HANSARD

Printed and Published by Nova Scotia Hansard Reporting Services

ECONOMIC DEVELOPMENT COMMITTEE

Mr. Keith Colwell (Chairman)

Hon. Judy Streatch

Mr. Keith Bain

Mr. Chuck Porter

Mr. Clarrie MacKinnon

Ms. Vicki Conrad

Mr. Leonard Preyra

Ms. Diana Whalen

Mr. Harold Theriault

[Mr. Keith Bain was replaced by Mr. Patrick Dunn.]

[Ms. Diana Whalen was replaced by Mr. Leo Glavine.]

IN ATTENDANCE:

Mrs. Darlene Henry

Legislative Committee Clerk

WITNESSES

Nova Scotia Business Inc.

Mr. Stephen Lund - President and CEO

Mr. Pat Ryan - Chief Operating Officer

Mr. Fred Terrio - Manager, Business Advisory Team

HALIFAX, TUESDAY, JANUARY 29, 2008

STANDING COMMITTEE ON ECONOMIC DEVELOPMENT

1:00 P.M.

CHAIRMAN

Mr. Keith Colwell

MR. CHAIRMAN: I'm going to call the meeting to order. First we will go around the table and have everyone introduce themselves.

[The committee members introduced themselves.]

MR. CHAIRMAN: Thank you. With that, I'd like our witnesses to introduce themselves and make a presentation to us, after which we'll have questions.

MR. STEPHEN LUND: Thank you very much. Let me start off by saying thank you. To my right - your left - is Pat Ryan, and Fred Terrio will be joining me today. I'll read some prepared remarks.

My name is Stephen Lund, President and CEO of Nova Scotia Business Inc., the province's business development agency. Thank you for the opportunity to speak to you today.

In September of last year NSBI released its new five-year plan. Since 2001, our agency has worked with companies in Nova Scotia and around the world to attract new and sustainable economic growth to the province. At NSBI our core focus is about delivering results for the province. Our results speak for themselves.

This afternoon I want to cover two areas. First is what we did in the first five years and then share with you what we're going to do for the next five. There has been a lot of activity across the province since 2001. We've worked with some great companies in Nova Scotia and also attracted some great companies here. Clearly, we've hit some home runs with RIM and the new financial services industry.

We saw exciting business growth take shape in rural Nova Scotia - from Yarmouth to Sydney. We continue to see companies like CSC, Minacs, Acrobat Research, AF Theriault and MacIsaac Kiltmakers doing great work in our province. They all see the value of doing business in Nova Scotia. It's because of these companies and others that NSBI has been able to reach the targets set out in its first five-year plan. Taking a business approach to growing the economy works. It has made us an even stronger global competitor. We know we can compete with the world.

How do we know? A comparative analysis conducted by ShiftCentral proves it. This study measured our province against 11 other jurisdictions around the world. When adjusted for the population of each jurisdiction, NSBI ranked third in total job creation, behind only Ireland and North Dakota.

When comparing the number of jobs created, based on the size of the agency, NSBI ranked third - well ahead of Ireland. Another validation can be found in Site Selection magazine which ranked all the provinces in Canada based on their success in attracting investment. To no one's surprise, Alberta came out on top, but to the surprise of many, Nova Scotia came second. Halifax was also ranked the number one emerging IT outsourcing centre in North America in a global ranking of the world's top 50 emerging centres.

Our strategies are working and our success in the first five years proves it. And for the next five years . . .

We travelled to communities across the province to understand what issues we needed to address in the new plan. We consulted with 14 communities during the development of the plan and revisited these communities as part of the launch in September of last year. Over the next five years we're going to maintain our core focus by working with businesses to deliver results for the province.

Our primary goal is to expand business activity in Nova Scotia. We're doing this by working to raise the level of wealth and prosperity for our people and increasing revenues for the province. We've set new targets and shifted the focus from focusing on jobs to focusing on the right jobs with better pay.

The themes included in our five-year plan represent a 15-degree shift. Why? Because we know what we are doing is working.

We're going to continue with our core, but also increasing our focus on things like:

• Regional growth;

• Talent;

• [Page 3]
• Competitiveness;

• Leadership; and

• Collaboration.

We're excited about the potential for Nova Scotia.

There is a lot of opportunity, but we do face challenges: the Canadian dollar, productivity, immigration, demographics and labour. We all feel affected by the value of the Canadian dollar and cannot control its rise, but the government is working with businesses as they enhance productivity and competitiveness across the country.

A couple of weeks ago I travelled with the Premier and the Minister of Economic Development to Truro. We met with manufacturers and exporters about this issue. We wanted to hear from them how the Canadian dollar is influencing their bottom lines. We also wanted to generate ideas on how we can tackle it. We heard that things like mentorship, export market diversification, and more financial support for productivity and innovation will be vital in helping local businesses overcome the rising dollar.

We are facilitating more discussions like these this week around the province and we will continue to collaborate to tackle these issues. This our formula for success.

We have a great opportunity to drive our province forward, to create more prosperity, to overcome obstacles, to provide great careers for our young people, and to continue to put our province on the world map as a great place to live and a great place to work. Thank you.

MR. CHAIRMAN: Thank you very much. Mr. Preyra, you have 10 minutes.

MR. LEONARD PREYRA: I'm not sure I will take all of that 10 minutes, because I was going to talk to my colleagues about how we're going to share it, but I'm happy to jump in. I have a couple of off-topic questions. As you know, I am the Immigration Critic in the Legislature and one of the big issues we have been dealing with is the Nominee Program. As part of the approval of business mentors and part of the recruitment of business mentors and part of the oversight of the contracts themselves, Nova Scotia Business Inc. was one of the parties at the table that was there to bring a business perspective on these mentorship contracts but we don't see anywhere in the documentation, or anywhere in the public debate, reference to Nova Scotia Business Inc.'s role in the Nominee Program. I wonder if you could comment on that.

MR. LUND: I'm actually going to ask Fred Terrio to comment but we really played a role, we were asked to be part of a small committee that looked at assessing the companies from a business perspective, are these companies strong enough. So that was the only role

we played and it certainly made perfect sense to have someone like Fred Terrio on that committee with considerable banking and business experience to offer that, but that was the only role we played. Fred, if you want to comment on that.

MR. FRED TERRIO: I was asked by a senior person at Economic Development to participate on a committee that would only involve assessing business applications that came in, basically regarding the viability of that business. If we, as the committee, the majority of the committee, considered that business to be viable, then that business name went on a list and at some future point, I guess nominees would have the option of applying and looking to that business.

MR. PREYRA: It seems to me that at least if you look at the original documents of the Nominee Program, the program was justified in large part by the presence at the table of Nova Scotia Business Inc., because there wasn't anyone else at the table who had that business perspective. It seems to me, if we can point to one place in the system where the system really failed - and I know that the Office of Immigration was the main party at the table there - it failed in the assessment of the businesses themselves and whether they fit the criteria, whether or not they were able to provide that management experience, whether or not the nominees would get anything that related to entrepreneurship out of that.

It seems to me that most of the issues that we've looked at - and again, we are looking at those 203 who were in the mentorship program itself - they didn't get it and it seems to me that somewhere in that committee of four was where the problem started. Somewhere in there, there wasn't that mechanism to assess these businesses properly and to provide mechanisms for making sure that they did what they were supposed to be doing.

MR. TERRIO: Let me make this comment, that the people on that committee, I know, myself - with 10 years in banking, 10 years with government in commercial lending and probably another 15 years in business development with government - and a colleague of mine from Economic Development, Andy Hare, who is a chartered accountant and has probably 26 years in government doing business development and lending, I guess I would have to think that the expertise around that table to judge whether a business is viable or not was there.

I think that during the process, you talk about was it the right business or not, I would have to say - as anybody around that table or anybody associated with that program - we hoped for larger businesses to apply. Unfortunately, that wasn't the majority of cases. The majority of cases were smaller businesses that were applying. Yes, we did ask for a middle management position and what we thought would give the nominee any opportunity to work in a middle management position, then yes, we were going to do that.

The other part to this is when we assessed a business, we sat down and we were given applications prior to meetings and we would normally have about eight to 10 applications

to review before we met, say, the next week. Those applications were improved after every meeting we went to, because there was always room for improvement to do that. I think, with the application process, we sat there and reviewed a business plan, three years of financial history on the company, a letter from the bank that was given for the credit worthiness of the company, a letter from the solicitor that indicated the company was in good standing legally.

MR. PREYRA: There didn't seem to be a feedback loop for reviewing how that relationship was working. On this question of recruitment of businesses as well, how do you account for the fact that so few reputable businesses, middle management type businesses, got involved in this project?

Given that if you look at the documents from 2000 to 2003, the Canadian Chamber of Commerce and the manufacturers' associations, all the businesses, were very keen on establishing a program exactly like this. It seems to me that one of the reasons why we have these very desperate contracts being signed between nominees and businesses is because they were really at the bottom of the barrel. They were taking, in the later stages, anyone and anything without any oversight at all. I'm wondering if that group of four, that process broke down at some stage to let that happen.

[1:15 p.m.]

MR. TERRIO: My absolute comment on this is that my role with the Nominee Program was strictly to do with assessing the viability of businesses. Myself, representing NSBI, had nothing to do with the administration that went on in that organization, or anything to do with matchmaking of a nominee to the program. So as for the administration role of the organization, I can't talk about that.

MR. LUND: I think Fred did his job and he'd be the perfect guy to have on that committee. As he said, his job was to assess the credit worthiness of the companies - period. After that, it wasn't his job to match the person with the company, to follow up with the company - that wasn't his role.

MR. PREYRA: No, I'm not asking about NSBI's role itself, I'm asking why that group of four was unable to deal with this issue of recruiting more businesses. Cornwallis, in its correspondence with the office, said they were not getting any support in recruiting businesses into the program. Somewhere in there, there's a committee of four that's supposed to be helping out - it's like a management committee for that part of the program.

MR. TERRIO: Actually, if I'm interpreting your question correctly, it was not our role to recruit businesses. I speak for myself and Andy Hare, who was on that committee from Economic Development, it wasn't our role to recruit businesses.

MR. PREYRA: But the documents relating to the Nominee Program suggest that the business side of that relationship would be handled by this committee of four. So if it wasn't Nova Scotia Business Inc. that was doing it and Cornwallis is looking for direction, the other party is the Office of Immigration, which is clearly just in its fledgling stage, and the Office of Economic Development. Even though great optimism was expressed about the partnership of business, there was nothing implemented in the program itself that would help that happen.

MR. TERRIO: I appreciate your comments, but I do have to stand and say it was not my role to do that. Actually, if that was in the contract, I was not aware that this committee was meant in any way, shape or form to solicit new businesses coming to that committee.

MR. PREYRA: I do have a minute? Could I have a quick statement, as an MLA for Halifax Citadel and on urban design, particularly to Mr. Lund? I was in Toronto over the holidays and one of the most miserable, bleakest, Godforsaken places in the province is the financial district around Bay Street over the holidays. I just want to urge you not to defend, as aggressively as you have, this idea of a financial district, because what we need in downtown Halifax is a place that has mixed commercial, residential, a space that can flow through into the North End.

I was talking with a senior banker from Bermuda who I asked about the establishment of banks here in Halifax, and you know Butterfield has been very aggressive here, and he said you know, we aren't in Halifax because of the money. He said we are in Halifax because of the people. It's a great place to recruit young people with lots of skills and we don't need Class A space and we don't need big bank towers, we just need the bodies. I just want to use the five seconds that I have to say reconsider that. I like everything else about what you have said, but on that I ask you to reconsider.

MR. CHAIRMAN: Order, please. Time has expired. Mr. Glavine.

MR. LUND: Can I get the chance to comment?

MR. CHAIRMAN: No. Mr. Glavine.

MR. PREYRA: Sorry about that.

MR. CHAIRMAN: In your closing remarks, you can address that.

MR. LEO GLAVINE: Thank you very much, Mr. Chairman. I know Stephen is anxious to get speaking again here, he's almost over the desk. Generally speaking, yes, Nova Scotia Business Inc. has had many positive initiatives in the province but last year the province, for the first time probably in a couple of decades, experienced overall job losses by a couple thousand. Those are the statistics now which are out. The sectors, of course, that

are getting hurt are the primary industries and the manufacturing, and I'm just wondering if you're playing any role in the primary sector area. Forestry is taking a big hit and if it weren't for the bit of buying of land, who knows? Maybe Bowater would be gone by now. What kind of a role is Nova Scotia Business Inc. playing with the primary industries?

MR. LUND: Sure, and I will include manufacturing in there as well. The Nova Scotia unemployment rate is currently 7.7 per cent. As you know, Halifax is 3.9 per cent, one of the lowest in the country. We are going through a shift in the economy, not just here but everywhere in the world, and we're moving from some of our traditional-based to more of a knowledge-based economy. That's just the way the world is going. In fact, Business Week would say that 9 of the 10 hottest jobs in the next 15 years would be in IT. It could be IT health care, it could be anything related to IT. So that's where the world is going. It doesn't mean we ignore what we have today and what our strengths are. I think that there is still lots of opportunity to grow each of our sectors.

In many respects, we work with business, that's our role. In the government, itself, there are lots of departments that focus on whether it's fishing or forestry, so our role is really to work with those groups where there are specific opportunities and we have. On the manufacturing side of it, in spite of all the losses that we have seen in manufacturing, there are more people working in Nova Scotia in manufacturing than a year ago - which surprises a lot of people, including me - which means that there are pockets of great success stories with smaller niche companies. I think that's the area that we need to continue to focus on.

As part of our new five-year plan, we are rolling out a new initiative based on helping companies be more productive and this will - the entire focus will be rural Nova Scotia, primary manufacturing companies and it's really to encourage, particularly with the increased competition around the world with the Canadian dollar. One of the areas that we need to work on is the level of productivity innovation that we have in the province.

So the answer to your question is, we absolutely do but as a support role for the most, more specifically to specific opportunities. Fred's group is really the group that's on the ground, meeting with companies, every day. In fact, they would meet with over 600 companies on a yearly basis.

MR. GLAVINE: There's no question, I think it's only five of our 18 counties that are continuing to grow population while the basis of maintaining our population and growing back to where we were is, of course, good economic opportunities. I think with forestry, fishing, and in my area of the Valley where one in four jobs is still directly or indirectly related to agriculture, is there a role for NSBI to look at value-added possibilities in these three sectors? Is that an area that you do have some direction and human resources being directed towards?

MR. LUND: I'll ask Fred to comment on some of what you guys are doing.

MR. TERRIO: I think if you're talking the base sectors and resources, to me, with my experience in government, that would come back to the department related to that. There's the Farm Loan Board, the Fisheries Loan Board, et cetera. So on some of those bases, they would help develop that sector.

Certainly, by all means, if there's a willingness there and a way, then our people in the field would absolutely participate in helping the business grow. But I think there's a certain policy aspect there that has to be worked through the appropriate department in one of the three "F's" that we're dealing with. Our role is strictly business to business.

MR. LUND: But even on a big company like Stora, there are lots of arms in the government that would be affected by that. I met with their parent company in New York recently, but it's only a supporting role to see whatever we can do from a business perspective. Usually, in many respects, there are many leads within government.

MR. GLAVINE: I'm certainly familiar with some of the roles you play; for example, what NSBI did in terms of attracting Acrobat Research to the area where I live. When you lose a Trenton and a Moirs and a Canard Poultry, those are significant hits across Nova Scotia.

Now, is there any role there in trying to make them viable or save the industry or coming in and picking up the pieces and moving in another direction? Is that part of the mandate of NSBI as well?

MR. LUND: We work with companies - period. Sometimes some of these issues are beyond us, really. To see the losses, short of a bail-out, which we don't even get involved in, the global economy is just - you're producing a product that can be produced somewhere else a lot cheaper; that's what we're going to face. Unfortunately, TrentonWorks - those guys can build a rail car cheaper in Mexico and Moirs chocolates can produce somewhere else in the world a lot cheaper.

With the Canadian dollar where it is and our levels of productivity, on average, it's a challenge. I think we're going to continue to see some challenges. We work with a lot of companies that would be a lot smaller, we would help them whether it's financing or helping them on productivity or many respects - opening up new markets for trade - that's where we play a role. We have worked with all those companies that you just mentioned, but sometimes we don't have all the answers. We're no different than any other place in Canada today, we're facing pressures, and you just have to make sure you're trying to get your successes to be more.

In yesterday's paper, you probably saw in Canada, there were 160,000 job losses last year in manufacturing, but there were 400,000 new service jobs added in Canada that paid

far more than those losses. The economy is shifting and, really, there are going to be winners and losers. We try to work with companies where we can.

MR. GLAVINE: Is there time for one - okay, two minutes.

If we take a look still at the overall picture in Nova Scotia, about 70 per cent of all employees worked in companies of five people and under. I see a lot of those throughout the Valley area where one or two more people can be added, but NSBI doesn't - I don't see them having an active role there. Is it an area that, again, from your board perspective, you would take a look at? Very often, in our rural communities, that one or two more positions in small companies really has, again, a good multiplier effect.

MR. LUND: Sorry to challenge your numbers but 70 per cent of Nova Scotians work for a big business, being 50 people or more. So in terms of companies with 50 people or less, it's actually, the latest numbers are about 30 per cent, 33 per cent. So in terms of people with 5 or 10 employees, it's considerably less. It's not to diminish the role of small business - those are the numbers.

The reality is, we work with big and small and the challenge with us is, if we work to bring a Research In Motion here, everybody knows that. That makes the paper, it's all over the place. About 70 per cent of what we do, if not more, is working with small business, in fact, mostly outside of Halifax. When you think of all Pat's team, all of Fred's team, almost all of our trade team work right here in the province and we could list probably 50 companies we have worked with for every RIM, right around the province.

[1:30 p.m.]

Your point is a good one, if we can help these companies add one or two people. But it's also if we can help them keep the five that they have; I think that, in some respects, is just as important. When we started off, it was really about go get jobs, get jobs, get jobs. I think we're past that now. To me, it's all about creating strong companies and if we can add one or two, and it would just change our payroll rebate, for example, to knock it down to 20. In fact, we even look at 10. If we can see companies that can grow or - our new initiative that Pat is spiriting around productivity - if we can help these guys keep five people, but yet see a way to get to seven or eight down the road. I agree with your point, I think it's very valid.

MR. CHAIRMAN: Order.

MR. GLAVINE: Thank you.

MR. CHAIRMAN: Mr. Porter.

MR. CHUCK PORTER: Thank you, Mr. Chairman, and thank you, gentlemen, for being with us today. I want to just start off by saying, as I was talking to Pat there on the way in - I have a good guy down there in my area who was very quick after the election to knock on my door and say hello and offer what it is that NSBI does and what they can do, and what they can do and how they can help us if they can. Sean is a good guy down there and I have been in touch with him on numerous occasions with business both big and small, I guess it's fair to say.

What I really liked about what NSBI does is if they can't assist maybe within their scope, they often know where to send you or to help forward you somewhere else. I found that quite beneficial actually - certainly as a new member in our community - as a very positive thing and people notice that in our business, especially our small-business people who generally don't maybe fit into your role, but it has been beneficial in Hants, I can say that.

Just on a couple of your comments, you talked about a study that measured our province against 11 other jurisdictions - I'm sure, in size, maybe in population. What other kind of measurements did we do in there?

MR. LUND: It was a third-party analysis that we did and it was an outside group that did it. They started off with a list of 40 jurisdictions around the world and they narrowed it down to 11, because they found out that not all those jurisdictions provide the same level of detail that we do. So it's kind of hard to get a comparison. So they came out with 11. New Brunswick was in there, Ireland and different parts of the States.

For me, the Irish model was one that really I wanted to - if I was to compare ourselves with other jurisdictions, it would be Ireland and it would be New York, or it would maybe be Quebec for certain things and maybe other jurisdictions for other things. Again, they looked at jobs per population, per agency and all of those kinds of things; that was the focus of that. In every way you sliced or cut it, we were in the top three in every one of those categories. To me Ireland has always been the model around the world. Everyone knows the story of the Irish miracle - they went from worst to first.

I wanted to point something out about Ireland, which is interesting. I know the debate is always around, is it rural, is it urban, do you bring business in or do you grow? I think the short answer is, it's all of the above. The analogy that Pat often uses is, if you have a strip mall, are you better off having 10 companies or having 10 companies anchored on each side by a bigger company?

Ireland? Make no mistake about it, Ireland imported their economy - period. That's how they grew their economy. Once they grew it to a size in Dublin, then they branched out. If you look now, what's going on in the west coast, it's booming. I just read the other day, there was an article in The New York Times about Ireland, about how these major

entrepreneurial companies - all the new spinoff companies that are formed up all over the place. There is no one answer and I think you have to be able to do all.

When we look at the job numbers, we've been able to do a good job. The biggest number that I think we're most happy with is the average wage of the jobs we brought in - it's around $50,000, which I don't think is seen anywhere else in the country. But again, that was then, this is now.

I think jobs are important, but it's also the right types of jobs. One of the things we found in going around the province, the whole thing about getting people - Clarrie, you were with us - it doesn't matter where you go. It's, I need to get the right people, that's got to be the focus for all of us.

MR. PORTER: For sure, that input is important, no question about that. You talked about Mr. Ryan's initiative toward productivity. I'd be interested in hearing a bit about what exactly that means. Good words, but what does that mean for the average Nova Scotian?

MR. PAT RYAN: I guess I'm going to have to answer that. (Laughter) We've modified the payroll rebate - I'm sure most of you are familiar with payroll rebate. It's a performance-based tool we pay after the fact, based on incremental job creation. We've modified that tool to be used to incent new capital investment in productivity and competitiveness; for example, incenting a manufacturer to implement the lean manufacturing techniques to improve their outputs. It would require capital investment on their part and we would use the same basic kinds of metrics to give them a rebate of a portion of their payroll based on performance.

The fundamental difference is that it's focused on a project around competitiveness and we would also, in some circumstances, incent job retention versus pure incremental. Mr. Glavine touched on those - you may have a 10-person manufacturer that really needs to make some investments in plant and equipment that are going to increase their throughput or they're not going to be able to make it. We would provide a form of rebate, matched by their dollars coming in, to allow them to do just that.

It continues to be performance-based, which is what attracts our board to it. We can demonstrate you're getting a return for the dollar. We have some transactions that have been approved and not yet announced that we'll be rolling that out forcefully in the next month.

MR. PORTER: You talked about Ireland, Mr. Lund, as an example of how they imported their economy and it's an interesting model, there's no doubt. Where do you see us in five years? You've taken the time, you've put it all together, you've talked about a couple of things in here but I'm really interested, where will Nova Scotia be in five years using that model?

MR. LUND: The short answer is, I don't know.

MR. PORTER: I can understand that. Projections then, perhaps.

MR. LUND: I think we're in a pretty good position right now to weather the storm in the U.S. The growth forecasts are pretty good for Nova Scotia, but we're going to have challenges. We're going to see more job losses in different industries, there's no question about that, but I think overall we'll get through this. I mean, too much has to happen in five years.

What I'd like to see, obviously, is a strong, vibrant economy. The biggest opportunity we have in Halifax is in financial services - period. We've done more in 18 months than any jurisdiction in the world. I think my goal would be to see that industry flourish, but to spin out around the province and to have that impact the whole economy of the province. I think we need to focus on a few things. I think we could have opportunities. I forget who mentioned that you might have it around people.

So right now, the biggest issue facing companies around the world is getting people. We met with one of the top three banks in the world recently in New York. There are jurisdictions that they are facing a 30 per cent turnover. That's just unbelievable and 20 per cent increases. So we're off to India next week. We know that area has boomed, but it has lost a little bit of its lustre just because of some of the issues I just talked about which create opportunities for us.

When I was in India recently, last year or whenever it was, I was really struck by something someone said over there, which was a question - why will India lead the world in 20 years? I said, I don't know. His exact answer was, because we're good at math. I started to think about that and I said, what do you mean. The whole thing was education is the only thing that's going to do it for us. So education and technology. You look at Ireland, back in 1990, free education - boom. They brought in all the people who moved away, they brought them all back. Big success story. Now they're bringing in tons of immigrants.

MR. CHAIRMAN: Order.

MR. LUND: Sorry. So the short answer is we need to focus on technology and education and I would like to see the prosperity of Halifax spread throughout the province in the next five years.

MR. CHAIRMAN: Mr. MacKinnon.

MR. CLARRIE MACKINNON: I'm very pleased to see that regional growth is at the top of your list for increasing focus. I do like to look at things on a broad basis, but I have

to have tunnel vision here for just a minute if I could. Could you comment on your regional successes in relationship to urban versus rural and Cape Breton versus mainland?

MR. LUND: We've had a lot of success, we met all our targets. We do a number of different things, some of which are measured, some aren't. If you take a look at just the numbers, jobs and things, we, for example, the number of financings - the majority of those are certainly outside of Halifax. The number of companies we have taken on trade missions, the far vast majority of companies are outside of Halifax. The people we have worked with and helped from Fred's group, almost entirely outside of Halifax. From an investment perspective, an investment attraction perspective, it's about 55-45 in terms of Halifax versus outside which, to me, is a pretty remarkable number.

I'm proud of the fact that we've been able to do so close to 50-50 when you think about it, because many of these companies coming here from different parts of the world, they would barely know Halifax; in fact, they would barely know Nova Scotia. They always start off with they want to come to Halifax. We don't force companies anywhere, but we try to give them options to go to different parts. We think we did a pretty good job - not perfect, but a pretty good job in and around the province.

Could I ask Fred to make a couple of comments?

MR. MACKINNON: Sure.

MR. TERRIO: I guess I'm passionate to this area, too. I have been around for 25 years doing regional development through Economic Development and NSBI, and I think the picture has changed in the sense of how business is done. One of the things that I like about NSBI is, it's business focused. There are other departments and agencies that will look after helping build that infrastructure of community development. I think we're doing a great job. We have six people in six offices located around the province that do nothing but direct their focus on business development.

We, or NSBI, are the first agency that I know of in government that has taken a proactive approach to business visits. We go out, we look for opportunities in those businesses to help those businesses grow themselves, whether that's through financing or export development. We act as counsellors, facilitators, mentors. The other thing that I think part of this regional development growth - we rely significantly on our networking partners.

There are two things here. One, NSBI in itself in rural development can't do it all, so we have to have partners to help us do that. I think an example of that is, in the first nine months of this year, we've had 17 transactions closed for 164 jobs through those transactions, for just a little bit over $4 million in payroll, which averages about $30,000 a job.

We work closely with chambers. We're doing things differently, I think, than maybe in previous agencies - the way things were done. We're out there, we have expertise - most of my team are ex-bankers, we know how to deal with businesses. It's not a matter of always just incenting with a grant. We take that role, we do a lot of matchmaking - I could go on and on, I get passionate about this because I do think that NSBI, the role it's playing with the resources that we have, we're doing a good job in trying to help small business in rural Nova Scotia.

MR. MACKINNON: I know you've done a good job in meeting targets and so on, but when ShiftCentral did the study - this isn't meant to be negative in any way, but do you actually have categories like, these were the ones we were involved with in some way, and these were the ones we were the make or break involved in getting them here?

MR. LUND: Most of those, if not all, are the make and break. Every company that has come in that we've been involved in, we've gone out and got the business. People don't just - I don't remember any companies, if any, calling up and saying, we'd like to come to Nova Scotia. The thing we do better than any place in Canada, we know, we know how to get business and we are proactive in doing that.

[1:45 p.m.]

I don't have all the details in front of me, but we count those deals where we play a major role and it's easier on the investment traction side of it, but we work with companies right around the province. Our challenge is getting the awareness up in terms of what we do and how we can help. As I said, it's easy with the big companies, everybody knows those names, but I bet Fred has a list of 17 companies here that no one probably has any idea that we're part of, where we spent a lot of time. We could spend months working with the company here - we don't do anything, we don't provide any financing or any exporting, but they get what they need, so it's a success.

MR. MACKINNON: I want to follow up on Leo's comments, because I think much of Nova Scotia, with the farming, the forestry, the fishery, we have to be assured that you're not treating these as sunset industries, because they have helped to sustain us throughout our history and they will continue to sustain us into the future. There are so many opportunities in biofuels and wood pellets and the new interest in Antigonish with an abattoir and so on. There are a lot of things that can happen and will happen, but they need help.

MR. LUND: No, I think you raise a good point. There are lots of opportunities, we just have to be able to recognize them and figure out how we can turn them into reality.

MR. MACKINNON: Something you said a few minutes ago that I found exciting. At one time, the payroll rebate used to be 50 employees and then it went down to 25. Did I hear you correctly in that you were saying you would actually look at 20 or 10?

MR. LUND: I think it's 20. I'm pretty sure it's 20, but that's a guideline.

MR. MACKINNON: It was 50; it went to 25.

MR. LUND: No, even when it was 50, it was a guideline. The reason we said 50 is because we're not a big shop, we don't have the resources to be doing 1,000 of these, so we had to pick a number we thought was reasonable. We've done lots of them less than 50 and I think, our recognition now, what we heard was people saying that was mostly to go after a big company like RIM, that's going to help me. I think we recognize that if we can help - again, lower the limit to help some of our local companies more - we will do that. So it is 20 as a guideline. So if there's a good opportunity for us when there are 10 people, then I don't see any reason why we wouldn't do it. It's not cast in stone, that number.

MR. MACKINNON: Certainly the high number is a great disadvantage to communities, for example, in my riding, you know Lismore . . .

MR. LUND: No, I recognize that.

MR. MACKINNON: What business are you going to attract to Sunnybrae with 50 employees or even 25? This is very important.

MR. LUND: It's a good point.

MR. MACKINNON: Looking at Ireland, we're always throwing Ireland around as the comparison. What similar factors do we have to Ireland and what do they have that we don't have, because I think they . . .

MR. LUND: A few billion dollars is what they have.

MR. MACKINNON: . . . are a lot further ahead . . .

MR. LUND: Well, I think people know the story about Ireland years ago. It was a combination of, they hit rock bottom so they got $1 billion from the EU, and they worked well with labour and government and business. You know, the most important thing for Ireland is they had so many educated people all over the world who weren't working, so the key to their success was - well, first of all they reduced their corporate tax rate to 10 per cent and what they found was that from 35 per cent or whatever the number was, by going from that to 10 per cent and losing all that tax revenue, they multiplied that by tenfold in terms of the new taxes that they got. They are getting billions and billions of dollars in new taxes every year that they never had before, because they got so many businesses. They have 13 of the top 25 pharmaceutical companies in the world there. They have something like 15 of the top IT companies in the world there.

They went out and they said, come to Ireland. We have educated people, low costs and boom, boom, they just exploded in growth. They went from the worst to the first. Many would argue that they've gone too far - try to buy a house today in Ireland. If you've been there recently or been there 20 years ago, it's phenomenal. I think everybody holds Ireland up as the model, everybody does because it works.

There are lots of things here that we do better than Ireland and the key for us in Nova Scotia is, as Leonard mentioned, it's people. We travelled the world. We are around the world any day of the week and at the end of the day, our biggest selling feature is people. So we need to continue to invest in education, things like technology and infrastructure and all those things are really important, but we are in a dichotomy here. I would argue that the two economies are not rural and urban, I would argue that it is educated versus non-educated.

MR. CHAIRMAN: Order. I'll just stop you right there.

MR. LUND: Sorry, okay.

MR. CHAIRMAN: At the end of this, you're going to have a chance to wrap this up, too.

Mr. Theriault, please.

MR. HAROLD THERIAULT: Thank you, Mr. Chairman, and thank you, panel, for coming here today. It's interesting. I want to speak about being proactive - and you just mentioned that NSBI is proactive - and I want to talk about the primary resources of this province. I have been in that business all my life, in the resources of the fishery, and I have watched the forestry around me and I'm still watching things unfold in the resources that we have. Those resources that are leaving here without value-add - our fish have always left here without value-add to them. That's starting to change now a little bit.

One thing that's happening right in Digby as we speak is the scallop, a delicacy that's pretty much only caught in western Nova Scotia, in the Bay of Fundy. Digby is famous for those scallops. There's another resource from scallops, the shell, which a person down there just put his home up for collateral. He has put three years of his life into it, into those shells that are being thrown away every day, to come up with a cleaning product that does a wonderful job, I use it daily. He's trying to sell it locally, but he just can't seem to get ahead, he can't seem to get help financially or in marketing. That's just one lately.

That has been sent away and the scallop itself has been sent away without value added. We have another person out trying to make a gourmet dinner with the scallops that he just told me three days ago that he's pretty much broke. Nobody will talk to him about how this can value-add to this scallop. You see it on TV all the time - go home, throw this

bag in the microwave and in 30 seconds you can sit down to a gourmet meal, whatever it may be. But he can't seem to get off the ground.

I've told him about NSBI, I've told him about ACOA - there are doors shutting all the time, and continue to value-add. We just saw a quarry down there that wanted to come in, the Americans, to take our rock away to build cement products - block and concrete. We have businesspeople coming to me saying, why are we letting that rock leave Nova Scotia? No royalties and no value-add. We can make cement blocks here, we can sell them down there. We know where there are markets in the Caribbean that want cement, we could just bag it, bag the cement, sand and gravel all mixed for them.

There are all kinds of ideas out there, I could go on and on here, get into the alders and the works if you want me to. But you said you were proactive - why aren't these things getting off the ground? This is just in western Nova Scotia and this has been going on for years. Just this past four years, there are two or three things I mentioned and the people who are trying to get it going are nearly broke, saying the doors are being closed on them. Have you been proactive on any of this?

MR. TERRIO: Mr. Theriault, I certainly am aware of the company with the scallops. Actually, I was in Digby and had the opportunity to have a presentation by that company. I absolutely agree with your comments. I think it's important to recognize that we're proactive in going out and visiting with companies and trying to identify those opportunities.

The next challenge, once the opportunity is identified, is how do we move that along to, as you indicated, value-add. That's not always easy. I think a certain amount depends on the entrepreneur, what is his business plan saying? We work with every networking possibility out there.

For example, Community Business Development Centres - CBDCs - we have unusually good success in referring companies to the CBDCs to get financing. I think any entrepreneur, as far as in my history of doing business development, an entrepreneur has to bring a certain amount of risk to the table himself and a reasonable business plan that other people who're going to study it for financing will be able to interpret. I know there are situations there that it seems as though they never get off the ground for one reason or another, but I'd like to say the glass is half full and I'd like to say that we do identify those opportunities and work with businesses, help them find financing and move it onward. I think I can say, at one time Sarsfield's were shipping apples or whatnot and now we're shipping apple pies. I think that's the whole idea, the focus of what we want to do here.

I'd also like to add the fact that you ask what is being done around this value-add in the fishing industry. We have just employed a new person in the Yarmouth area and I was speaking with him this week and there's an initiative that he has developed down there that

will bring a number of development partners together, as well as private industry people, to address that very concern, why are we shipping lobsters and not some off-products?

I don't know if that really answers your concern, but I certainly think the glass is half full and some of that emphasis has to go back on the entrepreneur. It's not a custom fit way of moving companies through, everybody has their own unique little intricacies why things happen or they don't happen. But I would like to stand by the fact that we are prepared to work with those people to overcome those obstacles, if there is any way of doing that.

MR. THERIAULT: I've been in the lobster fishery and 10 years ago I sat down with a person I knew well and had a plan for lobster. We ship 10 million pounds of lobster out of this province to New Brunswick. You had the plant all ready to process lobster instead of sending them to the canneries in New Brunswick and it ended up it was too risky of a business, the financial people said. This was 10 or 12 years ago, even before you came along. I have been in the fishery for 15 generations, my family. Yes, it's risky, everything is risky, but the lobster fishery has been one of the most stable fisheries in this country. Those people sat there at that table and said it's too risky, and we're still sending millions of pounds over to New Brunswick, across the bay, 30 miles. It just makes you want to pull your hair out of your head. Why? People sitting on the wharf, twiddling their thumbs with no jobs. I could go on and on. I don't want to, but I want to touch on one more thing.

The Cape Breton space pad, I want to touch on that. Is that going ahead? Is NSBI involved in that? If it does go ahead for $200 million, just what will that do for Nova Scotia?

MR. LUND: Well, I don't know if it's going to go ahead. I can tell you working in space and launching satellites, that's going to happen. There is no question about that. NASA is getting out of that business. Whether it comes to Nova Scotia, I don't have the answer to that, but we have been working with that company for the last 18 months. If they meet all their guidelines, if they get approval from NASA and all the partners come together, then it might work and could result in, could be hundreds, if not thousands of jobs. It's going to happen, I just don't know where it's going to happen and NASA has already said they're getting out of that business. Cape Canaveral is an incredible tourist destination, not only do they launch satellites and everything else from there.

So I don't know the answer yet, but it's probably getting closer to when we will know or not, but we look at businesses and they have to make sense. It has to be right for Nova Scotia and if it's not, then we don't get involved. So we continue to work with companies, as long as they continue to show progressive movement and they get the right partners involved.

[2:00 p.m.]

MR. CHAIRMAN: Order, again.

MR. LUND: Sorry.

MR. CHAIRMAN: Sorry to keep cutting you off here.

MR. LUND: It's all right.

MR. CHAIRMAN: Mr. Dunn.

MR. PATRICK DUNN: Thank you, Mr. Chairman, and welcome again. NSBI, what is the relationship with the Nova Scotia Community College, if any, as far as your daily operation, weekly operation and so on, what they can offer?

MR. LUND: We have a great relationship. I will talk about the community college and universities together, but I remember a couple of years ago we were invited to speak to the university presidents and they were making a comment, we're not getting enough recognition, you know, and we don't know if people will realize what we have. I said, do you know what our first slide is in any presentation that we use around the world? So anyway, I sent someone back to the office and they came back with a slide and the first slide was Nova Scotia universities and community colleges, our number one asset. So I put them together because they're both so critical for us. We work with the community college on a regular basis. In fact, they have been exceptional. We have a number of companies that have come here and worked with the community college to design specific programs around what they're looking for. Personally, I think they've done a great job.

MR. DUNN: NSBI has been successful as far as the financial services and the knowledge economy and so on. Can you foresee the rate of progress in the next five years as opposed to the past five years with regard to enticing and attracting these companies in, and if so, can you foresee maybe satellite offices similar to - I think the member for Pictou East mentioned satellite offices going out into the smaller communities eventually.

MR. LUND: To answer your first question, I don't know. It is going to be hard to maintain the rate of growth that we have had, because we look for opportunities and if we don't continue to have the right people coming out of school for the jobs that are coming, we are in trouble, so we need to focus on that area. But if you look at financial services, for example - Mr. Preyra, this is where I get to answer your question.

MR. PREYRA: Thank you.

MR. LUND: The biggest opportunity we have in Halifax is financial services. We have hit a home run that no one else has anywhere, in any jurisdiction anywhere in the last 18 months. We have the biggest, best, strongest companies in the world coming here and hiring kids and paying them double what they might be used to getting out of school. The average wages here are $60,000, $70,000, $80,000 in these jobs. They are phenomenal and they picked Halifax over every jurisdiction in the world. We have been competing with Brazil, the Eastern Bloc countries, India, the Philippines, and we're winning all that business. Why? We're winning, because we have a formula that works including we have people. We have good universities, a good community college system - that's the key.

In terms of financial services in Halifax, right now we don't have any space. There is no space in Halifax. In fact, if we get an opportunity today, I'm not sure where we would put them. If we don't fix the space problem, then we're out of business, in fact. So if we don't get a chance to grow those places around the province, which is what I want to see - if you go to New York, you can see New York is booming today because of financial services. So is London, so is Singapore, so is every major place in the world. If you stand in New York and look across the harbour, you can see - they call it Wall Street West, the second wave of financial services. So there's no reason why we can't have the whole shoreline of Dartmouth or the shoreline of Port Hawkesbury-Sydney as satellite offices.

That's what I would like to see, but I don't believe in creating a monstrous concrete jungle down here. That's not what I want at all. I believe that we need to respect the heritage and culture and all of that, but right now we just don't have any space. Some of our companies - most of them in the financial services - want to be downtown as their first step. Their second step, we're already working with some of these companies that will go anywhere outside the perimeter on their second move, and that's why I'm agreeing with your concept. But right now we need a solution for space downtown and I just think it has to be smart and I'm not disagreeing with that.

So the long answer to that is we've had a lot of success around the world, we are on the map around the world, and it almost takes going away to recognize that, unfortunately, and hearing what people around the world are saying about Nova Scotia and funny, even in Canada. I know of three or four provinces that are looking at setting up similar operations to NSBI because they think the model works here. It's not perfect, but go to some other provinces or go around the world. There are some great places around the world, but do you know what? We have a pretty good thing going here and so I would like to see it continue.

MR. DUNN: You answered another question you had dealing with the downtown core, downtown development and so on and the lack of space, and what critical issues revolve around that. You pretty well covered that. Perhaps just one more question, Mr. Chairman, and it's dealing with what my friend and colleague mentioned earlier - poultry,

chocolate, rail car industry and so on. NSBI's main focus is attracting and enticing new industry to Nova Scotia. Are they playing any role with regard to supporting - I will use TrentonWorks as an example, prior to TrentonWorks closing - are they involved in assisting older manufacturing places like that to maintain some sort of sustainability?

MR. LUND: First of all, our main role is not just to attract business to the province. We really believe you have to have both. I don't believe we could be successful focusing strictly on one approach. I mentioned earlier that about 70 per cent of what we do is really focused just working with companies around the province, of all sizes.

Some of the companies we have worked with, but often there are others who take the lead. There was a cast of thousands working with TrentonWorks, but we've worked with them over the years. Pat was part of a team and there are a lot of teams that are working with some of these companies - even after the fact - to help them with the transition side of it like retraining, the Department of Education.

Nobody wants to see a company leave, so you try to do your best if you know of any situation. Sometimes you're successful and sometimes you're not.

MR. RYAN: If I might, I've been close to the TrentonWorks situation for 18 months or so, and there's a good example of a lot of effort made by many partners. Activity was led by the regional development authority, I participated in the group that was focused on that. We made efforts to market that facility in the Caribbean, western Europe, southern United States, Alberta - I've been on the road, along with my colleagues with staff from that company and so forth. So a lot of effort went into promoting that value proposition in a lot of places.

On that topic, Stephen touched on the shift from a resource-based to a knowledge-based economy. But Mr. Theriault touched on the idea of adding value and I'm with you 100 per cent. In order to add value, you really have to use what's between your ears and not what hangs at the end of your arms. One of the things I've noted as we work on those kinds of problems like Trenton, Hershey, and Shaw Wood for that matter in the Cornwallis Park - like Britex in Bridgetown when it was lost a few years ago - you hear a lot of talk about productivity.

We have a literacy problem in this province - a serious literacy problem. Every time I start talking about that, the boss gets nervous because he thinks I'm going to set out and try to fix that on my own. No, I'm not, but I think we have a role to play in advocating and raising the dialogue about that provincially. We have a collective responsibility to try to do something about that. I'm going to educate my children - I think everybody's going to try to do the same thing.

But 38 per cent of Nova Scotians, according to our own Department of Education, are functionally illiterate. That's 200,000 people. Those are people who maybe dropped out of school in Grade 10 to go fishing. Now they're my age and maybe they were born 50 years too late. So they will survive - fishermen are good at surviving, something breaks when you're offshore, you better fix it or you're not coming home. They will survive in those communities, they'll find ways to adapt and overcome.

But what are they doing to advance society, collectively? What are they doing to add value? Maybe if there were a couple more people that could help that gentleman - I know the company, I have the stuff in my medicine cabinet - to help that along, what are we collectively doing to help our society along? When I stop working for other people, I think that's maybe a project I will get involved in, but not until then, boss. But that is . . .

MR. CHAIRMAN: Order, please. It was very interesting, I'd like to hear more of that. With the permission of the committee, I'd like to take five minutes and then we'll go to seven-minute rounds after that and everybody, again, I'll put on the rotation. The vice-chairman has stepped out for a minute, otherwise I would just swap seats with him.

I have a couple of quick questions. Has the Resource Recovery Fund Board talked to you at all about working with them on the raw materials they have - in particular, tires - to see if there are some businesses in Nova Scotia that might be interested and smaller businesses that might be interested in producing some products from whatever they have available? Has there been any discussion on that? Have they approached you on any of those issues?

MR. RYAN: I've had some preliminary discussions with their new business development fellow, but they're very preliminary at this stage. We haven't really had a meaningful discussion that I'm aware of.

MR. TERRIO: That's an ongoing book for me with tire recycling, I think, since the day it came out. We haven't had any direct ask from Resource Recovery Fund. But I can tell you we're working with an individual in Upper Musquodoboit and he is working with rubber product. Right now he's exporting about 95 per cent of that product out of the province. But we have not been approached by Resource Recovery Fund to do that.

I think in past history, we - call it Economic Development - were front and centre on that project. Since that point in time, no, we haven't been asked to come back to the table on it. We've worked with individuals, but that's as far as it's gone.

MR. CHAIRMAN: The reason I asked that question is that I've been very critical about burning tires, as everybody knows. Thank goodness the government decided not to burn them. I think that would have been a regressive move for all kinds of reasons.

It doesn't make sense. We have all kinds of raw materials the Resource Recovery Fund Board is collecting - tin cans, aluminum cans and all kinds of plastics. Some of those have been very successfully turned into other products. I think that's wonderful, those successes we shouldn't underestimate, or we're not giving them full credit for.

Always, when I ran my business, my biggest problem was getting raw materials at a cost that was competitive with my competitors so I could, indeed, then work forward. This is a golden opportunity - here are raw materials that you can actually have paid delivered to your door free and create a business out of it. I think it's just a natural marriage from what you've been doing at NSBI, trying to develop businesses, and here's a business opportunity. But if he's not talking to you as they should be and say, okay, if you have business people in there who might be interested or capable of doing this, let us talk to them. Let's get this thing underway. That's the only comment I have with it and my time is up. You might want to make some comments afterward on that.

We're going to have a full round again, seven minutes each and that will take us up to about 2:50 p.m. Mr. Preyra.

MR. PREYRA: Well, I was going to give up some of my time to Mr. Lund, because I got into a rant and didn't give him a chance to respond, but he has responded to it. I agree completely with you that we do need more space and that the biggest assets we have are our people. We have a well-educated population - where we disagree is whether we should have tall buildings and whether they should all be in one cluster, and we can talk about that outside I guess.

[2:15 p.m.]

I did have a question about the film industry; I know I've mentioned this to you in passing before. Nova Scotia and Halifax have been front and centre recently because of Ellen Page and Poor Boy's Game, and I wanted to ask a general question about where you see this industry going. What do we need to do? I don't know if you're in a position to comment specifically on Electropolis and its negotiations at the moment, but what do we need to do to nurture that economy and to make it better?

MR. LUND: I don't know if I have the answer, because we're not that closely involved with the film industry. There's a separate unit of the government that would deal with that. I do know it's a competitive business and that the other provinces in Canada have become much more aggressive in terms of some of their tax credits. I'd certainly like to see a thriving industry here.

With respect to Electropolis, we have an investment in a major film company here and that's the role we play from a business perspective in that industry. Certainly, I think one of the ways we need to probably leverage better is, the success of Ellen Page has been a great

role model of Nova Scotia. To leverage that even more from the business side of it - creating awareness of Halifax or Nova Scotia around the world - how do you take that and marry the two? It's like tourism and business. We're not directly involved in tourism, but all the people who come here are potential tourists and all the tourists are potential business people. So there is a link.

Pat, do you have any comments on that?

MR. RYAN: I'm a big Ellen Page fan. Not really - I mean, Film Nova Scotia is really engaged on that front. What I've heard suggested in the past is that we don't have any real studio space, which I think is an impediment to growth. I don't think we're going to be able to solve that.

You touched on the - DHX Media is one of our portfolio companies, so that's a good homegrown Nova Scotia success story and I'm pleased to see the Roméo Dallaire film has been nominated, I think, for 11 Genies if I'm not mistaken. We have a lot of talent here and a lot of natural beauty that's attractive to developers, but we're not very close to it. It's really a Film Nova Scotia play.

MR. PREYRA: I'm going to give up half my time to the member for Pictou East.

MR. CHAIRMAN: The time has expired for you.

MR. PREYRA: That was seven minutes? (Laughter)

MR. CHAIRMAN: Close to seven minutes. I'm trying to get us back on track here.

MR. MACKINNON: Thank you very much, Mr. Chairman. I still intend to use my seven minutes.

MR. CHAIRMAN: Okay, no problem.

MR. MACKINNON: Perhaps not, Mr. Chairman. I know I don't have much time here, but there is one little thing that I would like to mention in relationship to literacy. This is a good point that you have identified, Pat. We do have a well-educated population by and large, but literacy is something that we have to constantly strive for. I have hundreds of copies of The Hockey News in my vehicle right now to distribute, primarily, I guess - Bill Estabrooks wants almost all of them - to go out to youth who are probably struggling and Hockey News is something that they would read. So this is something that I want to quickly point out.

However, the example that you used of someone dropping out in say Grade 10 to go into the fishing industry, I want to very quickly tell you the story of the two brothers in

Northumberland Strait. Both went to St. F.X., both got good educations. One went fishing, the other taught for quite a few years. The guy who went fishing has an enterprise worth $1.5 million today. His brother has a pension - a good pension - but he is working as a deckhand on the boat of the brother who's in the fisheries. So having said that, there are a lot of success stories out there in relationship to the fishery. If you have a lobster and crab licence and other bits of an enterprise, you are in pretty good shape.

So I see today a lot of people quitting school to get involved in the service sector, in the McDonalds of the world and that kind of thing, because there is an opportunity to make some money and you might be working part-time and struggling in school and so you bow out. Now, having said that, it really concerns me in relationship to the financial services - and Halifax is a city that I love, always have, always will - that there's no space in Halifax, but there's a lot more to Nova Scotia than Halifax and there are some other centres that can, in fact, take spinoff from the Halifax economy.

Certainly not for banking interests, but we have 17 acres in Pictou County that you have been working with and we will welcome any of your efforts in relationship to that. When you look at 600 businesses being visited over the last number of years on an annual basis, I believe that a real objective should be to head towards 1,200 or whatever, because there are a lot of businesses out there that just need a little bit of recognition, a little bit of encouragement, just somebody dropping by. Some of them are small businesses that never get anyone knocking on their door.

Your people are very good - Lynn Coffin, in my area, is doing a good job I believe. Any experience I've had with her has been very good, but I believe we should be looking at increasing that number and knocking on so many doors. I'm sure on some days you can visit two businesses and offer that hand - not a handout but some kind of hand up, at least in relationship to encouragement. Is that something? That's a little bit of a rant, but is there a response to that?

MR. LUND: Well, you've just taken the whole seven minutes, Clarrie. (Laughter)

MR. MACKINNON: That's just the end of his seven.

MR. CHAIRMAN: That's actually the end of his, yes.

MR. MACKINNON: I still get mine. (Laughter) I have another rant.

MR. CHAIRMAN: It's going to have to be real short.

MR. LUND: The short answer is yes - your points are all valid, but there are a lot of other groups out there. There are a lot of groups around meeting with businesses and that and also doing community economic development. Fred's team is focused on purely business and

they have been out, that's a lot of companies even, 600 a year, and not to mention another 500 that we would meet outside of the area. But we're just focused, we're aggressive. We are proactive and aggressive and we try to meet with companies whenever we can and help them whenever we can.

You know we would love to see some more activity in Pictou and the financial services could be a good opportunity to spin out, but it has to work first in Halifax. Then their second wave could be anywhere and that's what we really want to focus on. On the literacy thing - I'm trying to cover all your points - there are going to be lots of examples of very successful people. I just think that the more we can address that issue in its entirety, the whole literacy thing, and the more we can help our population continue to focus on school, I just think it's a good thing.

MR. CHAIRMAN: I'm going to cut you off there. Mr. Glavine. (Interruption) You two might want to . . .

MR. GLAVINE: Are you cutting me off?

MR. CHAIRMAN: No. It could be you, you never know today.

MR. GLAVINE: I think our chairman is practising to be a timekeeper at the Metro Centre. (Laughter)

Two very different questions with my time. The first one, we hear a tremendous amount about the $100 million of R&D that our universities capture each year, somewhere in that area. Is NSBI working with the universities in terms of incubating and moving some of that research actually into small industry business type of opportunities? I'm just wondering if there's an active partnership in that domain.

MR. LUND: The short answer is no. We do a lot of R, we don't do a lot of D. So we do a lot of research in universities. Some of it - the brain repair centre - is world-class. Other stuff is not. I think the numbers around private sector R&D investment in Nova Scotia are really low and we need to encourage more D and less R. So we work on occasion with companies and InNOVAcorp is set up to help incubate companies and develop new products and that. So there are some great examples - for example, Acadian Seaplants and ONC - and there just has to be a lot more of those. You know there is lots of reasoning behind it and I have my ideas of what the issues are, and others might agree or disagree, but look at some places in the States. Boston, for example, they do a lot of research and development, a lot of spinning out new companies. I think it's an area in Canada that we don't do very well - period.

MR. GLAVINE: It's an area that kind of leads to my next question because in this whole area, Nova Scotia Business Inc. and universities, if they're going to take a potential innovation into a product, there's obviously some risk. In taking risk, through NSBI, what kind of dollar figure would there be around defaulted loans? That's going to be an inevitable part of the work you do.

MR. LUND: Well, we really haven't had a lot of defaulted loans. I shouldn't say because you have to define that and Pat can define that but in terms of big deals, we haven't had a lot. There are always issues with companies and we're looking after a portfolio that goes back years and years too. I think we are in the risk business. Any time a bank lends money they are in the risk business. You see all the issues today with mortgages and stuff that no one thought would happen a couple of years ago. You're in the risk business - period. So the challenge is you want to encourage companies and encourage growth, but you also want to protect the taxpayers' dollars. There is always a fine line. I think we've been lucky enough that we have been able to help companies provide financing, but we still return a positive return for the taxpayer of Nova Scotia. I'm getting into Pat's area more than I should be.

MR. RYAN: Our loan loss experience has been reasonable, I think, so we haven't had a lot of big hits. There are some who would suggest we haven't taken enough risk as a development agency, and I guess you're always going to be confronted with that kind of criticism, so there's lots of risk in that portfolio. There's lots of risk in every transaction that we complete. We're not afraid of risk and if we can see buying into a management team and a business plan, then we're prepared to take on a lot of risk. If it doesn't work out, then it doesn't work out, we'll take our lumps. We've had our failures, we'll continue to have failures, but we try to manage the risk the best way we can.

I think our loan loss experience certainly would be higher than what you'd see in a private institution. As public institutions go, I think it's quite a respectable track record.

MR. LUND: I just want to add one final point. We often talk about how both of us have worked in banks before - all of us have - but I think when you make a decision, at the time you make it, if it makes sense, it's the right one, that's your decision. Sometimes it works out, sometimes it doesn't. So you try to work with companies to make sure they're successful, you want to make sure you have the right management team.

You also want to make sure that the entrepreneur has some skin in the game. You don't want them just going to NSBI or directly into government and I need this or this, you want it to be a partnership. You want some of the risk shared.

MR. GLAVINE: One of the real success areas has been the call centre, the contact centre. Yes, there may be some criticism around that, but probably in a transition economy

it has been a necessary sector to cultivate. That being said, how healthy do you regard that sector where NSBI has been very active over the last 10 years?

MR. LUND: That's a good question. We are far less active the last few years than earlier on. That industry has probably been one of the most stable industries in Nova Scotia in the last 10 years.

[2:30 p.m.]

It's funny, I spoke the other night somewhere and this lady came up to me after and said, all those call centres come in and they all leave. I said, could you give me a list of those, please, because I don't know where they are. We've had a couple of them not work out and we've replaced them in a few months anyway. In fact, this industry is growing. There are 19,000 people working in that industry, paying wages that are equal to the average wage in Nova Scotia, and these companies are growing. The ones that are here are looking to grow. That's a healthy industry.

Your question about the future, I don't know. The Canadian dollar impacts these companies just like it does any manufacturing company. We're not going to be able to win business or keep business because we're a cheap place to do business - we've lost any advantage we had on that - it's people.

MR. CHAIRMAN: Order. Mr. Porter.

MR. PORTER: Just a quick question or two. A couple of weeks ago you referred in your opening statement with regard to the meeting in Truro - manufacturers, exporters and all those things surrounding the wonderful Canadian dollar. What came out of that? I'm looking for the positives coming out of that.

MR. LUND: What was interesting was we had a session just before the Premier was going to meet with the Prime Minister and the other premiers. I co-chaired with Paul Taylor, the Premier was there and the minister was there. We had 12 to 15 people in there representing companies in the region - we're doing these throughout the province.

Some interesting things came out of that. It wasn't the doom and gloom that I thought it would be. In fact, there were many examples of companies thriving because they're buying stuff from the U.S., being able to buy equipment to implement those things. Not everybody was affected.

There were clearly some companies that were impacted and there were a number of recommendations that came out. In fact, if you read the press from the Premier, one of the things he talked about came directly from that meeting and indirectly from the CME, which was changing write-offs for equipment and purchases, that kind of thing. I think one of the

themes was around productivity. How do we, collectively, become more productive? It wasn't that government should do this and government should do that - I thought it might have been, but they recognize that there's only so many things that a government could do and there's always going to be the push toward reducing taxes and changing write-offs. I think they would certainly be open to any moves around productivity.

The thing we're talking about here was a huge hit around productivity and we met with the CME and that. I think it was more positive than I expected and I think people realize that no one group has the answer, so how do we help the companies that are facing trouble and encourage the ones that are doing well? The other area was just on markets, like looking at new markets. Some companies even said this has been good for me because it has forced me to become more lean and more productive and take a hard look at how I operate. A lot of them also thought that we go like this - I'm up here today, I'll be down tomorrow and as long as I can be aware of that. So it was good, it was productive.

MR. PORTER: Thanks. That's all I had. I'll share my time, if I have any left, with Mr. Dunn.

MR. CHAIRMAN: Yes, you have.

MR. DUNN: We were talking about literacy and education and so on. Of course, education is the instrument for growth and success. I'm sure we all agree on that. I think things have changed drastically and the new wave of students coming through our school system are going to be better prepared with higher literacy rates and so on. In fact, I think - I can't quote, but the latest elementary literacy rates were quite high. I don't dare . . .

MR. GLAVINE: It's 85 per cent.

MR. DUNN: It was 85 per cent, which is quite significant. We go back to when we were in school, I don't know, I can speak for myself from Pictou County, living in a town with a rail car industry and when you got to Grade 8 and if you were struggling or you didn't like school, you persuaded mom and pa that you were heading down over the hill to the Trenton Car Works. Again, as time goes on, these industries fall down and the major crunch hits because of what we mentioned earlier about literacy. I foresee a great improvement, because there's such a strong focus on literacy now in our entire school system, in particular the elementary and preschool. Even with students who are having difficulty, we have teachers dedicated to a program for struggling readers and writers, which has full emphasis on these students to try to do some catch-up with their difficulties and so on. Thank you, Mr. Chairman.

MR. CHAIRMAN: Okay. Mr. Preyra, would you like to use some of Mr. MacKinnon's time?

MR. MACKINNON: After I use mine. (Laughter)

MR. CHAIRMAN: Go ahead, Mr. MacKinnon.

MR. MACKINNON: I'm a social democrat, so I'll give him two minutes. (Laughter)

MR. PREYRA: I have a question just following on the literacy question, but in general about skilled workers and the huge challenges that we're having, especially in rural Nova Scotia where we appear to have this pool of population that is available, but at the same time not available in those particular skilled areas. I was wondering how we bridge that divide between having these two co-exist, which is not supposed to happen in theory, but here we have this problem.

MR. LUND: It's a good question. I think the whole education discussion could be a full-day discussion and I think whether it's skilled workers or whether it's university, I think we have done a lot of work; I still think we have a lot of work to do. I think we're turning out some great university kids and I look at the people we interview and I think, good God, I'm glad I'm not competing against them today. But on the skilled workers side of it, to me it's all about matching and knowing where the jobs are versus where we think they are. I think that's critical because we know we're losing good people to go to Alberta, for example, and we know that there are still areas that have high unemployment, but yet some workers in the same town can't get workers. Those are issues. I don't have the answer, but I think we have to do a better job in matching.

We still have programs in the universities and community colleges that are turning out grads where there aren't any jobs, really. Here I am, I'm thinking I know we could generate thousands more IT jobs here in the province, but enrolments in IT are down across the country. There have never been more IT workers in Canada in any time in our history than today, but yet enrolments in many places across the country are down 40 per cent and so the skills trade area is no different. I think the community colleges have done a much better job in the last couple of years. If I had to pick one word, it's that matching thing. I don't know exactly how you do it, but that's what I think.

MR. MACKINNON: In the ShiftCanada study, the 11 other jurisdictions around the world that were looked at, when adjusted for population of each jurisdiction, NSBI ranked third in total job creation, behind only Ireland and North Dakota. We know all about Ireland's situation, what's the North Dakota story?

MR. LUND: I haven't a clue. You know what? That's a funny question, because I don't know. It's a good thing you read it.

MR. MACKINNON: Shouldn't we be looking at North Dakota to see their success?

MR. LUND: I think there are lots of places we can look for success. In fact, it's the same way . . .

MR. MACKINNON: But they were part of the study.

MR. LUND: It's the same way Ontario's looking for models around the world and they're looking at Nova Scotia. North Carolina, we know that, we know Boston. We know there are areas of great success in certain things. We look at that. They started off with 40 jurisdictions, it came down to 11.

The other model that's interesting is Georgia, which I think we're a bit familiar with. It seems as though these areas have gone out and picked an area that they want to be good at and they've really built that area up. They built the infrastructure, their education, all around that one thing. That seems to have been successful. It's focus. If I think of one theme around these places, it seems to be focus.

But there are lots of examples. India - that's such a huge success story to see where they went and where they are today. But look at China, there are lots of these places that have focused on being good at something. Nova Scotia, we're not going to be good at everything. We're not, so let's figure out a couple of things that we can be really good at and try to be the best in the world.

MR. MACKINNON: Can we have someone delegated to look at North Dakota and see what we can learn from them?

MR. LUND: Because you said that, I will look at North Dakota and see what's so good about that place.

MR. MACKINNON: The mentor program is one that you talk about and we've certainly heard a lot about mentorship in the last while. In relationship to what you're doing in mentorship, exactly what are you doing?

MR. LUND: This whole mentorship is something that came up in our discussions around the province. I think there are a number of initiatives out there around mentorship. We have a program called Edge where we pick entrepreneurs and we'll pay their way to go to school in the States - different schools like Babson and others where they can learn about being business leaders.

MR. PREYRA: Or Saint Mary's.

MR. LUND: That's right. Which is a good school to work closely with. Speaking of Saint Mary's - I don't want to take your time - we're working with them on developing a whole new initiative around financial services. They've been very, very good at that.

We're doing some, clearly not a whole lot, but we'd like to help companies where we can. Mentorship is such a big, big topic that everybody can use a mentor and everybody can use some help - with Fred's group particularly, working with companies and putting them in touch with others, helping them on the trade side of it, opening doors, helping them identify other companies where they can learn from.

MR. TERRIO: I think mentorship - I'll go back, Mr. MacKinnon, to one of your comments about we could do 1,200 visits a year. I was sitting here and I was going to ask Stephen . . .

MR. LUND: You did.

MR. TERRIO: I did ask him, but you may not have heard, I said, great, double my staff. But it's not all necessarily about just getting out there and doing those proactive visits. It's that, but it comes back to your second part, it's mentorship.

We spend a significant amount of time with our clients mentoring. If I had time, I'd give you a quick example. I don't have time, but I could give you a good example.

MR. MACKINNON: A closing comment in relationship to some of the examples that Junior used - very valid examples - in the primary industries. I believe there is a role for mentorship for some companies that have gone ahead with innovation and so on in those sectors. They could perhaps help the person trying to do something in the scallop industry or whatever. I think there are great opportunities in mentorship that we could be working with, and thank you very much.

MR. LUND: Yes, you're right.

MR. CHAIRMAN: Mr. Theriault.

MR. THERIAULT: Thank you and I just want to touch on that again, too, Pat, and probably tell you that I fished all my life. I was one of those guys who left school a little early and I figured I had learned enough to do the payroll at the end of the week, pay the bills and keep the business going. That's all I needed and I never looked back either until about four years ago when I got in this mess. (Laughter)

When you're out there fishing, you have to put your mind, not your hands, when you leave Digby and sail 15 hours to the southern and find a rock pile as big as this building - years ago did it with a watch and compass - find that rock pile, catch the fish around it, and get them back and try to get them on the market. You know, you had to use your brain a little bit and there weren't too many hands involved there.

MR. RYAN: I'm not taking a shot at the fishery, my father fished.

MR. THERIAULT: No, no, I know what you're saying . . .

MR. RYAN: I guess the point I'm trying to make is there is a difference between intelligence and formal education.

MR. THERIAULT: But we got people being formally educated, those people who dropped out of school, they are being formally educated right now - DALA in Digby, the Digby Area Learning Association (Interruption) Yes, they're putting 40 or 50 people out of there a year, educating them, getting their GED, Grade 12. There are a lot of them sitting around down there with nothing to do. Like Clarrie said, I think if you can help that fishing industry, help those primary industries get going, get value added going to every one of them, I think we have a whole new world there and we have to stop giving those resources away.

[2:45 p.m.]

Speaking of successes, how is Nova Scotia Business Inc. doing? What is your success rate and how many bad ones that you're not speaking about?

MR. LUND: Are you talking about on the lending side of it? Well, we're not a lending agency, we are a business development agency that does a little bit of lending. I mean that's a small part of what we do. We do investment attraction and clearly we think we've done a better job than anybody in Canada.

The trade side of it, you know we work with companies across the province. We can always work with more and help them become more aggressive. On the financing side of it, Pat, do you want to handle that? It's probably too early to tell really.

MR. RYAN: We've had some failures. We'll work with a client as long as they are prepared to work with us, so we're not quick to pull the trigger when we're in distress situations, but we'll act if we're left with no reasonable alternatives. The loans that we've been able to complete and the equity investments that we have been able to do have resulted in good, tangible benefit to this place, I think, and we'll do everything we can to try to sustain them. I think our failure rate hasn't been remarkable, but we will have failures. We've had some in the past, we had some loans that just didn't work out and we wound them down, others where we're working along, and some that are just sailing.

A point I would make is contrary to popular opinion, 96 per cent or 97 per cent of our customers make their payments every month without missing a trick. Many of them wouldn't be considered bankable - I know, because I'm a recovering banker myself - so we're not scared of risk. We do want to see more transaction flow and what you're getting at in terms of value added is absolutely consistent with our view of the world, especially when it comes to our resources.

MR. THERIAULT: Tourism was mentioned. You said you didn't directly get involved, but do you work with tourism to market Nova Scotia, on the marketing side, or does the Department of Tourism, Culture and Heritage market itself?

MR. LUND: Generally, the Department of Tourism, Culture and Heritage markets itself.

MR. THERIAULT: Are they doing a good job?

MR. LUND: I don't know. It's a tough business, it really is. There are some pretty good places around the world to go and see. I think they are, but it's out of my league. Where we kind of do it indirectly is - we were in Singapore last year and we had a chance to give a speech to a lot of people in the IT sector. We started off with giving a presentation, it was really about this is Canada, this is Nova Scotia - where we are in the world. That really helped from a picture perspective of Nova Scotia, because I bet 95 per cent of those people had not only never been here, but never even heard of it.

Our natural beauty does not sell for businesses, but it doesn't hurt. When you see the pictures of Nova Scotia - like Cape Breton Island is one of the prettiest places in the world - that doesn't hurt us. It helps more if we can get that message out.

MR. THERIAULT: Do you believe we need to keep the ferry services in western Nova Scotia, from New Brunswick and the United States? Do you think we need to build on that for marketing reasons? There's only one other cheaper way to move people other than by water and that's by rail. Do you believe we should be building upon ferry services in the southwest end of this province?

MR. LUND: Do you want to take a shot at that?

MR. RYAN: We absolutely need a ferry.

MR. LUND: There you go, you heard it here. I don't know all the implications and all the costs and stuff around it, from a 30,000-foot level . . .

MR. THERIAULT: From a business perspective.

MR. LUND: I'd have to say, I absolutely agree with that. He's from Digby, he knows the importance of it. You can see how it could be so beneficial and tourism from Yarmouth, business from Digby. I think, yes.

MR. THERIAULT: It's another access to this province.

MR. LUND: Yes.

MR. THERIAULT: Same as the air and the roads.

MR. LUND: I know if it's not there, the challenges it creates.

MR. CHAIRMAN: Thank you very much. Mr. Lund, would you or your colleagues like to make any wrap-up comments?

MR. LUND: No, thank you again. I think, at the end of the day, we're all trying to do the same thing here and your points are all valid. We recognize, I think, where we have a lot of strengths and we also recognize where we, as a group, need to work on. We're optimistic that we have a lot going for us as a province and we need to continue to get that message out there and work together.

MR. TERRIO: My only last comment is, if it's business out there, we're willing to engage in it and look at it. We'll work with our partners, we do that very well and we always look for those proactive opportunities to add value. Keeping that in mind, we want to go forward and make this province a better place.

MR. RYAN: I just appreciate the comments that have been made and I've taken note of them all. This is a tough business, collectively, you live it every day. It's not easy to do, but all of us are privileged to have the opportunity to work on behalf of this province. As Fred says, any chance we get to try to help an opportunity along to create value for this place, we're going to take advantage of that opportunity.

MR. CHAIRMAN: Thank you very much for coming. I did find it very interesting, as I know my colleagues did today and being informative. Keep up the good work - we need business desperately in Nova Scotia, as we don't need to tell you. Hopefully our economy will improve.

We have some committee business we have to discuss. The first is a letter I received from the Canada-Nova Scotia Offshore Petroleum Board. Everybody has received this in the past when it originally had come in. What is your wish with this?

MR. MACKINNON: I would suggest that we have a situation where we've heard two sides of an issue - there was a little bit of controversy generated from a presentation that was made here. I don't think it warrants any further action. I know I have read both pieces of correspondence and certainly the correspondence sheds some further light on the presentations that were made here. I don't think we have to spend any time on this issue.

MR. CHAIRMAN: Mr. Preyra.

MR. PREYRA: I agree. In the interest of fairness, if it's possible, we could table it and include it along with the documents that are available from the work of this committee and people can see and read it and reach their own conclusions about it. I agree, I don't think we need to recall anyone or compel anyone to give a different answer.

MR. MACKINNON: I would move that it be tabled.

MR. CHAIRMAN: Okay. Do I have a seconder for that?

MR. THERIAULT: I'll second it.

MR. CHAIRMAN: Any comments? Mr. Porter.

MR. PORTER: Mr. Chairman, I was going to ask tabled with the Hansard or tabled how? As part of the Hansard of the day?

MR. PREYRA: What would you prefer?

MR. PORTER: I agree with what Leonard said.

MR. MACKINNON: I would think it should be public knowledge and that it should be tabled as a document that may be affixed to the Hansard of the day.

MR. CHAIRMAN: Any other comments? Would all those in favour of the motion please say Aye. Contrary minded, Nay.

The motion is carried.

That handles that one. The selection of future witnesses. We have the Canadian Federation of Independent Business booked for February 12^th. I think we should book for March and April, just in case we're not in the Legislature. We can always readjust our April one if we're in the Legislature. What is your wish? Mr. Porter.

MR. PORTER: I was just going to point out, I see bolded here we'll be scheduled for March 2008, so does that mean we have February and March already scheduled?

MR. CHAIRMAN: No.

MRS. DARLENE HENRY (Legislative Committee Clerk): Those are two different . . .

MR. CHAIRMAN: We have to get permission to do that. So what is the wish of the committee?

MR. MACKINNON: Mr. Chairman, there are a couple of items that I would like to first ask if other MLAs are hearing comments in relationship to assessment. One of the things that we have here as a possible point of discussion at one point is the assessment services. However, having said that, I have asked for a response to that but we have already heard about Halifax running out of space in relationship to the business sector, the banking sector and so on.

I think we really, in this province, need a session on rural economic development and perhaps the agencies that are listed there when it comes to high-speed Internet - certainly Aliant did not win that contract and there are two other companies that may, in fact, be worth adding to that list. I think rural economic development has to be looked at. We have 17 out of 18 counties losing tremendous numbers of 18- to 26-year olds and not coming back, the out-migration situation in 17 of those 18 counties. It's not just Alberta that's gaining from the out-migration. Halifax, of course, is drawing a lot of people from the rural areas as well. I'm not trying to say anything negative in relation to that, I'm just saying that we really have to have opportunities in rural Nova Scotia for Nova Scotians.

MR. CHAIRMAN: Mr. Porter.

MR. PORTER: We don't disagree with that. I have a couple there, actually, Opportunities for Prosperity. Small business ties into that as well as the broadband initiative that I have listed under our caucus, so we could easily live with that for a future meeting.

MR. CHAIRMAN: Mr. Theriault.

MR. THERIAULT: Yes, I agree. The other one, too, that caught my eye was - I believe it's the one that's already scheduled - the Canadian Manufacturers and Exporters. It would be great to hear from them the problems that they're having right now, not just Nova Scotia but all of Canada. It would be very good to hear from them, that's for sure.

MR. CHAIRMAN: Mr. Preyra.

MR. PREYRA: Just a question for clarification. Are we thinking of two or three meetings here or are we just talking about the next one?

MR. CHAIRMAN: Two meetings. The next meeting has already been booked for February 12^th. We have a witness for that - Canadian Federation of Independent Business - that's on the agenda. But then we're talking about the Canadian Manufacturers and Exporters for March and then rural economic development, if I'm hearing everybody correctly, for April - tentative April, of course, depending on if the Legislature's in.

MR. THERIAULT: Maybe this next meeting - I'm sorry I missed that, I didn't see it - that could probably cover the manufacturing and export business under extended business?

MR. CHAIRMAN: No I don't think so. Both of them have a lot of - they're different.

MR. THERIAULT: Okay.

MR. CHAIRMAN: I think it would be too much for the two of them to be here at one time, based on all the questions the committees . . .

MR. THERIAULT: Disregard that.

MR. CHAIRMAN: If everyone agrees with that, March we'll do the Canadian Manufacturers' Association and April we'll do rural economic development. We will look at other people. I've heard rumours that EastLink now has the contract of the province - I don't know if that's correct or not - so it would probably be wise to invite them in. Anyone else any member can think of that should be in with this rural economic development.

MR. MACKINNON: Certainly the cable company in Cape Breton has also gotten a slice of the Internet activity there as well - Seabreeze Cable.

MR. CHAIRMAN: So if there's anyone you'd like to have come, just let the clerk know and we'll make sure they're invited. We don't want to leave anyone out; this is a very important topic.

MR. MACKINNON: Sorry, Seaside Cable.

MR. CHAIRMAN: The annual report. If everyone's had a chance to read it and are willing to sign off on it, we'd like to get it signed off. If you have any problems with the annual report - again, I'm new to this committee, so you'll have to forgive me. If you have no trouble with that, sign off on it and away we go.

MR. MACKINNON: Mr. Chairman, as a relatively new member of the committee, I'm not exactly sure of what transpired in the last year, so I have full confidence in the others who do sign off on it.

MR. CHAIRMAN: I would concur with that because I'm new too. (Interruptions) You'll never accuse Junior of hiding in the alders. (Laughter)

The meeting is adjourned.

[The committee adjourned at 3:00 p.m.]