The Committee met at 7:00 p.m.

CHAIR (P. Canning): Order, please!

This meeting is convened to consider the Estimates for the Department of Development and Rural Renewal.

We shall begin with the introduction of the members of the Committee.

I am Perry Canning, Chairman of this Committee, and MHA for Labrador West.

MR. SHELLEY: Paul Shelley, Vice-Chairman, MHA for Baie Verte.

MR. MERCER: Bob Mercer, MHA for Humber East.

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

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

MR. OSBORNE: Tom Osborne, MHA for St. John's South.

CHAIR: Minister, perhaps you can introduce your officials.

MS FOOTE: Okay.

To my far right is Sam Kean, Assistant Deputy Minister with the department; John Scott, Deputy Minister; Bruce Saunders, an ADM with the department; and Ken Curtis who is - what is your official title, Ken?

MR. CURTIS: Budget Officer.

MS FOOTE: Budget Officer with the department.

CHAIR: Thank you very much.

Welcome to the committee hearing. We will start out with an opening statement from the minister, if you wish, and then we will begin the debate. But before we do that, we have a few odds and ends to fix up.

First of all, do members have available the Minutes of the Resource Committee meeting held this morning? If they are in order, I would accept a motion to accept the Minutes.

On motion, Minutes adopted as circulated.

CHAIR: Okay, Minister, the floor is yours. Welcome.

MS FOOTE: Thank you for the opportunity to be here.

Most of you would be familiar, all of you would be familiar, I expect, with what has been happening in the Department of Development and Rural Renewal. Clearly, as you know, this was a new department instituted by this Administration.

While a lot of departments have gone through program reviews that have lasted maybe three months, I guess it is fair to say, and certainly my staff would agree, that we have been going through program review for a year. When you institute a new department and bring together several entities, it is always difficult to get a handle on what all of the entities have been doing and how best to carry on that line of work. So we had to, in fact, bring together four very different operations and try to make some sense out of them, and try to create efficiencies where we could, and come up with a department that really was able to focus on regional economic development, whether or not that was small or medium-sized business, employment programs, craft services - you name it and we tried to do it.

We were not that long in existence, I suppose, when the program review process came into play and then we found ourselves again having to look at a budget that was going to mean that we had clearly some objectives that we needed to achieve but we had to do it within the restraints available to us.

WITNESS: Speaking of restraints -

MS FOOTE: But we did that, and I suppose a lot of people look at development and rural renewal and the primary focus seems to be on the regional economic development boards. Yes, that is a main focus for us as a department. Because, clearly, what we are looking at is trying to work with a lot of volunteers throughout Newfoundland and Labrador, to put in place strategic economic plans for each of the twenty economic zones. That has been a time-consuming process and, like a lot of people, we hear comments that this seems to be taking a long time.

I, too, in the initial stages, thought that this was taking a bit too long so we decided - I decided, as minister of the department -that we really should try to get the strategic economic plans in place and we put a deadline in place, and I was pleased to see that we met that deadline for eighteen of the twenty economic zones in terms of having the permanent boards in place.

We are dealing with volunteers, and when you are dealing with volunteers and you are talking to the volunteers and expecting them to identify the strengths and the weaknesses, then we have to give them the time it takes to do that. Having said that, we have worked very closely with them, my staff have, to make sure development has taken place while the planning process has taken place at the same time.

I am happy where we are in terms of the Regional Economic Development Boards. We are working very closely with all of the volunteers and with the staff. We have eighteen of the boards in place. We have the southern Avalon. Initially, that was one zone, could not agree and wanted to be split. We agreed to the split. Having done that, even though we are working very closely with them, we have not been putting a lot of pressure on them to move along. They will do it at their own pace.

The point is, these are volunteers, these are the people who live in these regions. They know what is best for them, and they are the ones who are bringing strategic economic plans in place. We are working very closely with them, offering the types of business support they need, the planning supports they need. That is one aspect of what we are doing in the department.

There are a number of other things that are happening, and one, of course, is the Small Enterprise Development that is a part of our department as well. The emphasis here, of course, is on providing business information, counselling, and mentoring services. The business financing is focused away from generic business support and directed to strategic gaps and opportunities. What we are trying to do with the limited funding we have is really look at the growth agenda for the Province and focus on those industries where we know there is potential for growth, such as aquaculture, agrifoods, information technology, tourism, and the dimension stone industry, areas where we are really trying hard to diversify the economy.

In fact, with the Enterprise Development Fund for this past year, we assisted 128 companies. What we are finding is that these are indeed difficult times for a lot of companies, particularly in rural Newfoundland and Labrador. While we assisted 128 companies, that does not necessarily mean it was for loans. Clearly, we recognized the need in these difficult times to focus on after-care, to really work with these companies to make sure they do not go under in these difficult times, to work with them to restructure their loans. That has been a fair bit of our focus as well. Business counselling and mentoring is really important in this portfolio, because if you look at a lot of the companies throughout rural Newfoundland and Labrador - we have 6,800 clients on our books. We have a portfolio of about $140 million. We have quite a portfolio to manage, and thousands of clients that we work with. After-care is really important again for the number of jobs that have been created as a result of the assistance government has given.

We also spent a lot of time this past year negotiating a federal-provincial Labour Market Development Agreement, which all of you now know is being administered through the new Department of Human Resources and Employment. It took a considerable amount of time to establish a co-design and co-management approach, while maintaining federal delivery. That is about $386 million over three years. We were the first to put in place an agreement of that sort where you saw the co-design and co-management. We got the Federal Government to agree to it, and we are very pleased with that. We do not get to administer it, but that is fine, too, because part of the agreement we have struck with Human Resources and Employment is that in terms of the employment programs the focus will continue to be one where we will work with the growth industries to ensure that our employment programs take that into account.

So we have been working very hard as a department. We have identified some strategic business development - certainly, the Newfoundland and Labrador Film Development Corporation, which was established; the St. Pierre trade initiative, that has great momentum going, and, I think, great potential; secondary food processing and the food processor alliance, fostered, which we are working very hard on, and we should have an announcement on that shortly; and, of course, the commercial craft industry. We see an enormous potential there for growth in that particular area, and we are looking at working with the Newfoundland and Labrador Craft Development Association, and all of the craft producers, along those lines.

There has been a lot happening. We have a number of IAS adjustment services committees in place, eight, in fact. We have the sectoral committees - one in the construction industry, an IAS committee looking at the construction industry. We have another looking at the tourism-hospitality industry, another looking at the Newfoundland Association of Technical Industries, and another at the cultural industry. Then, on the community basis, we have an IAS on the Connaigre Peninsula, we have one on Bell Island, one in Burgeo, and one in White Bay - Central.

That is just to give you an overview of what we have been attempting to do in this first year of our operations.

CHAIR: Thank you very much, that was very informative. I might remind the officials that if you make some comments throughout the evening, do give your name at the beginning so that Hansard can properly correspond your comments to your given name.

I ask the Clerk to call the first heading so that we can initiate debate.

CLERK: 1.1.01.

CHAIR: Tom, perhaps you might want to start - or Paul. Paul, you are the co-chair, and seeing you are a ranking official here -

MR. SHELLEY: Okay, I will start with a couple of opening remarks, and then I have just a few questions - not many. I guess, further questions will follow later on in the year and in the House and so on, as the minister knows, but it is an interesting portfolio to watch, because of, very simply, the words `Rural Renewal'. It is no secret what I said last year - I have been saying it for three or four years, and not only the Opposition say it, but a lot of people - my belief is that Newfoundland goes the way rural Newfoundland goes. I do not believe in the other way around. I also believe in studying such places as Ireland, that they have really put a lot of focus back in the rural parts of Ireland and it has worked and so on.

I do not like using all the time either the excuse of: the downturn of the fishery. I know it is a major portion and is the major backbone to the economy and so on but, as you say, when you use the word `diversification', that is what we have to really look at and I guess that really your prime objective as rural renewal is to look at diversification. If the fishery is not there, then there has to be something else. So I guess that is your goal.

Really, the whole plan and using volunteers in the area to come up with ideas that they think would work, is the premise for the proper procedure, really. I mean, I agree with that and I know, by the way, you have some very good volunteers working in a lot of these groups. I know in my area there are some fantastic people who put in a lot of time, so you have that combination of using volunteers and people at the grass roots to help.

I certainly also believe that if we are to get anywhere in this Province, people have to see some hope and it has to be soon. It is really tough now - I mean, it is not a spiel that we do in the House - it is, I know, because every weekend I go home to my rural district of thirty-three - I have one that is very rural, so does Mr. Percy Barrett and I can think of some more really rural. I do not mean even the size of Baie Verte and LaScie, I mean small like 300 and 200 people; that is the real rural that is really hurting and need some answers and need to see a sign of hope. Like I said: I don't think you can go anywhere with business or inspire anybody to go into a new business unless they have a little bit of hope to begin with, but, if they do have hope, I find young people and people who have worked in the fishing industry and so on, they go on, after their dreams, to try to get something started. So that is just a little opening remark on rural Newfoundland.

As far as all the boards go, they are in place, they have done a lot of good work and I guess what we have to see now is if the plan will be executed. That will be next year. Really, this is just your year of getting organized, and I can understand that; that is why there have not been a lot of questions asked in the House because in all fairness, I mean, there is really not a lot to be asked. The groundwork is being laid but over the next year, there will be more questions and, of course, that is when your real challenge will be coming as a department and as a portfolio.

I will just go with a couple of very specific questions on numbers and at the end of it ask some more questions on things like telecentres and small enterprise departments and so on.

We will start with some headings. The very first one, very quickly on page 89, 1.2.01, Executive Support, I see a change there. Which positions were eliminated to reduce this amount of salary, at the top there?

MS FOOTE: We had one ADM position and one secretarial position. We started out and when the department was formed there were five ADM positions and now we have three; we have had four, one that was not filled, and then, of course, we had four, and then we did away with one and one secretarial position.

MR. SHELLEY: Okay. Some of these I know of but I want to just clarify and confirm. On the second page, 1.2.02, Policy Research and Strategic Planning. There will be an increase in salaries there. Can you clarify that?

MS FOOTE: Yes. Initially, the position of Director and Senior Planning Officer were partially funded under the SRDA agreement, the Strategic Regional Diversification Agreement during 96/97. Now, we pick up the cost of that.

MR. SHELLEY: Okay. Just very quickly, down on No. 12, Information Technology; what is that $5,100. I am curious, what is that for?

MS FOOTE: We are going to replace some computers.

MR. SHELLEY: Computers?

MS FOOTE: Yes.

MR. SHELLEY: We are up to page 92, 2.1.03, under the Comprehensive Labrador Agreement Initiatives?

MS FOOTE: Yes.

MR. SHELLEY: Very quickly, before I go down to the last one there; in Transportation, you have decreased by $9,800. What have you done there? Why the decrease in Transportation and Communications (03)?

MS FOOTE: Labrador -I do not - John?

MR. SCOTT: It is just a general streamlining of some of our accounts in respect of operations. Labrador, a Comprehensive Development Agreement is in its last year, in 1997-1998, so things are starting to gear down a touch in terms of staff support and in auxiliary support services that are required.

MR. SHELLEY: You did not lose anything significant, $9,000, so I was just wondering what kind of Transportation or Communications you were taking out. Okay then, well, the bigger question, of course. I know something about it but I would like you to elaborate on it.

Under 2.1.03.10, for the Grants and Subsidies, obviously that is significant, that is $2 million. Can you just talk about that?

MS FOOTE: The $3.5 million represents a cash flow available under the final year of this agreement.

MR. SHELLEY: So that is the total for the final year of the agreement.

MS FOOTE: Yes.

MR. SHELLEY: Last year it was budgeted at $1,751,000 and you spent -

MS FOOTE: Yes, and it came out to $1.5 million. It was just a decreased cash flow requirement.

MR. SHELLEY: That is the end now of that agreement, right?

MS FOOTE: Yes.

MR. SHELLEY: The $3.5 million. For the Inuit Agreement, everything there is off the table now, right?

MS FOOTE: Yes, there was a one-year extension.

MR. SHELLEY: Now, that is where that is terminated.

MS FOOTE: Yes.

MR. SHELLEY: Is that right?

MS FOOTE: Well, the funding - yes, it is one year. It terminates next - this is the last year. It was extended for one year.

MR. SHELLEY: Okay. Come on down again, 2.1.06, Economic Renewal Agreement - Planning. Just one question on that. The $600,000 for Professional Services, what is that for? What kind of professional services?

MS FOOTE: We have a number of (inaudible).

MR. SHELLEY: That is under the Economic Renewal Agreement - Planning, right.

MS FOOTE: We have the St. Pierre and Miquelon trade initiative - anything that are doing of new types of initiatives. For instance, the St. Pierre-Miquelon trade initiative, we would be budgeting $60,000 for that. A transportation study that is being undertaken under the ERA, that would be $100,000. Outsourcing in the small motorized equipment market, $60,000, and so on. I can read them all out to you if you want.

MR. SHELLEY: No, no.

MS FOOTE: Seaweed background paper. These are the types of -

MR. SHELLEY: These are the types of things here.

MS FOOTE: Yes. Some types of consulting services.

MR. SHELLEY: Okay. On the specifics I am just going to hold back. Tom can ask some more on that. I want to go through and let Tom ask a couple of more specific questions. We have some notes made on them.

About telecentres. I am just going to make a comment about it first, and then I will ask you again. Because, you know, I have asked you a few times now, and it is for, I guess, home reasons, really.

MS FOOTE: I know.

MR. SHELLEY: Because there is one there - for the simple reason, and I will be honest with you, that I have seen it work. I have been in there and I have sent people there. I had a young person call me who had this idea, and he cannot travel to St. John's. You know, an eighteen-year-old, nineteen-year-old, they go in there. Yvonne Bradbury-Wiseman has done a fantastic job there, bringing in people, explaining things to them, and it really works. I do not know how to get that point across. I know you believe it, too, but I am really afraid that with reorganizing, or whichever way you want to rephrase that, it is not going to be the same effect. It should be done in more parts of the Province.

I have always believed, instead of spreading out something and having very little use in a lot of things, at least right now these are working where they are. My suggestion, of course, if I could ever suggest anything, would be to keep adding some of these as we go throughout, and keep these up to scratch, what they are now. Instead of watering down. That is my analogy of it.

Really, they have worked. I have seen people there. I have sent them. In my three-and-a-half years, I have really had a lot of support from them. They are like home, you know. Somebody from Brent's Cove can go up - I say: Go in and see Yvonne, help you with your business plan and so on. It is really something practical that works. The technology of it, of course, they went around the world with it with a punch of a button. They were amazed and they got excited about it. I know people who have gone on to do things in business through that. I really support them, and I would just like to get your comments again on them, about the restructuring.

MS FOOTE: I could not agree with you more, Paul, and I have said this to you in the House, that particularly for rural Newfoundland and Labrador, I mean, the importance of having access to this type of technology is imperative for people who live outside the urban areas.

The cost of those five telecentres was $1.5 million on an annual basis. Clearly, there were people in certain pockets of the Province who were benefiting from the five telecentres. What we are trying to do, especially with the creation of twenty economic zones, is to be able to offer a semblance of this type of service throughout Newfoundland and Labrador in all twenty economic zones. Clearly, we do not have the financial resources to offer a telecentre of the type we have now in the five regions in all twenty economic zones, so how do we do it?

What we are trying to do, in light of what we have had to do with our budget, is we are trying to make the best of what we have, and we think we can offer a really good service. We are looking at partnering with the Federal Government and with the Public Libraries Board. The Public Libraries Board, right now I think is in twenty-seven areas of the Province with internet access and we are looking at seventy-two such sites. We are looking at partnering with the feds whether it is with HRD, ACOA, the BDCs in what we call a Canada-Newfoundland Business Service Centre. We are looking at that people can access - if they go to the Public Libraries Board, the internet access is there. They can go in on-line and access whatever information they want. If it is a business counselling type of service, that will be available to them through the Canada-Newfoundland Business Service Centre.

I know what you are saying in terms of the individuals involved. I find in a lot of cases that - as opposed to the service - a lot of times people go to bat for the particular individual because of the expertise that individual has, and because in most cases that is probably the value, in the person that is there and the hands on. What we are trying to do, in fact, is work with our federal colleagues and our counterparts here to see if we cannot utilize our work with the individuals that are there now to provide this type of service but not necessarily in the five existing telecentres. We are trying to do the best we can with what we have, recognizing that what we have is very valuable but that it is only available in five centres. If we had the financial resources to offer that same type of telecentre in all twenty economic zones, I would go for it, but we do not have it.

MR. SHELLEY: Well, very quickly, I would say with the amount of money that was spent in TAGS training and so on, we could take another 1.5 real fast and have another seven of these around the Province, and whatever.

MS FOOTE: Yes, I could not agree with you more.

MR. SHELLEY: We have to talk to those people. I know it all comes down to dollars and cents and spreading it around and there must be tough choices to be made, but I still say again that the ones that are there are working. You do not fix something that is not broken. Meanwhile, with the dollars you had, you had to do something. Anyway, I hope it turns out for the better so that we do not see that you (inaudible) and lost.

MS FOOTE: No, and I appreciate that. The one thing we will be doing, once these are put in place it is not like this is it and there is nothing else. We will continue to evaluate. We will continue to improve. We will do what needs to be done to make sure that the services being provided is a service that the people need.

MR. SHELLEY: Yes, okay. I just wanted to make that comment again. I will let Tom ask a few specifics there and I have a couple for afterwards.

MR. OSBORNE: Under the Regional Economic Development Services, page 94, the 1996-1997 Budget for Professional Services was over budget by almost $107,000 under the revised Budget. What would account for that?

AN HON. MEMBER: Where are you, Paul?

MR. SHELLEY: 2.1.07 Section 5.

MS FOOTE: Okay, John, do you want to speak to that?

MR. SCOTT: There are a number of capital projects budgeted for throughout Labrador. This would have included water and sewer projects historically, schools, the interpretative centre and the like. In order to deal with a number of design problems and get everything in order there was additional requirement for professional consulting services, engineering services and the like to take some remedial action and get those facilities in proper order, and that is what this effectively represents in part. As well, going into the last year of the Comprehensive Labrador Agreement, always in the last year of an agreement, towards the last eighteen months of a five- or six-year agreement of this nature, there is a need to re-profile monies from time to time. So there was some money re-profiled to deal with some professional services requirements in that regard as well.

MR. OSBORNE: Okay. Now, in 1997-1998 it is down to $111,500. It is down much less, maybe 40 per cent there this year as compared to what it was last year?

MS FOOTE: Yes, 1996-1997 was the final year of this component of the agreement.

MR. OSBORNE: Okay, so that is the -

MS FOOTE: It is just carry-over projects, that is all.

MR. OSBORNE: Okay. The Property, Furnishings and Equipment: Is it because it is the last year, there is no budget allotted for?

MS FOOTE: Yes.

MR. OSBORNE: Okay. Now, a question I asked Mr. Efford in the Committee this morning: I asked a question on the Fort Amherst boat basin and he said that there was no money provincially under Fisheries for that. I wonder, provincially under Development and Rural Renewal would there be any grants or subsidies available there? They are looking to expand the boat basin. The north side of St. John's harbour, as of this year, will no longer allow small- and medium-sized fishing vessels to dock and they are going to have to dock on the south side. There is simply not enough wharfage there and they have to increase the size of the boat basin, finger piers and that type of thing. Is there anything available as far as funding is concerned, under Development?

MS FOOTE: Not for grants or subsidies. The only funding we have available would be funding under the Small Enterprise Development Fund, and that has been restructured as far as fisheries loans and farm loans go, where the focus is strictly on seed and development- type money and not maintenance money. We found that, in fact, the BDCs are coming to the table when it comes to fisheries loans in terms of maintenance type of funding, but I will ask (inaudible) to speak to that.

MR. OSBORNE: That is actually set up as a small business, I would say, with the boat basin itself as opposed to being operated by fishermen.

MS FOOTE: Okay.

MR. OSBORNE: It is set up as a small business where they, I guess, lease wharfage space and that type of thing.

MS FOOTE: So they are looking for some capital funding?

MR. OSBORNE: Yes.

MS FOOTE: Okay.

There is a Transitional Jobs Fund which was negotiated with the Federal Government, as you know. That is a three-year fund, about $48 million over three years, and that will cover training costs for people they want to hire as well - their capital costs built into that - so that is a possibility. It is a business.

MR. OSBORNE: Okay. So that is through your department transitional -

MS FOOTE: TJF now is through Human Resources and Employment, but my staff would be involved in assessing applications from a business perspective.

MR. OSBORNE: Okay.

MS FOOTE: So we can sort of look into that for you, if you want to pursue that under TJF.

MR. OSBORNE: Okay.

MS FOOTE: There are applications available. Do we have them in our offices now in the field or are they all through Human Resources and Employment?

WITNESS: We still have them.

MS FOOTE: We still have them? Okay.

MR. OSBORNE: Okay.

Under your Strategic Enterprise Development Fund, 3.1.02, you are over budget for the 1996-1997 year by $10 million. That is under Loans, Advances and Investments. I am just wondering -

MS FOOTE: Where are we?

MR. OSBORNE: Section 8, under 3.1.02.

MS FOOTE: Oh, I am sorry. Okay, this one here.

That is a special $10 million one-time payment that was provided to the fund in 1996-1997, and that is basically for strategic development opportunities. For instance, if the tannery has to come through looking for $600,000, that is where we would take it from; or if there are call centres out there, that we are trying to attract a call centre, it would come out of that money.

MR. OSBORNE: Okay, something new.

MS FOOTE: Something new, something that is going to require a substantial infusion of money.

MR. OSBORNE: That is only for new business entities?

MS FOOTE: Yes, something again going back to diversifying the economy.

MR. OSBORNE: Okay.

Now, with that in mind, and knowing the importance of those types of grants and subsidies, while there was $10 million extra put in there last year, over last year's budget allotment of $8.1 million, it is down now to $7 million. Why would there be a reduction in that?

MR. SCOTT: (Inaudible).

MS FOOTE: You can speak to it, John.

MR. SCOTT: Okay.

The manner in which the $10 million was invested in a Strategic Enterprise Development Fund was a one-time investment late in the fiscal year. That money, while it was placed into the 1996-1997 Estimates, is a revolving account in our department through which we administer our Strategic Enterprise Development Fund. We have a pot of money which we turn over, in terms of advancing monies out in terms of loans or equity or guarantees. Our $10 million investment shows up in last year's budget, but it is still in the pool of capital available for reinvestment. So the monies that we had at the start of this fiscal year were actually $17 million, but $7 million is being requested from the Legislature to vote in new money to be added to that pool.

We have, from (inaudible) -

MR. OSBORNE: Maybe I should clarify my question. Before the $10 million was put in, your budget allotment was $8.1 million -

MR. SCOTT: Correct.

MR. OSBORNE: - whereas this year it is only $7 million. I am wondering why the $1.1 million reduction.

MR. SCOTT: Oh, I can answer that as well, because part of the new resources that are allocated in every year's budget is comprised of two components. One is carry forward components. For example, if something was approved last year on March 1 but the monies did not actually flow in total until after April 1, that is a carry-over commitment from a project that was approved the year before. Then, of course, there are monies for new projects that are approved during the fiscal year. We always make an estimate in terms of how much we need on the carry-over, and in the last two years what we have been doing is getting an increase to our pool of about $5 million.

There was $5 million available in 1996-1997 for new initiatives, and there is $5 million available in 1997-1998 for new initiatives. In the previous fiscal year there was about $3.1 million in carry-overs; this year it is about $2 million. So the level of new investment into the fund is the same, and the difference in the budget amount, for voting purposes, is accounted for by the various fluctuations over time with carry-overs.

MR. OSBORNE: Section 3.2.04 Newfoundland And Labrador Film Development Corporation: I am just wondering why - I guess that was just set up and that is why there are no Budget allotments for last year, okay.

MS FOOTE: Yes. That is a new initiative this year.

MR. OSBORNE: That is the initiative that I guess everybody heard announced back three or four months ago. How is that working?

MS FOOTE: We have the corporation in place, as you know; we have Danny Williams chairing it. John is on the board as well, and they have now to hire. I do not know, John, if you want to speak to that? They will be looking at hiring an executive director, someone who is familiar with the industry, someone who can court the industry and try to attract films here. One of those that we are hoping for and working hard to attract, of course, is Shipping News, and we have some sense that we will get a component of it but obviously not all of it, because they are looking at a $35 million initiative and we are just not set up in this Province yet to be able to deal with anything of that magnitude. We do not have the resources, we do not have the talent to the extent that you would need for that size of a venture but, we are hoping to be able to attract maybe even $5 million of it, if we can, which will be a coup for us if we could do that, at least, to get that one, first, big film. So we are hoping that it is going to be Shipping News.

MR. OSBORNE: Now, while this is a new fund and a new initiative by your department and $475,000, almost half-a-million dollars, that is good to see but, what I am wondering I guess, based on our geography and the landscape and that type of thing, you would suspect that if the proper investment were put in, a much higher investment even, that it would come back in returns. I know B.C. right now is doing phenomenally well in the film industry.

MS FOOTE: Yes, they are doing really well.

MR. OSBORNE: Even Nova Scotia now is doing quite well. So I am wondering, you know, in this particular part of your department, should we be looking at putting a larger investment even, in there?

MS FOOTE: Well, you know, that was part of the reason for my trip to Los Angeles when we went that time, and we had a discussion with the industry and all the advice we got was clearly that we should be starting small. I mean, you could be putting all your eggs in one basket or you could be you know, building a sound stage, but you are never going to attract the types of films you want, to the extent that you want, until you have the talent and the technical expertise here. So, clearly this has been done in consultation with the local film industry as well, that this is the way to go, and we are learning from the mistakes of other provinces that have just rushed in, you know, and spent a lot of money. But, again, the point here is that we are able to leverage a lot of money as well externally and from other sources, and this is based on the best advice we could get that this is the way to go.

MR. OSBORNE: Okay. That Grants and Subsidies money, what exactly will that be spent on?

MS FOOTE: This is salaries and operations only.

MR. SCOTT: Operations, marketing support.

MR. SHELLEY: Not full-time positions though, just -

MS FOOTE: It could be full-time - well, it would be for the executive director but this is only marketing and operations money; this is not infrastructure money, so this does not include any type of money for building a sound stage or anything like that.

MR. OSBORNE: Okay. So if we were to attract -

MS FOOTE: We would have to look at our Strategic Enterprise Development fund.

MR. OSBORNE: Okay. And, I mean, is there sufficient money there? I know, like half-a-million dollars in the film industry is only a drop in the bucket. So, is there sufficient capital available if we are to attract a major -

MS FOOTE: We are comfortable with what we have there. We have done a lot of research on this and we think that starting off small is the best way to go. And we have to attract that one major film. What is it, John - about 15 per cent is the incentive you usually offer?

MR. SCOTT: (Inaudible).

MS FOOTE: That is what the industry is telling us.

MR. OSBORNE: So now, I mean, we have a fantastic opportunity here if we can develop that industry.

MS FOOTE: Yes, you are absolutely right.

MR. SCOTT: What we are trying to do here is to provide the groundwork in a core operating entity that will show leadership. There are pots of money available in the Federal Government, through federal-provincial initiatives and our own Strategic Investment Fund so this is more of a directional, marketing thrust as an organization and into source financing to act on specific initiatives on specific projects from other sources, established sources and otherwise.

MR. OSBORNE: Okay. Thank you.

CHAIR: Thank you, Tom.

Rick, did you have some questions?

MR. WOODFORD: No, thank you, Mr. Chairman.

CHAIR: Anna Thistle.

MS THISTLE: All I would like to say is that from my perspective it has been an exhilarating experience as well, this new department. It has been an onerous task, I know, organizing and getting it ready, but from my economic zone twelve, we are up and running and we have our plan in place. Everybody is on side in what we want to do. Things are happening. We saw that ourselves with the announcement from Steelcore, the Boeing contract, and there are a couple of more now on the move. It is working, but it has taken a while to get everything, the footwork, in place and so on. I would like to compliment the minister on the task that has been - behind her, I will say, and she has that accomplished. Good wishes and good luck in implementing the plan now.

MS FOOTE: Thank you, Anna.

MS THISTLE: Thank you.

CHAIR: Thank you, Anna.

Bob Mercer.

MR. MERCER: Yes, just one question. When the RED boards were first established, great emphasis was placed upon their negotiating contracts with your department to provide dollars for support, administrative staff, and so on - the idea being, I suppose, that each zone would be somewhat different, each zone would require a different amount of support staff, and so on and so forth. I understand now they are into another set of negotiations.

MS FOOTE: Phase two.

MR. MERCER: How are those proceeding, and how is the allocation of the funding proceeding on that?

MS FOOTE: It is going very well. In fact, in a conference call this morning on the West Coast three of the boards have negotiated their phase two contracts. It has worked out very well in terms of negotiating. I met with all of the executive directors and all of the chairs of the boards in Grand Falls - Windsor about three weeks or a month ago and explained to them then where we were in terms of the amount of funding we had left for the phase two contracts for the budgeting. I explained to them, and got a good reaction in the room, we were looking at about $3 million left under SRDA for administrative type of funding for the boards.

The boards are not to be the implementers of the strategic economic plans. Clearly, they have a co-ordinating role. Their jobs would be to see that things happen. They will have the staff in place to work with the various groups and organizations that will identify projects, or that they will look to to make sure they carry out the projects that the boards have identified. For instance, tourism associations, municipalities, the private sector, the rural development associations, those are the organizations that will be implementing the plans that have been identified through the strategic economic planning process. They are negotiating now the funding for the phase two contract.

MR. MERCER: One of the concerns that I had initially when the RED boards came into being was the de-emphasis on the administrative funding for the development associations. We did provide administrative dollars for the RED boards but not for the development associations, which, in my looking at things, I see the RED boards as being a planning, strategic type of a role. If there were to be a role for the development association, it would actually be in the implementation. If they do not progress, then your implementation might lag behind. Have you been able to do any kind of assessment, in the year or two since we have been into this new mode, as to how the development associations are now surviving, or reacting, staying on a par? Where are we?

MS FOOTE: I guess there were fifty-six development associations altogether throughout the Province. Some of them have fallen by the wayside, there is no doubt about that, but you usually find it is in areas where there are other organizations, where there are tourism organizations or other heritage society organizations. In those areas where there are only the rural development associations, a lot of those, in fact, in the past have either had rental property, or they have had businesses established, that they have had a steady income, so they have not suffered.

The other thing, of course, if you look at all the projects funded under the Strategic Regional Diversification Agreement, a lot of them have been rural development associations, and clearly built into the project funding has been some administrative funding as well. Most of them are alive and well, but again, a lot of them - in fact, I think the second largest representation on the regional economic development boards is made up of rural development associations. They are having a key role to play in the planning.

MR. MERCER: Thank you.

CHAIR: Thank you, Bob.

Are there any further questions or comments? Paul?

MR. SHELLEY: I have just one point and then one question, that is all.

Development associations - I do not know if they are well. They are still there somewhere in part, but I will commend those associations for the work they have done, because I know I have worked closely with them in the last couple of years. They were at the grass roots level, and that was one of the pluses of those development associations, so they have done some good work over the years.

I have just one question, and Tom already touched on it. This is my last question, anyway, and it is for specific reasons, of course. You mentioned already the tannery. But 3.1.01, the Strategic Enterprise Development Fund: As you said, that money was rolled over and moved around so that went from $8 million up to $18 million last year when it was revised. This year it is $7 million. Now, is that what is in the budget for this year, $7 million?

MS FOOTE: No.

MR. SHELLEY: I was under the understanding that it was more.

MS FOOTE: Well, the $10 million -

MR. SHELLEY: Ten million.

MS FOOTE: Yes, plus, right?

MR. SHELLEY: Plus.

MS FOOTE: Yes.

MR. SHELLEY: Okay.

MS FOOTE: So you are talking $17 million.

MR. SHELLEY: So there are applications for that? Is that the way that works, too?

MS FOOTE: Well, this is business development, so it is like any enterprise development fund. Anyone who is looking to start a business, or seek development funding money, it would come out of that.

Again, if we are looking to attract a strategic business here - if we are looking at a call centre, for instance, and we have identified a business that we want to attract here, to any part of Newfoundland and Labrador - we would look to that strategic investment fund for that as well.

MR. SHELLEY: Has any of that money been called for yet, or is that still in the pot that is all there?

MS FOOTE: It is still there.

WITNESS: (Inaudible).

MS FOOTE: Gone? It is still there. It is about -

MR. SHELLEY: Very little committed yet.

MS FOOTE: Very little.

MR. SHELLEY: Okay.

CHAIR: Is that it, Paul?

WITNESS: (Inaudible).

MS FOOTE: Of the total $17 million - Bruce has some figures here -there is only $612,000 gone.

MR. SHELLEY: Oh, so there is potential there.

MS FOOTE: Oh, yes.

MR. SHELLEY: That is all I need to know.

Thank you. That is all for me.

MS FOOTE: There goes the tannery.

MR. OSBORNE: I just have one question. Under that fund, you may be familiar with the Fort Amherst project, myself and Mike Clair, and there was a chap from your department; I cannot remember his name offhand. Actually, we are planning another meeting now for maybe within the next week to ten days and there has been a group in St. John's, one of the charitable organizations, prepared to head it up and put I think about $10,000 seed money into the project.

MS FOOTE: Yes.

MR. OSBORNE: Would this project qualify under that particular fund?

MS FOOTE: If it is a not-for-profit organization, under SRDA is a possibility, or TJF. Those would be the two we would look to for that type of initiative.

MR. OSBORNE: I am not sure if it is going to be a not-for-profit. I think what they may actually try to do is - you are familiar with the project itself, I guess.

MS FOOTE: Yes.

MR. OSBORNE: I think what they may try to do is actually set it up as a tourist attraction, where -

MS FOOTE: They can make money on it, yes. There is nothing wrong with that.

MR. OSBORNE: Would it qualify under that if it is a profitable set-up, or would it have to go -

MS FOOTE: Yes, by a not-for-profit organization.

WITNESS: Under TJF.

MS FOOTE: Under TJF.

MR. OSBORNE: Okay.

MS FOOTE: What is the organization? Did you say there is an organization looking to sponsor it? Who is it?

MR. OSBORNE: Well, I guess I am safe enough to say, because Minister Kelly is already aware. The St. John's East Rotary Club are going to take it and -

MS FOOTE: Okay.

MR. OSBORNE: We have a meeting with them next week, and I believe they are going to put $10,000 seed money in there to start it. We have to get another meeting now with Mike Clair and Rotary and so on, and actually get the board put in place, but that is to start with architectural drawings and so on, to try to determine how they are going to refurbish the site.

MS FOOTE: Okay.

MR. OSBORNE: And once Rotary get it up-and-running and it is actually under way, then they will turn it back to the community and it will be the community's basically, unless somebody is prepared to take it over as a profitable entity. But as it sits right now, the City of St. John's does not yet have clear title. The Federal Government are the process of deeding the site to the City of St. John's, and the City of St. John's is actually willing to lease it to an entity for $1 a year if they are prepared to keep it up and do whatever maintenance and so on is required. So it does have the potential to be a profitable enterprise, I would suspect, or, well, a for-profit - whether they actually turn a profit, but a for-profit - enterprise. It is up-and-running now. As far as I am concerned, the process is under way, whereas seven or eight months ago when we initially spoke on it, it was just an idea I had, and we are actually to the point now where Rotary is prepared to take it over.

MS FOOTE: Good.

Well, certainly, let us look to TJF. One thing to bear in mind with TJF is that it is federal dollars and it is really important to have the MP on side, because they obviously have a say as well.

MR. OSBORNE: Well, that is probably in limbo.

MS FOOTE: We will not talk about that.

MR. OSBORNE: At the moment.

MS FOOTE: Until June 2.

MR. OSBORNE: Alright. What I probably should do is give you a call and one of your officials can sit in on the meeting within the next week or so and -

MS FOOTE: Well, just call the office and we will have someone sit in on it.

MR. OSBORNE: Super.

MS FOOTE: Okay.

CHAIR: Well, thank you.

Are there any further comments or questions?

MR. WOODFORD: Mr. Chairman, I would like to move the adoption of heads 1.1.01 through 3.2.04 inclusive, without amendment, and I would also like to move the adoption of the totals.

On motion, subheads 1.1.01 through 3.2.04, carried.

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

CHAIR: Well, Minister, before we conclude tonight's hearing I just want to say how much I appreciate the work of your department. The fact of the matter is that if anybody has been omnipresent in the Province this year past, it has been you and your department.

You have a huge challenge ahead, and we give you our best wishes. We appreciate, in fact, that we have had a few minutes together this afternoon to have a chat over a glass of pop and sundry.

Anyway, I could not help thinking, as well, as we were talking about the filming business, that we might have some opportunity for a western film. Who knows? There seems to be a certain amount of hidden talent.

MR. SHELLEY: Inaudible).

MS FOOTE: This sounds like a lot of envy, Paul, of what must have been a good time.

CHAIR: I ask for the motion to adjourn.

The Committee will reconvene for Forest Resources and Agrifoods on Wednesday, May 7, at 7:00 p.m., in the House.

On motion, Committee adjourned.