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22. Local, Regional and Provincial Economies

 Strong local, regional and provincial economies are valued by residents of Labrador and Newfoundland. Furthermore, both traditional and wage economies are important in Labrador. Coastal communities in northern Labrador continue to rely on subsistence activities such as fishing and hunting as a major component of their local economies.

This chapter describes the potential environmental effects of the Project on the local, regional and provincial economies. It is largely based on the discussion of employment and business presented in Chapter 21. However, there is also discussion of the effects of the Project in the following areas:

Environmental effects of the Project on the economies of the Labrador North Coast, Upper Lake Melville, Western Labrador, Eastern Labrador, the Labrador Straits, Labrador as a whole, the St. John's region, and the Province as a whole are discussed.


22.1 Existing Environment

22.1.1 Labrador North Coast

 Many coastal residents regard mining as an industry that may provide a new economic base for the region. However, they have a long-term view of their relationship with the land and recognize that mining extracts a non-renewable resource. Therefore, they are concerned that activity associated with the Project may jeopardize the ability of the land and sea to sustain their traditional hunting and fishing economy.


22.1.2 Other Areas of Newfoundland and Labrador

 The health of local, regional and provincial economies is an important issue across Newfoundland and Labrador. By most traditional measures of economic well-being (e.g., gross domestic product, employment and unemployment, education and training, income and dependence on government transfers), Newfoundland and Labrador has the weakest of the provincial economies.

The Province has a resource-based economy which fluctuates with market demand for its primary products. The traditional mainstay of the economy, particularly in terms of employment, has been the fishery. The collapse of cod stocks and the subsequent closure and quota reductions imposed since 1992 have had adverse effects on the provincial economy, particularly in rural areas. The Province's mining sector has been generally stable in recent years. While the forestry sector continues to be important, there are growing issues about the supply of pulp wood to the Province's three mills.

Between its start in 1990 and the completion of construction of the production platform in May, 1997, the Hibernia project has made an important contribution to the Province's economy. The tow-out and installation of the production platform in 1997 marks the start of a new era in the Province's oil and gas sector as Newfoundland and Labrador becomes an oil and gas producing province. Plans to develop the Terra Nova and other oil fields are also underway, and further offshore and onshore exploration is planned for the Grand Banks and Western Newfoundland.

Most of the adult population in the province is involved in the wage economy. This is particularly true for Upper Lake Melville, Western Labrador and the St. John's Census Metropolitan Area (CMA). Upper Lake Melville functions primarily as a government and administrative centre, while St. John's is particularly important for its government, administrative, retail, wholesale, financial, education and transportation functions. Western Labrador is a major mining centre.


22.1.3 Environmental Assessment Boundaries

 Project employment and spending will affect the economies of the Labrador North Coast and other areas of Newfoundland and Labrador. Separate predictions are made for i) the Labrador North Coast and ii) other areas of Newfoundland and Labrador.


22.1.3.1 Labrador North Coast

 The Labrador North Coast area, as defined for this assessment, includes the Town of Nain and the communities of Utshimassits, Hopedale, Makkovik, Postville, Rigolet and Sheshatshiu (Figure 21.1). While geographically Sheshatshiu is in the Upper Lake Melville region and, as such, is discussed together with Happy Valley-Goose Bay, North West River and Mud Lake, Sheshatshiu is also considered in the discussion of the North Coast area. This is due to the fact that the community has an almost entirely Innu population and will be one of the communities to derive benefits from an Impact and Benefits Agreement.


22.1.3.2 Other Areas of Newfoundland and Labrador

 The Upper Lake Melville area includes the Towns of Happy Valley-Goose Bay and North West River, and the unincorporated communities of Sheshatshiu and Mud Lake (Figure 21.1). While Sheshatshiu is discussed together with the North Coast, data for the community are included in Appendix A for Upper Lake Melville.

Eastern Labrador covers the area between Groswater Bay and Cape Charles. It includes the incorporated communities of Cartwright, Charlottetown, Port Hope Simpson, St. Lewis and Mary's Harbour, and the unincorporated communities of Paradise River, Black Tickle, Norman Bay, Pinsent's Arm, Williams Harbour and Lodge Bay.

The Labrador Straits is the region across the Strait of Belle Isle from Newfoundland. It includes the incorporated communities of Red Bay, Pinware, West St. Modeste, L'Anse au Loup, Forteau and L'Anse au Clair, and the unincorporated villages of Capstan Island, L'Anse Amour and Point Amour. This is the only portion of the Labrador coast which has a highway.

Western Labrador includes the iron mining towns of Labrador City and Wabush, and the unincorporated community of Churchill Falls.

The St. John's CMA will also experience employment and business related environmental effects from the Project, since VBNC's head office is located in St. John's.

The construction and operation of the Project will draw workers from other areas of Newfoundland and Labrador and, potentially, other areas of Canada.


22.1.3.3 Administrative Boundaries

 Labrador North Coast

Northern Labrador communities have a relationship with government that is different from that of Aboriginal communities in other provinces or territories. Despite their Aboriginal population, they do not fall under the jurisdiction of the federal Department of Indian Affairs and Northern Development due to decisions made when Newfoundland joined Canada in 1949 (Tanner et al. 1994). Yet, because the Province cannot afford to offer special programs in Aboriginal communities, much of what it does in northern Labrador is funded indirectly by various federal programs and agencies. The most important of these are two comprehensive "Contribution Agreements" which finance a wide variety of economic initiatives in the region. LIA and the Innu Nation have set up economic development corporations. Each of the five coastal communities within the jurisdiction of LIA (Nain, Hopedale, Postville, Makkovik, and Rigolet) has a community council operating under the provincial Department of Municipal Affairs. The two Innu communities (Sheshatshiu and Utshimassits) are neither bands under the federal Indian Act nor municipalities under the provincial Municipalities Act, but their elected chiefs and councils operate as local governments.

The North Coast falls within Zone 1 of the newly-established Regional Economic Development Boards while Sheshatshiu falls within Zone 3. As such, economic development initiatives are mostly administered by and through the Nanuk Corporation (the Regional Economic Development Board for Zone 1), with community and Aboriginal participation.

Other Areas of Newfoundland and Labrador

The management of the economy is, primarily, a provincial government responsibility, although the Province often delegates some powers and provides funding to Regional Development Associations and, most recently, Regional Economic Development Boards. In the latter case, Upper Lake Melville lies within Zone 3, under the Central Labrador Economic Development Corporation. Eastern Labrador is in Zone 4, and the managing body is the Southeastern Aurora Development Corporation. The Labrador Straits, in Zone 5, comes under the Labrador Straits Development Corporation. Western Labrador is in Zone 2, under the Hydron Regional Economic Development Corporation. St. John's forms part of Zone 19, under the Capital Coast Development Alliance.


22.1.3.4 Technical Boundaries

 Labrador North Coast

The major sources of information used are census data and reports of the provincial Department of Finance. Census and other government administrative data concentrate almost entirely on the market economy and contain little information about subsistence activities. Census data are mostly for 1991, as only limited data have been released from the 1996 Census. There is some disagreement with regards to the accuracy of the census data for North Coast communities. For these reasons, considerable reliance has been placed on information from academic literature and from the Innu Nation, LIA, band councils and other Aboriginal sources. Perceived deficiencies in the census data are noted below.

Other Areas of Newfoundland and Labrador

The major sources of information used are census data and reports of the provincial Department of Finance. Most of these are from the 1991 Census of Canada, and are thus more than five years old. Data from other secondary sources are used when available.


22.1.4 Methods

 The sources of information and data used to conduct the assessment for the overall economy include:

The economic environmental effects assessment was based on the information presented in Section 21.1.3.


22.1.5 Existing Conditions - Labrador North Coast

 The economy of northern Labrador has long been based on a combination of casual or seasonal employment, supported by unemployment insurance or social assistance, and various harvest activities that provide food, income or both. While the economy of Labrador as a whole has experienced the effects of the Goose Bay military base, the Churchill Falls hydro-electric generation project, and iron ore mining in Labrador West, these have had only indirect and arguably negative effects on the communities of the North Coast. The reasons for this, and hence the existing state of the economy of the North Coast, can only be understood in terms of past patterns of change. (The North Coast society and the cultural importance of subsistence activity is discussed in Chapter 20).

During the 18th and 19th centuries, northern Labrador was populated by families of hunters, fishers and trappers who depended entirely upon the natural resources around them for their economic and social well-being. They sheltered in tents and cabins at various locations according to the season, constructed their own sheds and boats, and used animal skins for clothing and bedding. With the family as the basic unit of society, the notion of individual property had much less meaning than it does in Western Labrador society. Survival required that people shared food, possessions, skills and knowledge (Brice-Bennett 1986).

Following contact with the Moravians and the Hudson's Bay Company, the Labrador Inuit, and later the Innu, began exchanging their own products for those of European origin. They began to enhance their subsistence economy with goods like guns, knives and pots, which made them more effective in their traditional activities. The Labrador Inuit, drawing on the productive marine environment, were now able to produce a wider variety of goods for trade, including fish, fur, and seal products. The Innu, living mostly in the interior, traded fur and caribou hides in return for required goods. In time, European goods, especially guns and ammunition, became essential to the Aboriginal way of life. However, the price obtained for the goods they produced was often lower than the value of the goods they needed. As a result, debt and dependence came to characterize their relations with the local merchants, especially during the first half of the 20th century (Brice-Bennett 1986).

In 1954, following an agreement between the federal and provincial governments, Ottawa began covering the cost of hospitalization and contributed a share to capital expenditures for Aboriginal people in the area. In the decade following, federal government encouragement of Innu community settlement resulted in a shift from a nomadic camp life existence to permanent settlement in centralized communities. There was also a shift from a subsistence to a cash economy based on wages from government-subsidized projects and transfer payments. In 1965, a new federal/provincial agreement provided a much greater level of involvement with, and funding to, northern Labrador communities (Usher 1982).

The economy of Inuit communities in northern Labrador improved after 1960 due to the increased prosperity of the cod and seal fisheries and access to unemployment insurance benefits in winter. As a result, families were provided with greater financial security and independence than previously experienced.

The Mushuau Innu were settled into Utshimassits on the island of Iluikoyak in 1967. Settlement on the island, however, restricted access to traditional hunting and gathering territories. The lack of employment left most people caught in a cycle of dependency.

"With the closure of the cod fishery and the salmon fishery, the reduction in harvests of Arctic charr and the loss of markets for sealskins, the major sources of income for the residents of northern Labrador have all but disappeared." (Williamson 1996.)

During the 1960s and 1970s there was substantial construction activity in northern Labrador communities. The beginning of the 1980s, however, marked a decline in construction, and subsequently the employment generated by these projects also declined. Many of the gains achieved during the 1970s, as well as the momentum for economic growth, waned after 1980. The poor fishing returns, limited wage employment opportunities, and larger numbers of youth entering the labour market contributed to a deterioration in the standard of living for many northern Labrador residents.

The economy and standard of living in northern Labrador has long depended upon a balance between the cash and resource sectors. Although not recognized (outside the north) as a form of employment, harvesting is a major contribution to the local economy in northern Labrador. As recently as the mid-1980s, only about 32 percent of total income came from wages compared to nearly 80 percent for the rest of the country. Almost 40 percent of personal income came from harvesting fish and fur for sale and fish, meat, and firewood for domestic use (Usher 1982; Brice-Bennett 1986). These activities required capital and operating expenditures. Boats, snowmobiles, gasoline, nets, rifles, and other gear were essential for a successful harvest, but these became less available with the decline in fisheries income in the 1980s.

By the mid-1980s, employment and personal income in Labrador were derived from four major sources; wage employment, transfer payments, the production of commodities for sale (e.g., fish, furs, and crafts), and the production of goods for domestic use (e.g., meat and firewood). About 15 percent of the available workforce in 1979 were employed full-time. The majority of these jobs (60 percent) were with some level of government, mostly provincial. Another 25 percent were employed by private agencies that were largely dependent upon government funding (Usher 1982; Brice-Bennett 1986).

Casual employment, although it involved a normal workweek while it lasted, was available only seasonally or on a short-term basis (Usher 1982). The chief source of casual employment was construction undertaken by community councils and other government agencies, or Canada Works projects. However, this provided work for less than 5 percent of the available labour force. Casual employment rose substantially during the 1970s, and although its type and seasonality were predictable, its supply was not (Usher 1982).

Casual employment provided much less income than permanent employment, but was crucial to the area for two reasons. First, it was more widely distributed across the population than income from permanent jobs. Secondly, as long as a person was employed for enough weeks, the earned income was supplemented by unemployment insurance (UI) payments which, in turn, allowed the claimant time to harvest the resources of the area (Brice-Bennett 1986; Usher 1982). One of the more important sources of casual employment were fish plants, which first began operating in 1971 at Nain and in 1973 at Makkovik.

Earned income has become crucial to the traditional economy because subsistence hunters and fishers need money to purchase and maintain snowmobiles and boats. People with little access to the cash economy are handicapped in the subsistence economy as well. In the Makkovik country food study of 1981, for example, households with an annual income of less than $13,000 harvested barely more than half as much country food as households with an income above this threshold (Alton-Mackey and Orr 1984). Similarly, the households that produced the most country food were those with higher incomes resulting from fishing or wage employment.

Income from commodity production has been more variable than that received from wage labour, since the former relies on payment for products with variable costs and prices. The principal items produced for sale were fish, furs, and handicrafts (Usher 1982). The income from the production of fish increased almost fourfold during the 1970s. One of the chief reasons for this improvement was the introduction of fish plants and their freezers. A decade earlier the chief products from the sea had been salt bulk cod and pickled charr. In 1979, almost all fish was sold fresh and brought a much higher price. Fishing was the most common occupation in the summer months; about 60 percent of the male labour force on the Labrador coast held commercial fishing licenses in 1979 (Usher 1982).

"The value of country food produced by households for their own direct and immediate consumption is rarely accounted for in assessments of the economy of the region." (Alton Mackey 1988.)

In 1979, the total gross household income for coastal Labrador amounted to $7,270,000, of which $5,326,000 was in cash and the rest in domestic produce. Of the cash income, wages provided about 45 percent, transfer payments about 37 percent, and commodity production (chiefly fish) about 19 percent. Two-thirds of the wage income was from casual employment. Transfer payments came chiefly in the form of old age pensions and family allowances, but also from UI payments and social assistance. Total domestic production amounted to $1,944,000, or nearly 27 percent of total gross household income. Domestic production included the harvesting of meat, fish, wood, and similar items, which families used directly for their food, heat, and shelter. The total value of "country food" production was greater than from any other single source. Moreover, this type of income was more evenly distributed. Taken together, domestic and commodity production accounted for $2,930,000, which was more than either wages or transfer payments (Usher 1982).

Economic well-being is a highly complex and subjective matter because there are no universally reliable yardsticks. Nonetheless, by 1980, gross and net household income had risen approximately three-fold compared to the previous decade, with increases in cash incomes being particularly important. Even allowing for inflation, these were substantial gains. Real per household income was about three-quarters of the national average and was much closer to the average for Atlantic Canada (Usher 1982).

It does not appear that the problems of the regional economy were due to a lack of personal income. The relatively rich renewable resource base and the increases in government spending had improved the cash base to support renewable resource harvesting. But there were important structural problems in the economy of Labrador. A large portion of the income comprised food and fuel, rather than cash. There was little surplus capital for investment. Domestic and commodity production had raised the gross returns for the traditional sector to nearly $3 million, but only a third of this was cash. Wages and transfer payments were needed to meet the difference. For this reason, both wage employment and transfer payments were essential to the functioning of the region's economy (Usher 1982).

James Pasteen, Innu elder: "The Mushuau Innu are poor in the community, but when they are in the country, they are rich." (Presentation to EIS Panel, Davis Inlet, April 19, 1997.)

Unfortunately, wage employment in northern Labrador was declining by the beginning of the 1980s, largely because of cutbacks in government infrastructure programs such as housing and road construction. Seasonal work in the fishery, either directly through fishing or at the fish plants, declined as landings fell in the 1980s. As declines in employment lowered the standard of living, unemployment insurance, and especially, social assistance benefits, became even more important in providing income to households. Adding to the hardship was the fact that social assistance payments did not take into account the high cost of living in Labrador, which was only partially offset through the use of country food obtained through harvesting activity.

The 1991 Census of Canada data made clear that the economic base of the Labrador North Coast was narrow, with a traditional economic dependence on primary resource production. As has been described in detail in Chapter 21, these wage-based incomes (which do not take into account subsistence activity) were low, both absolutely and relative to Labrador as a whole. Statistics Canada data indicate that 68 percent of the total income in North Coast communities came from employment and 31 percent from transfer payments. This compares with 88 percent from employment and 11 percent from transfer payments for Labrador and 73 percent from employment and 21 percent from transfer payments for the province. However, these data likely underestimate the importance of transfer payments and unemployment levels (Statistics Canada 1994).

Recent data on trapping, sealing and fishing show ongoing problems with the resource sector. Trapping and sealing are no longer commercially viable due to the lack of markets and low pelt prices. The total annual value of Labrador fur sales dropped from $900,000 in the 1986 and 1987 seasons to $250,000 in the 1989, 1990, and 1991 seasons. During this period the number of trapping licenses sold in Labrador dropped from 600-700 in 1986 to less than 500 in 1991 (DND 1994a).

The value of fish landings in the immediate area of Nain and Voisey's Bay has been falling over the past 12 years. The highest value in this period was $160,500 in 1988. It fell to only $40,100 in 1991, a year of extreme ice conditions and disastrous landings. Atlantic salmon, which made up 40 percent of the catch in 1988, made up only 1 percent of the catch in 1991 (Canning and Pitt 1996).

These figures, however, reflect the undercapitalized nature of the local fishery, not the value of resources in the waters adjacent to the coast or the harvest from them. Of the vessels used by North Coast fishers, 94 percent are under 35 feet in length. For reasons of safety, these vessels are largely confined to waters very near shore. By value, their catch from 1984 to 1995 was, on average, 67 percent Arctic charr, 18 percent salmon, 10 percent scallops, 2 percent cod and 3 percent other species (Canning and Pitt 1996). These small local boats, which land their catch chiefly in Nain, have shared in only 5 percent of the total value of landings in the area since 1984.

The most economically valuable fishery in the Nain to Hopedale area since 1987 has been shrimp, which accounted for 91 percent of the average value of the catch between 1984 and 1995. In 1995, when total landings of local boats came to barely more than $40,000, trawlers based outside the area caught nearly $2 million worth of shrimp in the waters off Nain and Hopedale. Most of this was caught well offshore and processed at sea and had little effect on the economy of the North Coast.

While fishing, hunting and trapping have historically been the main activities, mineral exploration and development are becoming increasingly important. Since the Voisey's Bay discovery, the North Coast has been the focus of considerable additional mineral exploration. In 1995, 230,842 claims were staked in Labrador (Table 21.2), many of which were in the North Coast area and which have resulted in greater employment and business opportunities for the communities along the coast, particularly in Nain.

Another important source of income is the federal-provincial comprehensive funding agreements. These apply to programs and services delivered by both the provincial departments and agencies and the regional housing associations or councils of the communities of Northern Labrador and Sheshatshiu. There are two agreements in force, one for Innu and one for Inuit (these are discussed in more detail in section 23.1.1.1). Funding under the agreements supports supplemental programs beyond normal allocations made by provincial agencies, such as curriculum development, supplementary teacher allocation and water and sewer projects. Core funding is provided to defray the costs of operation of the community and band councils, allowing for staffing necessary for the delivery of services and programs at the community level, which include housing, community development, recreation, fire protection, libraries and cultural programs.

There are also two agreements under the Canada-Newfoundland Health Agreement through which the federal government transfers money to the provincial government for the provision of health services to Aboriginal peoples. LIA and Innu Nation manage their own Non-insured Health Benefits Programs on behalf of Medical Services Branch of Health Canada.

Lastly, subsistence activities continue to be extremely important, although the total value of subsistence activities is difficult to calculate and is frequently not included in assessments of the economy of the region. This issue is more fully addressed in Chapter 21.


22.1.6 Existing Conditions - Other Areas of Newfoundland and Labrador

22.1.6.1 Upper Lake Melville

 Happy Valley-Goose Bay is the regional and government service centre for central and northern Labrador. Prior to the establishment of CFB Goose Bay, North West River was the largest community in the area and served as an education and health service and supply centre. Mud Lake was the second largest settlement in the area. Even in the early years of the military base the people of Happy Valley-Goose Bay relied on North West River for services and supplies (DND 1994b). This practice changed in the late 1940s when the Hudson's Bay store opened. By the 1950s, Happy Valley-Goose Bay had an RCMP detachment, a CBC radio station and a number of government agencies. Eventually, in 1983 the regional hospital in North West River was closed and the services transferred to the Melville Hospital in Goose Bay (DND 1994b).

Most residents of the Upper Lake Melville area and, in particular, those living in Happy Valley-Goose Bay, are involved in the wage economy. However, activities such as trapping, hunting (caribou and small game), fishing, sealing and berry-picking are still very much a part of the annual routine for many residents. Subsistence harvesting is more important to residents of North West River, Mud Lake and Sheshatshiu. Patterns of subsistence use have changed due to the wage economy and the incorporation of trucks, snowmobiles and motorboats into traditional practices. For many in the area, these traditional practices now tend to be limited mainly to weekends and holidays.

While Upper Lake Melville has experienced an overall downturn in its economic performance since the 1980s, its economy has remained relatively stable and prosperous. The CFB Goose Bay has been the most stable component of the Happy Valley-Goose Bay and Labrador economies, despite the fact that it has experienced downsizing on several occasions over the past 50 years. In 1992, the base contributed approximately $128.4 million to the Upper Lake Melville economy, including $53 million in salaries, $70 million in operating and maintenance expenditures and $5.4 million in construction activity. The personnel associated with the base injected in total over $3 million into the local economy through off-base expenditures (DND 1994a).


22.1.6.2 Western Labrador

 The economy of Western Labrador relies on development of the iron ore in the Labrador City-Wabush area and the hydro-electric potential of Churchill Falls. The hydro complex, which diverts the Churchill River away from the falls and through the turbines of an underground powerhouse, can produce cheap power indefinitely. However, the nature of the contract with Quebec covering the hydroelectric facilities under which Quebec buys most of the power limits the local financial benefits from this resource. The iron ore mines have proven reserves of more than three billion tonnes, enough for about 150 years at the current rate of production. After some softening of iron markets in the early 1980s, demand has recovered and the mines are currently operating near capacity.

A railway built to haul ore concentrate to a shipping terminal at Sept Iles, Quebec also carries incoming freight, usually about three days a week. (Churchill Falls is also connected to this railway by a well-maintained gravel road.) Initially, the railway carried most of the freight in the region, except for a small volume carried by air. In the 1980s, however, a chain of roads to mining and hydro projects in northeastern Quebec reached Fermont, just across the border from Labrador. This Quebec highway was gradually upgraded, and the Labrador portion was extended to Churchill Falls, so that Western Labrador is now linked by an all-weather road to Baie Comeau, Quebec, and from there to the North American highway system. The highway is becoming an important delivery route; roughly 20 tractor trailers arrive every day (Town of Labrador City 1994). Wabush airport provides three direct flights a day to Montreal and St. John's. Churchill Falls has scheduled passenger flights three days a week.

This is a very affluent area. In Labrador City, for example, the average household income is more than $23,000 higher than the provincial average (Statistics Canada 1994). Residents also enjoy very low power rates and inexpensive housing. Low housing costs result partly from population loss. The two mining towns were originally built to accommodate a population of about 25,000, but a serious downturn in ore markets in 1982 resulted in heavy layoffs. Many laid-off miners, with no market for their homes, simply walked away from their mortgages, and vacant rental housing was mothballed. There was little new home construction until about 1996, by which time the market had gradually reabsorbed the empty housing stock (Martin, B. pers. comm.) There is still a high vacancy in rental accommodation, which helps keep housing prices low.

An industrial park at Wabush has 50 acres of serviced land, linked to the railway and close to the highway and airport. The region is competing vigorously for a role in servicing the Project, pointing to its advantages as a developed industrial economy with a highly-skilled, mining-oriented workforce and business sector.


22.1.6.3 Eastern Labrador

 Doris Saunders: "The Labrador secret is the marvelous people themselves and their massive encounters with reality." (Labrador in the 90s.)

This area has long been almost entirely dependent on the inshore fishery for earned income. Cod catches fell disastrously in the Cartwright area in the 1960s and have never recovered, leaving fishers largely dependent on Atlantic salmon. Elsewhere in Eastern Labrador, the inshore cod catch partially recovered after the 200 mile limit excluded foreign trawlers from Hamilton Bank in 1978. However, the recovery was brief. By the mid to late 1980s, inshore catches had fallen again. The moratorium in 1992 halted the fishery entirely. Stocks of salmon, the only other species for which most coastal fishers had a market, also went into severe decline. However, a thriving crab fishery has developed in recent years, and there has been a modest expansion into other alternative species, including scallop and whelk.

Apart from the inshore fishery, there has long been a modest logging industry in the Port Hope Simpson-Charlottetown area. However, it is hampered by a lack of roads and, hence, difficult access to larger markets. Forest potential in the Sandwich Bay area suffers the same constraint. However, loggers in the Port Hope Simpson area supply some sawlogs and pulpwood to mills in Newfoundland, a trend which may increase due to a shortage of wood on the Island, which has been forecast.

The region has considerable tourist potential but virtually no tourist infrastructure beyond a few sports fishing camps and motels. One notable attraction is the reconstruction of Battle Harbour, once the site of major inshore fishing operations. Restoration of the site by the Battle Harbour Foundation has created a significant heritage attraction, but one accessible only by boat.

The province has agreed to take over coastal shipping in exchange for federal funding of the Trans-Labrador Highway, including construction of a new highway from Red Bay to Cartwright. Development of tourist potential in the area will depend heavily on the pace of this construction, and on the nature of marine services under the new arrangements.


22.1.6.4 Labrador Straits

 The highway and ferry connections help to integrate this region with the larger provincial economy, at least during months when the ferry is running. The highway has also helped to integrate the region itself. With the exception of Red Bay, none of the communities is more than 12 km from its neighbours, so the road has expanded both the market area and the labour force for individual businesses.

Interruption of the ferry service in winter and spring, and highway access to adjacent communities in Quebec, have encouraged residents on both sides of the border to share their resources and facilities. Residents on the Labrador side, for example, use the ferry terminal, the commercial airfield and the hospital at Blanc Sablon, Quebec. Many cod fishermen from the Labrador side have long fished in the Blanc Sablon area for part of the season, while Quebec residents traditionally obtained lumber from the valley of the Pinware River.

The region, which remains heavily dependent on the fishery, has suffered badly during the cod moratorium. However, the highway and closer connections to Newfoundland have resulted in this area enjoying a more vigorous economy than does the rest of the Labrador coast. Except for Red Bay, the cod fishery in this region relies on cod stocks in the Gulf of St. Lawrence, which did not collapse as disastrously as northern cod in the area adjacent to Eastern Labrador. In 1997, a limited hook and line fishery was permitted in Southern Labrador for the first time since 1992, and catches have been reported as good.

Despite the stronger economy, this region has suffered more population decline since 1986 than has Eastern Labrador. This may reflect both higher education levels, which enable residents to seek work elsewhere when times are tough at home, and stronger links to the provincial economy. Curiously, population decline in the Labrador Straits was more severe in the five years before the cod moratorium than it was after (see Appendix 21A, Table 21). This can be attributed to the severity of the fisheries decline prior to the moratorium, and the pessimism generated by this decline. While the moratorium virtually halted fishing in the area at first, it soon prompted more attention to previously-neglected species. Also, the compensation payments which resulted from the moratorium gave many fishers more income stability than they had had before, which slowed the out-migration (Flynn, S. pers. comm.).

Given its distance from the Trans-Canada Highway, the Labrador Straits has been very successful in marketing its tourist potential. In particular, it has capitalized on its cultural heritage, with an annual folk festival and international recognition of the historic importance of Basque whaling from the port of Red Bay in the 16th century. The remarkable preservation of physical evidence of this activity, including a galleon sunk in Red Bay harbour and the remains of a whale oil factory on Saddle Island, have led to its designation as a World Heritage Site. The federal department, Heritage Canada, is constructing an interpretation centre in Red Bay which will enhance its attraction to visitors.

These attractions, and the fact that it is the only part of the Labrador coast accessible by road, currently bring about 10,000 visitors a year to the area. Roughly 60 percent of visitors arrive on tour buses and stay overnight. The tour bus business has been growing steadily, encouraging the development of food and lodging services. The Northern Light Inn at L'Anse au Clair, the largest facility in the area, has 35 units and is building 20 more (Goudie, B. pers. comm.). In addition, there are housekeeping units and bed and breakfast services in Forteau, L'Anse au Loup, West St. Modeste and Red Bay, and sport fishing lodges on the Forteau and Pinware Rivers.

The region has recently seen a considerable expansion in the diversity of small business. Government encouragement and assistance have fostered the creation of 35 new businesses in the last five years, 32 of which are still in operation. The new businesses, the majority of them launched by women, include a regional bakery, a dress and gown shop, a gift and design shop, a desktop publishing and design business, and a woodworking shop (Hancock, R. pers. comm.).

The presence of a locally-owned fish plant and credit union has helped to boost investment and job creation in the area. The new gift and design shop in Red Bay, for example, recently obtained an order for 20,000 cotton bags for shipping scallops from the plant in L'Anse au Loup. These had formerly been made outside the province.


22.1.6.5 Labrador

 The Labrador economy as a whole has been described as two distinct sub-economies (DND 1994a). One is based on renewable resource harvesting such as fishing, hunting and trapping and is most common in the northern communities of Labrador. The second, the wage-based economy, is based on military and government administration, mining and hydroelectric power generation. This wage economy first emerged when the military base was established in Goose Bay in 1941 and the civilian community of Happy Valley began to develop on its perimeter.

The military base changed the settlement pattern and economy of Central Labrador. While Labrador's Aboriginal people used most areas of Labrador during different times of the year, the settler population was largely concentrated in coastal areas where it participated in the fishery and fur trade. The establishment of a military base at Goose Bay created a new focus of economic activity, drawing people and services away from the coastal communities and other areas of Labrador.

In the 1950s, forestry emerged as an industry, but potential growth in this sector was hampered by high transportation costs, lack of year-round road access and inadequate marine facilities. During the 1960s, industrial activity and settlement moved further west when the towns of Labrador City (1962), Wabush (1965) and Churchill Falls (1967) were established (DND 1994b). The iron ore mines and the Churchill Falls hydroelectric development in Western Labrador led to a boom in the Labrador economy, at least in terms of investment and salaries. However, very little of this wealth reached the communities on the coast.

During the resource development boom period in Labrador's economy, the population more than tripled. Between 1951 and 1961, it increased by 71.5 percent and between 1961 and 1971 it increased by 108.1 percent (13,534 to 28,166). Between 1971 and 1981 the population increased by 11.2 percent but by 1991 the population was declining (DND 1994b). This reflected the downturn in local economies and that of Labrador as a whole which had begun in the late 1970s with fluctuations in resource markets and the completion of several major infrastructure projects. The economy in Labrador was based on export markets and was vulnerable to external market changes. Throughout this period, CFB Goose Bay remained one of the more stable components of Labrador's economy, despite a decline in activity at the Base in the mid-1970s that resulted following the withdrawal of the United States Air Force. This pattern of decline has continued following the announcement in 1995 of federal budget cuts in both civilian and military employment at the Base (Department of Development and Rural Renewal 1996).

The Fishery

The Labrador fishery is in crisis due to a decline in several stocks, in particular cod and salmon, although crab, and more recently, shrimp present growing opportunities. Between 1980 and 1991 the total value of commercial fish landings fell from $12.2 million to $4.6 million (DND 1994a). The moratorium imposed on northern cod in 1992 resulted in further cuts to commercial fish landings.

Forestry

Of the total 3.6 million ha of forested area in Labrador, only a small portion has been harvested (Department of Development and Rural Renewal 1996). A forestry initiative that involved shipping trees to the Labrador Linerboard Mill in Stephenville proved to be unprofitable and the mill was forced to close in 1977. While there was an increase in the total value of forest products produced between 1981 and 1990, efforts to produce pulpwood have met with several difficulties and, overall, accounted for only a small portion of the total value of forest products. During this same period, revenues from fuelwood production were relatively uniform while the total value of lumber products increased (DND 1994a). The increase in the total value of forest products between 1981 and 1990 may be attributed to a boom in residential construction activity that occurred in Happy Valley-Goose Bay following the announcement of the proposed NATO training centre. Plans for the facility, however, were later dropped (DND 1994a). As of 1996, forestry efforts were having greater success largely due to increased provincial demand for pulpwood (Department of Development and Rural Renewal 1996).

Mining

The mining sector in Labrador experienced a sharp decline during the 1980s due to reduced demand for iron ore. This led the two mines operating in Western Labrador to decrease their operating staff by 800 (DND 1994a). However, the iron mines remain by far the largest employer in the province's mining industry, with three times more employees than all of the rest combined. In 1993, the total employment in mining in Labrador was 1,920, compared to 530 on the Island of Newfoundland. The volume of production over the past few years has remained fairly constant although it is expected to increase in 1997 (Table 22.1). Labrador produces 50 percent of Canada's iron ore (Department of Development and Rural Renewal 1996).

Table 22.1 Iron Ore Shipments (Millions of Metric Tonnes), 1990-1997
Year Quantity
1990 19.5
1991 19.8
1992 17.7
1993 18.2
1994 20.3
1995 20.0
1996 20.0
1997 22.4f
f - forecast
Source: Economics and Statistics Branch, Newfoundland Statistics Agency, October 1997.

The value of mineral exploration in Labrador also decreased in the 1980s, from $2.5 million in 1981 to $62,000 in 1986, but has risen sharply since then. In 1991, the total value of exploration in Labrador increased to $1.1 million, mainly as a result of an incentive program established in 1987. Under this program, every $1 spent on exploration resulted in a tax benefit of $1.30 (DND 1994a). Exploration activity in Labrador has boomed since 1994, largely driven by the Voisey's Bay discovery. The number of claims staked in 1994 rose nearly 12-fold from the year before (from 1,778 to 20,788), and rose 11-fold again the following year, to a record 230,842 (Table 22.2.)

Exploration expenditures in Labrador reached record levels in 1996, at an estimated $76 million. Of these expenditures, an estimated 75.8 percent was made in the Nain/Voisey's Bay area in 1995 and 1996 (Hinchey, J. pers. comm.). Prior to this surge, exploration activity in Labrador represented only a small proportion of the provincial total.

Tourism

The Labrador tourism industry (in particular outdoor activities and adventure tourism) has been experiencing growth since the opening of the Trans-Labrador Highway. There are some 46 fishing and/or hunting camps in Labrador (Best, E. pers. comm.). Outfitting operations in Labrador have generated gross revenues ranging from $3 to $5 million (DND 1994b). In 1989, outfitting generated approximately $3 million in revenue for the province, of which more than 50 percent was generated in Labrador (DND 1994b).

Table 22.2 Mineral Exploration Activity, Newfoundland and Labrador, 1981-1997

Claims Staked Diamond Drilling (m) Expenditures ($) Estimated Exploration Employment
Year Labrador Nfld. Labrador Nfld. Labrador Nfld.
1981 0 13,661 n/a 64,503 2,517,803 13,482,197 n/a
1982 0 4,670 9,342 39,429 2,639,648 9,360,352 n/a
1983 409 3,825 1,652 25,362 1,365,721 6,334,279 n/a
1984 1,057 11,021 205 43,941 444,100 7,955,900 n/a
1985 2,229 12,320 1,359 37,382 252,830 12,347,100 n/a
1986 2,861 12,413 3,110 48,035 61,559 11,738,441 n/a
1987 2,548 19,534 1,891 87,781 191,260 32,308,740 500
1988 843 25,763 518 234,313 453,449 40,706,551 600
1989 615 16,956 0 122,852 1,221,914 35,028,086 500
1990 1,453 8,968 1,350 91,346 753,930 22,246,070 300
1991 1,985 5,426 600 43,327 1,131,020 10,868,980 75
1992 1,615 3,503 2,524 19,349 3,712,612 7,428,388 60
1993 1,778 5,177 8,200 38,310 1,654,236 7,045,764 50
1994 20,788 1,468 933 48,552 1,154,980 11,336,020 75
1995 230,842 17,864 72,250 56,660 60,818,000 10,282,000 415
1996p 5,633 9,666 181,233 54,399 75,926,000 15,328,000 530
1997f 5,000 10,000 180,000 20,000 58,833,000 14,451,000 425
p - preliminary
f - forecast
n/a - Data not available
Source: Department of Mines and Energy, September 1997.

The Craft Industry

The Labrador craft industry dates back to the early settlers who sold or traded crafts with the Moravians in exchange for basic supplies. The industry grew under the influence of the International Grenfell Association, which established production programmes in many communities. Then the Government of Newfoundland and Labrador fostered crafts development in the 1970s and 1980s. By 1993, Labrador's craft industry involved approximately 20 organizations and government agencies, and contributed approximately $1.5 million (of a total $12 - $13 million) annually to the provincial economy (DND 1994a).


22.1.6.6 St. John's

 Like Happy Valley-Goose Bay, St. John's is an administrative and government centre. However, as the capital and by far the largest urban centre in the province, St. John's is particularly important for its government, administrative, retail, wholesale, financial, education and transportation functions. Tertiary activities dominate, with approximately 86 percent of workers employed in such activities (Statistics Canada 1994).


22.1.6.7 Newfoundland and Labrador

 Relative to the rest of Canada, Newfoundland and Labrador has the weakest performing economy. It is characterized by high unemployment rates, a traditional dependence on primary resource production and reliance on federal transfer payments. In the 1980s and 1990s, wealth from both the resource sector (particularly the fishery) and from federal contributions to current account revenues declined and provincial public sector debt grew.

In the 1997/98 budget year, 43.7 percent of total provincial revenue is expected to come from federal sources. While the provincial direct debt declined slightly in 1996/97 from $5,943 million to $5,528 million, the $540 million in annual interest payments still represented the third highest expenditure by government after health care and education (Newfoundland and Labrador 1997).

In 1996, Newfoundland and Labrador had the lowest level of personal disposable income of all the provinces ($10,104). In 1995, the unemployment rate was 18.3 in Newfoundland and Labrador, while the national average was 9.5 percent. Recent data on the unemployment rates for Newfoundland and Labrador indicate an increase to 19.4 percent in 1996 and a forecasted increase to 20.5 percent in 1997. Also in 1995, labour force participation rates (53.1 percent) were the lowest (the national average was 64.8 percent). Data on the labour force for Newfoundland and Labrador indicate a decrease of 2.5 percent from 241,500 in 1995 to 235,500 in 1996. In 1997, the Consumer Price Index for Newfoundland and Labrador increased by 0.6 percent to 130.3 from 129.5 in 1996 (Table 22.3).

Table 22.3 Selected Economic Indicators Newfoundland and Labrador, 1992-1997
Indicator 1993 1994 1995 1996 1997f
Population (000)
(As of July 1)		 584.5 (0.2%)1 581.8 (-0.5%) 577.5 (-0.7%) 571.7 (-1.0%) 563.6 (-1.4%)
GDP at Market Prices ($m) 9,501 (2.9%) 9,839 (3.6%) 10,449 (6.2%) 10,188 (-2.5%) 9,740 (-4.4%)
Personal Income ($m) 10,108 (1.1%) 10,225 (1.2%) 10,279 (0.5%) 10,104 (-1.7%) 9,872 (-2.3%)
Transfer Payments ($m) 3,456 (3.6%) 3,419 (-1.1%) 3,295 (-3.6%) 3,183 (-3.4%) n/a
UI Benefits (Constant 1986 $000,00) 760 (-15.3%) 639 (-15.9%) 529 (-17.1%) n/a n/a
Labour Force (000s) 241.8 (-0.5%) 244.5 (1.1%) 241.5 (-1.2%) 235.5 (-2.5%) 234.1 (-0.6%)
Employment (000s) 193.2 (-0.4%) 194.6 (0.7%) 197.3 (1.4%) 189.7 (-3.9%) 186.1 (-1.9%)
Unemployment Rate (%) 20.1 20.4 18.3 19.4 20.5
CPI (1986=100) % change 124.1 (1.6) 125.7 (1.3) 127.5 (1.4) 129.5 (1.6) 130.3 (0.6)
Newsprint Shipments (000 tonnes) 704 737 (4.7%) 735 (-0.3%) 714 (-2.9%) n/a
Value of Fish Landings ($m) 194(8.4%) 201 (3.6%) 330 (64.2%) 240 (-27.3%) n/a
Value of Mineral Shipments ($m) 698.9 (-1.0%) 838.3 (19.9%) 881.5 (5.2%) 933.0 (5.8%) 978.3 (4.9%)
Value of Iron Ore Shipments ($m) 614.4 (2.8%) 743.1 (20.9%) 795.8 (7.1%) 820.7 (3.1%) 898.7 (9.5%)
Value of Manufacturing Shipments ($m) 1,324 (3.4%) 1,423 (7.5%) 1,540 (8.3%) 1,572 (2.0%) n/a
f - forecast
n/a- Data not available
1 Percentage change over previous year (in brackets).

Sources: Newfoundland and Labrador, 1997; Department of Finance, 1997; Economics and Statistics Section, Department of Finance, Government of Newfoundland and Labrador, October, 1997.

Unlike the previous several years, the provincial economy did not grow in 1996, with real GDP decreasing by 2.5 percent. It contracted again in 1997 with a further 2.3 percent drop in GDP. The main contributors to GDP in 1996 by industrial sector are indicated in Table 22.4. The proportion of GDP generated by the goods producing sector is modest (25.7 percent). Mining is currently one of the smaller contributing industries (4.1 percent) within the group.

Table 22.4 Gross Domestic Product by Industry-Newfoundland and Labrador, 1996p
Industry Contribution to GDP (%) Employment (%)
Community, Business and Personal Services 25.1 30.9
Finance Insurance and Real Estate 16.2 3.1
Public Administration 10.7 9.7
Wholesale and Retail Trade 10.3 18.5
Transport and Communication 10.9 7.5
Construction 6.4 5.2
Manufacturing 7.4 7.5
Electric Power and Other Utilities 5.1 1.6
Mining 4.1 2.5
Other Primary 2.6 6.6
Other Services 1.0 6.9
p - preliminary
Source: Economics and Statistics Section, Department of Finance, Government of Newfoundland and Labrador, October 1997.

Mining

There was considerable growth in the mining sector of the Province in 1996. The value of mineral shipments increased by 5.8 percent to $933 million, employment increased by 2.8 percent from 1995, and preparatory work continued on the VBNC Project. The Iron Ore Company of Canada (IOCC), the largest mineral producer in the province, continued to report positive results on shipments and in 1997 and 1998, IOCC intends to spend $75 million on capital improvements. Wabush Mines, another large mineral producer, also reported positive production rates and will be completing a feasibility study on a new manganese extraction plant for the province. Despite the scheduled closure of the Hope Brook mine for late 1997, gold production in the province is still expected to increase. The recent or expected entrance of several gold producers including Ming Minerals Inc., Raymo Processing Ltd. and Richmont Mines Inc., is responsible for the anticipated rise in gold production (Department of Finance 1997).

Oil and Gas

Oil and gas activity in the Province is increasing and it is expected that by the year 2000, the province may be producing 225,000 barrels of light crude oil per day. The construction phase of the Hibernia project was completed in May 1997 and first oil was produced in November 1997. The development, drilling and construction of the production system for the Terra Nova project is scheduled to begin in 1998. The project is expected to produce 400 million barrels of recoverable reserves and has a life-span of 15-20 years. Interest in conducting offshore activities is also increasing. Husky Oil has confirmed their interest in developing the Whiterose field and Amoco will drill a well in 1997. In 1996, an offshore land offering was conducted for eight parcels of land, four of which are close to Hibernia and four of which are on the West Coast. The largest bid, from Amoco, was $65 million (Department of Finance 1997). The foundation for the future of oil and gas in the Province has been laid by the Hibernia project, which has created an infrastructure for long-term growth and development in this sector. The activity throughout the Province in oil development and exploration will continue to build a sustainable industry over the next 50 years (Chafe 1997).

Forestry

The forestry sector in the Province suffered a decline in 1996 mainly as a result of falling world prices and reduced consumption of newsprint. Within the Province's lumber industry there have been substantial improvements since the 1980s, which have been attributed to the aggressive export marketing techniques used by the industry. Unfortunately, results from a review of the province's timber supply indicate that the Province's forests are unable to meet the demand for raw materials. The shortage will hopefully be overcome through forest management and protection measures. In the short-term, however, the outlook for the Province's forestry industry is positive. A rise in newsprint shipments is expected for 1997, coupled with an expected rise in market prices. Investment in the industry is expected to remain positive as a result of committed spending for capital improvements. The issue of declining wood supply is still present, however, and the Province will need to continue to implement aggressive measures in order to achieve a sustainable wood supply and healthy forestry sector (Department of Finance 1997).

The Fishery

The traditional mainstay of the Province's economy, the fishery, has in terms of most measures, experienced a substantial decline over the past ten years. Employment, licences and groundfish landings have all decreased considerably since 1988. However, high prices and landings contributed to a record total landed value ($330 million) in 1995 ( Table 22.3). Despite the challenges presented by the groundfish closures in 1992, industry performance results in 1996 an improvement from 1995. Both fish landings and employment in harvesting and processing increased in 1996. This increase was attributed mainly to the return of capelin, higher turbot and redfish catches, high crab landings, and improved market conditions for turbot, redfish, capelin, shrimp, and scallop products. The Province's aquaculture industry continued to show growth in 1996 with licenses issued up to 210 from 158 in 1995. Aquaculture production has grown 17 percent over the year and, combined with funding from the Canada/Newfoundland Agreement on Economic Renewal, the industry is expected to experience further growth. In spite of the fishery's performance in 1996, employment and fish landing levels remain low. The overall industry will require many years of growth before returning to its past level of performance (Department of Finance 1997).

Tourism

The tourism industry in Newfoundland and Labrador is one of the main sectors with potential economic growth. There was a decline in non-resident visits and expenditures for 1996; however, it was likely that non-residents had postponed their visit to the Province in anticipation of the Cabot 500 celebrations in 1997. Customs and Excise data indicated a 59 percent increase over 1995 levels in international visits from England, France and Germany (Department of Finance 1997).


22.1.7 Likely Future Conditions - Labrador North Coast

 Without the Project, the North Coast will probably see the continuation of a generally stagnant economy. The levels of participation in the labour force will remain low in the North Coast area and residents' reliance on government transfers and other income will result in continued shortages of disposable income. Initiatives such as the Utshimassits-Natuashish relocation project may create economic stimulation in the North Coast area and partly compensate for the decline in disposable income and labour force participation. However, the short-term nature of such projects will not be sufficient to generate sustained growth in the local economy over time unless, as is hoped, the relocation project can stimulate other development initiatives.


22.1.8 Likely Future Conditions - Other Areas of Newfoundland and Labrador

22.1.8.1 Upper Lake Melville

 The Upper Lake Melville economy is unlikely to experience much growth without the Project. Currently, CFB Goose Bay has been undergoing some downsizing in staff levels and there is some uncertainty about its future. The Utshimassits relocation, the Trans-Labrador Highway and the new Happy Valley-Goose Bay hospital will mean some short-term construction business for the area. However, these projects are unlikely to create sustained economic growth and development for Upper Lake Melville.

In the long-term, the highway will probably stimulate further resource development in the area. A six-month shipping season has always been a severe constraint, and construction of the highway removes it. The cost of shipping by road will remain high, even when the Eastern section of the Trans-Labrador Highway is upgraded to the standard of the Western Labrador portion. Some potential forest and mineral developments will, however, probably continue to remain uneconomic.


22.1.8.2 Western Labrador

 The economies of the communities in Western Labrador, though highly dependent on export of single products (iron ore from Labrador City and Wabush; electricity from Churchill Falls), appear to be sound for the foreseeable future (Chapter 21). IOCC, for example, is currently studying whether to expand its pelletizing facilities in Labrador City or renovate a moth-balled plant at Sept Iles, Quebec (Malik, R. pers. comm.). The challenge for the mining towns is to diversify their economic base, so that the effects of periodic declines in the world market for iron ore are reduced. The last major decline, in 1982, generated heavy layoffs and an exodus from the area. Employment has recovered steadily since then, though not to former levels.

Completion of the Trans-Labrador Highway to Happy Valley-Goose Bay has been a considerable boost to business confidence in Western Labrador, giving hope for a more diversified economy. Many goods formerly shipped to central Labrador in summer by sea now arrive on transport trucks year-round, shipped via Labrador City/Wabush. Aggressive promotion of Western Labrador by local development officials, and a commitment by the mining companies to purchase more goods and services locally, have induced a number of mining service firms and wholesalers to set up operations in the Wabush Industrial Park (Malik, R. pers. comm.). As the highway improves and these supply links become better established, Western Labrador will share in whatever economic growth the Upper Lake Melville enjoys, and both regions will enjoy economies of scale from a larger market.

Tourism growth will accelerate as the Eastern section of the Trans-Labrador Highway, between Churchill Falls and Happy Valley-Goose Bay, is upgraded over the next three years. The highway has already spurred considerable growth in tourism, with more tour buses and private vehicles arriving each year. The outfitting business, guiding hunters to the huge George River Caribou Herd, is also growing (Brenton, D. pers. comm.).


22.1.8.3 Eastern Labrador

 Dominic Rose, Fishermen's Committee, Black Tickle/Domino: "It is quite frustrating and difficult to understand why our local people cannot avail of the rich resources of shrimp, turbot, snowcrab as well as other species that are adjacent to our shores, which are being fished by fishers from as far away as Quebec, as well as foreign vessels." (The Labradorian, Oct. 13, 1997.)

As in most of rural Newfoundland, the future of this area is largely tied to the inshore fishery; but the traditional mainstays of the inshore fishery, the cod and salmon stocks, have been seriously depleted. Northern cod in the waters adjacent to this region show little sign of recovery. The total allowable catch for salmon in Labrador this year was only 55 tonnes, less than half the figure for the early 90s. By mid-September, with the salmon fishery virtually over, landings were only about 43 tonnes (Best, H. pers. comm.). Even if the salmon fishery recovers, the market for wild salmon faces strong price competition from farmed salmon, and the commercial salmon fishery faces intense political pressure from the sport fishing industry.

The future of the inshore fishery in Eastern Labrador appears to depend on a successful transition to the harvest and marketing of new species, a process which is underway. The crab plants at Mary's Harbour, St. Lewis and Cartwright have become major employers, and their operators are branching out into other new species, including scallop and whelks. There has been some experimental harvesting of sea urchins, abundant in some areas, and there may be some hope for surf clams and lumpfish. None of these is likely to support a large fishery, but a market for a range of species will enable some small boat fishermen to maintain their way of life as they wait for cod to recover.

Shrimp may offer other projects for diversifying the Labrador inshore fishery. For decades, trawlers have caught shrimp off the Labrador coast and taken it to be processed elsewhere. Shrimp licences and the revenue from joint ventures have underwritten the costs of inshore fisheries development efforts by the Torngat Fish Producers Co-operative on the North Coast, and the Labrador Fishermen's Union Shrimp Company in Eastern Labrador and the Labrador Straits. However, neither of these, nor the other companies harvesting northern shrimp, has processed them in Labrador. There has not been any opportunity for smaller vessels to develop a smaller-scale shrimp fishery of the sort operating out of Port aux Choix. However, Coastal Labrador Fisheries Ltd., which runs the crab plant at St. Lewis, is currently preparing to process shrimp. If this proves viable, it will open up an alternative fishery to the longliners now fishing crab, and broaden the region's economic base.

Betty Sampson: "There must be some way we can live in this land, and make a living, without destroying it." (Labrador in the 90s.)

The other significant change in this area will be the construction of the highway from Red Bay to Cartwright. This will have profound effects on a region which, because of its isolation, has lagged behind other areas in its economic and social development. Provincial authorities plan to begin construction in 1998 and to finish the highway in about five years. As mentioned earlier, this road may slow or reverse the out-migration from communities it connects, and perhaps accelerate the decline of some of those it does not.

The highway will undoubtedly also enhance the prospects of the forest and tourism industries in this region, but the scale and nature of these developments is difficult to predict. Similarly, a highway will probably enhance mineral exploration in the area, but both the scale and the results of this are largely unpredictable.


22.1.8.4 Labrador Straits

 As discussed in Chapter 21, the prospects for economic development in this area depend chiefly on continued diversification of the fishery and growth in the tourist industry. The fish plant at L'Anse au Loup, by far the largest employer in the area, has diversified so successfully that it employs more people than it did before the cod moratorium. Now that moderate fishing has been allowed to resume on the cod stocks in the Gulf of St. Lawrence, employment in that sector should improve further. Extending the highway to Mary's Harbour and Cartwright, and ultimately to Happy Valley-Goose Bay, will stimulate tourism and, to a lesser extent, other industries. However, the seasonal nature of the ferry connection will be a continuing constraint.


22.1.8.5 Labrador

 Without the Project, Labrador as a whole will probably experience a decline in economic activity. Labrador is highly dependent on resource-based activities for economic growth. With the fisheries moratoria and loss of sealskin markets, the opportunity for residents of coastal Labrador is limited. The exploration activity and speculation to date has created a positive atmosphere in Labrador, but without the Project, Labrador will have little to depend on for continued economic growth.


22.1.8.6 St. John's

 Without the Project, St. John's will also continue to be affected by a decline in province-wide construction employment and business activity.

The area recently lost a number of jobs related to the Hibernia offshore platform when the construction was completed. At peak, approximately 35 percent of the workers employed at the construction site lived within the St. John's CMA. Jobs resulting from St. John's role as a supply base for the Hibernia field will partly compensate for the loss of jobs in platform construction. Future employment and business opportunities may be derived from the operations of the Hibernia development, in addition to other offshore oil developments such as the Terra Nova Project, the Newfoundland Transshipment Terminal, and additional exploratory drilling for oil and gas.


22.1.8.7 Newfoundland and Labrador

 Newfoundland and Labrador as a whole has the weakest of the provincial economies in terms of gross provincial product, unemployment rates and government transfers. Since the employment mainstay of the economy was traditionally the fishery, the adverse influence of the moratoria have been severe. The development of a more diversified and stable economy will be encouraged by projects like the Voisey's Bay mine/mill. Without this, the Province will probably see a continued deterioration in its economy.

Economic activity for 1997 is expected to decline mainly due to the end of Hibernia construction activity and continued government fiscal restraint. The construction industry is expected to experience sharp declines in activity in the short-term, although the Terra Nova and Newfoundland Transshipment Terminal projects present some opportunities for future growth together with production from the Hibernia field.

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