most of those headings.

MR. CHAIRMAN: Mr. Matthews.

MR. MATTHEWS: I have a couple of questions I would like to ask if I could, particularly on regional field offices. I believe the minister referenced that there were six. Did you say there were six field offices out and about the Province?

MR. CARTER: Yes. Plus Labrador.

MR. MATTHEWS: Is it the intent of the department to maintain this level of field services throughout the Province?

MR. CARTER: We have no plans to change them. It is working well now and why fix it if it is not broken.

MR. MATTHEWS: I agree but I just wondered.

MR. CARTER: We have a good satisfactory field staff that I am quite happy with.

MR. MATTHEWS: I concur.

MR. CARTER: It seems to be working very well. I think the fellow in your district, Bill, has done a good job.

MR. MATTHEWS: Right. With the last name he has I would say.

MR. CARTER: That is right.

MR. MATTHEWS: He told me to ask the question.

MR. CARTER: I hear he is going to run against you next time around.

MR. MATTHEWS: Oh, yes, for mayor of Fortune.

MR. CARTER: How do you feel about him now?

MR. MATTHEWS: I cannot change my opinion about him. He is one of my best poll captains.

I just want to ask a question on the middle distance boats. What is the situation with them? Have there been a couple sold, or are they all leased?

MR. CARTER: Two are sold and the other four are leased, the new ones, leased to FPI. They have two. Captain Jim Short has one and possibly another one. The ones leased to FPI we have an arrangement with. These boats are not money-makers as you can imagine. Once we lost the quota for them then their potential hit bottom. We have an arrangement now with FPI where it is part of the gross profit. Is that the way it works, 25 per cent? The bottom of $75,000 for the year - is that not the way it goes?

MR. MATTHEWS: For a minimum of $75,000 a year.

MR. CARTER: 25 per cent of the gross profit. Now we are not getting enough from the proceeds of the lease to pay their costs, so I suppose we are subsidizing them but those boats, as you probably know, and this is no reflection on the shipyard in Marystown, but the boats cost actually quite a bit more than they should have cost, by virtue of a subsidy that was actually paid I suppose to the shipyard and that is reflecting of course in the operational costs because they are financed to two companies, Pitney Bowes and Roynat, the Royal Bank. They were financed by those two organizations and we have to pay the lease amounts to them.

MR. MATTHEWS: The people who have the lease, what are they using them for?

MR. CARTER: Gill netting; Jim Short, Captain Short for example is using his for turbot and what he is doing is, he is fishing some of the quotas for example that last year NatSea gave him the charter or whatever to harvest the (inaudible). I think this year Clearwater is utilizing one of them I believe, is it not?

AN HON. MEMBER: (Inaudible).

MR. CARTER: Yes and then we had one leased to Newfound Resources for a while to do certain things, so we are trying our best to keep them occupied hoping that eventually, sometime, we will get a quota because these boats are good technology, we do not want to lose them and if we were to sell them outside the Province, you would not get even close to what they cost. Plus the fact the payout the government would have to make to Pitney Bowes and Roynat, would probably be greater than the amount we could hope to realize for the boats if you know what I mean, so we are trying to make the best of a bad job.

MR. MATTHEWS: So are they leased on an annual basis or -

MR. CARTER: Yes, we negotiate. We call proposals every year and their management plan comes in, prospective lessee - is that the word or lessor, lessee I guess, but there are not that many takers you know, there is no lineup -

MR. MATTHEWS: No. That is basically what I was leading up to -

MR. CARTER: - and we are lucky to get somebody to take them off our hands.

MR. MATTHEWS: What do you see happening? I mean with what is happening with resource -

MR. CARTER: (Inaudible) there are a lot of things happening now - a few, not a lot but some things, for example Captain Short, I think is geared up for deep water turbot, is he not Reg? We have assisted him with special gear for deep water turbot and we are looking at others maybe, who can become involved in underutilized specie fishing you know or whatever we can put in that. I do not know how Jim Short is going to make out because NatSea is no longer able to provide him with a quota to catch; the two that FPI has leased will be fishing in 2Gh, that is down in northern waters, for turbot, Harold?

MR. H. MURPHY: Mostly, yes.

MR. CARTER: Mostly turbot, so you know we are trying to keep them occupied but it is one hell of a job.

MR. MATTHEWS: So those who are fishing turbot in 2Gh, is that an allocation now that Fishery Products International has or are they going after this pool, this proposal call that the federal government has asked them to have proposals on, I think it was for mackerel and turbot, are they fishing FPI quota now ?

MR. VARDY: They have their own quotas. Those vessels have their own quotas but they are not really enough to keep them occupied fulltime. I am not sure whether these people have actually applied for some turbot from that pool, but those vessels are ideally suited for fishing turbot in deep water but the big problem with those vessels is, as the minister said, the fact that we lost the cod quota, the northern cod quota, because you need cod. When you are fishing turbot you still need a bycatch of cod and of course, cod is the mainstay, economically the mainstay of those vessels because the catch rates with turbot are not as good as they are with cod, therefore it was a major problem with the viability of that fleet to lose the quota.

MR. CARTER: NatSea last year paid Short a bonus price for fish he caught and by their own admission it was probably the best fish that they ever had landed in their plant. Large fish and good fish, you know, iced on board, cleaned, gutted and stored in boxes, so it is a good technology. The history is excellent

MR. MATTHEWS: The history of them has been that, hasn't it?

MR. CARTER: Yes. It's too bad the crisis came on, because were it not for what happened those boats could have been very - you would have probably seen a lot more of them built. Because there's no doubt about it, it's a technology of the future I think.

MR. MATTHEWS: Yes, I tend to agree. Mr. Chairman, there's a couple of things here. I'd just ask a question on a couple of subheads. Under Regional Services, 2.3.06.10, on the Community Projects. (Inaudible) like last year, last year it went up to $1.2 million and now down.

MR. CARTER: That, Bill, was a response program. We put $1 million into the response program, a job creation program. That's reflected in that $1,250,000. This year of course we reverted back to what it was, $200,000. These are clearly small community projects where we provide up to $3,000 to fishermen's committees et cetera to top up with small materials, nuts and bolts. It's a good little program.

MR. MATTHEWS: Yes, so I mean I think it would be pretty logical to conclude that you're probably going to have to find another million plus this year with the outlook that we're facing.

MR. CARTER: (Inaudible) it's a good way to generate work, it provides some worthwhile results.

MR. MATTHEWS: With the marketing end of things, I just have a question for you. Your total in marketing, page 116, you're talking about $1.1 million in marketing. Look at that. Is that adequate to do what needs to be done in marketing? When you look at - as I said when responding to your opening statement that it seems that we have to be aggressive marketers. Not that there wasn't always a need. But when you look at what's happening and if we're sincere, if we're going to do more than pay lip service to underutilized species and get into some other things, can we adequately do the marketing that's necessary with $1.1 million?

MR. CARTER: Marketing is very important, as you have said.

MR. MATTHEWS: Yes. I'm just wondering, just asking the question.

MR. CARTER: It's a private sector initiative. Most of the marketing is being done by the private sector. FPI, for example, they have their own marketing organization now in Montreal. Some of the other companies have got a consortium for example. There are one or two others, aren't there?

So most of the marketing is now private sector driven. A lot of the smaller plants have sort of gotten together and formed their own consortium of marketing and it's working out very well.

MR. DUMARESQUE: The biggest problem is supply these days, not to market.

MR. CARTER: Supply is the big problem.

MR. MATTHEWS: Yes. I appreciate your comment, Danny. What I'm saying is when I reacted to the minister's opening statement I talked about getting into more value-added.... the quantity of fish that is at our disposal is reducing. We are into looking at developmental fisheries, I suppose, if you want to call them that.

MR. CARTER: We intend to do that. But what we find is - I'll give you an example. P Janes and Sons in Hants Harbour, they've spent years trying to develop, promote and market a reasonably wide range of product but they've never been too successful at it. No reflection on them.

It's so costly for a company to take a brand new product with a new brand name and get it into the marketplace. Supermarket fees, and where are you going to have it in the supermarket, on what shelf. It is so costly and so complicated. So Janes, I suppose not really on our advice, but I guess we had some little part to play in it, made a deal with Canada Packers. Canada Packers has a product named Five Oceans. It is marketed in the US. They are doing cold packing for Canada Packers. They are putting out now about five different products professionally done through a multi-million dollar organization, Canada Packers, lots of good advertising and marketing. It's going well, and it's going to go well. We're assisting in cases like that. We assist in people developing a product, hoping that they'll align themselves with some international organization that will do the marketing for them. That's very high on our agenda.

MR. MURPHY: Mr. Minister, one of the things that I always felt - and I watched with great amazement on secondary processing in Burin, when they started doing up seal eats, flounder and spinach and cheese and all those great things, and actually store pricing it for Loblaws and what have you right in Burin. Is there any initiative from industry, any of your officials dealing, with more secondary processing with the bit of fish that we have?

MR. CARTER: In my opening statement I made reference to what's happening in Cottlesville, for example. That's private sector driven, although they were assisted through ENL. That is a case where on their own initiative they went to Japan and aligned themselves with a Japanese importer of female caplin. They came back and shared their expertise with them. They brought over some equipment. Now there is a full-scale operation going in Cottlesville, the first of its kind in Newfoundland, and I'm very excited by it. Because if we can only find ways and means of processing the 15,000 or 20,000 tons of caplin that we're shipping over there in a raw state, if we can find ways of doing that in Newfoundland - and you're talking about the creation and generation of 2,000 or 3,000 jobs. If you can visualise a mound of caplin, 10,000 tons, and every single caplin having to be handled individually about three or four times: picked up, skivered on a rack, and taken - it's so labour intensive it's something else.

Now that's happening in Cottlesville. Strangely enough, the plant in Cottlesville was working up until last week processing caplin that they caught last summer and froze. The Japanese came down last week and oversaw the operation and it's good. There's no reason why other - I think, Harry, you went down to see it, didn't you?

MR. SMALL: Yes.

MR. CARTER: What did you think of it?

MR. SMALL: A real good operation (Inaudible).

MR. CARTER: Isn't it?

MR. SMALL: There's a lot of labour involved there.

MR. CARTER: Lot of labour. There are seventy or eighty people there. I don't know if the company made any money because it's a pilot project. The potential is there. They tell me that the markets are good.

MR. MURPHY: Is it 1995 that the tariffs are gone?

MR. CARTER: On American you mean?

MR. MURPHY: Yes.

MR. CARTER: Yes, pretty well gone by then. They're starting now.

MR. MURPHY: That's store-ready product, isn't it?

MR. CARTER: Yes, but now we're talking about Japan. This is going to the Japanese market, not the US.

MR. MURPHY: No, I understand that. There's really not a problem there because of the supply and demand. The Japanese, I'm just saying -

MR. CARTER: Phased out over ten years. We've got two or three years. It's on about 6 per cent now I think, isn't it?

MR. MURPHY: But it's gone David, is it in 1995?

MR. CARTER: Not quite (Inaudible).

MR. VARDY: Well, ten years from whenever the - I can't recall when the free trade agreement was signed.

MR. MURPHY: 1988, 1989. So it's 1999. Okay, thank you, Mr. Minister.

MR. CARTER: It's having its affect. It's being felt now, I think, the reduction.

MR. CHAIRMAN: Mr. Matthews.

MR. MATTHEWS: Yes. The marine service centres. You mentioned in your statement again about I think you've privatised or released some of them to private operators.

MR. CARTER: Yes, we've privatised on an experimental basis the one in Fermeuse, the one in Hodge's Cove, and the one in Port de Grave. The Port de Grave -

MR. MATTHEWS: Oh yes, I remember that one for some reason.

MR. CARTER: Yes, the Port de Grave one was not a full-fledged marine service centre but sort of a shed and it had certain amenities there. How about the one in Fortune, isn't that -?

MR. MATTHEWS: No, no.

AN HON. MEMBER: (Inaudible).

MR. CARTER: That's being operated by the harbour authority.

MR. MATTHEWS: Yes, that is a fantastic facility. I want to go on record as saying that I think it's -

MR. CARTER: Yes. So we are gradually -

MR. MATTHEWS: - I'm really impressed with that facility.

MR. CARTER: - working into privatisation. The beauty about it is it's not costing the Province anything. In fact, there is revenue generating to some extent.

MR. MATTHEWS: I guess the question was, can they make it?

MR. CARTER: Yes, I think so.

MR. MATTHEWS: Are they making it? I had a discussion with Mr. Murphy months ago pertaining to Fortune when they were trying to get an agreement I think it was with the harbour authority. So I mean, are they going to be able to sustain it?

MR. CARTER: It looks good. The beauty about it too is it hasn't resulted in any increase in the rates to the users.

MR. MATTHEWS: I've been by there in the last few weeks and there's a lot of activity in the Fortune one, which is where I live. I'm really surprised, very pleased with the quality of the facility and the number of boats that were there. I really was. Of course they're gearing up, I suppose, for the season and stuff. I just wondered, I guess you intend to privatize for all intents and purposes more of them, is that the government intention?

MR. CARTER: We have to be realistic. For example there is Labrador, L'Anse-au-Diable, it is very unlikely, I suppose, that would ever be privatized.

MR. DUMARESQUE: Well, I think it would probably be a good idea to look at privatization but it would be very hard to find the total cost recovery with the number of boats we have down there and things like that.

MR. CARTER: Where it is feasible we will push it.

MR. MATTHEWS: Mr. Chairman, I would like to refer the minister and officials to Page 118, Subhead 4.3.02 (10) the Atlantic Salmon Management Agreement where you budgeted $7.6 million.

MR. CARTER: That is to take care of the agreement we have with the feds.

MR. MATTHEWS: The by-out?

MR. CARTER: We are responsible for 30 per cent of the cost of buying back licenses. That is phased over a two year period.

MR. MATTHEWS: Does this fulfil the Province's commitment or will you have to budget again next year?

MR. CARTER: Yes. It is two years.

MR. MATTHEWS: So you will have an equivalent amount next year. Is that what you are saying? That it will cost the $15 million roughly.

MR. CARTER: $12 million.

MR. MATTHEWS: It will not be as much next year.

MR. BURSEY: Next year it will be close to $5 million, $4.6 million, something like that.

MR. MATTHEWS: My understanding was, and maybe you can clarify this, that this year there was to be an $8000 payout and then next year the remainder. Those who were receiving more than that would get the remainder in the next fiscal year.

MR. CARTER: You know the way the system works. It was $8000 without any receipts or eight times the best year in three years with receipts.

MR. MATTHEWS: The best year of the last three, was it?

MR. CARTER: Yes, of the last three. The Province at the time wanted it to be the best of the last five years because it would have upped the ante quite a bit because 1987 was a good year for salmon. Anyway, in cases where the fishermen have taken the $8000 that is paid out in full this year is it not Dave?

MR. VARDY: That is right.

MR. CARTER: But in cases where they have applied the other formula then there is $8000 this year and the balance next year.

MR. MATTHEWS: So it will cost the Province less next year than it did this fiscal year? One final comment or question from me, Mr. Chairman, and that is dealing with the fisheries loans and assistance. I noticed my colleague from Humber Valley zeroed in on 5.1.02. Just looking at the total there of fisheries loans and assistance, pretty well at the bottom of 119, you are talking $5.5 million this year as compared to $7.2 million. What is the biggest explanation for that? The total fisheries loans and assistance last year revised was $500,000 short from that which you budgeted, shorter than the $7.2. Is that tied directly to interest rates?

MR. CARTER: Yes, the reduced interest rate.

MR. VARDY: It is pretty well the same. The only thing there that is different is the interest rate.

MR. MATTHEWS: What is happening then with the initiative that you announced a short while ago to deal with the problem because of the catch failures and so on? I am hearing from different sources myself, from other members and people, that the process seems to be slow.

MR. CARTER: Well, we have 6000 clients who potentially will take advantage of that program and what we have offered to do is wipe out the interest from 1991. Like I said we are dealing with over 6000 clients. In the case of bank loans we have two different programs in the Fisheries Loan Board. One paid direct loan procedure and anything over $30,000 is directed to the bank and guaranteed by the government. Now, in the case of the larger loans for the larger boats the same program does not apply, not in the same context. What we are saying here is that if a fisherman can demonstrate that they had a rough year and cannot make their payments then there will be consideration given toward eliminating the interest. How does that work, Brian? Are we going to wipe out the interest on loans where it can be justified? There is a formula that Brian can explain as to how it is arrived at. Both programs can avail of that assistance but in the case of direct loans it is automatic. In the case of the bank loans it has to be justified. Brian, do you want to touch on that?

MR. BURSEY: Yes. As the minister mentioned, we have the two programs, the Direct Loan Program and the Bank Loan Guarantee Program. I guess the assessment process under both those programs is close to being complete, certainly by the end of this month, we should be in a position to send all the different accounts information on whether they received the forgiveness and in what amounts.

As the minister has mentioned, under the Direct Loan Program, forgiveness is pretty much automatic, given that the borrower has made certain minimum payments in the period from 1988 through 1991, but to determine who actually got it took a fair amount of time because we had to examine each account individually through our computer system and so on; and we did not want to start advising some people on an ad hoc basis until we were in a position to advise everybody because we felt that would lead to a lot of enquiries along the lines of: so and so has got his money, when can I have mine?

In the case of the Bank Loan Guarantee Program, the process is a little different and the number of accounts is much smaller, it is around 250 and in that particular case, we actually sent out questionnaires to each account saying: how much did you land in 1991 compared to 1989 and 1990, so that process understandably took a little bit of time because of course, questionnaires had to go out in the mail and had to come back and then had to be assessed on an individual basis, then in turn taken to the executive board for approval, but those particular accounts as well should be wrapped up by the end of this month.

MR. MATTHEWS: How many did you say you were processing in the first program?

MR. BURSEY: Under the Direct Loan Program, there are about 5,500 different accounts, involving something more than (inaudible).

MR. MATTHEWS: But did they have to apply?

MR. BURSEY: No, but we still have to go through the process in each one to determine which ones had made the necessary payments.

MR. CARTER: Anybody who has not has a payment on his account in the last ten years-

MR. MATTHEWS: Yes, I know, yes, I know.

MR. CARTER: - I am not going to -

MR. MATTHEWS: What is that?

MR. CARTER: Anybody who has not made a payment on his or her account in ten years, we are not about to write off interest on that account.

MR. MATTHEWS: Shocking.

MR. CARTER: So there is a formula which must be followed.

MR. MATTHEWS: I thought that was the least you could do. Thanks.

MR. CHAIRMAN: You have a couple more questions?

MR. WOODFORD: Mr. Minister, my colleague mentioned the salmon buy-back agreement. In Deer Lake, a couple of weeks ago at the Confederation Wildlife meeting, Eric Dunne spoke and he was saying at that time that approximately 1,100 applications had been in for the buy-back; has that gone up in the last couple of weeks as that was approximately one-third of the total?

MR. CARTER: That is the latest figure we have heard, Rick, probably today it might be a little higher but that is the last figure.

MR. WOODFORD: So it is around 1,100. The one you mentioned about Cottlesville, that came up last year in the estimates as you know, you mentioned, when I was talking about Jackson's Arm and the Beta machine, you mentioned at that time about the labour intensive program that would be required if they went into the caplin, you mentioned that program and it is nice to see that it is working. But one of the things you mentioned then and one of the reasons for having it here was two-fold. One was that we have the labour force but the other one was they were having problems in Japan getting labour at that time to process the caplin in Japan, has that changed?

MR. CARTER: That is the advantage in that. When the operators of the Cottlesville plant went to Japan, that is what they found and they brought back videos, for example of the Japanese Caplin plant working, you know, which was a sea of faces, just absolutely amazing the number of people, a lot of them are old people, by the way. Hundreds of people operating in these plants and apparently in Japan there is a labour shortage; and this is not the most attractive job of course over there, and they are finding it difficult to - at least this is the story, correct me if I am wrong, Reg, I do not want to give the wrong impression. The impression I have been given is that in Japan they are finding it difficult to find the workers to do the processing and the cost is quite high.

MR. WOODFORD: I think I asked a question at that time and I will ask it again; is it primarily because of the Japanese themselves that the caplin is not processed here or is it because we ourselves have not taken the initiative to do what they are doing in Cottlesville?

MR. CARTER: In my personal opinion, I think in many cases in Newfoundland we have found a sort of a comfortable niche by putting the fish in blocks and shipping it out and making a buck on the pound or something, without too much trouble. There's a good dollar in caplin. The operators of the Cottlesville plant told me that it's costing them money actually. Because normally they could have sent out their so many tons or whatever and collected their $1,600 a ton for it and taken the profit off and would have been money in. But if they can carry a lot of that caplin now in inventory for the past six or eight months, and they're not making a fortune on it, but the long-term prospects look good.

I think it's somewhat that the processors have followed the 'comfortable pew' syndrome. They are quite comfortable shipping out the raw material. In fairness to them, that's not all of the reason. The Japanese appear to be more willing now to have it done over here for the reasons I've given.

MR. WOODFORD: Are you familiar with the new squid machine that P Janes is about to experiment on, or have been experimenting on, in the Hants Harbour plant? Under the agreement, if that works out it is supposed to be shipped to Jackson's Arm. I don't know what they're going to do or not. I think it is in the agreement that they have to. They have a 1,000 ton quota, I believe, of offshore squid. You don't have an update on that, do you? Nothing as of late?

MR. CARTER: No, we know about it but that's about all.

AN HON. MEMBER: (Inaudible).

MR. KINGSLEY: I understand they did have an offshore quota last year. I don't know what arrangements they have made for this year. I don't believe they took any of that squid last year.

MR. WOODFORD: No, they got the quota alright. But the machine itself, doing the cubes and the rings and so on, apparently when they tried it out they were supposed to try it out there before they went to Jackson's Arm with it, was that they did the frozen product, right?... and it was all, say, six, eight, and ten inch, and there was no consistency in the size. So they ran into some problems there. Now they were waiting for some fresh produce in order to test it. But it's worked out fairly well on what they did except for consistency in size and the frozen product, they ran into some problems.

Because it looks promising, especially for that area, because as you know it needs it. If any area needs it that does. One other short comment, you mentioned the middle distance fleets, are they leased?

AN HON. MEMBER: Yes.

MR. WOODFORD: Any monetary revenue?

MR. CARTER: There is a floor of $75,000 a year, a minimum charge of $75,000, or is it 25 per cent of the gross? Is that the way it goes now?

AN HON. MEMBER: Up to a maximum of $75,000 minimum or 25 per cent of the gross, whichever (Inaudible).

MR. CARTER: Alright, $75,000 or 25 per cent of the gross, whichever is the highest amount.

MR. WOODFORD: Why wouldn't anything show up under related revenue?

MR. CARTER: I don't know. Is there any answer for that, Harold?

MR. HAROLD MURPHY: Yes. The boats are owned by private companies, as the minister said, Pitney Bowes and the Royal Bank. They are leased. They have a sixteen-year lease with taxable corporations. There are four of them. The lease payments accrue to those corporations who run the boats for the government. So it is all done outside this process.

MR. WOODFORD: So nothing really comes back to the government? It goes to Pitney Bowes and the Royal Bank.

MR. CARTER: To the leasing companies.

MR. WOODFORD: To the leasing companies.

MR. H. MURPHY: Those are the leasing companies.

MR. WOODFORD: So having said that, your expenditure this year on middle distance is $2 million -

MR. CARTER: What page are you on, Rick?

MR. WOODFORD: Page 114, 3.1.06. Your expenditure in loans, advances and investments for the middle distance fishing is $2,248,000. I would think that is probably a -

MR. H. MURPHY: That is budgeted for the lease payments and the insurance, which government has guaranteed that these leasing companies will cover.

MR. WOODFORD: So it's still costing the government that x number of dollars a year, $2,248,000 approximately, just to use....

MR. H. MURPHY: If they could generate revenues then the leasing companies would not draw down on this amount. But given the (Inaudible) -

MR. WOODFORD: But they're not generating enough to cover that particular agreement, that lease?

MR. H. MURPHY: That's right.

MR. CARTER: I'll tell you, given their cost, and the fact that they were highly subsidized, I don't think you'll ever see a day, unless we can get a quota, when they're going to be able to break even.

MR. MURPHY: I would be happy to move subheads 1.1.01 to 5.1.04, inclusive.

MR. WOODFORD: Well I was going to do that to get you off the hook, but you go ahead.

MR. CHAIRMAN: (Inaudible).

MR. MURPHY: Me, trying to stifle the hon. Member for Grand Bank? Never let it be said.

MR. MATTHEWS: We are finished now, closure, you cannot speak anymore.

AN HON. MEMBER: Shut her down.

MR. MATTHEWS: You cannot speak anymore.

MR. WOODFORD: Never again.

MR. HEWLETT: Speak now or forever hold your peace.

MR. CHAIRMAN: It has been moved and seconded that -

MR. WOODFORD: It had been moved and seconded that the bill will be passed by committee.

MR. CHAIRMAN: (Inaudible).

SOME HON. MEMBERS: Oh, oh!

On motion, subheads 1.1.01 through 5.1.04, carried.

MR. CARTER: Before we leave, Alvin has been asking me some questions about the Little Bay Island plant. I probably should have answered you in the House. There is a process that must be followed when an application comes in to transfer a licence from plant A to plant B, if these plants are privately owned. If they are government owned plants, then we reserve the right not to entertain any such application, but in cases where they are privately owned plants, if an application comes in for transfer of a licence, then there is a process that must be followed - advertising for example. We have a licensing committee then that will take all of the responses, pro and con, and will make a decision on it.

In the case of the one in Little Bay Islands, there is an application - I am not sure if it has been formally submitted or not, has it Reg?

MR. KINGSLEY: Yes. I have not seen it yet myself, sir, but I understand it came into the department in the last day or two, very recently.

MR. CARTER: Okay. To transfer the license from Little Bay Islands to Fleur de Lys, is it not?

MR. KINGSLEY: Yes.

MR. CARTER: But I can only tell you that there will be no rash decision made there and we will talk to you about it and we will go through the process and we will make sure that there is a fair hearing. I fully appreciate how sensitive an issue it must be. I do not think there is any community, even though the plant is not contributing very much to the economy of the community right now, but no community wants to lose something, and that is all the more reason why they are very sensitive to the transfer of licences.

MR. CHAIRMAN: Okay. Before we conclude, I would like to have the Resource Estimates Committee minutes approved for the last meeting. Would someone move?

On motion, minutes adopted as circulated.

MR. CHAIRMAN: I would like to, on behalf of the committee, thank the minister and his officials for coming in. I think you have done a real good job and I want to thank the committee members on the way that the estimates have been considered, in a very friendly and cordial way and as we all say, I think that we should probably move down here from the House of Assembly to conduct business, because it seems as if -

MR. MATTHEWS: If it was not as warm.

MR. CHAIRMAN: - if it was not so warm, but again, Mr. Minister, and your officials, on behalf of all the committee members I want to thank you for coming and it has been a pleasure having you here.

MR. CARTER: Mr. Chairman, on behalf of my staff, I want to thank you and the committee for the very civilized and dignified way in which this meeting was conducted. I think if we could maintain this kind of co-operative spirit in the House of Assembly, Bill, we might (inaudible).

MR. MATTHEWS: I think we are doing great in the House of Assembly.

MR. CARTER: It is a time I think when Newfoundlanders should be singing from the same book on fishery matters.

MR. MATTHEWS: I think we are doing very well in the House, really -

MR. CARTER: Do you really?

SOME HON. MEMBERS: Hear, hear!

MR. MATTHEWS: I really think I am a big improvement over Simms and Baker.

MR. CARTER: You are a very good spokesman, I will say that for you.

MR. MATTHEWS: But I was going to say that it is a lot more civilized than the last time I was in estimates committee at the Colonial Building. I was then Minister of Culture, Recreation and Youth, and on the committee was the now hon. Mr. Furey and the hon. Mr. Decker and a few more honourables and they all night, from the opening whistle until we finished, pounced on me about my entertainment expenses. Half way through the committee hearings, in walked Mr. Jim Morgan and Mr. Glen Tobin and things completely broke down -

MR. CARTER: That is the time the boys were drinking cider, was it not?

MR. MATTHEWS: Well the next morning, as I was telling Tom today, Mr. Decker rose in the House to draw attention to the schemozzle that had developed the night before. Mr. Decker said: I could swear, Mr. Speaker, that the hon. members were drunk. Of course, he just got that out when everyone on the Government side started bawling and shouting: Mr. Speaker, a point of order, and Mr. Decker went on to say: drunk with exuberance, I mean.

SOME HON. MEMBERS: Hear, hear!

MR. MATTHEWS: This is far more civilized, I must say.

The committee adjourned at 9:45 p.m.