The Province of Newfoundland and Labrador embraced the new year with pride in our achievements of 2002 and with confidence that these accomplishments will secure a path to prosperity.

I consider 2002 a turning point, a benchmark, a time from which to propel to greater economic stability to ensure an even larger investment in the people of Newfoundland and Labrador.

Our economy is growing. It has become much more diversified. Employment is increasing. Unemployment is falling. Social assistance caseloads continue a downward trend. Out-migration is slowing. The trend line for all economic indicators is moving in the right direction.

Real change is happening in this province. People are working. Companies are investing. None of this happened by accident. I will tell you why we are seeing this change for the better.

The government that I lead is very proud to have played a significant role in creating a climate of investment that is showing a positive impact. We are proud of our small business initiatives that support new business in all part of this province. We are proud of the programs and policies that are shaping our education system, a system that is current and relevant and challenges our students to achieve and excel.

The quality of the education our young people receive through the K-12 system is a key component to the development of a prosperous Newfoundland and Labrador.

We are moving in the right direction and are making real measurable improvements through a number of major education initiatives.

The Government of Newfoundland and Labrador is creating a culture of literacy in this province by taking on the challenge of introducing a new primary language arts curriculum, and funding reading specialists for all our school districts and a program of teacher in-service for every primary and special education teacher in the province. In 2003 we will continue to strengthen our long-term commitment to increase the literacy levels in the province, a priority identified in our Strategic Literacy Plan.

This province has to date invested $6.5 million to establish the Centre for Distance Learning and Innovation (CDLI). This centre is innovative and it is ground-breaking capitalizing on communications technologies to greatly expand distance learning programs for students in small, rural schools around the province.

We want all students to have access to a quality senior high school program that will enable them to succeed in post-secondary education and to pursue careers of their choice - no matter where they live. By using CDLI a student in a smaller high school can do for example, a level 3 physics or chemistry course and confidently attend university without the fear of spending the first two or three years trying to catch up

We will continue the unequaled investment in our education system. This government has committed $170 million to new school construction and major renovations - the most significant school construction program undertaken in our province since Confederation.

We have more teachers in our schools than ever before in our history relative to the number of students. For the current school year we retained an additional 218 teachers at a cost of $11 million. This means we continue to have the best pupil-teacher ratio in the country, at one teacher for every 13.4 students.

The foundation set in the early years of education leads our children to success after high school. I reiterate that education is the key to success and the key to prosperity. Since becoming Premier I have kept my commitment to ensuring that post-secondary participation in Newfoundland and Labrador be the highest in the country and that all learners achieve credentials that will ensure a bright future for themselves and for our province.

Considering that more than 80 per cent of this province�s high school graduates go on to a post-secondary education I also committed that post-secondary education is both accessible and affordable for all individuals wishing to pursue that education.

Government has provided Memorial University with funding to enable them to reduce tuition by over 20 per cent over the last two years making the current tuition fees $2,675 per year, the lowest in Atlantic Canada and the second lowest in the country. A further five per cent reduction of tuition rates at Memorial University will occur in September 2003.

Over the past four years, government was instrumental in the implementation of a tuition freeze at the College of the North Atlantic and Marine Institute, making current tuition rates among the lowest in the country.

As important as education is to this province�s success, our people must remain healthy and well.

In 2002, we marked the beginning of a new era of health and community services in this province with the release of Healthier Together, a new strategic health plan for Newfoundland and Labrador.

We have set clear targets for the entire health and community services system over the next five years and we will remain accountable to our citizens who use our system through every step of this plan.

The strategic health plan calls for a far-reaching renewal of the primary health care system. Primary health care is the first point of contact people have with the health and community service system. Our new model of primary health care will establish sites throughout the province, each site providing a core set of services.

The strategic health plan also addresses concerns in the areas of long-term care and supportive services and mental health. In the near future you will see major changes in these areas. We will be developing a long-term care and supportive services strategy which will examine issues with our current services, such as home care and nursing homes, and explore alternative models for care.

The mental health strategy will address everything from legislation to community-based services in order to further develop supports available in the area of mental health.

Another major event in 2002 was the release of Building on Values, the final report of the Commission on the Future of Health Care in Canada.

Many of the recommendations in this report support the goals we have set in our strategic health plan. We have begun discussions with the federal government to express our province�s position on how to move forward with respect to health care reform and renewal. The per capita funding model that is currently in place, does not take into account the specific needs of our province. Efforts to work collaboratively on health care renewal within this province are continuing into 2003.

With quality healthcare and education supporting our people, we become better prepared to seize the opportunities that are becoming more concrete.

Earlier I referenced my opinion that 2002 was a pivotal year in our province. Those involved in business and industry will agree.

Four major files were brought to successful completion, files that will significantly impact the economy of Newfoundland and Labrador for many years to come.

The Terra Nova project continues to produce at impressive levels. The project has been so successful that government granted a production increase to the proponents in December that will see the province receive higher royalties earlier in the project, resulting in hundreds of millions of extra dollars for provincial coffers.

Hundreds of Newfoundlanders and Labradorians are currently employed with the project and our local service sector continues to expand to meet the demand from our offshore industry partners.

In March, our third major offshore oil project, White Rose, was sanctioned by the proponents, Husky Energy and Petro-Canada. The $2.35 billion project has since steadily grown and now employs over 200 engineers and technical staff in St. John�s who are completing the detailed engineering work for the project.

The benefits are also being realized in Marystown, an area that welcomed the beneficial news for their shipyard and fabrication facilities. Work at these facilities is expected to increase in the coming months, eventually peaking at more than 600 people. This does not include the number of indirect and spin-off jobs that will be created.

Just days after the sanctioning of the White Rose project, the province received more good news from our petroleum resource sector. On April 2^nd, the tribunal hearing the offshore boundary case between Newfoundland and Labrador and Nova Scotia, ruled in this province�s favour.

The boundary established by the tribunal provides Newfoundland and Labrador with 70 per cent of the area that was in dispute between the two provinces, an area equivalent to the size of the island of Newfoundland. This area includes 78.5 per cent of the potentially resource rich Laurentian Sub-basin. This area will be opened to advanced exploration for oil and natural gas, something that has been previously off limits to the petroleum industry. We are hopeful that our goal of new discovery and development will be realized in this new frontier of our offshore.

This leads me to one of the most important accomplishments of my government in 2002. Attention was heavily focused on our resource sector for the past 12 months, and no where was this more evident than the Voisey�s Bay file. After years of negotiations, we reached an agreement that sees the development of the Voisey�s Bay nickel-copper-cobalt deposit in northern Labrador.

This estimated 30-year project is a major economic stimulus for the provincial economy. With total employment benefits estimated to be 76,000 direct and indirect person years and an estimated $11 billion impact on the provincial GDP, it was easy to understand why the substantial majority of Newfoundlanders and Labradorians embraced this beneficial project. New technologies, new infrastructure, new investment, new opportunities and new benefits are all aspects that will accrue to our citizens.

We must continue to be proactive in 2003. Government will continue to promote the responsible development of our petroleum, mineral and hydro-electric resources for the benefit of all Newfoundlanders and Labradorians. New projects remain to be developed. Government will work tirelessly and responsibly for the people of our province in achieving our ultimate goal - resource projects that benefit the people of Newfoundland and Labrador.

Other industries also saw growth and success. The Department of Forest Resources and Agrifoods continues its commitment to sustainable forest management in the province to achieve a balance between protecting our forest ecosystem and ensuring the future of our forest industries.

Joint efforts between government and Aboriginal groups in advancing the Labrador forest industry mark a milestone in Government-Aboriginal relations that is expected to open doors for economic opportunities in the region.

The 2002 provincial silviculture program demonstrated government�s commitment to effective silviculture initiatives in areas of the province where it is needed.

Agriculture is an integral part of the Newfoundland and Labrador economy. Its importance was highlighted during our Jobs and Growth consultations and in response to this, government and industry continue to work together in building our agrifoods industry and pursuing growth opportunities for our province, particularly in research and development.

Great strides were made in this area this past year, including our province�s first commercial cranberry crop being harvested, which is a milestone for the industry.

Government also teamed up with industry in establishing four sea buckthorn projects around the province, which will further advance the research work being done on the new berry in determining its potential as a commercial crop.

Government has partnered with the fishing industry and redirected our energies to cultivating a fishery that is professional, diversified and sustainable. We are achieving this goal.

Through the Fisheries Diversification Program (FDP), we have achieved many successes including the development of a new commercial toad crab fishery in Labrador.

Other successful projects under the FDP include:

• the development of a new sea urchin fishery in the Cartwright area;
• an exploratory fishery for sea cucumber and whelk, providing new processing opportunities for Conche and Change Islands; and
• the development of a commercial shrimp beam trawl fishery in Fortune Bay.

Our aquaculture industry continues to enjoy growth and success, and is valued at $20 million, employing more than 500 people.

The Aquaculture Development Strategy developed by industry and government, has facilitated a focused development effort on four commercial aquaculture species - salmon, steelhead, mussels and cod. Government�s contribution of $1 million to construct the first commercial cod hatchery in North America, in Bay Roberts, makes us world leaders in this sector.

Tourism has grown steadily over the past decade or so, with especially marked, sustained growth over the last five years. The spending associated with these visitors last year reached almost $300 million, an increase of 22 per cent since 1998. When you add resident tourism expenditures to non-resident expenditures, they total approximately $620 million per year.

Tourism indicators pointed toward another successful year in 2002. In fact, tourism operators in the province indicated an extremely successful season.

• Inquiries for tourism information increased 35 per cent over 2001;
• Non-resident automobile visits were up 15 per cent this year.
• This, in turn, drove visitation rates up at facilities and sites in all regions of the province.
• To the end of September 2002, passenger and vehicle traffic were up 12 per cent and 15 per cent respectively.
• Marine Atlantic traffic was up 13 per cent.
• In July and August of this year, accommodations in the province increased by seven per cent.
• In fact, the Avalon Convention and Visitors Bureau considers this showing to be the best July and August performance since the John Cabot 500th Anniversary Celebrations in 1997.

Following unusually slow growth of 1.1 per cent in 2001 and 1.7 per cent in 2002, the world economy is expected to grow by 2.5 per cent this year. Though higher than the previous two years, projected growth is well shy the 3.9 per cent recorded in 2000 and significantly below long-term potential growth rates.

In the aftermath of a recession in the second half of 2001, the US economy grew by 2.4 per cent in 2002. The US is expected to continue a modest expansion in 2003 with GDP growing by two to 2.5 per cent.

Major Canadian banks have declared our economy the fastest growing in the country. Our GDP growth has nearly tripled from 2001. Canada�s economy is expected to continue to expand strongly in 2003. Real GDP is anticipated to grow by 3.5 per cent again next year. On a provincial basis, private sector forecasters are predicting that most provinces will post strong real GDP growth in and 2003. Newfoundland and Labrador is expected to outpace all provinces this year.

These developments will continue to increase the benefits and funding for our health care spending initiatives, ensure new educational expenditures, and strengthen our social safety net for people in our society. New resource development is one factor that will assure that these priorities are met.

The Department of Industry, Trade and Rural Development�s mandate is to advance government�s Jobs and Growth Agenda by strengthening and diversifying the province�s economy, with particular attention to rural areas.

On March 28, 2002, the Government of Newfoundland and Labrador announced that Peter Kiewit Sons (PKS), one of North America�s largest construction and fabrication firms, had purchased the Marystown Shipyard from Freide Goldman Newfoundland. Today, approximately 250 people are employed at Marystown in the fabrication work for the White Rose project and that number is expected to rise to 600 people in 2003.

On the same day that Peter Kiewit Sons took over the yard, they were awarded a fabrication contract for the White Rose project. This was the culmination of negotiations between the Department of Industry, Trade and Rural Development�s Industrial Benefits team and Husky Oil, and it led to an agreement that 80 per cent of the topsides would be fabricated in Newfoundland and Labrador.

In 2002 EDGE was strengthened even further to make Newfoundland and Labrador the most competitive jurisdiction in Canada for encouraging new business investment.

For companies starting or expanding outside the Northeast Avalon, we have increased the tax holiday from 10 to 15 years for eligible businesses under the new Double Edge program, which in addition to full relief in provincial corporate taxes, provides for a 50 per cent rebate on federal corporate taxes. Edge offers enhanced incentives for companies establishing or expanding in rural areas, like Hygenitek which recently announced a new manufacturing plant in Trepassey that will employ over 50 people.

I believe that the decision government made to target funding to help establish or expand businesses in all parts of the province is working very well. In 2002, the department provided financial assistance to 200 business ventures in strategic economic sectors. The funding helped establish a new company in Bell Island that will manufacture scaffolding and in Cottlesville it helped the largest manufacturer of kayaks in the Atlantic provinces develop new product lines. In St. John�s and Mount Pearl, it helped two manufacturing companies purchase new equipment. In Kelligrews it provided funding to a naval architectural firm that is producing the final drawings for the manufacture of the superstructures of three Kennedy Class Staten Island ferries that will be used in New York. This is a program that we will continue to promote.

The department�s partnership with the 20 regional economic development boards is central to our economic development agenda and a continued commitment by government. As we said in our Renewal Strategy for Jobs and Growth, "stronger communities and stronger regions will lead to a stronger province." All regions must share in our economic progress. REDB�s work with the communities to produce real results.

More than 60 per cent of the 27,000 new jobs created in our province in the past several years have been created in communities outside the St. John�s area. The real changes happening in rural Newfoundland and Labrador were profiled at RuralEXPO 2001 in Gander last year and are recognized each year through the annual Community Economic Development Awards ceremony which in 2002 was held in Port aux Basques.

Exporting is critical to Newfoundland and Labrador's economic growth and job creation, which is why government has focused on helping local companies enter export markets. Our exports have almost tripled since 1992 and reached over $8 billion in 2001. Companies in Newfoundland and Labrador are making their mark around the world today. For example, in the high tech sector St. John�s-based Lotek Wireless won the 2002 Canada Export Award for Innovation and Technology.

The department helps local companies find new export markets through trade missions. In 2002, companies from this province participated in trade missions to Germany, Russia, New York, and Boston. In September 2002, government took part in a trade mission to Ireland sponsored by the Board of Trade and Ireland Business Partnerships. Seventeen companies participated and early indications are that several of those companies will be signing sales and partnership agreements within the next 12 months. While the most recent trade missions to New York, Boston and Ireland are still reporting results, the total estimated value of these deals to date is $168.2 million.

Trade missions will continue to be a critical part of government�s economic growth and diversification strategy and local companies will be offered the opportunity to participate in a Team Canada Trade Mission this year to Amsterdam, London and Milan.

Small businesses grow our economy and are making a real difference in our economy. Almost 95 per cent of all businesses in our province are small businesses - there are over 20,000 in Newfoundland and Labrador, accounting for over one-third of total employment, creating 80 per cent of all new jobs in our economy. Government�s small business development agenda is helping make this happen, through measures like an increase in the tax free threshold for the payroll tax that has removed 95 per cent of all businesses from that tax today. Like our new Small Business Seed Capital Equity Program and our new Venture Capital Tax Credit Program and our new Small Business and Market Development Program.

The increase in our province�s minimum wage from $5.50 to $6.00 per hour reflects what is happening in the economy in general. Government is mindful of the impact that increasing the minimum wage has on small business, but the economy is strengthening and is now in a position where it can support a minimum wage of $6 per hour. This new rate has brought Newfoundland and Labrador in line with the minimum wage rates in the rest of Atlantic Canada.

In January, 2002, I joined members of the business and labour communities to announce a Strategic Partnership Initiative for our province. I said then that this partnership would be important in advancing our overall economic agenda as set out in the Renewal Strategy for Jobs and Growth. Our intention was to develop new models of economic co-operation and collaboration.

Competitiveness and productivity are issues that the Board of Trade has identified as critical to its agenda for the new year. A working group of the Strategic Partnership Forum is now designing an approach to address provincial competitiveness and productivity challenges for discussion by the forum.

As our province grows and prospers I determined early in my tenure as Premier that it is vital that we, as a government, seek the input of the public on the direction that we must go to secure our identity and place in the dominion of Canada. To this end I established the Royal Commission on Renewing and Strengthening our Place in Canada. A series of 22 public meetings have concluded and 200 briefs have been received by the commission.

I was heartened and pleased by the numbers of citizens in this province engaged in the process of examining the direction this province should take. The public sessions and briefs provided a vehicle to discuss the challenges that relate to this province as a whole, but as well, to individual regions and communities. The public consultations also reminded us of past challenges, suggesting to all of us that knowing where you come from provides valuable guidance as to where you must go. I look forward to the final report to be released later in the year.

We are now preparing for this year�s budget. Joan Marie Aylward, our Minister of Finance and President of Treasury Board is preparing to travel throughout the province in the next few weeks to seek input into the development of our next budget. I invite you to pay close attention this year to the Throne Speech and Minister Aylward�s budget speech in which we will provide a clear understanding to the people of the province of the direction the government is taking not only in 2003 - but for several years beyond.

There will be a deficit this year, make no mistake about it. We make no apologies for that. We committed to the people of the province a level of services such as education, health care, infrastructure, services through municipalities and we will keep these commitments even if it means a deficit. The government I lead will not break a commitment and cut services for the sake of balancing a budget. Further we will address in our budget the strategy government will follow to manage this short term deficit.

In conclusion let me say that we are building on two years of strong growth in particular strong growth in 2002. There is no reason why strong growth, as all the indicators I addressed earlier in my remarks show, that this should not continue in the same positive direction. Our role as government is to continue to facilitate that, to feed that, to work with everyone who is committed to these good things that are happening in Newfoundland and Labrador.

One of them will be to find a way to successfully conclude in 2003 the Gull Island Project. We are now in what I describe as a necessary pause. Since the discussions leading up to Christmas I have received an indication from the Prime Minister that the federal government is not interested in engaging in mega projects like Gull Island. However, in the same communication with the Prime Minister, our Ministers of Environment and Mines and Energy have been invited to speak with the federal government to see the role a Gull Island development would have in the federal government�s commitment through the ratification of the Kyoto Protocol, to meet targets for reduction of green house emissions in the next ten years. That time matches the time frame of the development of Gull Island.

It is necessary for government to look at all avenues in the development of this project and take decisive action on development of our major resources. I am committed to finding solutions, not reasons to delay or stop sound, sensible, planned development that maximizes the return, benefit and opportunities for all Newfoundland and Labrador. We must not miss the chance to make real change in our province. We are now on the way to achieving this, and in so doing, creating a solid economic base for a prosperous future.

Thank you