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HALIFAX, TUESDAY, APRIL 8, 2003

SUBCOMMITTEE OF THE WHOLE HOUSE ON SUPPLY

1:55 P.M.

CHAIRMAN

Mr. David Hendsbee

MR. CHAIRMAN: I call the Subcommittee on Supply to order, Tuesday, April 8, 2003, for the estimates debate for the fiscal year 2003-04. The time in debate so far has been four hours. We are reconvening the debate on the estimates of the Department of Agriculture and Fisheries. The Liberal caucus will be asking the questions for the next hour.

The honourable member for Cape Breton West. Your time is 1:55 p.m.

MR. RUSSELL MACKINNON: Mr. Chairman, the first series of questions I would like to ask is with regard to user fees and new user fees for the Department of Agriculture. Would the minister and his staff be kind enough to provide the detail as to what increases in user fees are anticipated for the upcoming fiscal year?

MR. CHAIRMAN: The honourable Minister of Agriculture and Fisheries.

HON. GORDON BALSER: The general answer would be there's very little change, but in the terms of detail, well, the quick answer would be there's very little change in relation to user fees, and to give you some level of detail, the resource stewardship integrated pest management licence fees are $10 for five years, the registration packer and controlled atmosphere in apples, $10 for five years, and in terms of the fees related to the 4-H field services, Camp Rankin, the fees there are around $140 - the camp is about 31 years old.

MR. MACKINNON: Are they new fees?

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MR. BALSER: No, there has been a fee in place for some time. I think it was $120 in 1999-2000.

MR. MACKINNON: Would you be kind enough to identify what the fee was last year and what is contemplated for this year?

MR. BALSER: I said $140 would be the fee last year and it would be $145 for the coming year.

MR. MACKINNON: Which one was that for?

MR. BALSER: That was for Camp Rankin.

MR. MACKINNON: Camp Rankin is how much?

MR. BALSER: It's $140 in 2002-03 and $145 for the coming year.

MR. MACKINNON: And what were the other ones?

MR. BALSER: No change from previous years. To be specific, the registration operator of controlled atmosphere storage was $10 for five years.

MR. MACKINNON: Was that a new fee?

MR. BALSER: No.

MR. MACKINNON: That's the same?

MR. BALSER: That has been in place since 2001 and it has been the same.

MR. MACKINNON: So there's no change?

MR. BALSER: There's no change.

MR. MACKINNON: I'm just interested in the ones where there are fee increases or new fees - if I could receive the detail as to what the fee was last year and then what it's going to be this year.

MR. BALSER: In terms of the Natural Products Marketing Council there is no change in the fees there. Again, fur farming, licences, the fee stays the same again. So as I said when I made my initial comments, there is relatively little change in terms of the fee structures. That pretty well covers the bulk of them. We can talk about dairy plants, they're

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paying for samples and the fee is $1.50. The official producer monthly sample is $1.50. Dairy bacteria testing, coliform and phosphatases, the first bacteria is $4.50.

MR. MACKINNON: Are they new fees?

MR. BALSER: No, they have been in place for some time so, as I say, there has been very, very little change in terms of the fee structure. That pretty well covers them all; that's pretty well it.

MR. MACKINNON: I think so. Any new fees?

MR. BALSER: No, no.

MR. MACKINNON: What about with regard to the Department of Fisheries, are you doing both of them at once or are you just . . .

[2:00 p.m.]

MR. BALSER: Yes, they're integrated.

MR. MACKINNON: I wasn't sure.

MR. BALSER: The fee structure for fishing licences didn't change; the same thing for a salmon licence, no change there; and no changes in terms of the aquaculture licensing structure. The Nova Scotia Agricultural College fees have changed to a degree.

MR. MACKINNON: What were they and what will they be?

MR. BALSER: Okay, just hang on a minute. The degree, course per course, last year was $430 and the coming year it is $470; in terms of the audit degree for a course, $430 to $470; in terms of tuition fees for non-Canadian students, a degree program went from $800 to $870; and technician and technology courses for non-Canadians, $800 to $870. Other fees per semester, for example the athletic fees went from $131 to $136; the residence fees for a shared room went from $1,623 to $1,670; the private room went from $1,854 to $1,910; the large private rooms went from $2,060 to $2,120; the 19-meal plan went from $937 to $965; and the 14-meal plan went from $894 to $920. That represents the bulk of any changes at the AC.

Just yesterday there was a question raised regarding the Agricultural College in terms of tuitions - and if I can find the answer to it, we will be all set, and you gave it to me - if it turns up, I will address it specifically. Enrolment, just in terms of tuition and enrolment, the Nova Scotia Agricultural College apparently has 732 students, which represents an increase of about 14 students from 2001-02. The tuition increase on average represents about a 9 per

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cent increase. The changes at the Agricultural College are reflective of the changes across post-secondary institutions.

MR. MACKINNON: With regard to the milk program, I would like to focus on the School Milk Program.

MR. BALSER: The milk program, yes.

MR. MACKINNON: Has milk consumption increased or decreased over the past year?

MR. BALSER: Per capita, Nova Scotia has the highest level of milk consumption of the provinces. In terms of actual growth I think it has remained fairly static. We don't have that level of detail, but generally speaking milk consumption at the school level has remained relatively flat, although I will say that the dairy federation is very interested in promoting milk as a healthy alternative to some of the other drinks that are available in the public school system. I had some discussions with representatives from that group about how they might work with the school boards and the schools in question to try to offer milk and milk products as a nutritious alternative to, as I say, some of the other beverages that are available.

MR. MACKINNON: I notice in your supplement you have $393,126.68 for the School Milk Program.

MR. BALSER: Yes.

MR. MACKINNON: How is this program administered and funded? I mean, obviously, there are a number of partners to this.

MR. BALSER: Yes. The way it works - and this will be from my memory as a school administrator, and I don't believe the system has changed - is it's run through the actual suppliers of the milk product. It's a rebate program, that they are rebated a portion of the cost of the milk directly to the suppliers at the school level, and it's so many cents per carton - 8 cents actually on a 250-millilitre serving.

MR. MACKINNON: So what's this $393,000-plus represent?

MR. BALSER: That would represent the monies that are available to allow for the 8 cents per 250-millilitre carton rebate.

MR. MACKINNON: Eight cents?

MR. BALSER: Eight cents per carton.

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MR. MACKINNON: And that's per 250 millilitre?

MR. BALSER: Yes. Part of the discussion - just a bit of a digression - in terms of some of the new milk products that are available, extending the program to include them has been a point of discussion. Historically this has been linked directly to white milk and there are now a number of flavour-added kinds of milk drink products that may have more acceptance among the school-aged children, so we're looking at how we may adapt that program. The last change in the student milk price was in 1995 when it was increased from 30 cents to 35 cents. Just to put it in context, there were 4.7 million servings of the 250-millilitre cartons and that covered off the $393,000. I did say that the line has been fairly flat. It does indicate that there has been a marginally slight increase in milk consumption, and the $400,000 allocated in this year's budget is reflective of what we expect the price to be. The School Milk Program represents about 1 per cent of the total Nova Scotia milk sales.

MR. MACKINNON: The price of a 250 millilitre went from 30 cents to 35 cents?

MR. BALSER: That's correct.

MR. MACKINNON: That's in the last year, is it?

MR. BALSER: No, 1995 was the last time the price went up.

MR. MACKINNON: Is there any increase contemplated for this year?

MR. BALSER: Not at this point, that I'm aware of.

MR. MACKINNON: At this point, okay. I would like to shift the focus just slightly with regard to the Federation of Agriculture and Agra Corp. - is that what it's called?

MR. BALSER: AgraPoint.

MR. MACKINNON: AgraPoint, I'm sorry. It's the new government agency that was established when government changed its policy on technical services and so on. There is considerable surplus in the budget for AgraPoint and certain explanations were given to that effect, but what I found even more interesting - well, the surplus to the extent that I believe it was 40 per cent or 45 per cent of the total budget was not spent for the year and yet they indicated when they appeared before one of the Resources Committee meetings of the Legislature that they were anticipating an increase in their budget from the provincial Department of Agriculture and Marketing. Is that the case for this year?

MR. BALSER: No, the budget will remain the same, but in terms of the surplus - and you indicated that during the discussions last year around the estimates this issue came up - what had happened is because there was a transition between the time of the change until

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AgraPoint became fully staffed, there was a creation of a surplus and it seemed reasonable that they would be allowed to retain that surplus in light of where they may be going in the future.

The whole creation of AgraPoint was driven by the industry, if you will, in that they wanted access to programs and support services, so it was a means to allow people involved in the agriculture sector to have support services available - and I can speak to a specific example in the not-too-distant past where we had the problem with the maple syrup producers in Cumberland County. I received a call on a Sunday night at about 10 o'clock indicating that they would need expertise on the ground as soon as possible, and by eight o'clock the next morning we had a person available to them who was very conversant in that sector and was able to provide on-the-ground support. That was done through AgraPoint.

There have been discussions about the role of AgraPoint as it moved forward, but it is to some degree at length from government. There is a board that's charged with dictating the direction of AgraPoint, and that board has membership recommended by the Nova Scotia Federation of Agriculture. So I think it's a vehicle that's providing and meeting a need in the industry, and was envisioned to provide on-the-ground support after the restructuring and the merger of the Department of Agriculture and the Department of Fisheries.

MR. MACKINNON: Would you agree that the Federation of Agriculture is perhaps the single largest stakeholder that would be affected by AgraPoint - not the only one, but perhaps the single largest?

MR. BALSER: Certainly they are a large player, but as the agriculture sector changes, needs and concerns change, and the horticulture sector is emerging and they have challenges. There are commodity groups now that are emerging, not that they necessarily didn't exist a few years ago, but which have found market opportunities, and the whole growth in care production is relatively new, at least in the way in which it's being marketed and so on. What we've tried to do with AgraPoint, and what AgraPoint is trying to do I believe is bring into play people who have specific expertise, cranberries for example - or right now we're looking at the issues related to blueberries - so the answer to your question is yes, the agriculture federation is a large user of that service, but it's not the only one.

MR. MACKINNON: I raise that question because, again, the Federation of Agriculture appeared before one of our legislative committees, as did AgraPoint, and there appears to be, without any question, considerable polarization between these two groups, and I don't see that as being very productive for industry, for government, for the taxpayers, or indeed for the people of Nova Scotia, or anyone who would generally benefit by goods and services produced from agriculture. What action have you taken to defuse that polarization?

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MR. BALSER: Well, certainly just in terms of the structure of the board and the accountability brought to AgraPoint, the deputy minister sits on the board; they prepare a business plan; and there are meetings on a regular basis in terms of the board. I would suggest that given that the board is comprised of people recommended by the agriculture federation in part - not in total - that the mechanism to deal with those concerns and to iron out differences I believe would be around the board table, that AgraPoint is designed to be responsive and reflective of the needs of the industry. I would also say that I do have correspondence from the county agriculture federations that are supportive of AgraPoint. I had a letter very recently where they spoke to the need for AgraPoint and the successful relationship that that particular county level agriculture federation group had had with AgraPoint. So I think it's partly a question of growing pains. It's a new model for delivery.

Historically, the Department of Agriculture and the agriculture sector generally had enjoyed access to government-supplied/funded programs, and when you move away from that model to a new model there's always a question of concern around the change. So I think the best strategy for dealing with it is to have the board sit down with the federation, work out their difficulties and differences, and try to look to a long-range plan that will address some of these issues, and I think we have to accept that early on, this is a relatively new model and it's still in the growing phase.

MR. MACKINNON: So the deputy minister sits on the board, correct?

MR. BALSER: Yes.

MR. MACKINNON: So the department in effect plays an active role in the decision- making process, is that a fair assumption?

MR. BALSER: They would sit at the table, obviously they . . .

MR. MACKINNON: Well either they do or they don't. Are they there just to sit and observe or do they play an active role?

MR. BALSER: Like any board, you have information brought forward. The President of the Agricultural College sits there, the deputy, and there are representatives from the agriculture federation. Recommendations are brought forward by paid staff from AgraPoint in terms of where they're going and the issues before them and then the board makes a determination and a decision. Obviously the province provides funding and so it's important that the deputy sit there to be able to be apprised of the issues and concerns. So does the deputy in his capacity as a board member dictate where AgraPoint goes and how it responds? Not entirely, they have a voice.

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MR. MACKINNON: But that wasn't my question. I didn't ask if the deputy minister on behalf of the department, dictated anything at the board. My question was, does the deputy minister play an active role in the decision-making process as one of a number of shareholders or board of director representatives at the board?

MR. BALSER: I would assume that the person sits at the table and takes part in the discussions in the same way that you would sit at a committee level meeting and take part in the discussions. I doubt that at any committee level meetings that you attend your voice carries the day every single time or dictates the direction of the committee, so I would think it would be a dynamic interactive board and that would be the best kind to have, where you have animated discussions about issues and concerns and move forward on a consensus model.

MR. MACKINNON: So the answer is yes?

MR. BALSER: Yes, insomuch as anyone who sits at a committee level meeting, or a board meeting, would have input.

MR. MACKINNON: Does the deputy minister vote on any . . .

MR. BALSER: Yes.

MR. MACKINNON: He does? I'm a little perplexed at that because when the representatives from AgraPoint appeared before the committee, the chairman of the board indicated that it was arm's length from government, the decision-making process, and it acted as a private corporation, independent of government, even though its only shareholder was the minister - and I see two colleagues who sat on the committee that day who would I am sure confirm that, and that is in Hansard - what you're saying here today is totally different, and I guess I'm looking for some clarity. What is the real relationship, if they're saying one thing and you're saying something different, and we have the deputy here, who I am sure, with his legal background, would be able to put in layman's terms, yes or no?

[2:15 p.m.]

So I will leave that with you, since you're saying things and the chairman of the board is saying something different, and maybe you could get back to us on a future day to explain the dichotomy of what was stated at the committee level as opposed to what the minister is saying here. That type of ambiguity is what may be causing some frustration between the Federation of Agriculture and its relationship with AgraPoint.

MR. BALSER: I don't think there's any difficulty and the position that I've articulated is the way in which the decisions are made. You have a voice and a vote, and a majority would move the thing forward. It's no different than the model that's in place at

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Nova Scotia Business Inc., which is a Crown Corporation, structured to be at arm's length, the Deputy Minister of the Office of Economic Development sits on that board as well to provide input and counsel and information. So I would not think the model we're proposing is an anomaly.

MR. MACKINNON: Through you, Mr. Chairman, with all due respect, I appreciate what the minister is saying, but what was conveyed to members of the committee and what you're saying today are two different things, and I will submit that for the minister's review, because that could very well be part and parcel of some of the reasons why AgraPoint is not meshing with the large stakeholder in the industry.

Also, concern was raised about the fee structures for the various services provided, and the suggestion was raised as to whether it's a level playing field with other facets of industry. We asked if we could have a list of their fee structures and they weren't able to provide us with detail on that. Does the minister have anything that would give us some sense of what they charge for certain services?

MR. BALSER: We don't have that with us, but we will take it under advisement. In terms of the fee structure, as I said earlier in response to one of your questions, the creation of AgraPoint was envisioned as a way of bridging from the kinds of programs and services that were available under the old Department of Agriculture, generally speaking free of charge to a new delivery model that provided, after consultation with the industry about how best to move forward, the kinds of expertise they needed. In some instances those services remain free and in some instances there are fees associated with the provision of those services, particularly, as I understand it, when the service being provided is unique to the individual - where a question or a concern, perhaps about nutrient management, comes up that's specific to a particular producer, then there's a fee structure associated with that.

We're still working through that piece. I know the fees, in some corners, cause a great deal of consternation. There are those in the agriculture sector who feel that any fee charged for the service is not appropriate, certainly from the consulting side. I met with the consulting industry here in the province, they have concerns that AgraPoint, perhaps their fee structures are not in line with what industry provides, and we're working through that.

And again, what I suggested to the consultants' group was that the best way to resolve this was to sit down with the board of AgraPoint and air their concerns around a common table. I would note that in my discussions with the people from the consultant group, they indicated their industry has grown in the last few years - I think last year their revenues were something in the neighbourhood of $2 million, and AgraPoint actually had provided some of that level of revenue stream through subcontracting services to consultants.

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MR. MACKINNON: Would the minister be kind enough to provide a list of the fees and the fee structures of the ones that are established? The ones that are still somewhat unresolved, I understand that, but those that are clearly defined, would the minister table that information?

MR. BALSER: It would be something that you could raise with AgraPoint, but we will certainly look into the availability of that information and make it available.

MR. MACKINNON: So that's a yes?

MR. BALSER: Yes.

MR. MACKINNON: I don't want to belabour the other point, because I understand what the minister said about having the deputy sit at the table and protect the interests of government - because the government is for the most part the single largest stakeholder there - on behalf of the taxpayers, because they're providing the funding. I wanted that clarity because it can't be an arm's-length relationship as put forth by the AgraPoint chairman to the effect that government has nothing to do with it - we're out there and we have nothing to do with government. I understand the same parallel that you drew with Nova Scotia Business Inc. It's supposed to be operating independent of government, but in reality it's not. There are still checks and balances in there. They have to account to government because ultimately it's taxpayers' money, and I respect that, but I would submit that it's important that people be told that in clear language. It's a smokescreen, that's really what it is. It's arm's length, we have nothing to do with it when it's bad news, and if it's good news the government will be one of the beneficiaries of the good news . . .

MR. BALSER: If I could - we have indicated that it is predominantly industry-driven by the very board structure. In terms of accountability, I clearly indicated that there is a process whereby they generate a business plan, they have regular meetings. I, as the minister, met with people from AgraPoint in the same way that I met with people from the agricultural federation. So the object in creating an arm's-length body is recognition that by virtue of the fact that some of the funding is coming from the province there's a need to be held accountable because it is taxpayers' dollars. I don't understand the difficulty you would have in seeing the deputy be a participant in the discussions around where this industry is going. Part of the whole process of having a Department of Agriculture and Fisheries is so that, at the provincial level, we can develop policies and programs that reflect the needs of the industry.

What we've created here, as I've said already, is not a whole lot different from other arm's-length Crown Corporation structures.

MR. MACKINNON: Well, first of all . . .

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MR. BALSER: Also, if I may, there was a four-page newsletter submitted to 4,500 farmers and people connected to the industry in July 2000, to talk about the whole issue of fee structures.

MR. MACKINNON: First of all, at no point in time did I say I had a problem with the government having a say in the process, contrary to what you've just indicated, and second of all you indicated that the government does play an active role in the decision-making process, although it's somewhat changed in formula by the numbers. You indicated that you meet or you've met with AgraPoint - how many times have you met with the board in the last year?

MR. BALSER: The board itself?

MR. MACKINNON: Yes.

MR. BALSER: I've only been the minister since December. I toured the facility in Truro, I met with the paid staff. A representative of the board members and the executive director met with me for about an hour, an hour and a half once. Post that, I think the deputy had at least two meetings with them, formal board meetings. We've had discussions, as I indicated, with regard to the maple syrup producers. I was asked to try to facilitate getting a person to help them, and that was generated through a call to the deputy who called the people at AgraPoint. So do I meet them on a daily basis or a weekly basis? No, but I have had the opportunity to meet twice.

MR. MACKINNON: Another issue is with regard to 4-H. I notice there's an item in here for the 4-H Council - I had it here in front of me. Something tells me it was around $18,000 or thereabouts. To be point specific, in Cape Breton County there is considerable criticism that the provincial government is providing little or no funding at all to the Cape Breton 4-H Council. Would the minister be able to confirm that, and perhaps explain why?

MR. BALSER: Just in terms of the 4-H organization, I did meet with the president of that body and the support staff person. The 4-H Program is very well supported by the province and, in fact, is a program that's world-class, in terms of the participation level of young people and the impact it's having on those young people and in the types of skill sets that they are developing. At the time of the meeting, there was no indication from the president of the organization or the executive director . . .

MR. MACKINNON: How much money did the province provide the Cape Breton 4-H Council last year?

MR. BALSER: We would have to get the level of detail there. We can tell you the gross number in terms of financial participation with 4-H across the province, but specific to Cape Breton, we will take that under advisement.

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MR. MACKINNON: Your colleague in Cabinet, the Honourable Cecil Clarke, and I attended their meeting, and we were advised promptly, by the board of directors there, that the province had provided no funding. There was certainly an opportunity for the minister to respond, and he didn't take up the challenge. So we took from that that what they were saying was correct. I'm just curious as to why the 4-H Council in Cape Breton County has been effectively abandoned. I know when it comes to activities over at the 4-H Exhibition in North Sydney, there was no support at all in the past fiscal year. I'm just wondering why the province all of a sudden pulled up stakes in perhaps one of the most important organizations with youth in rural Nova Scotia.

MR. BALSER: As I said, I can't speak specifically to the Cape Breton situation, other than to say that I will take it under advisement, to provide you the response to your question in detail. At the provincial level, there is a line item of funds that's directed to support the 4-H movement in this province. It's one of the few organizations that have funded support staff available to them. Each county, I believe, has a person on the ground who assists with the delivery of the 4-H Programs.

MR. MACKINNON: The only thing I see here in the Supplement to the Public Accounts, Page 11, is Canadian 4-H Council. That's $16,000-plus. Perhaps, not only just for Cape Breton County, you could give the breakdown for each county. I think it would be very helpful. I am not sure if they have a Kings County 4-H Council or . . .

MR. BALSER: The funding available to support 4-H field services and the 4-H rural organizations is about $841,600. That's up from the forecast of last year, which was $811,000. There are 14.9 FTEs available to support the delivery of the program. We are committed to working with them. The 4-H rural organization section provides human resource development, agriculture awareness and communications programs for kids between nine and 21. There are volunteers. So part of the funding is designed to provide professional support services for the 4-H Program.

As I said, when I met with the organization, they did not raise the lack of funding as being an issue for them. The president, I would assume, represents the entire organization for the province. Certainly that was the message he conveyed to me in our discussions.

MR. MACKINNON: I will certainly raise it on their behalf here today, as you can appreciate. I suppose 4-H is a topic near and dear to someone like myself, because I was a member of 4-H for quite some time. In fact, my mother is the longest-serving 4-H Leader in Canada at this juncture. (Interruptions) Yes, a colleague of Mr. Estabrooks. If she says that the province is shortchanging the Cape Breton 4-H Council, I take her at her word. The entire board seems to concur with that. I would submit that perhaps the government provide a little more support, particularly with the 4-H Exhibition, maybe that's their primary focus. It's getting increasingly difficult for young people to become involved in rural Nova Scotia

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activities such as 4-H. I notice that just by the decline in numbers. I'm sure Cape Breton County is not the only one facing those difficulties.

[2:30 p.m.]

MR. BALSER: Certainly, we would not call into question your mother's perception of the level of funding for 4-H, but we do provide funding for the camping program. Is it enough?

MR. MACKINNON: Which program?

MR. BALSER: The Camp Rankin program. So is it going to be enough? I doubt it, but 4-H is clearly one program that has had specific support from the Department of Agriculture and Fisheries for a number of years. Would it be nice to have more monies available? Absolutely. That's a refrain across government, across departments and across programs.

MR. MACKINNON: Up until the not-too-distant past, we used to have a full-time Department of Agriculture representative in the Sydney office, in the Provincial Building. We don't have that anymore. That type of disengagement really created a vacuum. When Mr. Harvey MacDonald retired, that was a significant loss.

MR. BALSER: Again, obviously if you go from a full-time person to less than that, that's a loss, no one is going to debate that. The support programs are available through AgraPoint, and I believe the . . .

MR. MACKINNON: For a fee.

MR. BALSER: In some instances. Some programs are not . . .

MR. MACKINNON: Let's be fair, Mr. Minister. They're volunteers, trying to get their feet on the ground, and you're going to suggest that they go to a politically-appointed board that charges user fees. Come on, give us a break. We need better than that. These are children who need help to become more active in the agricultural community.

MR. BALSER: I see, you're talking about 4-H in relation to the availability of an agricultural representative as opposed to the kinds of programs being allowed for program support for people in the industry. I see them as two different things.

MR. MACKINNON: Another issue, I notice there are a considerable number of expenses on new equipment, like new automobiles and that sort of stuff in the department over the last year. How many new vehicles were purchased?

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MR. BALSER: We will get that number for you.

MR. MACKINNON: What's the total number in your fleet?

MR. BALSER: We will get that as well.

MR. MACKINNON: You don't have that?

MR. BALSER: Not at hand, but we will take that under advisement and get it for you.

MR. MACKINNON: What's the province's relationship in terms of the issue of Native fisheries in Nova Scotia? I know it's predominantly a federal issue per se, but what role has the provincial government played on many of the issues surrounding the Native fisheries in the last year?

MR. BALSER: I'm not sure I fully understand your question. In terms of the need to respond to the Donald Marshall, Jr. decision and move forward, the province was very proactive in bringing that issue to the attention of the federal minister. I know the minister responsible for Aboriginal Affairs has met . . .

MR. MACKINNON: I think they were aware of it already, I don't think you had to bring it to their attention. What other role did government play?

MR. BALSER: Interestingly enough, I have pretty direct experience with that. It was another time and place, and I believe that you may very well have been a minister sitting here defending your estimates at the time that the Donald Marshall, Jr. decision first came down. It was the minister from Argyle and myself who raised it with the then-provincial minister and with the federal minister as a major concern. In fact, the provincial department was very aggressive and proactive in working with the federal department and RCMP support staff, and putting in place a management plan. We continue to have those meetings on a regular basis with the industry as we move forward in how best to include Aboriginal peoples in the fishery. I believe that's been a reasonable success story in terms of the way in which access to quota has been made available and how there have been supports to allow Aboriginal and First Nations people to become part of the fishery.

It's a standing item on the ministers' meeting each year. We talked about it when Minister Thibault was here in Halifax with my counterparts not that long ago. It is to some degree a federal responsibility, but it's incumbent upon all of us to keep focused on that particular item. I'm certainly pleased with the way in which the department has been working through that piece and I think the fact that the department at the provincial level has been so proactive has helped defuse the situation. Nova Scotia did not experience the same kind of difficulties that occurred in Burnt Church. I think that's a credit to the way in which

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enforcement at DFO, provincially and the RCMP were able to respond to the challenge. That's a success story.

MR. MACKINNON: I think you hit the nail on the head. DFO and the RCMP are both federal so effectively the province is essentially a cheerleader on the sidelines. My question would be with regard, because all we have to do is go back and look at the Public Accounts Committee several weeks back when we had your deputy and I believe there was one other staff before the committee.

MR. BALSER: If I might clarify that issue, the province did in fact have to amend its regulatory environment so that it was illegal to buy fish from Aboriginal peoples. We do have people engaged in this so I think it's not entirely fair to say that the province was not actively engaged.

MR. MACKINNON: I was speaking on the enforcement side because when your colleague, the member for Argyle was in Opposition, he was proclaiming that the department should have to hire - I believe it was dozens, I think it was somewhere around 60-some odd new fisheries officers in order to deal with the problem of illegal fishing in the province. I don't think the province has hired four, or two, the rest were federal. Why all of a sudden did the provincial commitment to the issue of illegal fishing become so unimportant on the front burner, so to speak?

MR. BALSER: Not at all. I think again you have a particular view of the way in which the province has responded. We did hire additional inspectors and what we've done . . .

MR. MACKINNON: How many?

MR. BALSER: We have now five inspectors and two additional that have been hired for a total of seven, but the real advantage has been in the way in which we've been able to empower federal level inspectors to enforce provincial regulations. So there's something in the neighbourhood of 120-plus people who are on the ground. This is a real issue, well beyond the Aboriginal fishing issue into the whole entire gambit of illegal fishery and illegal fish stocks and lost revenues. It's an issue that has been a challenge for a number of years. My understanding is that the potential lost revenue to the province could be as significant as $20 million over the last number of years.

What has to happen to address this problem? We have empowered, we've hired additional staff, we've created an opportunity where federal and provincial officers can enforce the regulations, but in communities where illegal fish are being landed, it's incumbent upon them to become involved and report that activity so it can be dealt with.

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MR. MACKINNON: Really, what you've said is, to put it in political terms, you've hired less than 10 per cent of what you said you were going to hire when you were in Opposition, but since you weren't going to commit any financial resources to do the job, you said okay, let's empower the federal government to go and do our work for us. So, we'll be using federal taxpayers' resources to do what we said we were going to do when we were in Opposition. That's essentially what you've just said.

MR. BALSER: Not at all. What I said was, we now have 120 people who are empowered to help enforce those regulations.

MR. MACKINNON: And how many of those are federal employees?

MR. BALSER: We've already spoke to that and indicated there are seven at the provincial level, but the object of the exercise is that they have as many people . . .

MR. MACKINNON: So that means 93 are federal.

MR. BALSER: . . . on the ground dealing with the problem as possible. I think, in fact I know, that in other jurisdictions they've looked at the model we've created here in Nova Scotia and indicated it is an example they would like to follow in other provinces where they have the same challenge.

MR. MACKINNON: I'm sure they would because they get somebody else to pay the bill.

That having been said, how many aquaculture leases were issued to the Native community in the last year?

MR. BALSER: Specific to Native?

MR. MACKINNON: Yes.

MR. BALSER: We'll look at that. I know there are 134 licence sites in the province - that was a question that came up last night - that's from memory. We'll verify that number. In terms of actual First Nations aquaculture sites, we'll have to get that number.

MR. MACKINNON: There were some issued, though, were there?

MR. BALSER: Yes.

MR. MACKINNON: My particular concern is Eskasoni because I've had occasion to visit some of their activities there and I'm quite impressed with how they're really becoming self-sustaining and their appreciation for the fishing industry. Perhaps the minister

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would be kind enough to outline what specific action his department has undertaken to facilitate and advance that type of self-sustainability in Eskasoni. What particular projects were you involved with in the last year, or your department?

MR. BALSER: Specific to Eskasoni?

MR. MACKINNON: Yes.

MR. BALSER: We'll have to dig into that, but in terms of the aquaculture sector, again a question that was brought forward last evening, that has tremendous potential for this province. We recognize there's a need to put in place a regime that everyone's comfortable with. It was an issue that was brought to the attention of the federal minister at our recent meeting where we talked about the time lag in terms of environmental approval process that has created challenges. If you look at the Arctic char aquaculture land base site that's being developed in the Truro area, that's a unique model. It's being developed by the Aboriginal community. If that is successful - and it will be a challenge because there has not been a successful Arctic char aquaculture development to date - if they're able to do that, it will become a working model for the future.

Specific to Eskasoni, again, we'll have to take that question under advisement and find the level of detail you're looking for.

MR. MACKINNON: Okay. Another concern, particularly for the farmers in the Valley and Hants County districts, is the issue surrounding Kyoto. I was a little surprised to hear representatives from the Federation of Agriculture indicate that the issues surrounding Kyoto as they knew them would have very little impact on how they would - in terms of their cost of doing business, which is a bit of a dichotomy from what the government was advancing when the Premier spoke in the House saying it would have a negative impact on industry in Nova Scotia. On the issue of Kyoto, what issues has your department faced and had to deal with?

MR. BALSER: The department has been involved on a number of fronts, particularly in terms of the research and development side. The Agricultural College has a number of pilot test sites in terms of dealing with ways in which the agriculture community can use their technological advances to deal with problems on farm sites. I would support the Premier's submission that the cost of implementing Kyoto is not fully appreciated or understood. In a previous life, as Minister of Energy, I and my colleagues from across the country took a united stand in terms of the direction the federal government was taking. They ratified the Kyoto Accord in the absence of a clear plan and the level of detail. We've heard repeatedly, as recently as two weeks ago, David Mann, the CEO of Emera, talking about the challenges they will have. I realize that's a company not directly related to the agriculture community.

[Page 86]

[2:45 p.m.]

In terms of what impact it will have - there are going to be challenges as we move forward, whether it's how much using farm machinery that burns diesel fuel is contributing to greenhouse gas emissions, in terms of heating for the horticulture sector in their greenhouses. So I think that it would be a bit premature to say that there will be no cost to implementing the Kyoto Accord requirements as we move forward and we will work closely. As I said, there's an opportunity, not only is there a challenge, there's an opportunity and the Agricultural College has stepped up to the plate very aggressively and I think that's a testament to that institution in the way in which they are seeing opportunity to position themselves. The Agricultural College has the expertise and with the focus at the provincial and federal level for funding for research, there's a real opportunity.

MR. MACKINNON: Through you, Mr. Chairman, have you been able to quantify on any particular issue as it relates to farming what the cost factors would be with the implementation of Kyoto?

MR. BALSER: And that, as I said earlier on, has been the challenge, not just in Nova Scotia, but across Canada. The problem is . . .

MR. MACKINNON: Well, I'm not interested in across Canada, I'm just interested in what you and your government have been able to ascertain for the farming community on this issue.

MR. BALSER: That's what I'm saying, is that we can't get to that level of detail because we don't know and that was the reason why the provinces, Nova Scotia included, were so reluctant to ratify because no one understood how they were going to deal with some of the recommendations contained in the national ratification agenda. So we haven't been able to determine all of those costs. There has been tremendous energy expended. It's not simply a matter of saying, oh, here's a dollar amount and this is what it means. It's going to take months, if not years, to come to a number value.

MR. MACKINNON: I guess that's where I'm getting a little concerned here because representatives from the agricultural community seem to think that this Kyoto Protocol is going to be good for them and they seem to be able to work without any undue financial hardship and you're saying that you don't have enough detail to be able to do any type of cost analysis on it and then we get other confusing comments, like the Premier saying that, you know, electrical rates will go up as much as 29 per cent. Then the representative from your previous department, Energy, appeared before one of our committees and indicated it would be more like, the high end, more like 12 per cent. So, you know, the mixed signals coming out from government are, I would submit, creating considerable frustration and confusion because of a lack of clarity. I mean at the governmental level you need clarity to be able to help industry and I think the minister can appreciate that. So if you indicate, today, that you

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don't have sufficient information to be able to quantify what the cost factors would be to the agriculture community, I will take you at your word.

MR. BALSER: Again, it's the level of uncertainty that's being generated by the federal government. When we spoke specifically about the cost associated with power rates, if in fact we move forward on an accelerated timeline to implement the Kyoto Accord and Nova Scotia Power is required to take its coal-fired production out of production and replace it with some other energy source, then the front-end loaded capital costs will be far more significant than if they're allowed to take their coal-fired production out on a life cycle agenda. So, you're right, there's no clarity and the reason there's no clarity is because the government federally implemented a plan with no clear understanding of what the requirements would be and that was the refrain that was put forward not just by governments, but by the industries far and wide as well. So, you're right, we don't have the detail because we don't have the information, but in the Department of Energy, and I'm not here defending the estimates of the Department of Energy, there are people who are working specifically and I was glad to hear you say that the agricultural community feels that it will have minimal impact in terms of their ability to do business as a result of Kyoto and I hope that they are right.

MR. MACKINNON: I'm a little disappointed that the department didn't seem to have that information from the agricultural community, that you're just hearing it now from an Opposition member because he picked it up from a committee level. I mean I find that a little concerning that the minister of a department doesn't seem to be on top of these rather pressing issues because we also have other issues such as, you know, drought and drought relief because that's a major problem for farmers. The argument has been made that we have lots of water, but it's a question of where it's placed, water storage and so on.

MR. BALSER: But as I indicated, part of the way in which the Department of Agriculture is attempting to assist industry with dealing with this is by putting resources in place to assist with research and development and working with the industry. So were we aware that Kyoto might pose problems? Absolutely. Are we working with industry through the Agricultural College and those kinds of programs to assist with this? Yes, and as I said already, it's an issue that has been discussed with my counterparts provincially and at the federal level.

MR. MACKINNON: Well, perhaps you could give us some specific detail as to what initiatives, what specific initiatives you and/or the Agricultural College, or whoever it is that's associated with the Department of Agriculture and Marketing, are doing to reduce the cost of farming to the agricultural community in Nova Scotia. Give us some point-specific detail and even if it's not exacting, you know, because you say there are too many unknown quantities, there must be at least a plan or some kind of action plan that would say here's where we are now and this is what we feel is the agricultural community's contribution to environmental problems in Nova Scotia as part of the big picture because if you quantify it,

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we represent a certain percentage and how does that break down vis-à-vis other sectors and what are we going to do to try to address that?

MR. BALSER: One example that comes to mind immediately is the work that's being done on the horticultural side. The Agricultural College has an experimental greenhouse facility that's using heat pumps and well water as a heating and cooling system that will at the end of the day provide a technological advancement that I believe will help the greenhouse industry grow. Last year's greenhouse industry, I think the growth rate was something like 26 per cent. That was a number I mentioned last evening. This is a world-class undertaking. What it will mean is that a number of the greenhouses in this province are currently heated by using oil-fired or natural gas-fired heating systems. If this project moves forward successfully, and there's every indication that it will and is, what you would then have is the ability to heat and cool a greenhouse facility for the cost of the operation of a heat pump which actually could be done by using wind turbines. So that is a world-class undertaking that has every potential to be commercialized and the technology exportable. So there's that example.

The way in which the Department of Agriculture is attempting to deal with the removal of dead animals, if you will, there's a composting facility there that's working very, very effectively. So there are a number of initiatives that are being brought forward from a technological side which is where this industry needs to go. I believe that the real tremendous opportunities in the agricultural sector will be when we reach out and embrace technology and research and those kinds of developments because there's no question that there is a need for the industry to recognize and promote their successes and that hasn't, I don't believe, been done quite as effectively as it needs to be done.

Young people don't look at the agricultural sector as a career opportunity in the way that they should. Last evening when I was talking about the Agricultural College, 91 per cent of the graduates from the Agricultural College have work within six months of graduation. That's a tremendous figure and I don't think young people are fully cognizant of that. My own daughter equates the Agricultural College with studying to be a farmer and nothing could be further from the truth. The technology that's employed at that school is second to none.

MR. MACKINNON: I know my time is getting very short here, probably a minute or so.

MR. CHAIRMAN: One minute.

MR. MACKINNON: But the reference to the greenhouse project, that's good, but can you have that incorporated somehow in an overall comprehensive plan or policy that we can see where the agricultural community or the Department of Agriculture is going to play its

[Page 89]

part on this whole Kyoto Protocol because it seems very sporadic, it's like a hodgepodge of things, but no clear focus as to how you're getting there.

MR. BALSER: I suspect in your time as minister, I think it was of Environment and Labour, or Labour . . .

MR. MACKINNON: Yes.

MR. BALSER: I think you recognized that any department has a myriad of activities and initiatives underway and I can tell you that the Department of Agriculture and Fisheries is focused on not just Kyoto, but on how we drive the research side of the industry. The Nova Scotia Agricultural College has recruited the Tier 11 Canada Research Chair in Agriculture Resource Management - that's a coup, and sets that institution and this province as a world leader. On an entirely unrelated issue, but one that's very challenging for both the agriculture and fisheries sectors, at a recent tri-national agricultural council meeting in Montreal, Nova Scotia was asked to chair the international agenda item on the implementation of the Bioterrorism and Home and Security legislation. So Nova Scotia is very much a leader in this sector and recognized as such by their colleagues internationally.

MR. CHAIRMAN: The time for the Liberal caucus has now expired. Could I ask the honourable member for Cape Breton West, do you anticipate any more questions from your caucus for this minister this afternoon?

MR. MACKINNON: Perhaps.

MR. CHAIRMAN: Are there any questions from the government caucus for this minister at the present time? Hearing none, we will go back to the loyal Opposition caucus, the NDP.

Honourable member for Hants East, you have the floor. The time is 2:57 p.m. You have up to one hour.

MR. JOHN MACDONELL: Good day again, Mr. Minister. I'm going to jump back to fisheries for a minute, specifically because a few days ago I received a letter from one of my constituents, a senior in my community, and although I had looked into this issue about a year ago for him, I kind of thought that it was dealt with about as far as I could take it. Anyway, I will get a copy from Hansard on whatever clarifications you can give me so I can give it to him - his issue was the regulations around boating on inland waters.

The federal government - at least it's my understanding and you can correct me - has imposed that he must take a course now, and I think there's some grandfathering to a point, you know, nine years for certain individuals, but anyway this gentleman has many years, over 40 years of fishing in lakes in Nova Scotia and he is questioning whose jurisdiction is what,

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where does the federal jurisdiction come into play and the provincial jurisdiction around this issue. His contention is that the province sells him a trout fishing licence so therefore they should have the say on this boating issue. I will give you that much, and if you can clarify who has what powers and if there's a reason that the federal government, if they do have these powers, if that's from some constitutional arrangement or if it's some type of service in exchange.

MR. BALSER: The quick answer is navigable waters are clearly a federal jurisdiction, and I would assume that rule is out of the British North America Act. It is the federal government invoking the responsibilities and regulations under the navigable waters that introduced the boating safety requirement. As a person who has completed the course and did so with a view similar to your constituent initially, I would say it is time well-spent and that you don't really fully appreciate the need to be conscious and cognizant of boating safety.

Every year in this province and across Canada there are people who lose their lives as a result of boating mishaps and recognizing that people who have had significant experience on the water, historic experience, may come to that course reluctantly. I think lifelong learning is more than a cliché, that there's always an opportunity to learn and sometimes you can, through a training program like that, recognize that maybe you've had some bad habits that you took for granted. So it is a federal requirement; I don't think it's entirely bad and, as I said, as a person who took the course reluctantly, I don't begrudge either the dollar cost or the training.

MR. MACDONELL: I'm assuming navigable waters are waters big enough to put some type of floating device, like a boat, in there - is that the definition of navigable waters?

MR. BALSER: That is correct and it's interesting that this should come up because last Friday evening I met with a group in my constituency who were talking about the interpretation of what constitutes navigable waters, and their presentation would indicate that any stream through which you could push, shove, or pull a boat of whatever description would constitute navigable waters. The question was some of the small tributary streams in the backwater, is that navigable water? Well, if you took the definition to the extreme, yes, it could be. So really any watercourse where you could use a boat of any description would be navigable water.

[3:00 p.m.]

MR. MACDONELL: So I'm assuming a portage is not considered navigable water?

MR. BALSER: It might be a reasonable assumption if you're on land.

[Page 91]

MR. MACDONELL: There would be a lot of water I think in Nova Scotia that you could push or pull a boat through that it would not have current enough to carry that supposedly floating object, so it just seems it's a pretty broad definition. I thought the Canadian Coast Guard had jurisdiction in terms of objects out in a lake that were deemed to be obstructions. So is it still the Canadian Coast Guard that has this responsibility - of course, the Coast Guard is under DFO anyway. Now, so . . .

MR. BALSER: That's right, that's my understanding and, again, that was an issue that came up the other evening and that was the response that was given - that DFO, the Minister of DFO is responsible for the Coast Guard and so they would be dealing with that.

MR. MACDONELL: So the province's jurisdiction around trout licences, fishing licences, would only be in what capacity, to set catch limits - you know, what are the powers of the province in terms of regulations?

MR. BALSER: The deputy is indicating there's an arrangement with the federal government, but the layman's answer would be yes, that the regulations, bag limits, and season openings and closings are the responsibility of the province, but they do so in consultation. Now, I guess if you had an enforcement officer who saw someone who was in clear violation of some of the requirements under the navigable waters boating safety, it would be incumbent upon them to take action I would think. Just as a matter of carrying out your fiduciary responsibilities - if you see a boater who is obviously breaking the law and you may be an enforcement officer, you might suggest to them that they should take that under consideration.

MR. MACDONELL: I'm going to assume that any regulations around, like the life jackets you should carry in your boat, when you're fishing, et cetera, that those are federal?

MR. BALSER: Yes.

MR. MACDONELL: Can you tell me the difference in jurisdictions. I know when you buy your fishing licence, those are sold through the Department of Natural Resources, am I correct?

MR. BALSER: That's right.

MR. MACDONELL: So that's their only role, is just the sale of those licences?

MR. BALSER: And they administer the program. It's Natural Resources' officers who enforce the regulations, I believe, and the deputy has indicated that part of the funding collected through the licensing and so on goes to assist in part-time enforcement officers under Natural Resources. So the administration, the enforcement part of it, the regulations

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are done through Natural Resources, we do the drafting of the licence and the documents pursuant to it.

MR. MACDONELL: And those enforcement officers under Natural Resources, are they fisheries officers or are they just called conservation officers?

MR. BALSER: They're called conservation officers.

MR. MACDONELL: Would they be the same ones who would be pursuing jackers in hunting season?

MR. BALSER: Yes.

MR. MACDONELL: So they have a double role in fisheries and in enforcing the Wildlife Act, I guess.

MR. BALSER: Yes. Then the seasons, to some degree, don't overlap, so it's the reason.

MR. MACDONELL: Okay, I can't think of any other points in his letter that I have to have clarified, and if I do I'll send it by way of correspondence to you, but I wanted to get something relatively quickly in my hand to give to him.

My next fisheries question is, is there any strategy that you have around trying to help the Town of Canso and its issues?

MR. BALSER: Absolutely. There's a case in point where government, at all levels, and at the community level in terms of participation from the community, have stepped up to the plate in a very large way, in a way that we can point to as a working model that has potential for other jurisdictions, whether it's in Nova Scotia - because there are other communities that are teetering on the same kind of issues that Canso has experienced. We had a non-departmental working group put together. The Deputy Minister of Agriculture and Fisheries chairs that because, to some degree, the Town of Canso was founded on the fishery, so there's a strong link. The recent announcement of the 50-seat call centre was applauded by the mayor in terms of being part of the solution.

There's no simple solution, these communities that are in crisis, it didn't happen overnight, it has happened over time. So the solution will have to come forward over time. The regional RDA is very focused on working to bring the solutions forward. Community- based kind of strategies for resolving a problem are critical. The Barry Group have ownership of the plant in Canso. That plant is a very large facility and it has challenges just in terms of the capital cost overhead. They've certainly pulled out all the stops.

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I met with Mr. Barry just last week to talk about his plan for Canso. They are looking at the crab fishery as being part of the solution. They have access to shrimp. We've requested of the federal minister that he look at the seasons related to the crab industry to try to bring them in line so there will be access to product. We've talked to the mayor about what we can do in terms of training, just in terms of temporary short-term relief last year when it was recognized that a number of people in the community would not have sufficient time to collect employment insurance. There were programs introduced to assist them through that.

Again, there's no yea, we fixed the problem overnight, but certainly from a government, we've been working, and interestingly enough, there was another community, Bickerton, that had a similar experience and when the community group asked for assistance from the government, we were able to come in and immediately put on the table the model that we had used in Canso and they were very appreciative.

There's no quick fix. Part of the long-term solution ties to tourism, eco-tourism, infrastructure. One of the challenges Canso has, to be blunt, is that they have such a small and eroding tax base that the cost, for example access to water for the Barry Group, they pay more to access the water system in Canso for their plant than they would pay if that operation was located in a major metropolitan centre. It's just a function of the small tax base. The same thing is true with the power rates. Now power rates are reasonable because Canso has its own utility, but the problem is the plant in question is so large that Mr. Barry indicated it cost something in the neighbourhood of $50,000 to fire the plant up in terms of electricity usage. So unless you are handling a lot of product, the freezing unit is very large, so he and his company are trying to work with the community to try to resolve that. That's the simple answer.

MR. MACDONELL: Well, I encourage you to stay on that one. I don't know if it's just the frustration of recognizing the dire straits that the community finds itself in, and the people there, or the frustration of being in Opposition and wondering if there is something more that can be done so I appreciate that you are having dialogues with them there and certainly I don't know that there would be anything you could come up with that we wouldn't support by way of trying to help that community and certainly, if they are supportive, we would be. So with that, I would encourage you in any way, if there's something that you can do.

MR. BALSER: I appreciate that. I think last evening you had asked a question - not to digress - specifically about the Agricultural College and the scholarship program, was it you?

MR. MACDONELL: I don't think so . . .

MR. BALSER: Okay, then I will hold on that.

[Page 94]

MR. MACDONELL: . . . but I wouldn't mind hearing about it.

MR. BALSER: Okay, just in terms of that, the scholarship program is $135,000 in total and, as I said last evening in response to the question, it's one of the richest, if you will, scholarship programs available to students in Nova Scotia - $110,000 of that is available for Nova Scotia students who are in the undergraduate program; and $25,000 is there - five scholarships of $5,000 each which go to masters students, with first preference going to Nova Scotians. The question, I think, in part was, what's the breakout in terms of access by Nova Scotians and that pretty well reflects it. Thank you for allowing me to do that.

MR. MACDONELL: Well, thanks for the information.

I want to just go back to the Supplementary Detail, Page 3.6 and Page 3.7 and also the Estimates Book at Page 1.11. On Page 3.6 it has Net Program Expenses and then it has Agriculture and Fisheries Loan Boards as a line item, and it shows a fair decrease. I asked you about this last night so I'm not going to ask that again, but I'm assuming that this line item on Page 3.6 is really around administrative costs, because the dollars that the department looks at in loans is on Page 1.11 in the Estimates. That's the way I would understand it.

MR. BALSER: You're right, although $600,000 in the item that you spoke to on Page 3.6 is related to the New Entrants Program and the balance of it would be related.

MR. MACDONELL: That was another question. What I wanted to come to was what you had in place for new entrants because I'm looking in the Estimates Book - and another question comes from that - and you have Fisheries Development Fund and Nova Scotia Farm Loan Board and up here on the Supplementary Detail, it's Agriculture and Fisheries Loan Boards. So I'm assuming those are the two loan boards. The Fisheries Development Fund is a loan board?

MR. BALSER: Yes.

MR. MACDONELL: So you have them as one line item here, but it's two line items here and I'm just curious as to why that is.

MR. BALSER: The quick answer would be simply that's just the way it was laid out in the presentation of the book, there's no hidden agenda item there that I'm aware of.

MR. MACDONELL: If we look at the Estimate for 2003-04 and it's $25 million, which is fairly in line with previous years, definitely with the Fisheries Development Fund, although the Estimate for 2002 for the Nova Scotia Farm Loan Board is $28 million when the Forecast was $21 million, and I'm going to call that ballpark for $25 million, my thought is around new entrants - if you were to have 50 new people wanting to go into farming, I

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don't really see anything here in your Estimate to indicate that you're really financing ahead on the idea that you're going to have any number of new entrants - $600,000 is pretty small in this industry.

MR. BALSER: That's a reasonable statement. Is $600,000 enough to do justice? No, but it's the value that has been placed there and it reflects, I think, historically, the level of new entrant interest, if you will. We could spend a fair bit of time talking about that challenge in particular. It's significant to the agriculture sector, it's also significant to the fisheries sector, and there's no simple solution. It was something that was raised with the federal minister and all the provincial counterparts; they were all facing the exact same problem. The challenge to encourage new, young entrants is significant. It comes back to my comments last night about how people perceive agriculture as a career opportunity.

[3:15 p.m.]

There's a significant disconnect with our young people and we really need to create a non-partisan, all-inclusive strategy to deal with the challenge and, to be blunt, I was somewhat disappointed in one of the meetings I had with the federation in that they don't see their own children looking to farming as an opportunity and I thought what an unfortunate situation that people who are the leaders in the industry, who are engaged at the federation level would, in their discussion with the minister, actively dissuade their own children from looking at agriculture as an opportunity. As I said last evening, if you look at some of the more wealthy family units in Canada, they have strong ties to this sector and I think it's a potential opportunity that's being under-appreciated.

We had 47 applications in 2000-01 under the New Entrants Program. We had 55 in 2001-02, so that number, and the number reflected, like the $608 and the $1,000 is consistent. Again, if we were able to pull out all stops, would we be able to recruit hundreds of new young entrants into the agriculture sector? I don't know if that's possible, it would certainly be a laudable goal, but we've got some real challenges just in terms of availability of land for agricultural purposes. In fact, I mentioned last night meeting with the farm scholars from the Neufeld program and they were talking about the Australian, Tasmanian, and New Zealand experience where now many young new farmers, and perhaps farmers who aren't so young, are looking to rented land to get land they could put into production, and that may be the way - I think maybe what we need to have is an opportunity for some real broad-range thinking about this problem, with no idea being unworthy of consideration. It's a challenge, there's no question. If you look at the aging population and those involved in agriculture, we've got problems on the horizon.

MR. MACDONELL: Well, I agree. I see problems not only attracting young people, but keeping the people who are there. I think something we've said is that we think the province should take the lead on land use issues. So, if you want to pass our bill on a land use commissioner, I'd be all supportive of that.

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I'm curious, the money in the estimates for 2003-04, is that money that's already allocated? Does that pretty well take up what the Farm Loan Board has on the books as money that's out there, lent out, because you made the statement of 214 accounts, $26 million, and I'm interested to know, is this an item that's - and if there's $25 million sitting there to be drawn on, is that the way you budget that?

MR. BALSER: That's correct.

MR. MACDONELL: I know there used to be an Interest Forgiveness Program if you were under 35. Now, I don't know if that's called by a different name or if it still exists, so the new entrants, I'm just curious about the numbers. You have a New Entrants Program of $600,000 and you have $25 million that you're hoping the people will draw on, what's the difference in the interest rates so that new entrants - well, obviously they are going to pay more for money out of the other fund, I'm assuming.

MR. BALSER: Just in terms of that, the benefits paid under the Industry Development Program, the New Entrants Program, the actual interest repaid on qualifying loans at $10,000 for two years is made available, so in terms of the interest rate, what we said last evening, the short-term borrowing is at a slightly higher rate than the longer-term borrowing, which is reflective within the chartered bank institutions.

MR. MACDONELL: I was just wondering about the difference in the interest rates on the $600,000 if you were a new entrant compared to the interest rates on the $25 million if you were a new entrant, because if you had 47 new entrants and you had $600,000, I can't see that going very far - 10 of them at $60,000 apiece will use that up.

MR. BALSER: The funding under the New Entrants Program is available for two-year commitments and all claims must be submitted by February 28^th of the year, and unclaimed funds in any fiscal year are not going to be made available so there's no carry-over. But, as I said, the last two years, the subscription rate has pretty well taken up the $600,000 to $800,000 .

MR. MACDONELL: I have the fear of my time running out and I have a lot of questions yet to ask, so I'm going to hit some other items.

I had a call from someone who knew of another person who had gone to the auction and bought an animal, a feeder, 500 or 600 pounds, probably around a $500 investment, and I think it was the day after, or two days after they got it home, it was dead. So, needless to say, this caused a fair bit of concern for the farmer, if not for the animal itself. So, anyway, I made some enquiries and . . .

MR. BALSER: The animal probably took it harder than the farmer.

[Page 97]

MR. MACDONELL: Right. Anyway some of the enquiries I made around what is done in other jurisdictions, I was able to glean that in Ontario there are veterinarian inspections at auctions. In other words, the vet would go in, examine all the animals to go through the auction. Once the veterinarian leaves, no other animals can be admitted to that auction for that day, and that fee was paid by the province for them to do that to try to at least cut down on the possibility that a really sick animal is going to go through the auction.

I think we pretty well take the stand of buyer beware. If you go to an auction, it's the same as if you buy a chair, but the only thing is usually the next day the chair looks pretty much the same as it did when you bought it. In terms of a living organism you do run that risk. In this case, I think the auction compensated the person, which I thought was perhaps above and beyond the call of duty. It would seem to me that the person who puts it into the sale should really carry the brunt of the expense if the animal dies.

I'm just wondering, has this ever come across your desk? Have you given this some thought, or would you give it some thought, in order to try to bring auctions under some type of supervision in this regard so that there's some standards set on the welfare of animals going through, and to protect the consumer in this regard?

MR. BALSER: It's the first time that particular issue has been brought to my attention as a minister. I know a number of years ago when we had a farm and animals, we had a similar experience, it involved a pig, but at that time it was buyer beware and that's my understanding of the situation. Is it something that we would consider? It's something worth talking about. I don't know that there's a definitive answer today other than there may be a model, as you indicated Ontario has a model in the works. I don't know, given our current fiscal situation, if it's doable, but obviously no one wants to see a person who attends an auction taken unfair advantage of.

MR. MACDONELL: The only other point I will leave with you is that there aren't a lot of these auctions in the province - actually the Thursday auction in Truro and there used to be one in Windsor and there's one in Lawrencetown, so I wouldn't see this as a one - if it turns out it's going to be part of a day for a veterinarian, or a morning or whatever. The vet I spoke to seemed to think this was a fairly quick breeze-through to look at the animals and try to allay any fears that people might have.

It is something I would like you to consider for the future and actually do some enquiries as to what other jurisdictions do, and if Ontario is the only province that does this or if they do it in Alberta or British Columbia. I think it's something that perhaps the time has come on this and with all issues around humane treatment of animals in particular, there would be certainly just cause, I think. I certainly wouldn't be expecting the fee to be exorbitant, but if you look around I would be interested to know what you find out at some point too, but it's not particularly urgent.

[Page 98]

MR. BALSER: It's a reasonable request and I will look into it.

MR. MACDONELL: I think I kind of milked the beef issue, although that's a contradiction of terms. I won't pursue that very much. One thing I do want to pursue is around provincial inspection of abattoirs. The honourable member for Clare had raised this, and I certainly want to raise it. I guess I didn't bring all of my notes on this issue, as would be the case. Anyway, from what I do know, I know that there have been meetings with the facility owners and so on, and that the province - I think, my impression, although I can't get any clear direction - is looking at trying to bring a standard across the board for other abattoirs that are not in the provincial inspection system.

Yesterday you mentioned that there were 14 inspectors across the province. The people I have been talking to - there are the Moxsoms in Shubenacadie, there's Walkers or Meehans in Upper Rawdon, and I'm trying to think if there was another one specifically in my constituency and I guess there's not, there's another one or two in the beautiful Colchester-Musquodoboit Valley. I have a couple of concerns around this. One is that there are not enough inspectors. A lot of inspectors have moved and gone to federal inspection facilities or federal plants, and they're doing inspection work for the federal government.

The number of provincial inspectors is way down. Actually it is my understanding that the people running these plants have been told, get your help where you can get it. I know in the case of Mr. Moxsom, he's lucky, one of the local veterinarians comes in, looks at the animals before he slaughters them, comes back and checks the carcasses, et cetera. Mr. Moxsom has been doing this for enough years now that he and the vet have worked well enough together that he knows what to leave out, lymph nodes and other things that the vet would need to see. So even if the veterinarian may come in the morning, then he will go and do some of his other calls, come back to check on the facility again later in the day, and maybe come in a couple of times in the day. This seems to work well for them, but he's in a unique situation where he has a veterinarian just up the road.

For some of the other facilities, this can't work. Of course, I'm assuming they're sending this cost on to the province to take care of, and I don't see that as cheap. That's probably more expensive than having inspectors doing this job. It seems that there was a fair bit of dialogue going on around this process, but that the process seems to have come to a halt. There's not much being said, and I would like to make the case, actually, for some of these small slaughterhouses that people are quite content with them. They feel that the level of safety is fine there, I mean the ones that are not under the provincial inspection plan.

It does have a concern around the food safety issues. I would like to see some type of graduated entry into the inspection system for these small plants. If they want to send an inspector to look at these animals before they're slaughtered and after and whatever, that's fine, so they ensure there is some quality control. One of the big issues at the Moxsom's slaughterhouse is they get a lot of calls, emergency calls for downed cows. You can't always

[Page 99]

have an inspector to observe these animals before they're slaughtered, so having the veterinarian available has given some flexibility for them in doing this. Mr. Moxsom is particular about making sure that things are done and done right.

What I'm saying is I would like to see some clarification for the industry, so they actually know where the department is going in terms of their plans around provincial inspection, and that they're going to support it and put the people in place to do the inspections, but also not to the point of watching some of these smaller facilities that are not inspected forced out of business. I think they meet a need that they have met for many years. Originally that would be a place where we would have gotten our cattle slaughtered some years ago. Very happy with the service. I'm not sure. I don't hear anybody complaining about that service. I was really surprised that the province seemed to be heading in this direction.

[3:30 p.m.]

I think if the province wants to take on the role - look, there could be some liability issues in these plants, we want to make sure there are some standards - I don't see anything wrong with that. The question is, what level are you going to place on them immediately that might be too much of a burden initially, when there is nobody complaining. I'm guess I'm raising two issues. One is around those plants that are not in the inspection program, and then those plants that are in the inspection program and are having a lot of difficulty getting inspectors and maintaining their business in the program.

MR. BALSER: Certainly you've captured the issue, there's no question. We've been going through a process of consultation, trying to grapple with the very issues you've articulated. At this juncture, we've had a significant amount of input, there's no question about it, about the potential downsides, if you will, and the challenges the industry will face. We're looking at the information, trying to move forward in a way that deals with the problems. At the same time, there is no question that food safety is a significant issue. With all due respect to the small abattoir operators, and again in my previous life I had some experience with that, it's fine to say they're doing okay, but if something were to happen, there would be tremendous repercussions. So you have to be cognizant of that.

Beyond that, in many instances these abattoirs have provided the same service to the same customers for decades. That's fine, but consumers generally are much more demanding in terms of their expectations about food security. As we speak, and I mentioned last evening this whole issue of bioterrorism and food security, the expectation is that the food will be safe and that there will be a chain of information that will allow the consumer to trace that product back to the supplier. We're working around those issues, trying to find a model that will take into consideration those people who are operating small-scale operations and who will face those challenges, and at the same time recognizing that the federal government, in terms of food inspection and quality, they have input as well.

[Page 100]

We're working on that, and we recognize that industry is looking with trepidation and concern about what government is doing. The very fact that we haven't gone forward is indicative of the fact that we're trying to come forward with something that will be doable.

MR. MACDONELL: I think that was an answer. What I would like to have heard, I guess, is that these small plants, we do have a concern about safety issues, although you never explained where that came from, because I'm not hearing that people are concerned. People who are using the service aren't complaining. But if the province were to say, look, you can't sell to third party buyers, or you can't have any animals slaughtered here sold to third party buyers, or set some regulations in place as to where you think that food will go because at the end of the day, it's like any other regulation, you have to assume that the people will abide by it until you find them not abiding by it, and then you charge them if they're breaking the law.

If there are laws in place that direct who they can sell to or what they can do with this, then that would certainly be helpful. Certainly, I don't think these small slaughter plants are selling to Sobeys. If they are, I would think that would be a concern, that you could be stating to the retailers, you can't buy from these facilities, you can only buy from at least provincially-inspected facilities. I want to say that Maple Leaf has had more recalls on hamburger than anybody else I know, and it's a federally-inspected facility. So as far as safety issues, I don't think we can always look at the small plants and say that these are the cause of this problem, because the larger ones are as well. I have real worries around the whole process now that we're getting into around irradiation of meat that that will take the liability actually away from the plants. In other words, it will become the customer's liability, oh, this was irradiated, you set it out on your counter, it's your fault. I have real issues around inspected facilities doing this and therefore, their responsibility around the food safety issue, I think, is gone in case there is a problem with that irradiation. Nothing has been deemed to prove how safe or not. I know we do it to fruit and other things at the present time.

The one thing you haven't answered for me, are you going to hire more inspectors? Even outside of the plants in the inspected program, we have the inspection program that plants belong to and they are having difficulty. There's an issue I think that you're going to have to deal with and I just wonder what your thoughts are around that. Are you guys going to fill the void on inspectors?

MR. BALSER: Certainly, we always attempt to have the people available to do the job that's required. Earlier on, one of the other interveners talked about the need for additional inspectors and enforcement officers on the fishery side of things. So it's not always a matter of more people. We always like to have more people but it's a question of managing the costs and providing a level of service. You raised in one of your previous questions the challenges being faced and we're always looking at how best to deal with the challenges. At some point, would the consideration be made to have additional inspectors? If that was the strategy that would assist in dealing with the problem, then it has possibility

[Page 101]

but I don't necessarily think more people is the answer. I think what you need to have are programs, regulations in place to do the very things you spoke of.

MR. MACDONELL: Mr. Minister, yours is the department that's promoting the concern around these issues, that oversees provincial inspection. You're making the view, well I don't know if additional people are what we need. I'm saying there are no people, not zero, but there are not enough to do the job, there are people who have left who haven't been replaced. If you're promoting this program and you see it as something that's necessary, because I think the people in the industry, they invested to bring their facilities up to a standard and they joined this bandwagon of provincial inspection. They saw that as necessary and it was the province that was promoting that.

So now they are in a situation where they made the investment, they've been carrying out business for years and now they can't get inspectors and that's affecting their ability to actually slaughter animals. It's not a case of just saying, well, I don't know if we need to hire more people. Well, we do. We do need to hire more people and that's the question I'm asking. Are you willing to put the investment in place to make sure that those people, if we had 25 and now we're down to nine, let's say - I don't know, I'm just picking numbers out of the air - what I'm saying is can you bring the numbers back up to 25? I'm not saying bring it up to 35. We don't have enough people to do the job, period. We need them. Are you going to hire them?

MR. BALSER: That was the point of my response. If we are going to pick numbers out of the air, do you have a magic number that's adequate?

MR. MACDONELL: Well, give me the numbers. If you have the accurate numbers, give me them and I'll work with those.

MR. BALSER: The point is that you have raised the issue of more. Well, how many is more? To me the solution to the problem is having the CFIA inspection regulations in place so that a lot of the work done by the inspectors can be done by simply auditing the procedures and programs that are in place. There's a great deal of energy being put forward by the fisheries side and I believe by the food processing side as well, in terms of the agricultural sector, about ensuring that their quality standards and programs are in place so that the inspector or the auditor's role is much diminished. They don't have to be there every day because the operator has put in place a regime that will stand scrutiny and that will stand the test of an audited experience.

A lot of the inspection that goes on is simply arriving periodically to verify inventories and results. So that, to me, is the solution. It's not a matter of you picking two numbers out of the sky and saying if nine isn't enough, is 25 where it should be? I'm saying what we need to know is what's wrong with the program? Is the solution additional people because it may be that there is a need for additional people. It may be that there's a need for

[Page 102]

a few, and whatever that number is remains to be determined. I don't think the answer is simply to say we don't have enough staff to do the job so just go hire some people and the problem will go away. I don't think the solution is that simple.

MR. MACDONELL: I don't think I'm making myself clear. You don't have the people to do the program. End of discussion. You don't have them, they left. Most of them left, a lot of them left, some of them left. You don't have the same number of people that you had carrying out the program. I'm not talking about more. I'm talking about filling those numbers back to where you had them, that's all. The people who left, replace them.

We started this discussion around issues of liability and then you're talking about audits. I think when an animal has to be killed and someone's going to be there to look at that animal before it's killed, then you can't wait for a week to keep him on the slaughter floor, tapping your fingers, saying I hope somebody gets here before this dies. Issues of downed cows, which the Moxsoms deal with a lot, they're lucky in the sense that they can get a veterinarian there to examine the animal prior - I think the term is ante-mortem, I'm not sure how that makes sense - but anyway, they look at them before they are killed and after they are killed. So there would be lots of plants that don't have that flexibility at all so they try not to bother with downed cows very much.

One of the issues that has come up is the condition of these animals for those plants that are not inspected. Somebody can say, well if you can't have somebody there to inspect this carcass or inspect this animal before we slaughter it, then I'll call Frank Smith and have him do it in his non-inspected plant and nobody has to be there to look at that. If you're going to raise issues of liability, you have to come forward with more than just saying we are going to do an audit now and then because I think there has been some discussion around giving the slaughterhouses some limited inspection abilities and that comes back to if you put regulations in place then you have to assume that somebody is following them. So if you are going to give this limited power to some of the slaughterhouses, I think you could give that to those who are not in the inspection program as well and assume that they are doing it.

I see you have some flexibility but I don't see that you are going to be able to run this program even under the inspection program you have now without inspectors and that's the situation you have. You don't have inspectors and this thing is going to collapse. The issue of liability isn't going to be a problem with those plants that are not inspected, it's going to be a problem with plants that are inspected under the province's program and that's where it's going to come and bite you, not on the other ones because they aren't even in the program. I'm not getting a very clear answer on whether or not you actually intend to put the people in place to make this program function.

MR. BALSER: I think I was quite clear in saying that the reason we haven't moved forward is because we are trying to determine a model that will work and will address the concerns that are being expressed by you . . .

[Page 103]

MR. MACDONELL: Does that model include people in it?

MR. BALSER: Potentially. As I said, we are looking at what will work and you spoke, somewhat facetiously, about the role of the CFIA in terms of ensuring that the procedures and protocols are being followed. I think that model is one that's been accepted nationally as a strategy that works. You spoke also about the liability not falling onto those people who are not part of the program. I hazard to guess that heaven forbid someone should have an illness or a death as a result of eating meat that wasn't properly processed. The fact that they are not in the program would not mitigate their liability through a class action. What we are trying to do is work with the smaller operators, and the larger operators, to figure out what is a reasonable model to put in place.

Better to take your time on the front end and do it right when you make the announcement and move forward than to have something that doesn't work and doesn't deal with the problem. So are we looking at how we can do this? Yes we are. Do we have the answer today? No. I recognize that you're bringing these concerns forward because undoubtedly you have a number of larger and smaller operators who are in a state of flux because the province hasn't come forward. This is a significant challenge and has potential implications that are far-reaching.

[3:45 p.m.]

MR. MACDONELL: Right, okay. I'm going to try to make this my last word on this. Even if you take the non-inspected plants and push them aside, presently in this province, under your inspection program, you don't have the people to run the program. That's the point I'm trying to make. So along with trying to make a model that somehow encompasses those smaller plants that are non-inspected, I think, first of all, you better get your house in order around the inspection program that exists now because it's falling apart. That's what I would like to see you address. Now, how you're going to come up with a model of inspection, unless you're going to have robots go in and do that, I don't know, but this is an issue that's a problem as of now and as of months ago. I think there must be enough information among the people who do this in your department to be able to tell you, look, you've got to do A, B, C or D or this is going to fall apart. This shouldn't be a revelation to you. There must have been some discussion already in your department because I know people have been talking to the industry on it. So is this the first time that you have heard it?

MR. BALSER: Not at all, no, this has been a significant issue and obviously because it's complex, it takes a great deal of time and analysis and we're back around to where we started at one point in talking about what's the magic number of enough inspectors. We're simply saying that we have inspectors. Is that the right amount of inspectors to be available to adequately supply the program that ultimately will come out of this process? The answer is we're not sure at this juncture and until we are sure of what the model will look like and what the requirements will be, the answer is not simply to go out today and bring in

[Page 104]

additional inspectors until we have a program that's going to be part of the solution. So we're working towards that and, at the end of the day, will it involve additional inspectors? It may well, but we don't know that right now.

MR. MACDONELL: Okay, I better move on. I want to raise some issues around the horticultural industry and their ability to get labour, or inability to get the labour they need at picking time. I know that they had raised the issue, and I'm wondering if you're aware, around EI payments or the way the EI system is structured. I think if you hire someone for seven days, you have to have a T4 for that person and I think the same thing has come up around issues of social services, if it's a clawed back dollar for dollar, anybody who goes to work. So I want to raise those issues and ask you if your department has had any discussion with the federal government on employment insurance and the formula that the federal government uses and if they would be willing to look at some changes that would help, well, it probably would help more sectors than the horticulture sector.

MR. BALSER: The answer is, yes, this is an issue that I'm well aware of. It was brought to my attention by the horticultural industry at their annual dinner at the Old Orchard Inn in New Minas. Actually they brought it forward, talking about this having been a challenge. The quick answer in terms of the federal government EI is that there's a great deal of reluctance on the part of the federal government to begin discussions about altering the current EI Program to deal with this. At the departmental level I did raise it with my colleagues at Community Services, the Department of Labour, talking about this challenge and how we might work with those who were on social assistance, recognizing that that challenge of clawback dollar for dollar after a certain threshold has been reached is a disincentive to work. Beyond that there are issues of migrant labour, recognizing that there are jurisdictions that have similar experiences, and we're trying to find a solution that will work and can fix the problem, but there's no quick answer.

Just a digression, but I was speaking to someone involved in the raspberry industry and they were indicating that for them, finding labour to harvest the raspberries was not a major challenge, that because of the quality of the product that this individual had available on their farm, people who were focused on harvesting could make a fair level of remuneration. In fact, the same was true in the strawberry industry in recognizing that, you know, there are a number of issues and challenges, but one of the strawberry producers said that a harvester working could make $150 a day picking in a good field, which is a reasonable level of income for that type of work. So we are working to try to find a labour solution. We've talked to industry and there are people in the department who have met with their counterparts in other departments, but in terms of the federal government, there's absolutely no willingness, to be blunt, to deal with that issue although I think it's not unique to Nova Scotia. I haven't talked to my counterparts federally and provincially about this, but it's something that we need to look at.

[Page 105]

MR. MACDONELL: I think Horticulture Nova Scotia has been audited, I don't know if that was by the province, there was HST on it. Would that be by the province or by the federal government?

MR. BALSER: No, it would be by the federal government.

MR. MACDONELL: I think one of the problems they've run into is if they have a program and they get money from the province to run a particular program, that's deemed as income by the federal government. So they're forced into paying HST for something that, it's just flow-through, you know. They apply to the province for it and it goes off to somebody else. Have you had any discussion in this regard on the impact of the money from programs that goes to commodity organizations that would be deemed as income - I mean they collect membership dues and this type of thing which they're willing to say, look, that makes sense, that's the income we need to pay for paper and do the things that we need to do, get out messages but when we apply to the province for money for a program and they grant us, either that or a proposal they will help fund it, that money is deemed to be income to the commodity group and the federal government dings them.

MR. BALSER: Apparently that determination in terms of process was made by the federal government about four years ago and we are responsible for carrying out their wishes under that legislation. To be blunt, at any of the meetings that I have attended, it has not come up as a question or concern from the industry and maybe I just haven't met with the right group to raise it, but we are responsible for carrying out the direction of the federal government when it comes to revenue-related issues. (Interruption)

The deputy indicated that one of the ways in which we have assisted the industry in dealing with the problem is to increase the level of funding to try to assist them with that piece. The amount of monies available are reflective of the portion that would go to the HST.

MR. MACDONELL: But as far as the audit itself, that's the federal government?

MR. BALSER: It's federal.

MR. MACDONELL: Mr. Chairman, how am I doing for time?

MR. CHAIRMAN: You have four minutes remaining.

MR. MACDONELL: I'm going to move on to the Turkey Producers' Marketing Board and maybe going on a wing and a prayer. (Interruptions) I have looked at the Natural Products Marketing Council or Natural Products Act, I guess, and I have two concerns. Actually it came to me through my local co-operatives that they were getting 50 cents a poult for their program when they sell turkeys to the public and people raise them in their

[Page 106]

backyard, or whatever. So the Turkey Producers' Marketing Board had raised that from the previous year of 25 cents to 50 cents. So they wanted to know what the fee was for.

I met with the Turkey Producers' Marketing Board and they indicated that it was for doing inspections and supposedly anybody who doesn't have a quota, you can't have more than 25 birds. So I took them at their word, but one of the problems that I see in the Act, I think, is that it would strike me that the responsibility of the council in making regulations for the board is purely around individuals who have a quota, the commercial turkey industry and it doesn't seem to me that they would have the power to place a levy on those who are not quota holders. So I'm just wondering what your thoughts are on that issue, if you had any. I'll try to find the wording here if I can.

MR. BALSER: Again, we'll look into it. That's not an issue that has been brought to my attention by the industry as such.

MR. MACDONELL: No, I don't expect they would. It was the people who are the vendors who brought it to me. Actually, I wrote the former minister, there should be something there.

The other thing I have a concern about in looking at the turkey production. About 40 per cent of the turkey market in Nova Scotia comes from away, yet this is a supply-managed commodity and I think some of the fears of the turkey marketing board - and I think it's the reason that they're a little worried about who raises turkeys in their backyard - is the part of the market that they're losing. Yet, I see a bigger problem in the turkey, the 40 per cent that comes in from outside the province. I don't really understand on a supply-managed commodity why there's access to this market if they have quota for filling this market, or I'm assuming they do. That would seem to be a problem. I don't see anybody speaking for them in this regard. Do you have any comment on how that works?

MR. BALSER: There are some significant challenges being faced.

MR. CHAIRMAN: The member's time has expired. I will allow the minister to answer the question and we'll go to the next member.

MR. BALSER: Certainly, the turkey sector has had significant challenges of late. The issues you raise about the loss of market share, competition, has caused a great many challenges. I didn't speak directly with people involved in the industry, but one of the growing concerns is as commodity quota becomes available, that that will be purchased outside of the province and will ultimately lead to some significant challenges for those remaining in the industry. There's no simple solution to this challenge. I think it's incredibly important that the association, the turkey producers come together, meet with the department and talk about how we can correct the problems that exist.

[Page 107]

You're right - part of the problem for that industry is there is just not enough market even if they were to capture all of the available market, it would be a challenge for them to make an economic model that works. At least, that's my understanding.

Growing the industry, I believe, will involve being able to secure a market outside of Nova Scotia and perhaps outside of Atlantic Canada and looking to the export opportunities. That's my understanding. As I say, I would encourage the industry to arrange for a meeting with myself and the department to talk about these issues.

MR. MACDONELL: There must be a market here that they are not tapping if 40 per cent of the birds are coming from away.

MR. CHAIRMAN: The time has expired for the member for Hants East at the present time. You have more than enough time to come back and ask more questions of the minister. Time has been requested by the Independent member of the House, Brian Boudreau, for Cape Breton The Lakes. As a member of the House you have the privilege of up to one hour to ask the minister some questions. Your time now begins at 3:58 p.m.

MR. BRIAN BOUDREAU: I just want to recognize that I will not be using all my time, hopefully not, depending on the answers I get, of course.

MR. BALSER: I just wanted to ask, are you going to be asking specifically about Agriculture and Fisheries?

[4:00 p.m.]

MR. BOUDREAU: Agriculture, mostly, I do have some fisheries questions.

MR. BALSER: No, that's fine. In terms of support staff, rather than have . . .

MR. BOUDREAU: Yes, I noticed that you have your agricultural staff.

I know you're a new minister just re-appointed to this department, so I want to congratulate you and I think your staff has the reputation that comes before you, so you're very fortunate to inherit that particular department.

MR. BALSER: I couldn't agree more.

MR. BOUDREAU: In any event, I do represent Cape Breton The Lakes and agriculture represents a $20 million industry in my community, you realize that, do you?

MR. BALSER: I wasn't aware of the dollar value. I knew that there was an industry in Cape Breton and I've talked to some of the people from there, so, yes.

[Page 108]

MR. BOUDREAU: With the collapse of the coal and steel industries, this now is a very viable industry and necessity that we feel is viable in that community. Farmers have issues there that they feel are not being addressed by your department.

One, and I've brought this issue to the House several times, I've discussed it publicly and privately with the previous minister. The farmers in my area have requested several times for an agricultural inspection specialist to be in the community so that they can visit farms and do the proper testing on crops, similar to what is done on the mainland. Mr. Minister, time and time again this request has been denied despite several on the mainland. The farmers that I represent feel separated. They don't feel that they're receiving the same attention from this department as other areas of the province. I guess my question is, what do you plan on doing with this issue?

MR. BALSER: The changes that came about came as a result of the restructuring that occurred two years ago when Agriculture and Fisheries were merged under one department. There was a restructuring that saw the creation of AgraPoint which provides support services to the agricultural industry. I also understand that there's been a reinstatement of a part-time position in the Inverness area which allows for those services to be made available. Obviously not as directly and as often as if you had a full-time staff person available in your community, but that's a reality for a number of areas in this province.

There was a significant restructuring, downsizing that saw centres being created. There's an agricultural representative in southwestern Nova Scotia that supports a fairly large geographic area. Historically, there had been more service available, that's just not the case, but what we've attempted to do through AgraPoint is to put specific skill sets in place so that a farmer requiring expertise, let's say in the area of blueberries, cranberries, carrots, would be able to access that service through AgraPoint. So we do have a shared position that's available to your community and to the Inverness area and we have AgraPoint which will provide those services as well.

MR. BOUDREAU: So does that mean that you're going to fix the problem that they feel they have?

MR. BALSER: As I said, there's not at this point any decision or consideration of reinstating a full-time position in your area. We were able to create a part-time position in Inverness which is shared and we have AgraPoint. That's the way in which the programs and services will be delivered at this point and there's no consideration to changing that.

MR. BOUDREAU: That's fine and I'll pass that message back to the farmers. It will surprise them because they feel that your staff is just as well educated in their situations as in other areas of the province. I don't think they're willing to accept any part-time supervision or specialists or whatever.

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Whatever you're planning on doing down there on a part-time basis is required in the industrial area as well. Inverness is outside my area, it's in close proximity and you're probably right - the same individual could, if he was allotted the amount of time needed and if the position was moved from a part-time to a full-time position, then you may be able to deal with the situation. Mr. Minister, I want to express very strongly that farmers in Cape Breton have lost confidence in your government. I think that's unfortunate and there are many programs that are vital to develop this industry. At least from where I sit, I feel that your department has a responsibility to encourage development and not sort of hold down on it, hold the farmer back and say, hey, we're going to develop according to how we decide. So, how do you feel about losing the confidence of Cape Breton farmers?

MR. BALSER: The individual I spoke of in my earlier answer is available roughly two days a week, as needed, to your community. So, there is a service available. In terms of the confidence, I think what the agriculture community is asking for now and have been asking for for some time is the expertise to assist them with the challenges they face. Whether it's nutrient management or marketing.

A growing area in terms of the Department of Agriculture and Fisheries is helping producers access global markets. If you look at some of the emerging success stories in the agricultural sector, they are companies that have been able to take a particular commodity group and create a vertically integrated corporate structure. The case in point would be Sarsfield that has become a world global competitor in the frozen pie market or Avon Foods that are doing the same thing with peas and beans, or to go to another jurisdiction, the Irving group and Cavendish Farms have done it with potatoes successfully. McCain's have done it successfully with potatoes in New Brunswick. John Bragg and Oxford Frozen Foods have done it in two commodity groups - blueberries and carrots.

So that's the kind of model we're looking to and I think the people involved in the agricultural sector are looking to that experience and looking to capture commodity groups and models that work effectively. So I would suggest that the industry has not lost confidence. The deputy met just very recently with the Nova Scotia Federation of Agriculture to discuss the budget for Agriculture and Fisheries and I believe they were very happy to think that we were able to maintain funding, that we were able to allocate additional monies for the business risk-management side of the Agriculture Policy Framework.

We've gone through significant restructuring. There's no question that the Department of Agriculture and Fisheries and the programs and services provided by that body are different from what was available under the old Department of Agriculture, but if you look across Canada, that model is one that seems to be gaining favour. A number of jurisdictions have moved Agriculture and Fisheries together. A number of jurisdictions have created very strong marketing components within the department. Brand Nova Scotia is a clear example of how we can help the industry promote their products. So there's a tremendous opportunity in the agricultural sector to capture a market share in the U.S., in

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Japan and China, and the interesting opportunity is that we have a number of companies in the fisheries side that are doing that and they can bring their knowledge base and their contacts to the agricultural side.

So I guess my view is that we haven't destroyed the confidence of the agriculture sector, that we have programs in place that they understand and know about and appreciate and we will work with them. That's the commitment that we've made to the industry and will continue to make.

MR. BOUDREAU: Thank you for your answer, Mr. Minister, but I just want to acknowledge that I haven't spoken to those farmers and if you want to pass the names on, I would appreciate an opportunity to discuss the situation with them, perhaps just so I can consult with the individual farmers who are telling me different stories altogether than what you just stated. Just one last comment in regard to that, Mr. Minister. Cape Breton farmers are not only looking for support for themselves, but food inspection is very important to the consumer in this province. So I will just leave it at that. Sometimes even the consumer has to be protected against farmers, sir, because they might use too much of whatever - you know, you guys are the agricultural specialists here, not me. So this would not only be a benefit to the individual farmer or the farming community and it would also mean protection for the consumer who purchased these products. Again, some local grocery chains are changing the delivery, I guess the way they accept delivery from local farmers down there and the packaging methods and all these issues are affecting not only the operations, but they're driving up the prices for the consumer. Has your department been consulted in regard to any - is this something that you regard as a private sector issue or hands-off for agriculture, or have you done any consulting in regard to this issue?

MR. BALSER: There are two or three pieces to that question. In terms of food safety, you're absolutely correct. The consumers have much higher expectations in terms of food quality and accountability and internal controls around the safety of that food product and the CFIA, for example, which is a federal initiative, is being implemented, not just in Nova Scotia but across Canada, as a means to ensure that. Beyond the challenges that it creates, it provides a tremendous opportunity because we will be able to, in Nova Scotia, differentiate our food products because of the kinds of securities we have in place. As far as the way in which the retailer deals with that, costs are passed on. That's a fact of life. In terms of the cost of food to consumers in Nova Scotia and Canada, while it would seem that food is expensive, and it is, by comparison to other jurisdictions like some of the European countries, the United States for example, our food is relatively inexpensive when you consider the overall budget implications for the average consumer in the Province of Nova Scotia.

We recognize that the cost of food is a large burden, but when you compare that to other jurisdictions in terms of their budget allocations, it's still a relatively inexpensive piece comparatively speaking. Again the reality is that the overall retail sector for food has changed

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dramatically. There are a very limited number of large retail chains. I think basically 90 per cent-plus of the food market retail outlets are controlled by two major companies and so they will dictate a lot of what happens in terms of packaging, pricing. It's a challenge and an issue and there's no simple solution. So are we working with the industry to deal with that? Yes, we are. It comes back to how do you take those kinds of requirements and then create a value-added opportunity.

On the beef side, for example, there's a pilot project to brand-differentiate high-quality Atlantic Canadian beef with a view that there's a niche market opportunity. So we're encouraging industry to work with us and with the retail chains to try to capture those opportunities and it comes back to the kinds of services. One of your earlier questions was about what does the department do to assist. That's one of the things we can do. We can help the producers create niche opportunities and differentiate their product. Nova Scotia greenhouse-grown tomatoes, that sector has grown by 26 per cent in the last few years and, again, it creates, if you work closely, you can capture even more of that market share.

MR. BOUDREAU: In regard to private industry, recently the Cape Breton District Health Authority put out a tender for the supply of milk products to the regional facilities and various hospital facilities within the authority's jurisdictional district. Was your department monitoring this situation?

MR. BALSER: I'm not aware of that particular issue, but certainly in terms of procurement, the whole Brand Nova Scotia, Taste of Nova Scotia initiative is designed to assist Nova Scotia companies that are involved in the food industry to capture market opportunities. There are some real challenges there. Health boards, district health authorities, school boards, any of these institutions, private or publicly funded, are always trying to get best value for their dollar. So when you go to an open tender, price is part of the equation, so is quality of food product. Are companies or health boards, school boards, et cetera, prepared to pay a premium to buy Nova Scotia? One would hope that they would recognize the value of supporting their local industry, but at the end of the day, if you have scarce dollars and you're trying to stretch them as far as you can, you have to make decisions based on, as I say, costs and value equated together.

MR. BOUDREAU: And that's fair, Mr. Minister, I don't disagree with that analysis, but in this particular case the Cape Breton dairymen down there who bottle the milk lost the contract. There are 50 to 75 people who work at that operation. Local farmers are a little nervous about, you know, if their product is going to remain in demand.

MR. BALSER: There's an independent dairy in Cape Breton outside of - and I'm just asking the question, I didn't know, I was under the impression that there is a Baxter, there's Farmers and there's Cook's. Is there another dairy that operates in Cape Breton?

MR. BOUDREAU: There's one in the Sydport Industrial Park, yes.

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MR. BALSER: What's it called?

MR. BOUDREAU: Cape Breton Dairymen, I believe, is the name of it, I will double-check the name of it and I will let you know, or your deputy minister know, the exact name itself. And I have been approached by the delivery people who work at this plant and they are concerned about their jobs. I have also discussed the situation with many of the farmers who are afraid that now their product will not be in demand, because local demand won't be there, and this will obviously impact the farming businesses in Cape Breton. I've just learned here today that your department is not even following any of this. Do you have a plan? When you get an area where there's some difficulty, maybe over a couple of years because of a situation like this, is there a backup plan to help those dairy farmers remain in business?

[4:15 p.m.]

MR. BALSER: Again, the issue of dairy production is supply-side managed. I guess if we're speaking specifically about a lost contract, if you look at simply economies of scale, Farmers Dairy is a large dairy operation and can cover their fixed costs because of the size and scope of their operation and may be able to pass on those savings to the consumer through their product; the same is true for Scotsburn. If you look at Cook's Dairy in southwestern Nova Scotia, in Yarmouth County, they have captured a very small niche opportunity and they don't look to expand beyond a certain level at this juncture. So if you have an operation in Cape Breton, you're telling me, that has lost a contract to supply the local DHA with milk product, it may be a function in part of price, it may be a function of comfort around quality of product. I'm not casting aspersions on this company, I'm just saying that unless you have the total information package available to analyze why the contract was awarded to someone else, it's difficult to just jump to any conclusion.

Certainly from the side of production we're always trying to figure out how we encourage new entrants into the dairy industry when, as I say, it's a supply-managed commodity and there's relatively limited opportunity. It's a real challenge, and I don't know where the industry will be going. Are people in our department working closely with the dairy federation? The answer would be yes.

MR. BOUDREAU: But how do you put this all together - what you just said - if you're not even aware that it's taking place, if you're not monitoring the farming industry in the community or you're not consulting them? It seems like there's a breakdown here. You're not even aware that this issue is alive. It is an issue in Cape Breton. I can excuse you, Mr. Minister, you are a newer minister for that particular department and it does take time for you to be brought up to speed, to educate yourself in your department. I can appreciate that.

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I'm just going to close out with a comment because I don't want to ask any more questions here; I can see I'm not going to get any answers anyway. What I'm going to suggest, Mr. Minister, is that - perhaps I won't go there - I want to again acknowledge what I believe is the ability of your staff, because every farmer that I've ever discussed a problem or good news with has always indicated very clearly that they have a lot of respect for your staff. This is not a staffing issue; they feel it's a political issue. I would encourage the minister, perhaps maybe to even visit there, visit the farmers down there and maybe earn that trust back and that confidence, that move forward that you're talking about here, perhaps you should put those plans to work so that they can benefit people all over this province. Thank you.

Mr. Chairman, at this time, I would like to pass my time over to the Liberal caucus.

MR. CHAIRMAN: You're finished with your questions to the minister? Will you have any more questions for this minister on a future date? This might be his last night here.

MR. BOUDREAU: I don't anticipate any to the Agriculture Minister, no.

MR. CHAIRMAN: The time, for the Liberal caucus, is 4:20 p.m.

The honourable member for Richmond.

MR. BALSER: If I could, Mr. Chairman. Just in terms of your line of questioning, are you going to focus on Agriculture and Fisheries as opposed to some of the other responsibilities?

MR. MICHEL SAMSON: No, Fisheries.

Mr. Minister, as you are well aware, in the last few years we have had some significant problems in dealing with our neighbouring Province of Newfoundland when it comes to the issue of crab import/export. As I'm sure you are well aware, crab season is upon us very shortly. I don't think DFO has set the exact date yet, but I'm curious if you could advise where the province currently stands in its negotiations with the Province of Newfoundland on the issue of allowing our buyers to go into Newfoundland and allowing raw product to leave Newfoundland?

MR. BALSER: As the member is aware, last year there were significant challenges. The minister of the day put together a committee to try to address the problems related to unprocessed crab leaving the province. There was a great deal of work done. Specifically, our challenges are directly related to two jurisdictions, Newfoundland and Quebec, which have invoked what we feel to be an unfair trade practice in that they do not allow raw material to leave their provinces. You're probably aware that, as the minister, I drafted a letter directed to the buyers and processors related to this issue, indicating that Nova Scotia

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is, by word and practice, a free trader, that we viewed the position taken by Newfoundland and Quebec, vis-à-vis raw crab product, being restrictive in terms of export, and at the same time acquiring raw product in New Scotia to be unfair.

We indicated that the province would, if this action was not remedied, be prepared to look at invoking sanctions related to their licences. We had a similar discussion with New Brunswick. To put things in context, New Brunswick I believe is the largest competitor in terms of our acquiring crab. I think 80 per cent of the crab which left the province last year did in fact go to New Brunswick as opposed to Newfoundland and Quebec - that number is from memory and I will verify it.

I met with my provincial counterpart in New Brunswick, discussed some of the issues they had vis-à-vis Nova Scotia, we had vis-à-vis them. We have a mutual agreement that New Brunswick will deal with the problems outstanding and they will allow Nova Scotian companies to purchase crab in New Brunswick, and we will extend the same privilege to them, because that's what free traders in fact do.

MR. SAMSON: I can tell you from our situation locally, in Richmond County, it's not uncommon that there is some crab sent to New Brunswick for processing during their peak seasons when it is a slow time locally. On the flip side, when New Brunswick starts to slow down they will sometimes send crab to be processed down at our facilities in Cape Breton, so that seems to be working in that sense. I am surprised at your figure of 80 per cent of the landings going to New Brunswick. I know there's a lot going to Newfoundland - 80 per cent seems to be a big figure going to New Brunswick.

MR. BALSER: That's my recollection. As I said, that number was from memory and that's 80 per cent, not of the total landings but of the landings which are being acquired by other jurisdictions, and the deputy will verify that number.

MR. SAMSON: I don't want to get too technical on the language, but you're saying "acquired" by other jurisdictions. What we have - and I'm not sure if you're distinguishing what the situation is - is buyers from Nova Scotia who are sending unprocessed crab to Newfoundland. I'm wondering if you're adding that into that figure of your 80 per cent as to where the unprocessed crab is leaving the province, or if you're not adding that in, because the issue becomes again that you can send crab to Newfoundland to get processed but you can't go get crab in Newfoundland unprocessed and bring it to Nova Scotia for processing - that is one of your main issues there. I'm curious, with that 80 per cent figure, are you taking into account what is purchased here from Nova Scotia buyers and sent to Newfoundland for processing?

MR. BALSER: The number that I've reflected is the number that's indicative of the dollar value of crab which is going out of the province unprocessed. The breakdown to be exact, as the industry reports, indicates 66 per cent of the crab landed in Nova Scotia was

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processed here in 2002 - my number was overstated - and 24 per cent was exported to New Brunswick, 9 per cent to Newfoundland, and 1 per cent to Quebec. So the 80 per cent was an error and, as I said, I was doing that number from memory.

MR. SAMSON: Could I get a copy of that actual breakdown?

MR. BALSER: We can give you that information, yes.

MR. SAMSON: I appreciate the difficult situation you find yourself in, Mr. Minister, when it comes to Newfoundland and the fact that they have closed their border, but I guess you've had the discussions, you've had your working group, the crab season is upon us again, what can you tell us, today, for the communities, whether it be Isle Madame, whether it be the processing facility in Mulgrave, whether it be Canso, whether it be Louisbourg, or some of the other facilities in eastern Nova Scotia, what assurances can you give them today that when crab season starts, the issue with Newfoundland is going to be dealt with?

MR. BALSER: Interestingly enough, I had a conference call with the processors just last week and, again, we discussed the content of the letter that I had written. They were very comfortable with the direction the province had taken. At this juncture, crab has not been loaded on trucks to be moved out of the province. We're prepared to look at the options available to the province when that occurs. We've been clear and direct with Newfoundland and with Quebec. We've also been clear and direct with New Brunswick and resolved our issues there. So are we poised at this juncture to invoke actions that are not required? No, but are we aware of our options that are available, and are we prepared to pursue those if the need be? Yes. That was clearly what had happened last year after the minister of the day met with particularly the workers and with the processors.

There are a number of sides to this issue. You have the plant workers who are concerned about their ability to gain employment to get EI; you have processors who are anxious to have access to raw materials; and you have harvesters who are concerned about getting the best price for their product. At the end of the day I think it's an open-market dynamic that will dictate what will be the best price, and preliminary discussions with harvesters, they're well aware of the content of the letter and we're confident that the market will sort itself out. I think at this early stage every indication is that the price will be a competitive price. We've had some preliminary discussions and what we will do is go down the road we need to go down when we need to go down it.

MR. SAMSON: So is it safe to say, based on that, if unprocessed crab starts to be shipped out to Newfoundland, you, as minister, are going to take action to put an end to that?

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MR. BALSER: Clearly that was the direction indicated in the letter that was sent forward to the processors and buyers in anticipation of the problem that we had last year. We indicated that the options available to the province are clear - we can invoke sanctions based on the licence process and we can take those actions when the need arises.

MR. SAMSON: First, if I could, I would like to request a copy of that letter that was sent out to the buyers and processors, but I guess, with all due respect, Mr. Minister, your predecessor had those same options available to him last year, and he chose not to invoke any of those options last year. You're presented with the same options this year and we're pleased to see you're aware of what options are available to you, but those options are of no use if you're not going to invoke them. So I ask you again, if the situation does arise, rather than telling us you know what your options are, will you take action to put an end to this unfair practice by these provinces?

[4:30 p.m.]

MR. BALSER: If you look at my record with regard to trade practices as the Minister of Economic Development, I assisted Farmers Dairy in their challenge in accessing P.E.I., and we've done a similar thing with regard to New Brunswick in terms of moving forward. Here we have an issue related to interprovincial trade. There are vehicles available. Obviously, the best solution at the end of the day is to have a negotiated agreement and settlement which we were able to get with New Brunswick.

So, are we abandoning the hope that we can come to some negotiated settlement with Newfoundland and Quebec? No, but the odds are very strong that that will not be the case, and so at this juncture what I'm telling you is that my department is well aware of the options and we will obviously look at what's the appropriate course of action once events begin to unfold and dictate where we're headed. At this juncture it's all speculation but, as I said, the content of the letter clearly indicates that we're well aware of our abilities under the trade agreements between provinces. It's something that has been discussed repeatedly and we're prepared to pursue the course of action necessary and dictated by events as they unfold.

MR. SAMSON: I'm curious if your department has kept any sort of log or record in regard to those who are buying crab, as to what's being bought by each individual licensed buyer, what's staying here in this province, and what was sent out by each individual buyer of crab - if you've kept any sort of record of that to be able to give us an idea whether the gentleman buying on the wharf in Arichat, if his product mainly stayed in Nova Scotia, whether the fellow buying in Louisbourg, his product all went to New Brunswick or Newfoundland - do you have any breakdown of that?

MR. BALSER: There's a fairly extensive dockside monitoring program and the requirements are that there be documentation to ensure continuity of tracking of the product, if you will. Now, in terms of being able to pull together a particular request, if you want to

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know how much fishermen X put through a particular plant, it would take some time to do that and I don't know just how much time, energy, and effort would be devoted to that. I think probably the simple answer would be if you have a specific question we could take it under advisement and deal with it off-line, if you will, because there are thousands of pounds of crab processed by the various plants and operators and landed by the various harvesters. So I think to belabour that point here would probably not be the most effective use of time.

MR. SAMSON: No, and I'm not suggesting where each pound landed went from the harvesters' perspective, but one would think you only have so many licensed buyers in the Province of Nova Scotia and I guess my question was did you have a system of tracking for whatever pounds that were bought from those actual buyers and where that product ended up? Did it stay here to be processed in Nova Scotia? Did it go to New Brunswick? Did it go to Newfoundland or anywhere else? I guess your statement is that that hasn't been broken down to say whether buyer X, most of his product that he bought was processed in Cape Breton through those plants, or buyer W sent everything he had to Newfoundland?

MR. BALSER: One of your earlier questions was the percentage of crab and we were able to get that information, and I corrected my earlier submission that it was 80 per cent - it was actually 60 per cent. So do we have that level of detail? The answer is yes. Part of the whole fisheries management program is to ensure that there is very strict monitoring and record-keeping. So the answer to your question is yes, the information is available.

MR. SAMSON: I don't know if you understand exactly what I'm saying. I know of some buyers that pretty much 90 per cent of their product was processed in Cape Breton; I know of another buyer that 100 per cent of the product he purchased was sent out of province and not one pound stayed within the Province of Nova Scotia. So in my eyes, I think it would be important to know who that buyer is who is sending everything out of the province compared to the one who 90 per cent of his purchases remained here. I guess my question was, do you have a means of identifying that. I think the answer is you haven't broken it down specifically . . .

MR. BALSER: No, the answer is yes. I've said that three times, the answer to your question is yes, we do have that level of information available, but if you want to talk about a specific buyer, processor, harvester, that rather than belabour it here in this forum, that the appropriate strategy, I think, would be to raise the question off-line and we can dig through the information to find specifically - we don't have it here in this room available at our fingertips, but within the accounting procedure available to the department in terms of monitoring, that information is available.

MR. SAMSON: So that could be made available to us if requested?

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MR. BALSER: Not necessarily down to the level of detail of individuals, but we can do it from a plant perspective I would tend to think. We will see what's available and deal with it off-line.

MR. SAMSON: Have there been any changes made to the licensing process for buyers of crab in the last number of years in light of some of the challenges that have been faced by the industry?

MR. BALSER: It's safe to say that there have been a number of conditions put in place around licence approvals, dealing with some of the very things that you've been talking about, trying to ensure a close monitoring of harvesting, processing, and we continue to have ongoing discussions. There were more inspectors on the ground, involved in this industry last year than the year before, and I suspect that the level of scrutiny will be every bit as rigorous in the coming season, given the heightened sensitivities around the issues you've already been alluding to.

MR. SAMSON: One of the main complaints and concerns of the industry is that you've had a number of buyers leaving the province, from the Province of Newfoundland, who have come and purchased operations here in Nova Scotia, allowing them direct access to buying product and then trucking it back to Newfoundland. That has been one of the main concerns that we've heard. I'm curious, is there anything that has changed in the last few years to try to get stricter control over that, or can any buyer in Newfoundland come over here, purchase an operation and just have the licence transferred over to them or have you put any sort of checks and balances into that?

MR. BALSER: New buyers in the Province of Nova Scotia are required to have a plant or a facility so that they can process crab in the province.

MR. SAMSON: They're required to have a plant, but there's nothing that requires them to put the product through that plant. I can buy a plant that has been closed for a number of years, as long as their buying licence is still good, I have a plant, I could put the product through here, but I'm shipping it back to Newfoundland to the plant I have over there because I can make a bigger buck running it through there than I can at this facility, so there is nothing that has changed in that sense that would require them to process it here?

MR. BALSER: That's correct.

MR. SAMSON: I can only hope that the actions that you have taken with the consultation will address this issue. It is a shame to see a raw product that could be creating employment here in this province leaving and going to other provinces, whereas our own buyers here in this province can't go to Newfoundland and pick up raw product there and bring it back here for processing. I will certainly be watching to see what actions will be taken on that front.

[Page 119]

MR. BALSER: I guess if I could respond to that, it comes back to that fundamental question or discussion we had about Nova Scotia's position with regard to trade and practices. If you look at the performance of Newfoundland's economy the last decade, decade and a half, there's no question in my mind's eye that Nova Scotia's economy has outperformed Newfoundland's economy significantly - in fact Nova Scotia's economy has outperformed the other Atlantic jurisdictions as well - I think some of the trade policies that Newfoundland invoked has worked to their detriment, not to their advantage, and we will leave it at that.

MR. SAMSON: I appreciate the minister's comments, but I will leave it up to him to explain that to the Minister of Fisheries in Newfoundland. They don't appear to be too interested in hearing that kind of logic.

MR. BALSER: Unfortunately.

MR. SAMSON: Yes, very much, especially for the people of Newfoundland.

The Mayor of Canso was recently in the local paper indicating that you had made some form of commitment to write to the Minister of Fisheries and Oceans requesting that the Canso Trawlermen's Co-op be allocated a shrimp quota. Could you advise whether that is accurate or not, and whether you have and, if so, could you provide us with a copy of that letter?

MR. BALSER: The answer to both is yes. I did make that commitment and undertaking, that the experimental fishery allocation for shrimp given to the Canso trawlerfishermen's association has worked well but not as well as it could work if that allocation was made permanent, and the view is that the part of the Barry Group strategy for the Canso plant was to process shrimp, and we drafted a letter to the minister in process, I believe I signed it off but I know the content, and it would be to raise that as a suggestion, as a strategy to help assist with the redevelopment of Canso's economy.

There's no question that the fish plant in Canso is, in terms of its ability to process shrimp, certainly one of the ultramodern facilities. Mr. Barry, I met with him not that long ago to talk about his views for the future of that facility. It has some challenges, it's a very large facility, and it has significant capital costs associated with operations. The freezing facility is very large compared to the amount of product that has been available. The Barry Group has recently entered into a memorandum of understanding with some of the Aboriginal communities around their quota allocations and he's trying to find product to put into that plant to allow it to operate.

The mayor certainly was supportive of that initiative and recognized that there's no simple, instant solution to the problem, but I do believe there's a compelling argument to be made with the position taken by the Canso trawlerfishermen's association vis-à-vis shrimp.

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MR. SAMSON: Did you make representations to the Department of Fisheries and Oceans on behalf of any of the other organizations in regard to shrimp quota?

MR. BALSER: I've had one formal meeting with the federal minister with regard to a number of issues. That was the forum that was held here in Halifax where a number of concerns around the fishery were raised. Shrimp was raised as an item - not exclusive to the discussion of the agenda, but there was discussion about shrimp - there was discussion about the need to have a change in the timing of the crab fishery licensing, and there was an extensive discussion about the cod fishery - as well, so were shrimp a topic of discussion in passing, in the same way that there were a number of other items.

MR. SAMSON: The reason I raise this, Mr. Minister, is I certainly appreciate the efforts that you are undertaking on behalf of Canso, but I think it's important you realize that not only the Canso Trawlermens Co-op lost their shrimp quota, also the Richmond fishermen's co-op, that had a temporary shrimp quota, lost their quota with the recent cutbacks in the quota announced by DFO. I guess I can't encourage you enough that, if you are lobbying on behalf of one group, I would hope that as minister for the province you would lobby on behalf of the other groups involved in this fishery that have been as adversely impacted as Canso has been on this issue.

I appreciate your comments that you've made in regard to Mr. Barry and his attempts to get Native quota, and while it sounds great for Canso, I would remind you that the quota that he has been able to secure for Canso is quota that used to be processed at the Petit-de-Gras facility in Richmond County, so you're basically robbing Peter to pay Paul in this case. I don't think that's a long-term solution to the crisis in Canso, or some of the challenges we're being faced with in Richmond County, when Mr. Barry is making great fanfare of taking quota from our facility and sending it off to the facility in Canso. I certainly urge the minister to use caution in what's happening in that case.

On that same subject - and I'm sure the deputy may have a recollection of this - around 1998-99, when the Canso Trawlermens Co-op was given a loan through the Fisheries Loan Board for the purchase of the Cape Ryan, right around the same time money was given to Mr. Bill Barry as part of the Barry Group for the installation of a shrimp processing line at the facility in Canso. I'm wondering if the deputy recalls, or if he has within his means of quickly getting the information, how much money was given to Mr. Barry at that time and what conditions came with that funding, as to how much processing was required to take place at that facility, if any?

MR. BALSER: It's the deputy's recollection that there were no direct monies, there was a writedown of the loan, that the Barry Group arranged for financing in the neighbourhood of $4 million - again, this is from recollection, so we will verify - and that it was contingent on certain criteria being met. So there was a direct infusion, it is my

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understanding, of money from the Department of Economic Development, that it was a loan restructure that was tied to employment creation or sustaining employment opportunities.

MR. SAMSON: So there were no actual processing requirements or targets set as part of that deal? Because that's not my recollection, and I will give you my recollection first and then you can tell me if I'm right or wrong. My recollection was certain monies were either given or forgiven in order for the shrimp line to be put in, with the understanding that Mr. Barry would use the shrimp quota that he had to put through the Canso facility. That happened one year, and ever since then, for the most part, the quota that Mr. Berry has held for shrimp has been sent to other facilities and has been used as a bartering process to access other quota. So the quota that initially we thought was going to go to Canso, that the government invested money to put a shrimp line in Canso, other than for one or two years, has not actually happened - maybe the deputy can tell me whether my recollection is correct or wrong in that matter.

[4:45 p.m.]

MR. BALSER: It's the deputy's recollection that it was linked to employment targets, that it wasn't related specifically to any one species, that it was not a direct infusion of money - it was tied to a loan program, to be written down as a result of employment targets being met.

MR. SAMSON: Can you confirm whether those employment targets were met?

MR BALSER: As I said, that level of detail we'll have to follow up.

MR. SAMSON: Okay, I would appreciate it if you could provide that information, because it's been a great source of frustration in that regard. I do appreciate Mr. Barry's compelling arguments to get more quota for Canso. My fear is that the quota that is hopefully going to be achieved, that has been achieved in the past for Canso, isn't being landed there, isn't being processed there but is being sent to other facilities. My fear is that your lobbying on his behalf and the province's lobbying on his behalf is not going to be a long-term solution for Canso, because the fact is past experience shows us that the quota wasn't going there in the first place.

I appreciate the overhead costs that he has at that facility, it's a very large facility. It's got a lot of overhead to do any minimal amount of processing and, while I appreciate the mayor's enthusiasm at the Native quota, I'm afraid that if he believes he's going to get four to six months' work out of the little bit of quota that has been achieved, it's just not reality. It's unfortunate because I sympathize with what they've gone through in Canso, we've seen it in our own community - the devastation that can be caused - but I would caution the minister that if there's going to be lobbying on behalf of Mr. Barry, that there be some sort of written commitment from him that that quota you're going to lobby on his behalf, to get

[Page 122]

for Canso, actually stays in Canso and gets processed there and creates the employment for the people in that community, which, as I said, it doesn't appear to have taken place in the last few years.

One of the last issues I wanted to touch on - two issues I guess. First of all the shrimp issue with regard to the inshore trap fishery. I've spoken to your predecessor numerous times on this, each time we went to budget. I can't encourage you enough to work with DFO to strengthen this fishery. I believe it is an opportunity to diversify our dependence on certain species here in Nova Scotia. It would create more long-term employment rather than dependence on EI and would be of benefit to communities throughout the province, especially in and around the Cape Breton area, and even the Canso area where the trap fishery has had some modest success.

I notice in your budget documents that there's some reference to getting more enforcement officers. I'm curious as to what role your department played - and your department, not federal departments, Revenue Canada or any of the others - what role has your department been playing, from the buyers' perspective, on the issue of both illegal lobster sales and cash sales of lobster in the Province of Nova Scotia?

MR. BALSER: Certainly in terms of inspectors, we've brought forward additional inspectors, but I don't think you can differentiate, the problem is of such magnitude and concern and the way in which we structured this is a model that other jurisdictions are looking at in terms of having federal enforcement officers empowered to deal with provincial regulations. What we've actually done is put something in the neighbourhood of 120 people on the ground to deal with this problem. It is a challenge and it means lost revenue and it means that community groups or residents who have knowledge of an illegal fishery need to take it upon themselves to come forward and lodge complaints and be willing to follow through. I've been to a number of communities where they've talked specifically about the illegal landing of not just lobster, but crab. Last summer when that issue was brought forward, we were able to mount a level of surveillance that dissuaded that particular operator from continuing that activity.

It's not fair to the processor, the intent or the outcome, to say what is the province doing. It's everyone's problem and it's the responsibility of all of us to deal with it. We have hired additional enforcement officers and we've been able to create a model in terms of accessing the expertise and manpower resources available from our federal partners to put 120 people on the ground dealing with this, and I think that's something that we should all take some satisfaction in.

MR. SAMSON: I certainly appreciate your comments, but I'm sure you will recall very well when you sat in Opposition your colleague, the member for Argyle, felt that it was the province's responsibility to solve this problem and he didn't accept the efforts that had been undertaken with DFO and with Revenue Canada and that the province needed to play

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a bigger role. In fact, I believe he even suggested 40 additional officers be hired from the province because it wasn't enough to rely on the feds, it wasn't enough to rely on DFO, it wasn't enough to rely on Revenue Canada, that it was the province that was to take this lead - it was the province's problem, and it was up to them to solve the problem. I must say I do find it ironic to hear you basically justifying the system that was being put in place at the time that your colleague was actually criticizing and saying that the province wasn't doing enough by bringing this plan of bringing Revenue Canada and the Department of Fisheries and Oceans together as partners in dealing with this issue.

MR. BALSER: I guess that taking a leadership role involves creating a model that's an example to other jurisdictions in terms of putting together common resources to deal with the problem. I think we should take some satisfaction and pride in that. It's a model that other jurisdictions have looked to and asked, how did you do that and how can we replicate it? So when you have small provinces that have limited resources, whether it's Nova Scotia, Newfoundland, P.E.I. - or the Province of British Columbia is facing similar challenges - I think what we've done here is something we should take some satisfaction in.

In the best of all possible worlds it would be nice to have the monies available for additional inspectors. I know how many times in the House you've raised the issue of finding money to meet any myriad of programs, so what we're doing is working within our departmental budget and being resourceful and creative in finding solutions, and I think that's something the department should take pleasure in.

MR. SAMSON: Very much. I certainly would take my opportunity to congratulate Keith Colwell who started the process and the staff at that time who started this process that your government did get to inherit.

AN HON. MEMBER: Well, you'll know in another month's time.

MR. BALSER: It's unfortunate you'd politicize that issue because it is a challenge for all of us - $20 million in lost revenue is something that affects your riding, my riding and every Nova Scotian, so I think if we can find a solution, whether it's red team, blue team or orange team, I think the answer is to work together.

MR. SAMSON: Without a doubt, sir. I guess it's good to hear that the process that was being put in place at the time that your colleague was saying was insufficient is now being used as a model for saying what a great job we're doing. But I know my colleague here has a few questions and I certainly appreciate your answers. I will wait for that information I asked for and will look forward to seeing what happens during crab season.

MR. CHAIRMAN: The remaining time left for the Liberal caucus is 27 minutes. The time is now 4:53 p.m.

[Page 124]

The honourable member for Cape Breton West.

MR. RUSSELL MACKINNON: My questions are with regard to Sydney Steel.

MR. BALSER: Is it safe to assume that Agriculture and Fisheries is done?

MR. MACKINNON: I have one question on Agriculture, but I can just . . .

MR. BALSER: Can we deal with it off-line?

MR. MACKINNON: Sure.

MR. BALSER: If you'll bear with us for a moment or two, the staff person responsible for Sydney Steel stepped out and we're going to round him up - or if you like we can start and see where it goes, and if I need to take it under advisement, I will.

MR. MACKINNON: With regard to Sydney Steel, I notice that the government, under Crown Corporations, has budgeted $31.7 million for the upcoming fiscal year. Going through the estimates here - and I'm looking for the minister to guide me on this - when the Conservative Government took over in the Fall of 1999 they put the full cost of Sydney Steel on the books, and that continued on an annual basis until this year. Now the cost is just the cost of what the government will expend for the current fiscal year, like the upcoming fiscal year as they did 2002-03 and looking ahead.

It would appear to me that there was a change of accounting here. Initially the debt was somewhere in the vicinity of $324 million. That's what the liability was. Now we're not looking at that; that doesn't seem to be there anywhere. All of a sudden it's converted from that liability, which kept the province in a deficit position, to the government's position to be able to say it has an operating surplus at the end of the year on the global budget. Would the minister be kind enough to explain why the change of accounting?

MR. BALSER: There are a couple of pieces to that, if you will. When Sysco was operating as a Crown Corporation, they had a fiscal year-end that was different from the province's. Sysco, for all intents and purposes now is in receivership and being wound up, so there was a decision made to bring the fiscal year-end for Sysco in line with the province's. To some degree you're comparing a 12-month budget process in the year preceding to what has now become a 15-month process. The other piece of it was that when we booked the potential liabilities related to the remediation of Sysco - the $300-some million that you spoke of - the intention was to draw that into the revenue side as we move forward that process. I believe you'll see in that line item for 2003-04, there's a . . .

MR. MACKINNON: I need some clarification on this. You're saying that you converted the charge as a debit into a revenue stream?

[Page 125]

MR. BALSER: No, what I'm saying is that there are two pieces to it. Initially, as I said, the year-end for Sysco when it was a Crown Corporation operating was different from the province's year-end, so we've taken care of that by realigning. What I also said was that in terms of the booking of the monies for the remediation and so on, the intention was to draw that into the operating side of Sysco as we move forward with remediation.

MR. MACKINNON: As a revenue?

MR. BALSER: Well, as a revenue stream for dealing with those problems. We're now in the process of decommissioning. We've had the construction of the feeder road and there are other initiatives that are moving forward, so now there's a requirement to bring those monies into the operation budget of Sysco.

MR. MACKINNON: As a revenue.

MR. BALSER: As a revenue, yes.

MR. MACKINNON: Okay. So, ergo, really what you're doing is you're artificially eliminating your deficit provincially by moving the Sysco dollars from the charge, from the debit side, over to the revenue stream - that's essentially what you've just said.

MR. BALSER: Not at all. What we did initially - and we were clear in our discussions around that - was that we were booking the liabilities related to the remediation and decommission of Sysco, and as we move forward through this process those monies would be drawn into the budget as they were needed. Initially, that wasn't necessary; now we're in the phase where that is being required, so that's what we've undertaken to do. There's nothing untoward in terms of process.

MR. MACKINNON: So you're showing them as revenue.

MR. BALSER: We're bringing them in to be part of the operating revenues to deal with the expenses associated.

MR. MACKINNON: Revenues for the cleanup. I want to be clear because you took the whole - let's use the figure $324 million, in that vicinity, we'll go with that figure - that entire charge was put against the debt of the province and the operating deficit for that year?

MR. BALSER: Because it was viewed that monies would be needed as we moved forward and we had to have a dollar amount to book at that time.

MR. MACKINNON: Okay, agreed. And now you're using some of those deficit dollars as a revenue.

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[5:00 p.m.]

MR. BALSER: Well, we're bringing them into the budgeting process so that we'll have monies available to deal with that problem. The commitment was made two years ago when we said this is the course of action we have before us - there's a recognition that we will not have those costs incurred today, but as we move forward to what will be transpiring we need to have access to the money to deal with those problems. So there's nothing that wasn't contemplated occurring in this instance. We recognize that we've now moved forward with the construction of the arterial road, and there's a cost associated with that. We recognize that we're now going to be looking at assessing some of the environmental issues, the Class 2 environmental assessment and what needs to be done there, so there'll be a cost associated with that.

In the last few years as we move through decommissioning there was scrap steel being sold so we had a revenue stream. We always contemplated using the monies that were allocated for the decommissioning at some point to deal with the cost associated with moving off this. So there's nothing that wasn't contemplated in having that money allocated in this fiscal year to deal with the expenses associated with the decommissioning.

MR. MACKINNON: I recall when the electric arc furnace was shipped from Pittsburgh - I think it was initially placed over at Sydport Industrial Park because they had to scrape it down and repaint it - everybody thought we were getting a new electric arc furnace when in fact it was about 30 years old and they had to repaint it, or maybe George Tippins, who was the owner and the successful proponent at that time, either he painted it there or before he shipped it up. I'm not sure how many tens of millions of dollars it was - it escapes me at this point - but we seem to have sold all that for $4 million or thereabouts and change. It seems as though we didn't get much of a bargain for a $425 million modernization project. It all went for less than - well you add up all the scrap steel and the electric arc and the accessories, we're probably looking at less than $10 million in revenue. Who in heaven's name was auctioning this stuff off? Did we really get value for dollar is what I'm trying to figure out.

MR. BALSER: Relatively speaking. When you're in a decommissioning mode for a steel plant in a time when the steel industry is in decline, I think if you look back to the timing there were a number of U.S. steel manufacturers that were placed in Chapter 11 protection. In a perfect world we would have been able to bring those pieces of equipment to market in a robust market. We had world-class auctioneers. We, in fact, exceeded our expectations in terms of the sale of scrap steel. The market was depressed initially and we were able to hold some of the scrap steel, because there's varying grades, and capture some bumps in the market price, that assisted us.

[Page 127]

You're right. Selling the electric arc furnace for $4 million when you paid in excess of several hundred million dollars for it is unfortunate, but that's the reality when you're decommissioning a project. You can look around the globe at any number of these initiatives where the same kinds of things unfold. You have to go out to market, you canvass the world and, at the end of the day if you're moving in a particular direction, you take the best prices available. In this instance, $4 million was the price that was available.

MR. MACKINNON: What's the total dollar value of revenue that you would expect to receive from start to finish, from the electric arc to the rail mill to the scrap steel, everything, what do you realistically expect to collect?

MR. BALSER: At this juncture we're about where the real value has been recovered. We're getting into the lighter phases of decommissioning.

MR. MACKINNON: What's that?

MR. BALSER: The total amount to date has been, between the two years, you're looking at about $18 million to $20 million, depending on where we go in the next little while.

MR. MACKINNON: So, less than 5 per cent of the total value of the project.

MR. BALSER: But then if you consider the added total cost associated with . . .

MR. MACKINNON: Generally at a bankruptcy sale, you'll get 10 cents on the dollar.

MR. BALSER: In effect, that's what we were involved in. The decision had been made to decommission Sysco; it had been a significant financial drain on this province for several decades. There was no reason, in light of the current market conditions, when the decision was made to go to decommissioning and liquidation that there was going to be a turnaround. We could have continued to follow the practice of the previous government, and that was dumping $30 million annually in terms of trying to keep it operating.

That difficult decision was made, and in terms of the province dealing with Sysco, I think that's an example of government staying the course and making the right decisions and trying to do the best they could with a difficult situation. The workers were dealt with in what I believe was a fair manner. There will always be those who are disappointed, but by and large those workers who were affected either had enhanced pensions or severance packages made available. We have recovered in terms of the scrap, monies, and that money has been put back into the redevelopment. We now have a . . .

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MR. MACKINNON: If you don't mind, through you, Mr. Chairman, let's go that route. Let's go on the premise that okay, let's cut our losses and move on. We are pumping $30 million to $35 million into a losing proposition, but the fact of the matter remains if you were to take the total number of provincial dollars invested in Cape Breton since the closure of Sydney Steel, they don't even come close to a one-year subsidy. So if you took $30 million a year times four, that's $120 million, and you take the total number of provincial dollars reinvested to realign Cape Breton's economy, you wouldn't even come close to that $30 million for one year. So the government has had a pretty good deal on the backs of this issue. They have browbeaten the credibility of the steel community to pieces, and I would submit that the government has used this as a political football for its political advantage.

I'm not disagreeing with the economics of the situation, and the minister knows full well I'm a businessman. I don't like running a business because if you run a business and lose money, you're not going to be in business. That's the long and the short of it. But let's be realistic, it's one thing to realign your economics, but you haven't reinvested in a substantive fashion and the dollars speak for themselves. If the government were to reinvest $30 million a year for four years, I don't think you would find any Cape Breton politician or any Cape Breton businessman coming across the Canso Causeway looking for assistance, because they would have just about everything they need.

If you put that in road infrastructure, if you put it in upgrading some of the other services, we would be light-years ahead. The United Nations referred to us as one of the 10 best places in the world to live but if you take the total number of provincial dollars invested - and this is an issue I will be addressing with your colleague - I think you will readily agree that the government has had a pretty good deal in more ways than one.

To sit here and pat yourself on the back about what a great job you've done on shutting it down and moving on, that's only one part of the equation. I look at the tar ponds cleanup and other aspects of that, and I've been waiting for over a year for the Department of Environment and Labour, and even anyone who has spoken to this issue, to give us the groundwater results for that site, despite the fact that Mr. Spurr gave a commitment that he was going to provide it, despite the fact that the deputy minister of the department of the day gave an undertaking he was going to provide it - everyone is going to provide this information, but it never seems to come.

So talk is cheap and I don't mean that in a negative fashion, because I'm sure the government has done some good things on the issue, and I was there to compliment them on the selection process at Steelworkers Hall several weeks back on making a decision collaboratively with the federal government to move on, but in real dollars the provincial government has sold this entire package for less than bankruptcy prices just to get the political football moving in their direction. I would submit that the whole thing was sold as much for political expediency as it was to get the best possible dollar, and there was no reinvesting by the provincial government in any substantive form.

[Page 129]

MR. BALSER: A couple of things in response to that. For all intents and purposes, we were in a bankruptcy sale, there is no question about that, the decision had been made to place Sysco in receivership. As I indicated already, there were challenges in terms of the market. Having said all that, I guess I feel called upon to respond to some of the issues raised by the member and his questioning around investment and reinvesting in Cape Breton. If you look at the level of employment in Cape Breton now, it's the best it has been in some number of years. If you look at the creation of the Growth Fund and the province's participation in that vehicle, that's a significant reinvestment. Is it short of the $30 million? Yes it is, but to be blunt, the $30 million . . .

MR. MACKINNON: The $12 million over four years, for heaven's sake . . .

MR. BALSER: . . . was, in fact, for all intents and purposes, a subsidy. You can call it anything you want . . .

MR. MACKINNON: At $12 million for four years, that's $3 million a year for heaven's sake . . .

MR. BALSER: You can call it anything you want. It was, in fact, a subsidy. If you look at the investments that were made in terms of call centres - and I don't say that call centres are the entire solution, but if you look at Glace Bay, I think that community is very grateful for Stream's presence. If you look at the participation of EDS, if you look at the initiatives that we're undertaking, we are using the recommissioning of Sysco as an opportunity to create an industrial park that has the potential to be world-class. EDM, when they did their analysis of what should happen post the decommissioning of Sysco, they cited the facility there as having the potential to be every bit as good as the industrial developments, that have located in Long Beach, California, and some other jurisdictions. We have Provincial Energy Ventures there as an anchored tenant, and we have a number of companies that have come forward to look at the buildings that are there. So I think we have to focus on where we are going, not where we have been.

MR. MACKINNON: Mr. Chairman, I realize my time is getting very tight, but $3 million a year for four years - $12 million is all that government committed for the economic adjustment fund. It was the federal government that put the lion's share in, not the provincial government. Compare $3 million a year to the $35 million that he was crying about having committed to Cape Breton as a bad investment. So they put less than 10 per cent back in, and as far as the employment situation in Cape Breton, that's because there are over 450 young people a year moving off the Island because of those types of economic and social policies. For every tractor-trailer or every transfer vehicle that hauls a new family to Cape Breton Island, their furniture, there are 10 that are moving off the Island and that's a noted fact. You go talk to the people who are in the business.

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So for the minister to sit here and pat himself on the back, it's an insult to the intelligence of the people on the Island. He may see economics a little differently than perhaps others, and that's fine and dandy. Yes, there have been some good initiatives, but let's bear in mind the majority of them have been federally led, especially in Glace Bay. That call centre, almost without exception, was federal support dollars except for a provincial loan which will benefit in ways that perhaps certain parties may think it's great but many others would think it is not so great - and I think the minister knows exactly what I am referring to with regard to the building in question and the ownership of such.

MR. CHAIRMAN: I trust there is a question there for the minister.

MR. MACKINNON: Well, there doesn't necessarily have to be. This is budgets and I have a right . . .

MR. BALSER: It's very entertaining.

MR. MACKINNON: Well, if that's what you find, that Cape Breton economics and politics and the concerns of the people of Cape Breton are nothing but entertaining, that speaks directly to the issue that I have been trying to put across and put through to your mindset. You think it is nothing but a joke, Mr. Minister, about the way we have been trying to put our issues forth. If you find it entertaining, then come to Cape Breton. You didn't come the last time and stand and meet with the steelworkers, you didn't come and meet, you were in and out like a scalded cat because you were afraid that somebody may have a question with a little bit of pressure on you.

So, yes, you were in and out so fast they thought it was a lightening storm, but I can assure you we do not take kindly to your condescending approach to the economic and social problems that are in Cape Breton. You have had that disposition ever since you took this tenureship and you seem to display again here today, and I think that's the type of thing that actually adds dismay and disappointment - and this divide and conquer was a great tactic of John Buchanan's, always pit one part of the province off against another, and it was a great tactic by Donald Cameron who used to stand up in the Legislature and say "youse people" like we were some kind of a different species from another part of the world. That's the type of condescending attitude that really hurts all of Nova Scotia, not just one part. You treat people with respect, and that, sir, is something that, obviously, by you finding this entertaining, ultimately speaks for how the government and people like yourself in government feel.

[5:15 p.m.]

MR. BALSER: I guess now it's my turn. In terms of my having been present in Cape Breton talking to the steelworkers, I met in the Steelworkers Hall with John Traves, who is at my left and has been involved with Sysco in fact, to present to them the information - and

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I will note that you weren't in attendance. I made a number of visits to that facility. I have been there on any number of occasions as the minister responsible for Economic Development . . .

MR. MACKINNON: . . . and they would take issue to some of the things . . .

MR. CHAIRMAN: Order. Order. No badgering the witness. You will have time when he finishes answering the question to ask him another question to clarify a point.

MR. BALSER: Beyond that, in terms of the issues and challenges faced by out-migration, as the member mentioned in his questioning, that's not unique to Cape Breton. Cape Breton has a significant challenge and no one would belittle that, and no one would belittle the significance to that community, but I can tell you that many jurisdictions in the Province of Nova Scotia face exactly the same issue, concern and challenge. The Eastern Shore is an area of unemployment and a lack of opportunity that I believe is comparable to the worst case in Cape Breton, and my riding, for example, has had an out-migration.

The reality is, if you look at the demographics in this province, the population is not on a significant upward growth trend. We do have a real challenge in that the young people who choose to stay in Nova Scotia tend to congregate around metro, and that is a problem not just for this government but for everyone in Nova Scotia - it was a problem for the previous government - and there are no simple solutions.

In terms of the commitment to industrial Cape Breton, I would stand on our record, certainly in terms of a commitment to try to find solutions for that jurisdiction. I would stand on the record of this government in terms of dealing with Sysco; it was not an easy issue to resolve, but I believe at the end of the day people in industrial Cape Breton have accepted the decision and they're focused on the future in a way that has not been seen for some time. I think what we need to focus on is the strengths of that area, the strengths of the people that the member has spoken most eloquently about.

Certainly my comment about "amusement" was not meant to be disparaging or dismissive to the plight. I simply implied that in his line of questioning, he's able to make it entertaining in his delivery, in his emotion related to the issues before us. So it was not meant to be condescending to those good people in industrial Cape Breton, it was merely a comment about the member's eloquence and ability to engage in a way that keeps everyone focused on the issues he puts before us.

MR. CHAIRMAN: Are there any further questions for this minister from the Liberal caucus? You still have two minutes remaining in your time.

MR. MACKINNON: I have no intention of arguing with an unarmed man. That's the end of my questions.

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MR. CHAIRMAN: Are there any further questions from the NDP caucus for this minister? Are there any questions from the government caucus? Well, I have one question, a quick question in regard to the sale of coke from the site of Sydney Steel for the local blacksmith shops and iron workshops that are around the province. Who can I contact in regard to obtaining coke from the Sydney Steel site, instead of them having to import it from Pennsylvania?

MR. BALSER: Matt Harris at Ernst & Young, we can get you that contact number.

MR. CHAIRMAN: That would be greatly appreciated.

Seeing there are no further questions, Mr. Minister, you have an opportunity to make some final remarks if you wish.

MR. BALSER: I think we've covered it all. I appreciated the level of participation. I think the questions were thoughtful and insightful, and I hope we were able to provide information to the questioners. In the cases where there was a request that we be able to take the information under advisement and respond, we will be attempting to follow up on that. Thank you all for participating.

MR. CHAIRMAN: Just a reminder on any requests of the minister. I would ask that the information be sent to not just myself as chairperson of the committee but also to the three caucuses that requested information, regardless of which caucus had asked for it, it should be sent to all three.

Shall Resolution E1 stand?

Resolution E1 is stood.

Resolution E14 - Resolved, that a sum not exceeding $14,642,000 be granted to the Lieutenant Governor to defray expenses in respect of the Executive Council, pursuant to the Estimate.

Resolution E39 - Resolved, that the business plan of Nova Scotia Harness Racing Incorporated be approved.

MR. CHAIRMAN: Shall the resolutions carry?

The resolutions are carried.

I would like to call the estimates of the Department of Economic Development.

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Resolution E24 - Resolved, that a sum not exceeding $30,909,000 be granted to the Lieutenant Governor to defray expenses in respect of the Office of Economic Development, pursuant to the Estimate.

MR. CHAIRMAN: I would like to welcome the honourable Minister of Economic Development, the MLA for Cape Breton North, to the Red Room for his estimates. I believe this will be your first time in presenting budget estimates to the House. You have an opportunity make some opening remarks to the panel here, as well as introduce the staff who are with you. Just to advise you, if any information is being requested by any of the caucuses, the information is to be sent to the chairperson of the subcommittee as well as to all three caucuses, regardless of which caucus asked for the information. Mr. Minister, your time is now 5:23 p.m.

The honourable Minister of Economic Development.

HON. CECIL CLARKE: Mr. Chairman, good afternoon to all committee members. It's a pleasure to join my colleagues here for estimates, to speak on behalf of the Office of Economic Development and our five Crown Corporations that report to my office, that being Nova Scotia Business Incorporated, InNOVAcorp, the Waterfront Development Corporation Limited, the Trade Centre Limited, and the Nova Scotia Film Development Corporation.

Joining me today, on my left is Kevin Elliott from Finance's Corporate Services Unit, and on my right is Chris Bryant from the Office of Economic Development. Also, joining us, probably tomorrow, will be Chris Smith for Nova Scotia Business Inc., and he may join us this afternoon.

MR. CHAIRMAN: Just for your information, there will be no estimates tomorrow afternoon, it being Opposition Day, but it will follow on Thursday.

MR. CLARKE: Okay, Thursday. Thank you for that.

In the interest of proceeding along, what I thought I would do - I have a prepared text and copies made with regard to introductory comments, and what I will do is distribute them for all members of the committee, and that may facilitate some of the post questions. In that way it will enable us to move along as best and as quick as we can to the actual questioning on estimates.

I would like to provide a bit of an overview. As we sit here in April, last month in March we saw a record number of Nova Scotians employed, finally reaching 436,300 Nova Scotians who are working. Part of that we attribute to the growth strategy and the opportunities for prosperity. We have engaged in such activities as a Business Climate Index, that was a new one last year, and there will be another update again this year. Last year showed us fourth in competitiveness in the country. We initiated such progressive things as

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the Provincial Nominee Program for immigration, economic immigration that will see up to 200 immigrants per year for the next five-year period.

We've seen investments in innovation, whether that's facilities such as the MRI technology, and the brain repair centre and the research there, or our recent investment of $8 million in the Nova Scotia First Fund. Also, we're very pleased with the success and the rollout of over 400 CAP sites throughout Nova Scotia. Our working relationship with regional development authorities and other economic players around the province, chambers of commerce, was highlighted during my provincial tour of the province this past summer, and I'm looking forward to another opportunity to consult and to look at programming opportunities, and I suspect some questions may come forward.

We've also, again this year, seen three new CEDIFs created, the Community Economic Development Investment Funds, and as you noted in the budget there was further advancement to that, and again we will be looking at how we continue to improve and to see increased investment from communities for economic development purposes, and showing that individuals in their community not only have the desire, but the capacity to put investments into projects and businesses that have a real yield for them in their region, and their investment stays at home.

We've seen increased co-operation as well in the co-operative sector itself, the Nova Scotia Co-operative Council. I was very pleased to be a signatory to our memorandum of understanding with the Co-operative Council and will see further working relationships enhanced in the coming year. I was also very pleased to be part of the reinvestment of $500,000 to the Black Business Initiative and, as well, other investments, whether that's Aboriginal youth business summits, or investments in customer contact centres such as in Canso in terms of where small business and communities of interest need support and endorsement.

As well this year, we provided our third instalment of $3 million to the Growth Fund - and I'm sure that's an area where we will have some further discussion - that fund has seen over $45 million in 21 new and existing Cape Breton companies and projects, producing over 2,800 jobs. We had issues of importance and significance to our economy, the railway issue for the Cape Breton and Central Nova Scotia Railway in terms of coming to a resolution on that, whether that was a reinvestment in the future of Stora Enso, as well as efforts by Nova Scotia Business Inc. to go around the province and to consult with over 450 province-wide consultations, as well as 63 active export development clients at this time.

NSBI is currently doing their Capital Ideas road show and are in Yarmouth today, and what we will see and have seen in the first year alone was $15 million invested in 19 companies, but also to speak to the wider interests of what is happening in the film sector, the major activity that has been happening under the roof of the World Trade and Convention Centre. We've seen great success in the leadership there and most notably and recently was

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the World Junior Hockey Championships and that was shared, not only here in metro Halifax but Sydney as well, and a true success for the Province of Nova Scotia. It just shows that we can go for bigger and better events and we have a venue to build upon.

As well, InNOVAcorp, as I mentioned, very pleased to have made an $8 million investment, a reinvestment that doubles the current portfolio for the Nova Scotia First Fund for companies looking to expand and commercialize their interests in IT and innovation, and the Waterfront Development Corporation Limited in their leadership in moving and advancing interests of the capital area as it reflects a number of initiatives, both planning and projects in and around the capital district. So without further ado, I would like to conclude those as introductory comments so that we can facilitate the most amount of questions possible.

MR. CHAIRMAN: We will now entertain some questions. I believe we will start off with the NDP caucus. Just a reminder that we will be concluding our four hours this afternoon at 5:55 p.m., so we have approximately 25 minutes left in our time here this evening. So whatever time you have not concluded tonight, we will carry over until the next day which will be Thursday, April 10^th. Your time now begins, it is now 5:30 p.m. for you, sir.

The honourable member for Hants East.

MR. JOHN MACDONELL: Thank you, Mr. Chairman, and thank you, Mr. Minister, I really appreciate getting the statement and actually if you can impress upon your colleagues how well that works, I would really be interested in that happening. Actually I believe I asked the Minister of Agriculture and Fisheries for a copy of his speech yesterday and I never thought to mention it to him again today, but he agreed to provide me with one.

Well, I'm new to this as well actually. Since I was elected in 1998 with a somewhat larger caucus, I was Agriculture Critic. Then when we lost some members in 1999 I took on Agriculture, and Natural Resources, and then last Fall took on Economic Development. It was my intention to contact your staff and sit down and let them educate me as to what goes on in the department, and the structure of the department and so on, and I haven't done that, so I have to say I'm a little curious about the differences or the similarities between InNOVAcorp and NSBI.

[5:30 p.m.]

In looking through the Crown Corporations' business plans I got the impression that InNOVAcorp deals almost specifically with the IT sector, innovative technology businesses - or I wasn't positive if that meant just businesses that might want to apply the technology to the greater aspect of their business, so I just wonder if you could give me a bit of a rundown

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on InNOVAcorp and NSBI and the roles that each play, because I'm assuming they're lending institutions, is that correct?

MR. CLARKE: They both have the capacity, yes. So thank you very much and what I would be happy to do if there's anything that requires an expansion during your time now, on Thursday I would be pleased to bring forward any clarifying points, obviously, and maybe go back a step further, and that was the whole restructuring of Economic Development itself into the Office of Economic Development and thus the ensuing roles and relationship now with the five Crown Corporations as part of that.

What we see clearly is a hub-and-spoke approach where the Office of Economic Development is facilitating and coordinating, dealing with policy, and helping to take away some of the silos that normally would get built up across the system. As you know, with many economic issues, the railway for instance was an economic issue but it involved Transportation and Public Works, Environment, other interested areas, for instance Sydney Steel in terms of its interest in the redevelopment, so to be able to work and facilitate, that meant going across government, but to be able to maintain focus and clarity on the issue.

So in looking at the hub and spoke and working out to the five Crown Corporations, Nova Scotia Business Inc. as the trade, promotion and investment arm of government with a private sector-led board and its focus to be arm's length in trying to make sure that a full business case approach is done with projects. For them they have their five sectors that they focus on and so just to clarify, to bring in InNOVAcorp, one of the areas of course is information technology and obviously innovation, and business expansion in this day and age cannot go without being duly considered, so there would be areas where there's possible crossover, but I would say collaboration, between the two entities. But more specifically with InNOVAcorp, obviously they've had a more direct role in the incubation, the development, making the type of investments that are obviously higher risk because you're into, just by the very nature of the activities - and we've seen with that if you look for instance, Chitogenics Ltd., a company that's very much on the cutting edge, but in the whole commercialization process you have to look at how to help incubate and support that development, and InNOVAcorp plays a key role in that.

InNOVAcorp, unlike NSBI, because it already has had a mandate and a history, is now getting into the next generation, and that is that it has brought a number of companies forward and is looking at what its business plan reflects in terms of the current needs of that sector, and with NSBI going out and trying to define specifically while dealing with commercial accounts, also doing the consultation that's necessary to define where their programming and their activities should be focused. For instance, as I mentioned, the Capital Ideas road show is in Yarmouth today and I believe there may be about four more stops as part of that tour, no different than their consultation around the province last year which was, like I say, over 450 different contact points to do that. So in trying to define the best use and

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application of their resources its something they've undertaken, while at the same time focusing on continuing with trade and promotion and business attraction and retention.

So we've been very pleased with the progress in a short period of time. But if you look at, for instance, some of the things where there's collaboration, if you notice at the World Trade and Convention Centre, at the Metro Centre - people saw it really full in use during World Juniors - the score box in the centre, with the high graphics, big screen activity. Well, the Nova Scotia Film Development Corporation in collaboration with the Metro Centre was able to bring their synergies together and make sure that that came onstream and that the best utilization of resources were being applied.

So that's where, as I say, the hub and spoke, and then there's the wider application throughout government and as we talk about capital planning for instance, as you note in the Speech from the Throne the concept of a capital planning commission - for instance the Waterfront Development Corporation that deals with a lot of components that are going to be very integral to that. They will be able to play a resource role to that, that we don't have to always recreate and reinvent the wheel because there are some tools at our disposal that we should be utilizing. So there are going to be overlaps. It's a matter of who is best positioned to take advantage of ensuring that the outcomes of success can be achieved.

One of the other things we have to do and I've said clearly is making sure that these people have the tools to assess when not to make investments, you know that's another reality and no is not a bad answer if there's a reason for it, but there's a way you go about doing it as well that's respectful and we have to make sure of that and I think we have a good mechanism in place that everyone has a full and fair review with any of their ideas.

MR. MACDONELL: I want to turn to, I guess it's the Supplementary Detail, on Page 5.3, Net Program Expenses, Strategic Management and Rural Development - and I'm curious, I'm thinking about overlap and synergies and actually I think some people assume right off the bat that there are silos within government and that sometimes the left hand doesn't know what the right hand is doing, but I'm looking at Rural Development here as a line item and I'm really curious as to what your department means by that. We just ended estimates with the Minister of Agriculture and Fisheries and I see economic development in rural Nova Scotia to be agriculture and fisheries and forestry as significant avenues to generate wealth in rural Nova Scotia, but when it comes to agriculture, I almost exclusively believe that the Farm Loan Board or the Fisheries Loan Board are the routes to those sectors of the economy accessing funds.

So I'm just wondering about the role here of the Department of Economic Development in the economic development process around those rural sectors. Is there much of a draw in your department for support in those areas or does it take the extra to the value-added side, you know, of turning apples to applesauce? I mean . . .

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MR. CLARKE: Actually this particular area is one that I think the ensuing year can be very positive in terms of outcomes based upon consultation. When I had the opportunity to tour the province, one of the reasons we did that was with the Strategic Management Unit and Rural Development. One of the things we talked about was, you know, the rural versus regional development because you can't talk about rural communities without the towns that cluster and form that regional economy, and one of the focuses was how do we grow the strength of the regions of the Province of Nova Scotia as units and where are the complementary - what planning, what infrastructure, what types of economic supports because the variances around the province can be significant and to the point of, you know Guysborough County versus the Valley, I mean the composition is totally different even though you're talking rural or regional development.

One of the things we did look at, of course, is how do we support - I mean it's very clear when you hear in non-urban areas about the needs for supports for small business to enable them to be able to operate outside of, and clearly what we heard for instance on one front was about the lack of ability for banking and financing and how people feel that the big banks have moved away from small-town Nova Scotia - and probably that can be said to be true of all of Canada - but how do we deal with supporting the fact that 80 per cent of all businesses in the province are small businesses? So we've engaged and have had dialogue with the Credit Union organizations throughout Nova Scotia to look at what types of things may be feasible to support small business. Nova Scotia Business Inc. is undergoing a process to look at enhanced programming that fits the needs of small business, that we look at in our consultation with existing organizations such as the CBDC, the Community Business Development Corporations - that really flowed initially from ACOA - but they're in the communities and they are involved and they have portfolios.

Well, what things can we do with our staff in the Strategic Management and Rural Development side to make sure that we're actually value adding in terms of the types of programs we can come out to service small communities, and what are we doing to ensure that regional priorities come forward. Well I believe one way we've done that, and I think it has been successful, has been through RDAs. The regional development authorities across the province have achieved great success and some are building and trying to make their processes work better, but ultimately to ensure that there is regional prioritization, there's planning and there's consideration of the community economic development initiatives that go outside of the types of things - as you say, just because you have apples, are you making applesauce?

There are other people and expertise that can realize other opportunities and that's something we are seeing, and to achieve that and to have the outcomes it was important to get out in the field and to travel the province and to do that consultation so we could reflect some of that, no different than when we heard about CEDIFs. Just because you have rural areas, it doesn't mean that you don't necessarily have people with the capacity to invest more than others, and so to move the investment ceiling from $30,000 to $50,000 offers an ability

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for those who believe and want to see their communities grow to make that additional investment, to see some further efforts within the Department of Finance that look to small business supports as well. Ultimately it's again coming back to this hub and spoke - what are we doing to facilitate the ability, region by region for their priorities to come forward and, as I say, I would like to think we've made great progress on that and I think there will be some other initiatives come forward this year.

MR. MACDONELL: You mentioned regional development authorities. So regional development authorities come under the municipality - is that right? - or do they come under the department, under the government?

MR. CLARKE: Well, actually a regional development authority is a partnership of all three levels of government - municipalities, the province, and the Government of Canada. What was important was the government's commitment for a 5-year funding so that every year all regional development authorities would know they would have funding from the Province of Nova Scotia and that is comprised of, from the province, core funding of $125,000, $100,000 from Economic Development and $25,000 from the Department of Community Services. In going back to your point about how do we respond to needs in a community, and they're not always specific to one particular industry, they are probably specific to a number of initiatives that support communities and their well-being.

MR. MACDONELL: So is that funding shared equally - I mean all contributors three ways, all at that level, or . . .

MR. CLARKE: The core funding for that would flow and is it $125,000 or $100,000? (Interruption) Okay, it's up to and I know, for instance, on various projects there may be other types of funding, project-specific that an RDA may be a sponsor or a facilitator for a municipality or a particular business interest. Some RDAs for instance help facilitate the transformation of some buildings into incubator space for businesses and then have them transferring it over, so they've been the agent and the facilitator first in development.

MR. MACDONELL: In the Estimates Book, I believe on Page 5.2, if you look at 2001-02, the Estimate and the Actual, then 2002-03, but in 2001-02, the Estimate, I believe that number is $34.708 million then the Actual was $49.3 million so can you explain the difference between the Estimate and the Actual there for 2001-02?

[5:45 p.m.]

MR. CLARKE: Just a moment, please. That was a pretty good question to which I think there's a clear answer.

MR. MACDONELL: I'm curious as to the difference between the Estimate and the Actual.

[Page 140]

MR. CLARKE: Right. The most significant component of that would be a provision for loss on doubtful accounts from the loan valuation accounts, from LVA. Obviously, that just reflects cleaning up some outstanding matters.

MR. MACDONELL: So, I guess we'll assume then in the estimate the estimation of the loss was not as great as the actual loss, is that what we're saying?

MR. CLARKE: The province reserved more than it forecasted for the year. Is there anything else specific to this?

MR. MACDONELL: No, I think that answers the question. If you say the province reserved more than it forecasted, I'm not sure if that makes sense to me.

MR. CLARKE: If you look at the estimate, between the Estimate of $500,000 and the Actual of $19.946 million, with that whole provision for losses, I think clearly it is just recognizing the amount, and rather than having them carry forward, we recognize that they need to be cleared.

MR. MACDONELL: Then can you tell me the difference between the Estimate and the Forecast for 2002-03?

MR. CLARKE: I would suspect it's the same thing, just to a lesser degree . . .

MR. MACDONELL: Okay.

MR. CLARKE: . . . and really, if you look, I think that would probably be consistent with the fact that with a government change and then coming through, people would analyze the accounts and probably make decisions as to what items they would want to account for, and I think that would accommodate why in the 2001-02 year a significant portion was identified.

MR. MACDONELL: Certainly by looking at 2002-03, they're definitely closer to the mark as far as the department is concerned. A significant difference between $500,000 and $19.946 million. I'm just wondering, was there something that caught the department off guard there? Was there something they weren't expecting, or a turn of events, a special project?

MR. CLARKE: I would initially say probably just history caught up and people had to reflect the realities of some of the accounts and investments. Obviously, an estimate of $500,000, while necessary, is not desirable, but when you're in government making investments, as you know, we probably run more than average, a higher level of risk. It's never palatable to want to see major write-offs.

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One of the things that we obviously have to look at are we see sometimes write-offs, but we don't necessarily see what the derivative benefit or other future or post outcomes have been. Sometimes when a business is unsuccessful, it doesn't mean that the business or the concept did not go on to succeed. Of course, that will not reflect that and may not for five years down the road in terms of it . . .

MR. MACDONELL: I certainly wouldn't be opposed, if you wanted to give me some of the success stories at some point in time. If you have a listing, the types of things that we don't see necessarily indicated, and I would be curious as to what made up that $19.946 million, if there were some that were losses.

MR. CLARKE: What I'll do, if it's okay to the member, is take a review of that. I don't want to be in a situation where it's commercially sensitive, but at the same time wherever possible we'll be pleased to do that. I think the member knows me well enough now that we will get those success stories and that information to you.

MR. MACDONELL: I don't think I want to go in terms of some of the businesses affected here, I can recognize the sensitivity.

On Page 69 of the Crown Corporation Business Plans, it says Budget Context, Budget Summary, Budget Estimates 2003-04, Forecast 2002-03. So if we look at the Forecast, the overall total of the bottom line, $25.6 million, and then the Budget Estimates for 2003-04 is $29 million, so there's more or less a $4 million difference there. Can you tell me what you're thinking there?

MR. CLARKE: Actually, if you just go to the last line item, just before the overall title Strategic Investments, what you will see from the Forecast estimate is the $4.3 million, is the bulk of it there, which is just investing more dollars and enabling NSBI, where it was possible, to increase the level of resources available to them to go out and meet their mandate.

MR. MACDONELL: So had there been a concern raised in a general way that they didn't have the funds they required to meet their mandate or was there something specific they could see coming over the hill that they thought that they needed this?

MR. CLARKE: NSBI has been very aggressive in its approach to achieving its mandate. Any group that is motivated is going to look to ways to further their mandate and their business case. Obviously, one of the things we'd all love to have are more resources at our disposal for any level of activity government can undertake when it comes to business growth. No different than the incremental efforts we make with small business, whether it's with the credit unions or working with the Co-operative Council or the Black Business Initiative - all of that is based on a wider context that it all becomes part of an overall effort

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with regard to economic development and revitalization of our economy and ensuring a stable future.

Nova Scotia Business Inc. has been provided with a clear mandate to get out there and to work on business case solutions and to go out and attract businesses that are going to be good business decisions and good for the economy. To do that, you need resources. I'm sure I'd have no debate from the board or the management and staff if we put $10 million more there. Where possible, $4 million approximately was added to that and I think they'll make very good use of those dollars and look forward to next year's estimates.

MR. CHAIRMAN: Time has expired for debate today for the Subcommittee on Supply. The four hours have been achieved and the time is now 5:55 p.m. At the time of adjournment the NDP caucus still has 35 minutes remaining in their first hour allotment. We will reconvene here on Thursday, April 10^th, and I look forward to the minister at that time coming forward with more information.

We stand adjourned.

[5:55 p.m. The subcommittee rose.]