Maximizing benefit of natural resources through responsible management

Ed Byrne, Minister of Natural Resources, says the department�s allocation in Budget 2005 demonstrates government�s pledge to maximize benefits for the people of Newfoundland and Labrador through strategic investments in and responsible management of the province�s natural resources.

"We are ensuring that we leverage the maximum benefit of our natural resources for the long-term interest of the people of the province," said Minister Byrne. "This government�s approach is to encourage the development of our renewable and non-renewable resources through responsible management and well-thought-out planning."

Minister Byrne notes the following key Budget 2005 initiatives:

Agriculture Policy Framework
The government continues its commitment to strategically invest and build capacity for sustained growth in the agriculture and agrifoods sector with $10.1 million in federal-provincial funding under the Agricultural Policy Framework agreement. This is the third year of a five-year, $32.5 million agreement with programming in five elements: business risk management, food safety and quality, environment, science and innovation, and renewal. The program has seen approvals for over 300 projects representing an investment of close to $12 million to date.

Farmland Consolidation and Development
Government will invest an additional $3.5 million in the first year of a new five-year program to support the long-term consolidation and development of farmland throughout Newfoundland and Labrador. Under a multi-year arrangement, government will enhance the land consolidation program and provide assistance to farmers to aid land development. This represents the largest single government investment in farmland development in recent provincial history.

Silviculture
Government will provide $7.3 million to support silviculture initiatives at various locations in the province. This will be used to support the Wooddale Provincial Tree Nursery and the Goose Bay regional nursery, the reforestation program, and research and development activities undertaken in this sector. Government considers silviculture to be an integral component in meeting its mandate for natural resource management on a sustainable basis. Silviculture funding enables the implementation of numerous projects which create meaningful employment opportunities for many rural communities throughout the province.

Resource Road Construction
Government will invest $3.5 million for the construction of forest resource roads. It will allow the department to undertake several high priority ecosystem management projects as set out in the department�s Provincial Sustainable Management Strategy.


Specifically, this funding will allow the department to establish resource roads in difficult to access and partition wood stands near the communities of Roddickton, Main Brook, Point Leamington, Gambo, Gander Bay South and Fox Island River. In addition, it will also provide for resource road construction along the south coast of Labrador near the communities of Port Hope Simpson, Charlottetown and Cartwright.

Value-Added Wood Manufacturing Program
Government will provide $300,000 in funding for a new initiative that will focus on supporting the manufacture of value-added wood products. The Forestry Services Division will provide support to the industry to pursue these new opportunities. This initiative is expected to complement recent efforts by government and the lumber industry which to date focused primarily on the value-adding of hardwoods.

Mineral Incentive Program
Government will maintain $1.6 million in funding under the Mineral Incentive Program in the upcoming year. The mineral sector continues to make a significant contribution to economic growth and employment in the province. This program enables continued private sector investment in prospecting and exploration activities throughout Newfoundland and Labrador.

Bull Arm Site Corporation
Increased oil and gas exploration activity triggers a need to maintain critical marine fabrication infrastructure. The Bull Arm Site Corporation will receive $1.1 million in order to internationally promote the site and provide for the day-to-day operations of the facility to maintain a shelf-ready state for potential future fabrication needs in the offshore.

Canada-Newfoundland Offshore Petroleum Board
The Canada-Newfoundland Offshore Petroleum Board (C-NOPB) will see its budget increase through a cost-shared enhancement of the board�s capacity to carry out its mandated responsibility for worker safety, resource management, benefits monitoring, environmental protection and regulatory compliance. The provincial government will provide $300,000 to position the C-NOPB to respond to growth in the industry. For example, there are currently four offshore installations � two production installations and two drilling installations. In 2005 and 2006, this will double to eight installations including an additional production installation with White Rose and three additional drilling installations � South Whale Basin, Orphan Basin and Laurentian Basin.

Positioning the Energy Sector
The province�s wealth is critically linked to energy resources. As such, government will invest $900,000 to strategically position the energy sector to maximize benefits for Newfoundlanders and Labradorians. The successful conclusion to the Atlantic Accord negotiation demonstrates the benefit of taking a long-range approach to resource planning. In keeping with this theme, a comprehensive Energy Plan will be developed. Furthermore, government will undertake a full assessment of the possible acquisition of petroleum interests by Newfoundland and Labrador Hydro. Within this allocation, funding has also been identified to provide the department with the resources required to prepare for and maximize the province�s returns from future major energy resource developments.

"This government continues a commitment to invest public funds wisely in key natural resource development priorities," said Minister Byrne. "The forecast is positive for employment and revenue growth through these commitments announced today in agriculture, forestry, mining, and energy."

Media contact: Carmel Turpin, Communications, (709) 729-5282, 685-4624

BACKGROUNDERS
Positioning the energy sector

The Blueprint outlined a number of key energy policy positions, two of which were the need for an Energy Plan and an intention to either restructure Newfoundland and Labrador Hydro or create a new Energy Corporation. Furthermore, government is fully intent on having the resources and knowledge-base to ensure that benefits of any future energy developments are maximized for the people of this province.

In Budget 2005, government has allocated $900,000 to assist government in positioning the energy sector to provide for long-term benefits for Newfoundland and Labrador.

A portion of this funding, $350,000, will be used to support the development of a comprehensive Energy Plan. This will be a strategic process and, when completed, will have the potential to have a significant impact on the province�s economy, society and environment. It will provide a roadmap of the major directions and policies to guide government�s management of the energy sector so that the returns to the people of this province from their energy resources are maximized. A discussion paper is being drafted and will be released during spring 2005. Following the release of the discussion paper, the department will lead a consultation process with energy stakeholders and general public throughout the province. While primary responsibility for development of the Energy Plan rests with the Department of Natural Resources, a team approach has been undertaken to involve Newfoundland and Labrador Hydro (NLH) in the process.

Secondly, government will spend $250,000 to undertake a strategic assessment of the possible acquisition of petroleum interests by Newfoundland and Labrador Hydro. This assessment will look at the trends and experiences of governments participating in the petroleum sector; the funding required; financial impacts and risks; and structure and governance.

The remainder of the funding will be dedicated to ensuring the province is prepared for potential discussions and/or negotiations with companies proposing developments in the province�s oil and gas sector. This potentially will include having access to expert advice and completing various assessments on issues in the sector including the various tax and fiscal issues, infrastructure capacity to support developments, and in-province refining.

Land consolidation and development

While there has been a traditional agriculture industry in Newfoundland and Labrador, this province remains at a very early stage of development in the agrifoods industry in comparison to other provinces in Canada. This presents tremendous opportunity for significant growth in this industry.

Newfoundland and Labrador producers are challenged by access to capital, climate conditions and availability of a sufficient acreage of farm land. Currently, a very small percentage of the agriculture goods consumed in this province is produced locally. For example, only three per cent of beef and 15 per cent of root crops consumed by Newfoundlanders and Labradorians are produced here. The expansion and development of the land base provides the farming sector with the means to increase local production and create opportunities to increase the consumption of locally-grown goods.

Government will invest $3.5 million in the first year of a new five-year program to support the long-term consolidation and development of farmland throughout Newfoundland and Labrador. Under a multi-year arrangement, government will enhance the land consolidation program and provide assistance to farmers to aid land development. This represents the largest single increase in government investment in farmland development in recent provincial history.

In the St. John�s area, an agriculture development zone was first created through legislation in the 1980s to protect farm land from competing uses. Government acquired land that had not been used for farming within the St. John�s agriculture development area and leased the land back to agriculture producers.

This approach is particularly important for the dairy and root crop sectors in this province. In the dairy sector, the cost of feed is a much higher component of production than in any other Canadian province. The provision of an additional 31 million litres (annually) in industrial milk quota over the next 10 years provides an opportunity to double the province�s total milk production. To benefit from this allotment, there needs to be an additional 15,000 to 20,000 acres of land into forage production. An additional 10,000 acres of land is required to achieve self-sufficiency in root crop production. Access to competitively priced land is a critical element in the growth strategy of both sectors.

Farming activity in the province accounts for $500 million in primary and secondary production. Across the country, Newfoundland and Labrador had the third highest growth rate in farm cash receipts in 2003. The sector directly employs 4,000 people.

Land consolidation and land development investments by government are one-time investments. The return in the form of provincial revenues and employment continues for many years after the investment is made.

Value-added wood manufacturing and secondary processing

Government will provide $300,000 in Budget 2005 for the first year of a four-year program to fund a new initiative that supports the manufacture of value-added softwood and hardwood products and strengthens the commercialization of previously underutilized species. Of the allocation, $240,000 is earmarked for new product development, marketing support and industry coordination to stimulate softwood value-added processing. As well, $60,000 is targeted to continue efforts underway in hardwood value-added processing.

Government is firmly committed to maximizing the economic value of our forest resources. The department will use this program to develop new opportunities to further softwood production use in �I� joists, finger-jointed products, solid wood siding, flooring, fencing and pallet stock. In addition, this initiative will help to continue our success in hardwood value-added product lines such as kitchen cabinets, acoustic guitars, floorings, furniture, and wood trim products.

The third element in this expanded valued-added strategy lies in the commercial development of underutilized species. The consumption of two underutilized species, larch and aspen, has risen over the past five years. For example, larch is now used in flooring applications and aspen is a source of pulpwood. Government�s plan is to direct as much as possible of the available resource of these species into value-added industries.

This program investment in the forestry sector leads to resource diversification and increased economic value derived from our existing commercial resource mix.

2005 03 21                   3:35 p.m.