Volume XL Monday Province of Newfoundland FORTIETH GENERAL ASSEMBLY OF NEWFOUNDLAND Third Session VERBATIM REPORT {Hansard) Speaker: Honourable Patrick McNicholas Number 39 11 May 1987

The House met at 3:00 p.m. MR. SPEAKER (McNicholas): Order, please! Statements by Ministers PREMIER PECKFORD: Mr. Speaker. MR. SPEAKER: The hon. the Premier. SOME HON. MEMBERS: Hear, hear! PREMIER PECKFORD: Mr. Speaker, in recent weeks, as all hon. members will remember, it has been suggested by a number of people that there is room for improvement in our Conflict of Interest (Public Employees) Regulations. As a result, these regulations have been examined, in detail, to determine how they could be made more effective.

The regulations were put in place in December 1982, to establish a clear code of conduct expected from provinvial public secvants in Newfoundland and Labrador. The permanent head or deputy minister of each department is responsible for the implementation of these regulations. As a result, decisions on what does or does not constitute a conflict of interest situation is dependent upon a subjective

interpretation of the regulations by the permanent head of the relevant department. We have come to the conclusion that while the regulations are excellent as a code of conduct, the procedures for their implementation may result in L2048 May 11, 1987 Vol XL virtually the same set of circumstances being considered a conflict of interest in one department and not in another department, because of each permanent head's

interpretation of them. Even though the set of circumstances may be the same, one deputy minister in one department might indicate that this is a conflict of interest by some employee and another deputy minister might rule the other way. In order to improve this situation, it has been decided that an impartial tribunal be established to assist deputy ministers who have potential conflict of -_ interest situations in their departments. This tribunal will bring consistency to the

interpretation of the regulations and will be fairer to all public servants. The tribunal will comprise, Mr. Speaker, Mr. Peter Withers, Chairman, who is the Chairman of the Public Service Commission of the Province, Mr. David Vardy, who is President of the Institute of Fisheries and Marine Technology, and Ms. Deborah Fry, Associate Deputy Minister of the Department of Justice. The tribunal, in the first instance, will be asked to prepare a set of guidelines for its operations _to be considered by the Cabinet.

We are confident that this tribunal will do much to improve the fairness and effectiveness of the Conflict of Interest (Public Employees) Regulations. I commend all hon. members to this statement. No. 39 R2048

MR. SIMMONS: Mr. Speaker. MR. SP EAKER: Mr. Speaker, I first of all thank the Premier for making a copy of this statement available to me before he rose. First of all, we welcome the initiative represented by this particular statement. Members will recall that I raised the issue a couple of months ago when I put a question to the Minister of Development and Tourism (Mr. Barrett) relating to a specific instance. I did not get into the details of the instance publicly because that would not have been fair to the individual, but we did raise the general principle.

You will recall that the Premier then took the issue as it related to that department and expanded the concern, and I see this statement as his response today to that particular issue. He did undertake, Mr. Speaker, to do what he has done today, or at least to review the matter, and I assume this is his response to that review and I thank him for that. We welcome the initiative and we hope this process works. We have confidence that it will.

I would just make one suggestion: Given the possibility that is embodied actually in the Premier's statement, that sometimes we would get some inconsistency in the application of guidelines, I would have hoped that the Premier and the administration would have considered having at least one person on the tribunal from completely outside the public service altogether. Mr. Withers, of course, is Chairman of the Public Service Commission, Mr.

Vardy is a man who has been in the public service and who is, I L2049 Kay 11, 1987 Vol XL suppose, by extension, still in the public service though not directly in a department of government, and, of course, Ks Fry is an associate deputy minister. PREMIER PECKFORD: The tribunal needed a legal mind. MR. SIMMONS: Yes, I understand that.

I do not quibble with any who are there, but the Premier might want to consider not for the appearance alone but also, it seems to me, that having somebody there from private industry, for example, might bring a new perspective to it and might assure the public that having a person there who has had no part of the public service gives it that extra - PREMIER PECKFORD: It is a little bit difficult, because it is hard to get someone, unless it is a retired businessman, who may not at some point be doing business with the government somewhere. Still, your point in well taken. MR.

SIMMONS: I make that observation, Kr. Speaker, and perhaps the Premier might want to take it under advisement. Otherwise, we: welcome the statement and we wish the tribunal much success in its fairly awkward and difficult job. MR. LONG: Mr. Speaker. MR. SPEAKER: The bon. the member for St. John's East. MR. LONG: Thank you, Kr. Speaker. I would also like to thank the Premier for a copy of his statement in advance and would simply like to raise a No. 39 R2049

concern about something that seems to be internally inconsistent inasmuch as the tribunal has been put in place to deal with the procedures and not the regulations. In the final sentence it says that the tribunal would do much to improve the fairness and effectiveness of the conflict of interest regulations.

In light of the fact that the tribunal will be dealing with the procedures in the application of the regulations and not the regulations themselves, we would add a further concern, that once the tribunal prepares a set of . guidelines for its own operations that that report be brought not only to Cabinet but also brought to the House so that we can deal with the original question as it was raised. Thank you, Mr. Speaker. MR. SIMMONS: Mr. Speaker. MR. SPEAKER: The hon. the Leader of the Opposition. MR.

SIMMONS: There is a matter that the House might want to deal with, and I make reference to the passing on the weekend of the Most Reverend Richard T. McGrath, the Bishop Emeritus of the Roman Catholic Diocese of St. George' s. I would like, on behalf of my colleagues, to ask the House to consider a resolution that would extend the condolences of the House and its members to the family and relations of the late Most Reverend Richard T. McGrath. Bishop McGrath, Mr. Speaker, was an outstanding example of a clergyman involved in most of the L2050 May 11, 1987 Vol XL socially important concerns of this Province.

A short list of his involvements span from the editorship of the Monitor, a close association with the Catholic Youth Club, membership on the Senate of Memorial University, promotion of healthy trade unionism and continuous participation in various aspects of education in Newfoundland and Labrador. These are but a sparse outline of his many contributions to this Province. Mr.

Speaker, I am sure the House would like to mark the occasion of his passing and extend its formal tribute to the values which his life worked so hard to help establish and preserve, and to honour his commitment to his church and to his Province as a whole. MR. POWER: Mr. Speaker. MR. SPEAKER: The hon. the Minister of Career Development and Advanced Studies. MR. POWER: Mr.

Speaker, on behalf of members on this side of the House I also want to join with the Leader of the Opposition in passing our condolences on to the McGrath family and to say that we also, as a government, fully appreciate the accomplishments of Bishop McGrath over his lifetime of service in Newfoundland . I have known Bishop McGrath for many, many years . I served as an altar boy with him. It certainly seems a lifetime ago now, when he served as a Parish Priest in Tors Cove, in Witless Bay. And although it is the major things, the public things, like being Editor of the Monitor and the No. 39 R2050

things that Bishop McGrath did in Education that he is remembered for by the general public, to those persons who knew Bishop McGrath, certainly it was the small things he did. I remember as a small child in Tors Cove, where there were no recreational facilities, Bishop McGrath making the parish hall available to all school kids and somehow or other finding 200 pairs of roller skates to donate to the kids in Tors Cove. Those are the kinds of things that those persons who came in touch with Bishop McGrath tend to remember.

His service to individuals and to the community certainly are something for his family to be very proud of. I can only say, Hr. Speaker, and all members on this side of the House, pass our condolences on to the McGrath family, and say that as Newfoundlanders we have lost a Newfoundlander of some renown. SOME HON. MEMBERS: Hear, hear! HR. SPEAKER: At this stage I would like to welcome to the gallery a delegation from Wabush town -council with their Mayor, Bill Kelly, councillor Derm Flynn, and manager Keith Warren. SOME HON. MEMBERS: Hear, hear! HR.

SPEAKER: I would also like to welcome ten participants and two instructors from Brother Murphy Center . on Water Street, St. John's. SOME HON. MEMBERS: Hear, hear! Oral Questions L2051 May 11, 1987 Vol XL MR. TULK: Mr. Speaker. MR. SPEAKER: The hon. the member for FC>go. HR. TULK: Mr. Speaker, I have question for the Minister of Rural, Agricultural and Northern Development. Since he is not in his seat - MR. SIMMONS: He is being gagged. PREMIER PECKFORD: He is down in Bay d'Espoir. MR. TULK: He is probably being gagged like the civil servants. Mr. Speaker, I will clirect my question to the Premier.

It concerns the gov ·ernment' s financial involvement in the Sprung - SOME HON. MEMBERS: Oh, oh! HR. SPEAKER: Order, please! MR. TULK: Mr. Speaker, they are in love with me again today over there. Mr. Speaker, it conce!rns the government's financial involvement in the Sprung proposal to establish a greenhouse in Newfoundland and Labrador, specifically in the Mount Pearl area. Mr.

Speaker, my qu4~stion to the Premier is this: Why does an identical project in Quebec for a $15 million greenhouse project receive only a $4 million commitment from the government there while the Sprung proposal of $18 million in this Province No. 39 R2051

receives a conunitment from this government of $13.4 million? In other words, why does the Quebec government only have to make a conunitment of under 30 per cent, while this deficit-laden and, if we can believe the Premier, bankrupt Province has to make a conunitment to kick in over 75 per cent of the cost of the project in Newfoundland? MR. SPEAKER: The hon. the Premier. PREMIER PECKFORD: Mr. ·Speaker, first of all let me correct the statement made by the hon. member in his

preamble to his question. It is not a greenhouse that we are building, Mr. Speaker. It is an application of a new hydroponic technology that nobody else in the world has at the present moment, except the Sprung Group of Companies . So it is not a greenhouse at all. It is the application of a new hydroponic technology which we have been successful in attracting to the Province. The Opposition and others in the Province Dver the years have been saying that we are driving investment away.

Now we have just had new investment brought to the Province, an investment into research and development and high technology so that we are on the leading edge of this new technology, so we will not be last but that we will be first. that we are not going to piggyback and wait for somebody else. We are going to be in there. Mr. Speaker, I do not know anything about the Quebec proposal that the hon. member refers to. I will have to get the details of that financial arrangement.

We have invested equity into this new joint venture company of $3.5 million and the Sprung Group of L2052 May 11, 1987 Vol XL Companies have invested $3.5 million in it. I would refer the hon. member to page 447 of the House Royal Conunission Report. "In the long run. we should aim to exert more provincial control over our resource industries. including taking an equity position, if necessary, perhaps through joint venture arrangements.

Newfoundland ownership should mean that more profits could be re-invested in Newfoundland, more senior-level personnel trained and hired in Newfoundland, more research and development" - which is what this project is all about, in the same way as we do for NORDCO or C-Core or any other leading technology enterprises on the go - "could take place in Newfoundland, and companies would be more likely to develop long-term commitments to this Province." We are in the business, Mr. Speaker, of implementing some of the things that the House Royal Commission has said. SOME HON. MEMBERS: Hear, hear! MR.

TULK: A supplementary, Mr. Speaker. MR. SPEAKER: The hon. the member for Fogo. MR. TULK: I say to the hon. gentleman, Mr. Speaker, if he wants to read the House Commission, perhaps he should read it all and not just those parts that are selective to his purposes. Let me say to him that Dr. House was concerned with rural Newfoundland and not necessarily with megaprojects. As a matter of fact, he said they should be small scale projects. SOME HON. MEMBERS: Hear, hear! No. 39 R2052

MR. TULK: Let me say to the Premier, let me ask the Premier again - MR. SIMMS: Anything in excess of one dollar is a megaproject to them. MR. SPEAKER: Order, please! MR. TULK: Now the economist from Dave Gilbert's garage in Grand Falls is at it again. Mr. Speaker, let me ask - MR. SIMMS: Listen to the economist from Fogo. MR. SPEAKER: Order, please! AN HON. MEMBER: Name him! Name him! MR. TULK: Let me ask the Premier what is so different in Quebec that the Quebec Government only had to put in $4 million to get their project underway

whereas our government had to put in and guarantee $13.4 million out of $18 million in order to get this into Newfoundland? I would say to the Premier that perhaps it has to do with his style, perhaps they are more successful at negotiating and do not go off the head when they see a few cucumbers growing. PREMIER PECKFORD: Mr. Speaker. MR. SPEAKER: The han. the Premier. PREMIER PECKFORD: Mr. Speaker, I will let my record speak for itself when it comes to negotiating.

The Fishery L2053 May 11, 1987 Vol XL Restructuring Agreement that we negotiated, I think all Newfoundlanders and Labradorians would agree today has bee'n a major success with FPI. SOME HON. MEMBERS: Hear, hear! PREMIER PECKFORD: They said it could not be done, Mr. Speaker. At the time when the restructuring agreement was done and I said it was one of the most important agreements since Confederation up to that point, we were criticized all over the place. I was laughed at in a federal Liberal Cabinet Mlinister' s Office when I talked about Burin being a secondary processing plant.

It is all work that has been highly successful, Mr. Speaker. When we talked about ho lding out for the Atlantic Accord and getting a deal as if the oil were on land, they told me it could not be done, that I was confrontational, I could not get an agreement. We have the Atlantic Accord, Mr. Speaker. We got it in legislation in Canada and in Newfoundland. SOME HON. MEMBERS: Hear, hear! PREMIER PECKFORD: Mr. Speaker, I remember when the Bowater people ~ere going to leave Corner Brook; they said I could not negotiate, that Corner Brook and the West Coast was going to be gone.

Now we have $150 million to $180 million already spent there with a new company. Everybody in the Province! thought Come By Chance was going to destroyed. Today there are 547 Newfoundlanders working at Come By No. 39 R2053

Chance, M~. Speake~, 547 Newfoundlande~s and Lab~ado~ians. SOME HON. MEMBERS: Hea~, hea~! PREMIER PECKFORD: M~. Speake~, that is pe~forrnance. But we a~e not, as the House Royal Commission said, just going to ~ely on au~ t~aditional indust~ies; we a~e going to have a balanced app~oach to ou~ future, we a~e going to get involved in high technology whe~eve~ we can, we a~e going to c~eate jobs whe~eve~ we can.

And this latest initiative is anothe~ one which will be added to those four to show that this government is serious about job creation and that when we negotiate deals we can stand by them and they will be p~oven to be good deals fa~ Newfoundlanders and Lab~ado~ians. SOME HOM. MEMBERS: Hear, hea~! MR. TULK: A final supplementa~y. Mr. Speake~. MR. SPEAKER: A final supplementa~y. MR. TULK: Mr. Speaker, his ~eco~d! Newfoundland Energy Limited, a secret company in Bermuda! FFTs! His record! Canada-France! Some 60,000 unemployed when he promises 45,000 jobs. Oh, for his ~eco~d. He should stand on his record. Mr.

Speaker, let me ask the Premie~ a supplementary. The Newfoundland government will p~ovide this failed Alberta company with thirty acres of serviced land - I ~epeat the word 'serviced' - in Mount Pearl, valued, the government says, at $1 million. Let me ask the P~emie~ - L2054 May 11, 1987 Vol XL MR. SIMMS: They did not fail in Calga~y. MR. SPEAKER: O~de~, please! MR. TULK: They did! Read. do you good. Read. It will - who pe~forrned the app~aisal on this land in Mount Pea~l?

Will he now table the app~aiser's repo~t on the value of those thirty ac~es of serviced land, or is he going to do the same thing as he did with Newfoundland Energy Limited, keep that secret and hide it, if he has to, in Bermuda? MR. SPEAKER: The han. the Premier. PREMIER PECKFORD: M~. Speaker, we ~eleaseed the agreement between Newfoundland Energy and the Government of Newfoundland to the public. As soon as the legal ag~eements a~e put in place fo~ the Sprung group of companies, at the end of this month, we will be releasing all the information to the public as it relates to this deal. Mr.

Speaker, let us be clear on what we are doing here. We are involved, as we a~e with the flume tank as the Marine Institute which we fought for and got, as we a~e involved with the ice tank of the National Research Council on the Memorial campus, as we are involved in aquacultu~e over in Bay d' Espoir, where we put in $1.5 million to get a hatche~y going, as we a~e doing with mussel farming, Mr. Speake~, as we are doing with small hyd~o projects at Pa~adise Rive~, as we have done at Roddickton; we a~e involved in research and development.

Research and development, as the House Royal Commission says, takes No. 39 R2054

money from all sources. MR. TULK: A point of order, Mr. Speaker. MR. SPEAKER: Order, please! A point of order. MR. TULK: I am glad, Mr. Speaker, he is finally reading the House Commission but will he now answer the question and table the appraiser's report for that valuable piece of land that he has given to Mr. Sprung - Spring, Sprang, whatever - from Alberta? MR. SPEAKER: The hon. the Premier. PREMIER PECKFORD: Mr. Speaker, we will, as I said, table all of the details relevant to this project when all the legal agreements are in place, not before.

As soon as the legal agreements are signed, we will table all the information for the hon. member. Just let me refer the hon. member to Page 449 of the House Commission Report. "The Commission believes that we have been so preoccupied with large-scale resource industt"ies" - this is supposed to be a megaproject at $18 milllion, Mr. Speaker, Some megaproj ec t! A very medium industry. MR. TULK: A point of order, Mr. Speaker. MR. SPEAKER: A point of order, the hon. the member for Fogo. MR. TULK: Mr.

Speaket" wi 11 recall that he, the other day, made a ruling that when asking questions you do not L2055 May 11, 1987 Vol XL read from documents. Would he make the same ruling as it applies to the Premier? He is finally starting to read the Royal Commission on Employment and Unemployment. MR. SPEAKER: Order, please! To that point of ordet", it is in our Standing Ordet"s that, "Ot"al questions must not be prefaced by the reading of letters, telegrams, newspaper extracts or pt"eambles of any kind." I think that equally applies to replies. PREMIER PECKFORD: Well, Mt".

Speaker, I refer the hon. member to the House Commission Report on Page 449 which talks about gett.ing into agriculture in a bigger way.

I would refer hon. members not only to that, but also to pages 15, 19, 21, 24, 27, 123, 160, 161, 171, 397, 447, 449, 455, and 457 of the House Royal Commission, W'here they talk about the government having to be the facilitator of research and development, that if we want to do the kinds of things in the future which are going to be important for us to create jobs thet"e has to be the political will, the government has to marry with the private sector in doing that, and especially in research and development areas.

This is a research and development opportunity which will create jobs for Newfoundlanders and Labradorians. We are proud of it and we are going to go out every day, as we have in the last four or five months, and find other research and development opportunities. More of the same, Mr. Speaker, will be coming so that we have a balanced approach to our development. No putting all our eggs in one basket, but No. 39 R2055

many eggs in many baskets to help create jobs. SOME HON. MEMBERS: Hear, hear! MR. EFFORD: Mr. Speaker. MR. SPEAKER: The hon. the member for Port de Grave. MR. EFFORD: Thank you, Mr. Speaker. With the Premier's boasting of his record over the last seven or eight years, I wonder if I am living really in a Province where we have a deficit of $4.4 billion and 80,000 people unemployed. I must be dreaming. SOME HON. MEMBERS: You are! You are! MR. YOUNG: You have been asleep ever since you came in here. MR. FUREY: Silence the cucumbers! KR. SPEAKER: Order, please! It is impossible to questions.

There seems continuous noise on my would ask bon. members allow questions. hear any to be a left. I to please The bon. the member for Port de Grave. MR. EFFORD: Mr. Speaker, let me get to the question to the Premier. It is very clear that we, on this side, have no arguments with getting a business started in Newfoundland and creating jobs. But we better make sure that the jobs are going L2056 May 11, 1987 Vol XL to succeed. My question to the Premier is very simply this: Obv .iously the Premier stated very clearly, about the project, how much produce is going to be grown at this particular development.

I would like to ask the Premier, has he had a market study done in the Province and outside of the Province as to accessibility to markets. PREMIER PECKFORD: Yes, Mr. Speaker. We have, of course. SOME HON. MEMBERS: Hear, hear! MR. EFFORD: No question. He stated very clearly, and the Premier knows full well, that the high cost of growing these vegetables here in Newfoundland, the high cost of electricity, and the high cost of exporting, is going to create a problem. SOME HON~ MEMBERS: Put everything on the mainland. MR. SPEAKER: Order, please! MR.

EFFORD: Will the Premier, now that he has the market survey done on accessibility to markets, table it this afternoon in the House? MR. SPEAKER: The hon. the Premier. PREMIER PECKFORD: Not this afternoon, Mr. Speaker, but we will after the legal documents are signed. A full market study has been done. As a matter of fact, on the two critical areas, number one, remember this, that this is a No. 39 R2056

r-esear-ch and development oppor-tunity. We want to be in on the leading edge of technology and we have the oppor-tunity to do it her-e now, and no other- place. If you ask the leading biotechnologist down in the United States, who build the biotechnology center- at the Epscott Center-, he will tell you a good stor-y about the Spr-ung technology. If you ask the National Research Council of Canada, they will tell you the same story. If you ask the Dean of Science at the Memorial University, they will tell you the same story, that this is an excellent technology and that it is wor-thwhile for- us to pursue.

Two areas, fr-om an economic point of view, remembering that it is like C-Cor-e, that it is like NORDCO, that it is like these other infant high technology industries, recognizing that it is like that, but still wanting to make it economically as quick as possible, the Government of Newfoundland with the Spr-ung Gr-oup, isolated, as the Minister of Agricultur-e (Mr. Wise) said I think on radio this mor-ning, the two areas; one was marketing~ the other is production.

Under mar-keting, the Spr-ung Group of Companies have gone out to the marketplace and have examined the marketplace and has letters fr-om companies who want to buy all that they can pr-oduce. It is going to be cheaper. The bon. member talks about the high cost and all the rest of it, but our economic analysis shows - and we have been at this six or eight months now - that we can produce these products cheaper to the marketplace, not only in Newfoundland but in Easter-n Canada and the Eastern United States, than their L2057 May 11, 1987 Vol XL competitor-s in those mar-ketplaces.

That has been pr-oven and we have letter-s to substantiate that they have a market. They have been into the marketplace now for- the last two or three years in developing this. Secondly, was production, M~. Speaker. On that we have ensured in the agreement, just in case, although we have done climatic studies on other parts of Canada including the West, including the Eastern part of Canada, also in Wester-n Europe, and we have as a safety net, Mr. Speaker - MR. EFFORD: A point of order, Mr. Speaker. MR. SPEAKER: Order, please! A point of order, the bon. the member for Port de Grave. MR. EFFORD: Mr.

Speaker, when we ask a question on this side if we

preamble one sentence too long we are cut off. I asked the Premier a very simple question, 'Will he table a copy of the survey that he had done in reference to the marketing of the product inside and outside of Newfoundland?' I did not ask for- a full hour's speech. PREMIER PECKFORD: To that. point of order, Mr. Speaker. MR. SPEAKER: To that point of order, the hon. the Premier. PREMIER PECKFORD: I was just trying much information member as I could. No. 39 to provide as to the han. R2057

MR. EFFORD : Mr. Speaker. MR. SPEAKER: To that point of order there is no point of order. The han . the member for Port de Grave. PREMIER PECKFORD: If there is no point of order sit down and I will finish.

On production, what we did there after the climatic studies were all done, also in Western Europe, by the way, because there is a lot of hydroponic acttvity going on in Western Europe, especially in Holland, we ensured in the agreement that we had the $3 million high intensity lighting, to go as an addition to what would normally be the complex, as a part of the complex as is being built to ensure that that safety net was there if we did need it. Those are is, Mr. Speaker, the two areas on the economic side. I come back, Mr.

Speaker, to the point that this is a research and development initiative in the first instance. and. hopefully within a year or two after it is up and running, we firmly believe, from all the studies that we have done that it will be very economically viable too. We are going out into an area of ~esearch and development so that we will become one of the leade~s in the world in this technology, and that is ext~emely important in the s~e way as it for NORDCO or C-Core in other high technology areas that we are trying to get into. SOME HON. MEMBERS: Hear, bear! MR. EFFORD: L2058 May 11, 1987 Vol XL Mr. Speaker. MR.

SPEAKER: The bon. the member for Port de Grave. MR. EFFORD: Mr. Speaker, I assume from what the Premier said that he is going to table that before the agreement is signed with this company. I guess be is going to table it tomorrow. But let me ask the Premier this: Did he have a study done, has there been a study done as to anywhere else that this project could be built cheaper other than the place they have ag~eed on? Could it be built any place else cheaper than it is going to cost out in this particular place on Brookfield Road? MR. SPEAKER: The han. the Premier. PREMIER PECKFORD: Mr.

Speaker, we have examined numerous sites around the Province. We have looked at all of these sites throughout all of the Province and on the Avalon Peninsula, and this is, from all of the analysis that we have done, perhaps the best place fo~ the first facility, because we are hoping that there are going to be others after we get this one up and running. MR. FUREY: _ Mr. Speaker. MR. SPEAKER: The han. the member for st. Barbe . MR. FUREY: Mr.

Speaker, I want to ask the Premier, if the prospects for this 75 per cent subsidized project are so rosy, why did the government see fit to single out this failed No. 39 R2058

Alberta company for a sole exemption from government's oppressive retail sales tax? When every other small business in the Province is pleading for a reduction in sales tax, Mr. Speaker, why did the Alberta Sprung operation get a complete tax exemption and no other small business in this Province gets a sales tax exemption? MR. SPEAKER: The hon. the Premier. PREMIER PECKFORD: Well, Mr. Speaker, let me say first I think it is unfair for the bon. gentleman to say what he just said, this failed company. This company has never failed, evEm in Alberta.

One component of their companies failed because the plant was built on the site of a former Imperial Oil refinery. MR. SIMMONS: That is what they say. PREMIER PECKFORD: Yes, and reports - MR. TULK: No. MR. SPEAKER: all Order, please! PREMIER PECKFORD: the consultants Independent consultant reports have proven that. Right next to where that facility is, by the way, there is a subdivision, and the people in that subdivision have now come out and supported what the independent consultants are saying about that site.

Not only that, it has been revealed that the building contractors who were on that subdivision withheld, as did some other agencies out in Alberta, information f~om the L2059 May 11, 1987 Vol XL Sprungs when they signed their lease with the City Council of Calgary. The building contractors withheld information, and the information they withheldl was that they had ascertained that there was gas leakage on that soil and put an extra insulation layer in the foundation, unknown to the people who were buying the houses.

Now let me just come back, the Sprung companies have been in existence for 100 years and they have been highly successful. And we, as a government, obviously have gone to their bankers, independent of them, as we did with Newfoundland Energy, and sat ' down with them for over a week and gone through all of their operations. They are good clients of the Royal Bank of Canada, which gives them full marks in the way they manage and operate their businesses. MR. TULK: Not true!

PREMIER PECKFORD: We have checked with all the scientists around in the 101rorld who have anything to do with this technology, and they say it is a good thing. And now on the sales tax, Mr. Speaker, we did it for TE~rra Nova Shoes when they were doing an expansion. Strange, is it not, it is so hard to get information out around this Province? We have had a policy, for the last three or four years, that on capital equipment, in either expanding an existing industry or starting a new industry in the Province, that there be a sales tax eJ<emption. We have done it for several other companies around the Province.

This is not the first. It is part of our policy to attract investment to the Province and No. 39 R2059

create jobs. SOME HON. MEMBERS: Hear, hear! MR. FUREY: Mr. Speaker. MR. SPEAKER: The bon. the member for st. Barbe. MR. FUREY: A supplementary, Mr. Speaker. Mr. Speaker, there are consultants in this country who would argue with the Premier's rebuttal with respect to the leakage of fumes from their own furnaces, but that is another matter.

I would like to ask the Premier, with respect to his local preference policy, why is it that a local businessman, Dan Munroe, who tried to get into this business and contacted Rural, Agricultural and Northern Development for the past eight months, did a lot of research, a lot of ground work in place - in fact he has even talked to Newfoundland Hydro about accessing the eighty-eight degree water so that that would not be a factor or a cost - was continuously ignored by the minister's department?

What is it that he has against local businessmen getting into hydroponics and trying to develop this so-called high technology food? We have to give him credit for taking the initiative to do all of that research, put the groundwork in place, try to access some government programmes and yet he is continuously ignored. Why was he ignored? MR. SPEAKER: The hon. the Premier. PREMIER PECKFORD: Mr. Speaker, I will have to get L2060 May 11, 1987 Vol XL the details on that gentleman's proposal. But let me just respond in a general way now and I will get the details for the bon. member for tomorrow or next day.

No later than the next couple of days I will get the details on that. Number one, nobody else in the world has this technology that we are talking about here. Nobody! It is patented. They have nineteen or twenty patent. Nobody in the world, and the leading biotechnologists in the world will tell you that, has this technology. So this gentleman that the hon. gentleman is talking about, whilst he might have had a good initiative, it is not in the same category as what we are talking about here. This is a brand new technology that nobody else has, Mr. Speaker, in the world. Now, Mr.

Speaker, let me just deal with the other part of it. We are out every day encouraging people to get involved in aquaculture. Who put the $1.5 million into Bay d'Espoir for the Newfoundlanders in Bay d • Espoir who came to us? Who was it? Did we go outside, Mr. Speaker? No. It was the Development Association of Bay d'Espoir, Newfoundlanders and Labradorians. Who is helping the mussel farm out in Cottrell's Cove which is now being highly successful, run by a Newfoundlander? We are.

And every single day we are approving loans and grants for aquaculture, for hydro developments or whatever, all over the Province, for Newfoundlanders and Labradorians. But we are not going to exclude anybody from outside of Newfoundland and Labrador who comes to us with a new idea when we can · get on the No. 39 R2060

ground floor of a leading edge of technology which will assist us to create jobs and give us a sort of a focus, Mr. Speaker, that no other province has at the present moment. We are going to do that too. We are going to help Newfoundlanders and Labradorians wherever we can. We are approving loans and grants for them every day through Rural Development. The Minister of Agriculture stood in his place a couple of weeks ago to talk of 300 or 400 jobs in blueberries, in krafts, and all the rest of it, all for Newfoundlanders and Labradorians, Mr. Speaker. But we are not going to discriminate.

If somebody comes to us with a good idea, especially in research and development, and we can forge an agreement, as the House Commission says we should, we are going to do it, Mr. Speaker, because we are not going to be behind the eight ball or coming in last any more. SOME HON. MEMBERS: Hear, hear! MR. FUREY: A final supplementary, Mr. Speaker. MR. SPEAKER: A final supplementary, the hon. the member for St. Barbe. MR. FUREY: The Premier should know, Mr. Speaker, that hydroponics is not new, it is set up in Iceland where they use the volcanic water for the plants.

I want to ask the Premier, how much will the electrical costs be for this particular hydroponics plant in the Mount Pearl area, given that there is wasted fuel in terms of 88 degree water being pumped out into the ocean that L2061 May 11, 1987 Vol XL could have been used at a substantial saving to set up a hydroponics plant much like they do in Iceland? I want to ask the Premier, Hr. Speaker, how much does it cost or will it cost in electrical rate terms to supply this particular plant? MR. SPEAKER: The bon. the Premier.

PREMIER PECKFORD: I do not know the number, right off the top of my head, what the dollars will be, but I will get it for the bon. member. The company has to pay the going rates in the Province. Let me just tell the hon. member on the other part of his question or his

preamble, he is talking about Iceland. I was in Iceland. I was in those greenhouses. It was not hydroponics, Hr. Speaker, as we are talking about here. The reason why they can do H cheaply enough to grow their vegetables is because of that water coming through, but they do not need this warm water for this one. It is hard, I know, for the hon. member to think and to extend his brain and his thought processes to the future and not to the pa.st. Who wants to go back to the past for Come By Chance white elephants and Stephenville white elephants and Upper Churchill white elephants? I do not, Mr. Speaker.

I do not want to go back to that. I want to go to go ahead to the Krugers of this world, I want to go ahead to the Newfoundland Energies of this world, I want to go ahead to the Sprungs of this world whe~ have a technology that is nonexistent in Iceland. SOME HON . MEMBERS: Hear, hear! No. 39 R2061

MR. SIMMONS: Mr-. Speaker-. MR. SPEAKER: The hon. the Leader- of the Opposition. MR. SIMMONS: I believe, Mr-. Speaker-, if I may assist the Pr-emier- in completing his or-ation, it would go as follows: On the seventh day I r-ested. SOME HON. MEMBERS: Hear-, hear-! MR. SPEAKER: Or-der-, please! MR. SIMMONS: Mr-.

Speaker-, the question r-eally that the Pr-emier- has not answer-ed and I hear- what he is saying about the need to be on the leading edge; we have no ar-gument about that, we have no ar-gument with agr-icultur-e; all those ar-e r-ed her-r-ings in r-elation to the question that was put to him two or- thr-ee times dur-ing this par-ticular- per-iod - which is what the people of Newfoundland want to know and what this House . wants to know, and I am sur-e he is capable of giving this answer-, is why is it - ther-e may well be a good r-eason but the r-eason is not ver-y public yet - that this particular company is being given such dispr-opor-tionately high assistance from the taxpayer-s of the Province?

That is the issue. Can he address that one? Why this company and not some other company? What is the particular­ r-eason, if this is such a good thing, if it is going to be such a r-esounding success, the company not risk some of its own money? MR. SPEAKER: The bon. the Pr-emier. L2062 May 11, 1987 Vol XL PREMIER PECKFORD: Mr-. Speaker, they ar-e bor-r-owing $3.5 million fr-om the bank to put into equity into this new joint venture company, primarily because it is in r-esear-ch and development, Mr. Speaker. That is the prime r-eason, because it is in r-esearch and development.

It is not· like a Newfoundland Ener-gy or like a Kruger-, even though in the Kr-uger case both governments put some money in, but not at the level that we have her-e. For in the same r-eason why we give money to C-Cor-e, for the same r-eason we give money to NORDCO, because they are bur-geoning new industr-ies which need mor-e help than a tradi tiona! industry does. That is the reason. And then when it is up and running, as the House Royal Commission says on about fifteen or- twenty differ-ent pages her-e, then it will go on its own and they will buy us out. That is par-t of the agr-eement.

They will buy us out and we will get all our money back. But it is R and D, Mr. Speaker, it is new technology. And that is the r-eason for it. It is brand new technolgy. They are the only ones that have it. Secondly, Mr. Speaker-, let me put the other part of it into context, and it is this; one of the problems when you are talking about change or doing something different is you have in Central Canada, because I do no think that the Quebec deal that the han. member for Fogo mentioned has been signed and finalized. MR. DAWE: Non-existant. PREMIER PECKFORD: I think it is non-existant, as the han.

Minister of Transportation No. 39 R2062

(Mr. Dawe) is saying. MR. TULK: That is your version . PREMIER PECKFORD: No. We have an agreement signed in principle and we are working out the legal end. But it is this, Mr.

Speaker, it is like everytime when changes come, the greenhouse growers, not the bioponic growers, of Eastern Canada requested a special caucus of the government members in Ottawa from New Brunswick, PEI, Nova Scotia and Newfoundland to stop this from going anywhere, because it was going to interfere with them, because this kind of change and this kind of new techology is going to affect them if they are growing some of the same products in a different process. And the same way in Ontario, where they have a lot of greenhouse growers, but not in hydroponics in the way Sprungs are.

So you have a lobby of traditional and modern also, modern in the sense of greenhouse growers, who are opposing this kind of new technology. And therefore one of the only areas in Canada where you have hardly any of that opposition, because 95 per cent of our greenhouse growers are in the flowers, is in Newfoundland, Mr. Speaker. So we were able to attract this kind of R and D technology for that reason as well. MR. SIMMONS: Mr. Speaker. MR. SPEAKER: The bon. Opposition. MR. SIMMONS: the Leader of the Mr. Speaker, I thank the Premier L2063 May 11, 1987 Vol XL because in the answer was the real answer.

The answer had to do with research and development, and decoded that means, I submit, the company itself has got t«> do some more of its homework before it is sure how successful this is going to be. Mr. Speaker, the question remains: Why did not the local people have an opportunity to get a crack at this kind of government funding? Now the rebuttal is they did not have the technology. Could not a way have been found to have local people apply this technology, instead of having the originator, if that is the term, com~~ in with it and peddle it under franchise? While I am on my feet, as a supplementary, Mr.

Speaker, will the Premier reassure the people out there who are in the farming business, the greenhouse business and related enterprises, and who are concerned, Mr. Speaker, that their jobs might be at threat? There is only a certain size market there, and from what we hear this one location can produce all the cucumbers, and I never knew we were so big on 'cucumbers four times a day, but apparently - MR. TULI<: We are going to need tomatoes for the Premier in the next el4ection. PREMIER PECKFORD: The whole of Eastern Canada. MR.

SIMMONS: Yes, and I hear this facility is going to be able to export, so what happens to the existing facilities that are producing various vegetables and flc>wers and so on, what happens to them? And are their jobs at threat if this enterprise becomes success ful? No . 39 R2063

PREMIER PECKFORD: Mr. Speaker. MR. SPEAKER: The hon. the Premier. PREMIER PECKFORD: Let me just deal with the local people. Mr. Speaker, we would have been overjoyed if somebody in Newfoundland had this technology. They have seventeen patents on this. This is their secret. MR. EFFORD: No, no! Seventeen pending! MR. PECKFORD: This is a secret thing for them. They are ahead, as anybody will tell you, of anybody else in the world right now, and that is a big thing, and we need their expertise. They spent $35 million in research and development on this technology so far by themselves, this company has.

Now they have had an unfortunate circumstance in Calgary which is going to cost them a fair hunk of change, Mr. Speaker. And when I refer to research and . development, let me say I am not referring to research and development, which has already been proven on cucumbers and tomatoes, I am referring to another ten of fifteen commodities which are going to be tested out here, and in our agreement with Sprung we have access to all of the information on this research and development at this facility for all those other commodities, Mr. Speaker.

We also have a provision in there on local preference; Newfoundlanders and Labradorians have to be hired here and they have to be trained here in Newfoundland, Mr. Speaker, for high paying jobs. That is what we have in there. We will get all of L2064 May 11, 1987 Vol XL the research and development information that the Sprung people get, not just on cucumbers and tomatoes, we are talking about twenty or thirty different commodities that research and development is going to go ahead on in this facility. So it is a real university, if you want, as Mr. Sprung described it on Friday.

It is a real university, it is a real learning experience and a real opportunity for us to be really in the lead on something that hithertofore we have not been able to do. MR. SPEAKER: Order, please! The time for Oral Questions has elapsed. Notices of Motion DR. COLLINS: Mr. Speaket:. MR. SPEAKER: The han. the Minister of Finance. DR. COLLINS: I give notice that I will on tomorrow move that the House resolve itself into a .committee of the Whole to consider certain resolutions transferring the imposition of a tax on insurance premiums from under the Insurance Premiums Tax Act, 1978 to the Retail Sales Tax, 1978.

MR. POWER: Mr. Speaker. MR. SPEAKER: The han. the Minister of Career Development and Advanced Studies. MR. POWER: Mr. Speaker, I give notice that I No. 39 R2064

will on tomO('('OW ask leave to intt"oduce a bill entitled, "An Act To Amend The Memo('ial Unive('sity Pensions Act." Orders of the Day MR. OTTENHEIMER: Ot"der 23. The adjou('ned Bill No. 34, Mr. Speaker. Continued debate on second Leading of a bill, "An Act Respecting The Return Of The Business Of FisheLy Products Inte('national Limited To Pdvate Investors." (Bill No. 34). ·. MR. SPEAKER: The han. the member fO(' Twillingate. MR. W. CARTER: Mr.

Speake(', I brief corrunents bill, because important bill, affect the well-being of Newfoundlanders. have a to make few ve('y on this very will it is a one that future social a lot of We, on this side of the House, Mr. Speaker, have had some reservations as to the wisdom of privatizing Fishery Products International when we did. There a('e a lot of questions that have not been answered. We all know that dudng the first year O(' two of the restructuring of that Newfoundland fish company very substantial profits were made. We must bear in mind that, as the old saying goes, one Swallow does not a Surruner make.

Because the company happened to show very substantial profits in its first and second year of operation as a ('estructured company, we are not convinced that that would indicate its ability to stand on its own feet. L2065 May 11, 1987 Vol XL I am sur·e that every Newfoundlande(', ce('tainly membe('s on this side, would welcome the success of that company. I suppose FPI is the la('gest single employer in the Province. Most Newfoundlanders, in fact, I suppose, all Newfoundlanders, have nothing but good wishes for the success of that company.

What we fear, because of good ma('ket conditions that prevail at the present time for Newfoundland fish, high prices and a very favourable climate in the market place, is that the pro fits that are cur('ently being rolled up by FPI cannot be sustained. Of course, if that happens, then the question must be ,asked: Where do we go from there?

Beadng in mind that the fishery in the overall scheme of things i~ this country accounts for probably less than 2 per cent of the gross national product, I would hesitate to think what the reaction of the federal government would be were it to come to pass that Fishery Products International again needs to be restructured. We, on this side of the House, Mr.

Speaker, and we have expressed this both in the House and outside the House, have some very strong reservations as to the \olisdom of the governments, and governments must accept responsibility for their actions in this regard, making available to brelve or thirteen of the executive officers of Fishery Products International a large block of common shares. I do not have the final prospectus of that company here in front of me, but I believe it was a block of 53,500 common shares that were reserved for the thirteen executive members of that company. Again, without_ having No. 39 R2065

the benefit of that prospectus here, I seem to recall that these shares were made available to the thirteen executive members of that new company, share options, at a price that was established when the issue first took place, that being $12.50 a share - 53,500 shares share options available to thirteen highly paid officials of Fishery Products International at a price of $12.50. I believe today these shares are trading on the Stock Exchange for around $17.50 a share, or close to that amount, which means a profit of $5. 00 a share.

I believe at one time last week - I was not in the House, I was in my district - the shares did in fact go to around $18.25. These people, Mr. Speaker, have an option now to pick up 53,500 common shares for $12. SO, and that is $5.75 profit on a share. Without any investment whatever required, any of these directors can walk into a bank, or the stockbroker, and can immediately exercise their option to pick up a block of these shares at $12. SO and they can sell them five minutes later, without even a dollar changing hands - they could a few days ago - and make $5.75 per share.

So, 53,000 shares at a profit of even $5.00 a share means there is a potential profit there to be divided by twelve or thirteen people of in excess of $250,000.

Now, if Fishery Products International was a long-established company, it was a company with a proven track record, if the directors of that company were forced to work for less than the going rate for the type of services they have rendered, then we could expect that maybe there would be nothing wrong with those people, who stood by the company and who built it up L2066 May 11, 1987 Vol XL and made it what it is, sharing in the benefits and the profits of that company. But, Mr.

Speaker, a large part of the executive board of that company are people who, until a year or a year and a half ago, in some cases, were very gainfully employed, I might say, as senior provincial civil servants. In fact, I believe, that on that board there are people who left deputy minister• s positions within the provincial public service, and I think there are people who left other highly paid positions within the provincial civil service. I believe one of the gentlemen who is an executive officer was a former Chairman of the Canadian Saltfish Corporation upon till about one and a half or two years ago.

That gentleman occupied a highly paid position with the Canadian Saltfish Corporation. Then we have another gentleman, Mr. Dave Norris I believe his name is, who was at one time Deputy Minister of Finance, again a highly paid position within the provincial public service. So these thirteen executive members who now have an option than can be exercised at any time, can make themselves a very, very handsome profit. In fact, it is all profit, because they do not have to invest anything.

These people have not grown up with the company, they have not worked to make it what it is, and I feel, and I think a lot of Newfoundlanders will agree, certainly members on this side of the House, that they are not entitled to that kind of a windfall. So for that reason, Mr. Speaker, we have some serious reservations as to the wisdom of setting aside a block of 53,000 common shares for these thirteen highly paid individuals. No. 39 R2066

DR. COLLINS: Have they acquired a windfall? MR. W. CARTER: It is there when they want it . The Minister of Finance asked the question, 'Have they acquired a windfall?' Of course. In fact, it is even better than one could expect, in that the options are there and can be exercised at any time. These shares might very wel -l go to $25 or $30 over the next two or three or four or five years , and I hope they do, quite frankly. The fact remains, Mr. Speaker, that if that happens, then, again, these thirteen highly paid people will be able to cash in on a very handsome windfall.

We are not against people getting windfalls or coming into a bit of good fortune, but we believe, in this case, these people are not entitled to that kind of windfall. These people are highly paid. I believe the average income of the thirteen or fourteen people on that executive board, not mentioning certain perks, amounts to over $107,000 a year. That is the average salary of each of the thirteen executive board members of Fishery Products International.

Now, one Executive would expect the Chief Officer would be receiving a much higher salary and consequently some of the lesser lights within that company are more than likely accepting a lot less than $107,000 a year. But averaging it out, across the board the executive board members of that corporation are now receiving $107,000 per year as remuneration from that company.

On top of that, I repeat, and I know I am repeating myself, have within their grasp an option they L2067 May 11, 1987 Vol XL can exercise at any time to purchase shares at $12.50 which at this very point in time today would net them a profit of almost $5 per share, or, collectively, in excess of $250,000 in a windfall profit. Mr. Speaker, I think, as I said when I started my few remarks, most Newfoundlanders hope and pray that Fishery Products Interna tional will be a huge success. We all know how much depends on that company.

They have 8,000 or 10,000 employees I think, all earning reasonably good money and depending on it for their livelihood. I might as well confess, and I do not apologize for this, I had some serious reservations at the beginning as to why they were divesting themselves of the so-called seasonal plants around the Island. I believe there were fifteen altogether. There is one in Twillingate and Bridgeport in my district, and I musl; confess that by that time I had very serious doubts as to why they were doing it.

But luckily, and maybe it is more luck than anything else, it appears that these plants at least - all but one, I believe - have now ended up in the hands of good, reputable operators . Certainly I can sp1eak for Twillingate. I believe that was probably the best thing that ever happene d to the Twillingate district, that Fishery Products International Company decided to divest themselves of the Twillingate Plant along with the other fourteen _less productive and less profitable plants that they owned around the Island.

So I am not too concerned about lthat and, quite frankly, I think, as I said, that in most cases it was a godsend almost that these plants No. 39 R2067

were released by FPI and ownership acquired by a number of local companies. Beothuck Fisheries, we all know, is a very reputable, a highly reputable, well-established, experienced and financially sound company, and that company operates plants in Valleyfield, Greenspond, in Bridgeport, and now in Twillingate. r have nothing but high hopes that Boyd Way and Tommy Hallett, who are the owners of Beothuck Fisheries, will do an excellent job in Twillingate and in Bridgeport, where they now operate.

If the minister is within listening range of my voice I would certainly suggest to him that the problem of seasonality of those plants be addressed. I am not convinced, and I never will be convinced, that the seasonality of those plants is necessary. For example, and the Twillingate plants are not unlike plants on most other parts of the Northeast Coast, seasonal plants in Newfoundland, the Twillingate plants operate anywhere from June 1 until the middle of September, which would be three and a half months.

I do not think we will ever achieve the maximum benefit in those plants, and when I say we I mean the people of Newfoundland and the people of Twillingate district, the workers of Twillingate district and the fishermen who sell them their fish, I do not think we will ever achieve the maximum potential in those plants unless we can find ways and means of extending the operational period in which they operate in any given year. I see nothing at all wrong with finding ways and means of procuring raw material to be trucked or gotten into these L2068 May 11, 1987 Vol XL resource-short plants.

Now I know there is a problem with quotas, and the minister, I am sure, in his closing remarks will remind me that we are operating under very stringent rules when it comes to cod quotas, but I should remind the minister that in December of last year he and his governments agreed to a very substantial allocation of cod from the areas 2G and 2GH, areas that are now North of the 2J+3KL area where our vessels normally fish. That quota, Mr. Speaker, as we all know, was the subject of a rather heated public debate in this House and in the House of Commons in Ottawa as to the wisdom of giving that quota to the French.

Most people believe that that fish is not surplus to our own needs and, of course, as long as we have fish plants operating at less than half, or probably 40 per cent of their actual operating capability, then how can we in all conscience say that cod fish, groundfish within our 200 mile limit is surplus to our own needs? Now, whether it is in the areas 2GH or 2J+3KL, the fact of the matter is, Mr.

Speaker, that if the French are anxious enough to get that fish and have sufficient interest in that stock to use it as a bargaining lever, or to accept it to be used maybe as a bargaining lever, then surely the technology . must be available to harvest that stock. And that is what I meant a moment ago when I said that in the plants along the Northeast Coast, resource-short plants, very seasonal, which are operating at probably 35 per cent or 40 per cent of their actual operating capability, surely it is incumbent upon the government to find ways No. 39 R2068

and means of pr'ocudng additional r'aw mater'ial to extend the working period in those otherwise very seasonal plants. I suppose, at the present time, bearing in mind that there are restrictions on the quotas that are allocated to Newfoundland companies and Canadian companies in the 2J+3KL area, and given the fact that there are restrictions on those quotas, it seems to me that the only other available source of raw material would be from the area 2G and 2GH.

I would strongly suggest to the minister that he use every device at his disposal to ensure that never again will there be a pound of cod fish, one tom cod, from the areas 2J+3KL and 2GH allocated to a foreign country. Now, I know these are probably brave words on my part and I am sure the minister will have an answer for them, but certainly where there is a will there is a way, and if we decide now that we want to harvest and utilize that cod stock, then I think we will find a way to do it.

As I said a moment ago, if the French have the technology, if they are capable of penetrating the ice-infested waters of that area, and they are ice-infested, then surely we Canadians can acquire similar technology, and that, I believe, is what we should be doing. I do not know what special technology is required. We know, of course, that to penetrate these ice-infested waters there would be a certain ice reinforced vessel required. But, again, that is not something new, Mr. Speaker. I believe most of the new draggers now are ice reinforced.

Certainly any of those which have any thought of harvesting fish in the L2069 May 11, 1987 Vol XL Norther'n part of the 2J+3KL zone would need ice reinforcing. That is why I am wondering what is so different about fishing in the 2GH area? Now, I think the experts will probably tell you that it is more difficult because the bottom is rough, it is not easy to manipulate nets and whatever they use up there. Again, Mr. Speaker, you must realize it is only a pencil line, a very imaginery line, a pencil mark separating these two areas. And that is something else I have thought about for quite sometime .

Let us assume that it is perfectly all right to give the French or any other foreign power, for that matter, leave and licence to operate in the 2G, 2GH areas, let us assume that is perfectly legitimate, how can we be sure, bearing in mind that there is only a pencil mark, really, separating the two zones, 2GH and 2J+3KL, can we be satisfied, Mr.

Speaker, that these companies with their ice reinforced vessels do not go up in that area under the pretense of exercising their right to harvest their quotas in the 2GH area and work So uth into the 2J area, where Newfoundland vessels are given quotas and expect to fish? That is a big, expansive piece of · water. The 200 mile limit is almost physically impossible to properly police, and let us not kid ourselves into thinking that we can keep our finger on everything that is happening within that wide area of water, 200 miles out.

Maybe I am bad minded, but I know that fish is a highly sought after and very costly commodity, there is a big demand for it, and I have had visions of these French No. 39 R2069

_!_ vessels going up there under the pretense of fishing in the 2GH area and very quietly, when there is nobody around, slipping South, whatever distance it takes, into the more fishable area, if that is the right word for it, and harvesting substantial quantities of groundfish, and then slipping back up when the time is right, back and forth. I would not put it a past them, quite frankly. We have seen, Mr. Speaker, where foreign countries have been given licenses to harvest certain quotas of caplin.

I recall some years ago - I believe LeBlanc was the federal Minister of Fisheries in Ottawa at the time - when the Russians were given a license to harvest x number of thousands of tons of caplin off our Grand Banks, much to our sorrow, it was found out that these Russian vessels were not content to go up there and to harvest their so many thousand tons of caplin as allowed under their permit, they exceeded their quota by 100 per cent. Now, that is a frightening thought, especially when you are dealing with a species on which there has been very little research done in recent years.

I am only a rank layman, I suppose, I know very little about the biology of fish, but I am not convinced that there is sufficient research being done at this point in time to justify what we are doing with respect to our caplin stock. Now, that is only one item. Getting back to what I was saying a moment ago about the behavior of foreign nationals who are given licenses to fish within our 200 mile limit, we now have enough evidence: We have seen the West Germans, for example, abusing that privilege, coming over here and doubling their quotas. I think .

L2070 May 11, 1987 Vol XL the people concerned have been denied any future quotas, in fact, denied access to our ports. We saw the Spaniards, I believe, and it might have been the Portuguese - AN HON. MEMBER: Both. MR. W. CARTER: Yes, the Portuguese and Spaniards. Both of these countries had vessels within our 200 mile limit abusing the privilege that we extended to them. I say to you now, Kr.

Speaker, whether it is a French vessel, or a Russian, or a West German, a Portuguese or a Spaniard, when you go out on a limb and offer them the right to fish in the otherwise, as we preceive it, surplus stocks, like in the 2GH area, then I think we must expect that there is going to be a lot of hanky- panky going on. As I said a moment ago, the lowly cod is no longer lowly, it is a high priced commodity and there is a lot of pressure coming from all sides to get their hands on king cod. So, Mr.

Speaker, I would again suggest to the minister that when next the occasion arises for him to sit down with his federal counterpart to discuss the disposition of the so-called surplus stocks in the 2GH area, that he give very serious thought to what he is doing. Now, I know last year he went up and agreed to a 1,000 or 2,000 ton quota. We are not going to condemn the minister for that. I think he did it with all good intentions. His heart was in the right place. But, I say, despite that I think he was dead wrong, because what that gave them was a toehold within our 200 mile regime. No. 39 R2070

Mr. Speaker, I have strayed from the subject matter of this debate, but getting back to the privatization of FPI, we, on this side of the House, and I am sure all Newfoundlanders irrespective of their political affiliation, wish FPI nothing but good luck. We hope the company succeeds. I mean that sincerely. It almost boggles the mind, Mr. Speaker, to try and visualize what would happen in this Province if the fishing industry failed and if Fishery Products International, which is the flagship of the Newfoundland fishery, were to fail.

It is hard to imagine the dire consequences that would result from that kind of action or that kind of thing happening, so we have nothing but good wishes for that company. We have strong reservations as to the wisdom of privatizing it when we did. We say again, Kr. Speaker, that one or two swallows do not a Summer make, one or two good years, as we have seen that company have, do not really ensure that that kind of success will continue to be theirs. We hope it does, but we have some very strong reservations.

The big question, of course, which must be asked, and maybe the minister can answer this one, is what happens two or three years down the road? I know it is not the thing to be negative and to be forecasting doom and gloom, but those of us who have watched the fishing industry over the past number of years, and I have since a boy, know it is up and down, peaks and valleys. In fact, I think most people will agree that there have been a lot more valleys than peaks in the Newfoundland fishery since John Cabot threw his first basket over the side.

There have been a great many more valleys than peaks, and the thing L2071 May 11, 1987 Vol XL that bothers us is what will happen if at some time in the future we have some valleys? It is a very, very finicky market. There used to be a saying that Mrs .

American Housewife, the person who is utilizing probably 85 per cent or 90 per cent of our fresh frozen cod, is a very fickle individual, a very budget conscious individual and if she goes to the supermarket and she finds that the price of chicken legs or mincemeat has dropped considerably below the price of fish, then there is a good chance that Mrs American Housewife, trying to balance her budget, will reach for the chicken legs or the mincemeat and will ignore the fish, and that is a problem.

Fish is becoming a very high priced commodity and the danger is that maybe at some point in time we will price ourselves out of the market. And what happens then, Mr. Speaker? Can we expect Uncle Ottawa to come back and bai 1 us out, or will they just le t us stew for awhile? MR . SPEAKER: Order, please! 'rhe hon. member's time is up. SOME HON. MEMBERS: By leave. MR. SPEAKER: Leave is granted. MR. W.

CARTER: Again, expressing the views of this side of the House, we1 do have some very, very serious reservations about the timing not the principle, because I believe that most people believe that governments should stay as far as they can away from the actual day-to-day operation of business. We have great faith in the No. 39 R2071

ent~ep~eneurial skills of Newfoundlanders, and certainly I do not think anybody would want to condemn that company in perpetuity as a wa~d of the government o~ as a C~own corpo~ation. Aubrey MacDonald, a fanner well-known Newfoundland sportscaster, a delightful and charming character, one time, in talking about government's intervention in business said, 'If you want to make crime not pay, let the government run it.' That, maybe, is a ve~y good example for Fishery Products International. But at this point in time, maybe we were hasty in allowing it to fall into private hands. MR. BARRY: Mr. Speaker . MR.

SPEAKER: The bon. the membe~ for Mount Scio - Bell Island . MR. BARRY: Mr. Speaker, I am glad to have the opportunity to say a few wo~ds in this debate because it is quite a significant piece of legislation. What has happened over the last several months is going to see the face of the fishery in Newfoundland change for many, many years, I suspect, which is not to say that government will never again have to intervene in the fishery.

Indeed, one of the most serious reservations that we have on this side in questioning whether FPI should have been privatized when it was - not, I do not think, that we object to p~ivatization. Our Socialist members to my right will p~obably object as a matter of principle because thei~ philosophy would be to have government owne~ship of this type of firm, L2072 May 11, 1987 Vol XL but the Libe~al philosophy has been, Crown ownership when necessary but not necessarily Crown ownership. We recognize the merits of the free enterprise system.

We recognize, as the last speaker has said, that government is not known for its efficiency in operating businesses of any nature. One only has to look at the operation of the Canada Post Office to understand the concerns that many in the general public have when they contemplate government taking over the running of business operations. We, in the Liberal Party, believe that there is a role for government to step in from time to time. When the~e a~e predominant social interests that outweigh the economic interests, there is a role for government.

Government has had to do this time after time in the fishing industry. Here is one fellow who is not going to get up and say government will never have to do it again because government very well might have to do it again. So ou~ ~eal concern is that FPI does not yet have a proven track record. That is one very real concern. It is not the most important reservation, Mr. Speaker. Our most important reservation is what this might be doing to the inshore f ishe~y. I will start with that most important issue first, what this might be doing to the inshore fishery. As we said in our press release on January 6, Mr .

Speaker, we believe that the affect of this privatization, privatization bill will be to lock in to the offsho~e offshore sector, No. 39 and the now befo~e us, a quota to FPI, fleet, to the some part of R2072

which might be eventually necessary for the inshore. It might be necessary now, for all we know because, Mr. Speaker, the final studies are not yet in. We do not have sufficient information. The biologists have admitted they do not know. The best scientific information which the hon. minister has at his fingertips and which ministers in Ottawa have says they do not know why the inshore fishery has been failing, particularly on the Northeast Coast of this Province. Mr.

Speaker, it may very well be - my impression is that scientists are leaning more and more to the view which inshore fishermen have had for a long time, and indeed, which offshore fishermen have had for a long time - that it is overfishing in the offshore that has had this dramatic impact upon our inshore fishery. Mr. Speaker, if that is correct, if there is overfishing in the offshore, if there is not a sufficiently large quota for the inshore, then we should not be locking things, freezing things, as they are right now.

Because it should be the objective - and I would ask the minister to address this directly - of any government in this Province to make sure the inshore fishery, not just survives, but prevails, grows, improves, because there are so many of our small communities around our coastline that are dependent upon the inshore fishery for their future. If the inshore fishery goes, they go. MR. TULK: The Premier will probably grow them a greenhouse then. MR. BARRY: Mr. Speaker, I think it is not L2073 May 11, 1987 Vol XL just coincidence.

I pick up the newspaper, last Thursday's paper, Kay 7, and I am just glancing at it before the debate starts and I see this story about the Innu woman from Nain, originally from Nain Bay. She talks about how, in her opinion, things were better when she was a child, depending on the land but also she mentions the cod fishery. She says today there is no trapping of fox, no cod fishery. There is even a quota of fish up Nain Bay. Now, I am not sure what she is saying there, I assume she says there is a surplus that is not being taken up. AN HON. MEMBER: (Inaudible). MR.

BARRY: Well, she is referring to cod first and then says there is an even - then she goes on, no more row boats, no more people camping out in Spring and many seals are gone. She talks about how the schooners do not come to visit because the cod fishery has disappeared. That is just an small community. the centre of the all know that. example of one Nain was never cod fishery.

We But we do know that this was one way in 1~hich the Native people on the Coast of Labrador did supplement their incomes and did justify their existence and did feel that they were doing something worthwhile when they participated in this cod fishery on the Coast of Labrador. So we really have to question, and this is another point, the approach of the minister and the Premier, and the administration on this Canada/France fisheries agreement when they seem to blithely pass over the so-called the surplus cod off Labrador No. 39 R2073

~ because it is off Labrador as though that is some reason why there should not be every effort made to have that fish retained for our inshore, if that is the only use that could be gotten for it, or for an offshore Canadian fishery, if that is a more efficient way of doing it, and if it can be run coincidental with a viable inshore fishery. But, Mr. Speaker, I just mention that, I am a little off track, because it is an example of how things have been changing, and changing for the worse in the inshore fishery.

We have to make certain, other countries have done it, we have to make certain as well that if the inshore fishery can be, not just preserved, but improved, then we should aim for that.

If FPI has been privatized, the minister will say, "Oh well, it is understood by the investors that these quotas are subject to annual allocation." Well, the minister is being naive if he thinks that once a quota of fish has been allocated to a company, if he thinks any more than any other property, once it has been allocated to a company, if he thinks that that is going to be given up easily, if he think that that can be transferred easily to the inshore after that point, after that step has been done, he is wrong. So this is one very real concern we have.

The privatization of FPI, with the offshore quotas which that company has, means we are now going to see that quota frozen and we are going to see a situation where the inshore will be deprived of that fish, fish which might be necessary, I say might, we do not know · for certain, L2074 May 11, 1987 Vol XL but fish which might be necessary in order to ensure, yes, the very survival of the inshore fishery. In any event, it may be necessary to make the inshore fishery even more viable than it is at the present time. The other significant objection we have is that there is no proven track record for FPI.

Yes, FPI .did well last year, but let us look at the facts. The price of fish in the past eighteen months has been at an all time high. We have seen companies, basically they could get almost any price they were looking for. It was a matter of the demand outstripping supply. FPI made good money in those market conditions. The real question is will FPI continue to make good money as market conditions change, as we see other white fish substituted for cod, as is now happening and is a natural cyclical part of the market place.

As we see other products, ·such as poultry, again become competitive in price with cod and the market conditions for cod deteriorate. Will FPI continue to make their profits? This is going to happen as well even though there is a great - and I hope it continues to be stressed - a great scientific aid that we now have in marketing fish in that we have so much scientific thought about this Omega-3 factor and about how nutritious fish is and how healthful fish is.

This Omega-3 is actually supposed to not just be something to improve your physical condition in terms of moderating harmful diets in the future, but it actually when it gets into your system is supposed to improve your cholesterol balance. It acts almost like a medicine. No. 39 R2074

It is ironic that we get back to the old wives tale of fish being b~ain food. Mo~e and mo~e scientific studies a~e indicating that, yes, that is absolutely co~~ect. People a~e going to be physically mo~e healthy and mentally mo~e ale~t if they eat mo~e fish ~a the~ than of ~ed meat. So this has been anothe~ facto~ in imp~oving the ma~ket conditions fo~ cod and fo~ FPI. What is going to happen as we see othe~ p~oducts come back into competition?

As the price of cod goes up the~e is a ce~tain b~eak even point whe~e, despite all the good adve~tising in te~s of health food, despite all the good adve~tising in te~s of how much physically and mentally bette~ you will be by eating this food, people have budgets. At some point they a~e going to sta~t substituting chicken o~ othe~ white fish o~ othe~ fish fo~ cod and the ma~ket is going to not be as good as it has been ove~ the past yea~. How is FPI going to do in these less p~ospe~ous times? M~.

Speake~, in the past yea~ we should also ~ecognize FPI has been pe~itted by both levels of gove~nment to sell off the less p~ofitable plants. It was a good time fo~ selling off because people we~e optimistic as a ~esult of the good ma~ket conditions. It seems that people have sho~t memo~ies. I guess it is a natu~al pa~t of human natu~e that if you have good times, people expect the good times to continue fo~eve~.

So it was good fo~ gove~ent to st~ike when the i~on was hot o~ FPI to st~ike when the i~on was hot to sell off the less p~ofitable plants p~ovided gove~ent was satisfied that the pu~chase~s of these plants a~e going to be able to ope~ate them L2075 May 11, 1987 Vol XL in bad times as well as in good because, othe~ise, we a~e just going to have to go th~ough this same p~ocess all over again. Gove~nment is going to have to inte~vene, ~epurchase these small plants in o~de~ to continue to p~ovide employment fo~ fishe~en in the a~eas whe~e the plants a~e located , if times get tough again.

So the ~eal question is: What would FPI's financial position have been H it had not been pe~itted to sell off the less viable plants? We do not ~eally know the answer to that question and that is why the official Opposition has suggested that it may be premature and p~obably is p~emature to p~ivatize FPI this yea~. It would be better to wait until FPI had had mo~e time to show that it could do its stuff, until it had mo~e time to establish a track reco~d and show that it could be p~ofitable in bad times as well as in good.

It is not that anybody wants bad times to come for the fishery, but being pragmatic, being realistic, we have to expect that they will. Afte~ two or th~ee o~ four o~ five years the cycle will change again and things will toughen up and become more competitive in the fishing indust~y. So those have been the two main reasons why we on this side have objected to the privatization of FPI taking place when it did. Mr. Speake~, since our p~ess release in January and since the p~ivatization took place, I have to express conce~n about anothe~ point.

Maybe the minister could add~ess this when he gets up because, fo~ the life of me, I do not unde~stand why mo~e sha~es we~e not made available fo~ pu~chase by Newfoundlande~s. The No. 39 R2075

Premier seems to think that just because you have resident directors that is enough to control a corporation. Well, Mr. Speaker, they have resident directors in the Bahamas, in Bermuda, in Switzerland, in Costa Rico, wherever they have offshore companies, they have resident directors. But the minister knows that those resident directors do not control the operations of those corporations. What really bothers me is that government and the management of FPI did not do enough to ensure that as many Newfoundlanders as possible were able to acquire shares in FPI.

What happened was a block of shares were allocated to the Province and there was a greater demand for the shares than there were shares available. We had a situation, Mr. Speaker, where - and I have spoken to some investors who told me that they were going to broker after broker and just could not get enough shares. It is not uncommon on a new issue, if there is any sort of favourable pre-publicity to the issuance, ·it is not uncommon for this to happen, for their to be fewer shares going around than are demanded. Mr.

Speaker, I am not saying the minister could have ensured that there would be enough shares for everybody all around the world, across Canada, in Europe, wherever. But the minister could have, the Premier could have, through influence with the management of FPI, with the directors that the government had in place in that company, and those directors, I mean, when the Premier got up and said that we appoint directors, but we do not control them, we do not give them direction. . _ .. - L2076 May 11, 1987 Vol XL AN HON. MF.MBER: (Inaudible). MR. BARRY: The member should go back and check the Premier • s s ta temen t.

I was amazed. Now maybe he made a s 1 ip of the tongue . I would hope so, Mr. Speaker. Sure there is· a limit, a director does not become automaton because he is appointed by government; a director just does not say well I forget that I am a thinking person with common sense and just become a mechanical robot and do whatever the Minister of Culture Recreation and Youth (Mr. Matthews) or the Minister of Fisheries (Mr. Rideout) or the Premier might ask. But, Mr.

Speaker, the point that we were making on this side of the House is if they are government-appointed directors, they should be even more sensitive to the social issues involved, to the political issues involved than if they were just business people selected off the street by the shareholders of the company. That is really the reason why government appoints directors in this type of corporation because they are expected to be more sensitive to the social and political issues as well as the economic issues.

All the Premier had to do, all the Minister of Fisheries had to do was to ask that these directors to see that more Newfoundlanders had access to shares, in other words, that there was a larger block of shares made available for purchase. What was it, 20 per cent or 30 per cent, I forget the percentage that they allowed to the Province, or was it that much? I do not recall the figures. In any event, it could have been doubled, I am sure, and the shares would have been taken No. 39 R2076

up by Newfoundlanders. While none of us would encourage that to be done just for the sake of speculation, just to encourage people to buy these shares and sell them the next today, it should not be passed over that there has been a tidy paper profit at least made by those who purchased the shares. The shares were sold at $12.50 and I think they were going for $18.50 there lasj: week. AN HON. MEMBER: $18.25. MR. BARRY: $18. 25. They have fallen back a bit in the last day or so and they will fluctuate. They will go up, they will go down.

But, you know, almost a 50 per cent increase on your money in the space of a few weeks, that is not a bad investment. That is not a bad return. It is regrettable that more Newfoundlanders were not given the opportunity to participate by having shares made available for purchase in this Province. I would hope that if members opposite, if government, gets into privatizing any other Crown corporations, they keep in mind that access by Newfoundlanders for purchase of shares should be something that is kept in mind. Mr. Speaker, I do not have to ~any other points to make on this.

As far as the fishery overall is concerned, whatever our concerns may be about the Meech Lake agreement in terms of how it might tie the hands of government or put government into a straitjacket in terms of bringing about other national objectives in the future because too much power may have been given to the provinces - I am not sure that is the case but it L2077 May 11, 1987 Vol XL is something that should be considered and should be looked at I am pleased to see that fisheries jurisdiction is going to be on the agenda of First Ministers' meetings.

Th is is how this Province is going to be able to have a greater control over its destiny in the future, by having a bigger say in matters relating to the fishery than it has had in the past. MR. DAWE: (Inaudible) John Turner that. MR. BARRY: Well, yes. As a matter of fact, I have. Do you know something? He agrees and he has no problem whatsoever living with the concept of a province, such as Newfoundland, with such an interest in the fishery, having a greater say in the fishery·. Constitutional change is one way of bringing about a more effective fishery.

I fear that in the past one of the reasons we have had problems with the Government of Canada is because we have not had a plan, as a Province, that we could lay before them, and say, 'Look, here is something that you should be doing over a period of time that is consistent with national, as well as provincial, objectives.' Yes. of course, we go out and we clamor for less fish being allocated to foreigners and more fish being allocated for the Newfoundland inshore and for the Newfoundland offshore effort, but we have to go further than that. We have to have a more comprehensive plan for the fishery than that.

I think, as part of the exercise of establishing that, we should have greater jurisdiction over the fishery. We No. 39 R2077

are going to have to go through that exercise. The minister seems to be doing it in dribs and drabs right now, bits and pieces. I mentioned the Link study. The Link Group is doing a study on the allocation of fish processing licenses. Mow, I have to say to the minister, and I have said this in the House before, I think the minister is still operating in the dark ages when it comes to the allocation of dghts respecting the fishery, and the federal minister is acting in the same fashion.

It drives me when I go and look at the Public Utilities Board where you have the right to a public hearing, you have the right to people coming in and intetvening, and if somebody applies to get a truckers license that might be worth $50,000 or $100,000, that may affect the livelihoods of six or seven or ten Newfoundlanders, and when it comes to allocating fish quotas or licenses, there is no right of public intervention; it is arbitrary; it is total discretion in the minister. That is not the way it should be.

However much confidence we might have in our provincial minister or our federal minister, that is how it was done in the times of the Divine Right of Kings where the concept was that he who had the power had the right to allocate in whatever way he wished. We have to get a better system.

We have to get a system that is more in tune with modern day times which recognizes that people are entitled to be heard, are entitled to go in and have their say and not just be heard but be listened to, not just have a minister put people through an exercise just to L2078 May 11, 1987 Vol XL keep the water unruffled, just so that it will appear they are getting a chance to have their say. You have to have some independent group that are there and that can listen to these often conflicting interests. The most obvious one of course is the conflicting interest between the offshore and the inshore.

Then you might have your conflicting interests between your inshore fishermen with the fixed gear and your fishermen with the small trawlers, or draggers, that come in too close to land and start interferring with and tearing up that fixed gear. You have to have a way of arbitrating between their interests. You will have a conflict between today's fishermen and the fishermen of tomorrow in terms of how much fishermen should be allowed to catch today at the risk of endangering the catch for tomorrow.

I really appeal to the minister to look at getting a better system, and press this for the federal minister as well, get a better system for the allocation of licences. I do not me ·an advisory boards. Advisory boards are well and good, but I do not mean advisory committees who consult and take views and then make recommendations to the minister, but the minister is able to decide whatever way he wants to, with no appeal from this decision. I do not think that is the way to go.

I think we have to get into a quasi-judicial type of hearing process where you have individuals with the opportunity of going before independent decision-makers, making their case, and have a decision made - and yes, in certain cases having the right of appeal as well. That is what is done in the allocation No. 39 R2078

of most othe~ ~ights o~ p~ivileges and it should be done in the case of the fishing indust~y as well. Ther-e is no ~eason why it should not be. So, Mr. Speaker, that is just one example of what I see as a se~ious flaw in the present approach to the fishing industry. I only have a couple of more minutes. I think the member for St. John's East (Mr. Long) is going next but if I could just say to the minister, the time has come, if we expect to obtain more jurisdiction over the fishery, we have to start showing that we are going to be able to exercise that jurisdiction in a r-ational way.

I would recommend to the minister that he tackle the problems of the fishing industry in the same way we tackle the problems of offshore oil and gas, and I mean in terms of the technical aspects; I mean in terms of the regulations that you put in place. Take offshore oil and gas regulations as an example. I think we did a good job, and members on all sides of the House did a good job in seeing that we brought into place in this Province a modern up-to-date fine set of regulations for the oil industry. We saw some of them fall by the wayside.

We can be critical of that in the course of the negotiations with the Government of Canada, and I talk about Crown participation as an example, but at least we went through the intellectual exercise. We started f~om rock bottom. It was easier to do because we had not had an oil industry for 500 years the way we have had a fishing industry. But the minister should encourage his officials, and he himself encourage his Cabinet colleagues, to go th~ough that process. L2079 May 11, 1987 Vol XL Pretend the fishing indust~y is just starting. If that was the case, how would you put it in place today?

Now that might be the unattainable ideal, the Holy Grail, but at least it would give you something to work towards. I would think, Mr. Speaker, that if the - MR. SPEAKER: The han. member's time is up. MR. BARRY: Yes, I will just conclude my sentence.

If I would say to the minister, if the minister were to take that approach, start from scratch, assume that we were only going to start fishing for the first time tomorrow, inshore and offshore, start from scratch and decide what rules and regulations should we have in place for the fishing industry, I think we would see many changes to the system that we now have in place, many changes that are long overdue. MR. LONG: Mr. Speaker. MR. SPEAKER: The han. the member for St. John's East Extern. MR. LONG: Thank you, Mr. Speaker.

I would like to speak for a few minutes on the bill and try and put succinctly our party's position which. has been made clear in the House before, and certainly in public statements by my leader, who was looking forward to participating in the debate but, unfortunately, had to be in his district of Menihek today. I am not going to take a lot of time. The basis of our concern has been No. 39 R2079

shared by other speakers here today f~om the official Opposition. But more than that, we have a disagreement in degree in that we are not only opposed to the sale of FPI at this time, we are opposed in principle to the sale of FPI. If I may I would like to direct my comments to a principled opposition to the privatization of Fishery Products International at this time.

We have real problems with the move to privatize Fishery Products International, especially, and I guess you could say fundamentally, in light of the concerns that all members of this House, and certainly all Newfoundlanders have been expressing, especially over the last couple of months concerning control over the fishery. The provincial government was in a very heated battle with the federal government on the question of jurisdiction through the Winter months.

It was an immense irony to see in the middle the Premier and the Fisheries Minister and members of the government, indeed members of all sides defending Newfoundland's interest on the question of control of our fishery as a critical feature in our own struggle for development in this Province. Without control over the fishery we are not going to be guaranteed any protection for the future. We are not going to be able to put in place any kind of long term development strategy for the Province because the economic and social, and indeed, cultural lifeblood of the Province revolves around the fishery.

At this time, then, for the Province to be giving up the only real stake that it has secured through the restructuring L2080 May 11, 1987 Vol XL agreement in terms of having some say in the control and the direction of the industry, to be turning it over to private hands simply does not make a lot of sense and, in fact, represents an obsession with giving to the private sector or seeing pdvate corporations as the only rightful institution to participate in the economy.

Of course, it is well known that the NDP in this country and we, in this Province, are consistent in speaking to the need for government involvement in the economy. The idea that public ownership, Crown corporations, does not work has been disproved not only in this country but elsewhere in the world, especially in Western Europe, in Sweden and Switzerland, where there have been very successful stories of economic growth, nationally and regionally within countries, being produced as a result of public ownership and public intervention in the economy.

Certainly in this country the role of Petro-Can in dealing with the critical energy questions facing this country has demonstrated, if it needed to be, the important role of public ownership in order to be able to carry forward public policy in determining economic plans and determining the activities of major economic institutions. The proposal to privatize, when it was announced some time ago , had only one caveat for maintaining some degree of NewfQundland control and it was in the Board of Directors. As my leader has pointed out in the past, there will be problems enforcing that.

If there was ever a constitutional challenge to the residency No. 39 R2080

requirements, it is not clear that the legal basis for what is being presented in this legislation would stand up. It may be contrary to the Charter of Rights and the Constitution that a member of a private corporation is bound by legislation to residency requirements. More than that, as a technical difficulty with the requirement of Newfoundland residency for the Board of Directors, we also see that as a rather token attempt to try and pay lip service to maintaining some degree of Newfoundland control when actually the shop is quite literally being sold out.

What we see in this privatizing of FPI is the opposite of what members of this House are constantly accusing the NDP in this country and this Province of, and that is an ideological disposition or an ideological obsession on one question or another, and an ideological approach.

What we are seeing is the approach to economic programmes or the lack of economic programmes by governments borrowed from England and the United States in which anything that is making money must be in private hands; that there is no reason in which any profit being made should be left with the taxpayers for the public good because there is a clamour wherever there is profit from people who want to get wealthy in their own positions and to help themselves to profit-making enterprises. The immense irony in our own context is the massive debt facing the people, not only of Canada, but certainly of this Province.

When we have a public corporation such as FPI with involvement by L2081 Kay 11, 1987 Vol XL both the provincial and federal governments making the kind of dividends that it did in the last year and demonstrating incredibly positive prospects to continue to do well, the immediate response is to get out of public hands and give it to the private sector. When you put that against the massive debt load that every citizen of this Province is facing, it simply does not make a lot of sense. The Minister of Finance (Dr.

Collins) was able to reap some benefit in the sale of FPI whether it is in this year's budget or next year's budget or current account or capital deficit. In bringing in this amount of money on the sale, it may help in the short-term but in the long run it is simply playing blind adherence to a rather blind philosophy of free enterprise having the only right to participate in profit-making enterprises. The question of control over the industry is a very serious concern we have with this.

What we see is the government giving up any responsibility that it had, which originated in the restructuring agreement, towards the notion of a social role for FPI. That was a central part of the restructuring agreement and it is now going to be tossed to the wind. The $250 million to $300 million that was put in by governments to begin the restructuring process is now a gift as this is being privatized and the guarantee of concern for what has been called the social plants in Ramea, Gaultois and St. Anthony and the other plants that we are concerned about being closed now will not have any guarantees.

There will not be any public accountability. No. 39 R2081

This is a private corporation that is going to have as a single motivation for its direction and economic plans in the industry the maximization of profit. What we had seen developed in the last three or four years with the crisis in the fishery in this Province was an absolute need, in the public interest, for governments to intervene and to take some responsibility for the direction of the industry.

That has now been given up and its an open question as to whether the selling off FPI, once it has made a profit, is not going to put us back into exactly situation that produced the crisis in the fishery and produce the restructuring agreement in the first place. We may end up back where we started.

Other speakers have pointed to that as a very serious concern and we would suggest that the concern is not only one of timing, that FPI should not be sold at this time, but in the long run the case could be made that the FPI should not only be kept in the hands of provincial and federal governments so that there is a degree of public accountability, but that it should be used as an instrument for long-term planning and long-term development of the industry in this Province.

We see as the problems and the concerns that we are bringing forward in the selling off of FPI the giving up of public accountability, the lack of government control in the direction of the industry, and the turning over of profits. As taxpayers, we already had shares in this corporation.

We were being asked, until the date was closed, and as other speakers have pointed out, there were not very many shares made available to L2082 May 11, 1987 Vol XL Newfoundlanders after all, not as many shares as there was interest in, but all taxpayers had a share and a stake in this corporation with public involvement through the monies invested by both levels of government.

Then we were being treated to an opportunity to all become private entrepreneurs, to all play the stock market and to invest our own personal finances into a corporation and to change the nature of our involvement from a public one in which all taxpayers shared an equal stake in the corporation to those who could play the stock market were invited to participate. What we see in that is a division in our own community.

It is in the common interst of all Newfoundlanders to protect and develop the fishing resource and the industry but the only people who are now going to have a monetary stake are the people who have the financial resources to play the market.

In a Province like Newfoundland where so many people are unemployed and so many people have so few financial resources, it is ridiculous to try and entice people into becoming small capitalists, small players in what is a giant international marketplace with very large private corporations and to expect people to get some satisfaction, some sense of sentimental involvement or their own ability to participate in the direction of the fishing industry by playing the stock market.

When people are being invited to play the stock market, they. are being invited to play a very dangerous game and that is the essential concern that we have. This is being thrown to the dog eat dog world of market forces. No. 39 R2082

It has been so clearly demonstrated in the debate that has raged in this Province over the last three or four years that produced restructuring of the fishery. the newly restructured FPI and now has produced this privatization sale. the debate has revolved around the lack of jurisdiction. the lack of control over our resources when the federal government gave away the Northern cod stocks. People have been seeing the absolute need for public accountability and initiatives by our government to have some say over the industry and this is what we are giving up by selling off FPI.

I might say. for our part. in pointing out the gesture of compensation in the residency requirement on the Board of Directors. that has not been enough.

We have put forward an alternative in which we see the one representative from the Fishermen • s Union. although he no doubt would be a very strong representative and would bring some degree of insight into the concerns of the people who work in the industry in this Province and people who live in the fishing communities, but one representative of the Fishermen's Union is not enough to represent the interests of the people who work in the industry and people who live in the communities where the industry is an essential part of the local economy.

The President of the Fishermens' Union in this Province at the time the record as a lost was for an this sale was announced is on saying that this was opportunity. There historic opportunity government to use some imagination creative, ownership genuinely and develop some alternative forms of that would be a L2083 May 11, 1987 Vol XL demoncratic expression in which people who work in the industry and people who live in fishing communities could be invited to more than buy shares, but be given some major measure of control in the corporation.

Shares could be sold to the workers in the plants and to workers on the offshore trawlers. Municipal governments could have been involved. There could have been an arrangement or a financial structure put into the corporation that would keep control. not only in the Province in very definite terms. but also would encourage local involvement and local imput into the direction that the corporation would take over the coming years. On a personal note, I might say that on the day for launching the sale of FPI at Hotel Newfoundland some time ago.

I think it was about three weeks or a month ago, I happened to be in an adjacent room at the hotel attending a special committee meeting, a standing committee of the House of Commons to examine the Secretary of State Women's Programme in which there were eight or nine parliamentarians from Ottawa who were travelling across the country. They visited St. John • s to meet with women•s groups who are being funded through the Secretary of State programme.

The federal minister responsible for the Status of Women in tnis country, Barbara McDougall also happens, by coincidence or otherwise. to be the minister responsible for privatization. After some discussion in which I was sitting in on as only an observer. and many presentations were being made, one of the presenters pointed out that the minister responsible for the Status of Women was in the next No. 39 R2083

room to celebrate the sale of FPI and that she should be invited to come nextdoor. The message was given to her and she did come nextdoor. She was met with what I thought was a very articulate illustration by one of the members of the committee, who is a New Democratic Party critic for women's and social issues from Vancouver.

She put to the minister the image of her coming to drop in to say hello to women who were making submissions on behalf of women's groups in this Province and on behalf of individual women who are suffering the difficulties that women in this country are facing with low pay, a lack of day care, the problems of transition facilities, women who are identifying the concerns that ordinary women in this country are facing, many of them living in very difficult conditions of poverty, underemploment and unemployment.

The minister was able to drop in to say a few words representing the Canadian government and was then going to be returning_to this massive celebration. When I left the meeting room myself I could see, as the NDP critic suggested, it was very male-dominated and very wealthy.

The juxapose of the two room side by side in which women were telling their stories of hardship and going to the government to seek support for programmes, then nextdoor there was a group of mostly wealthy men celebrating the return to the private sector and the return to the stock market of what should be a public corporation, the irony was almost too much to take, especially in terms of the office of this minister representing the federal government who is able to function in an official capacity in both meeting rooms, on the one hand, addressing the concerns of L2084 Kay 11, 1987 Vol XL women, and on the congratulating the government here for its other hand, provincial successful Products sale of Fishery International.

The point in relating this story is to illustrate the concerns that we have at this time when not only the issue of control, the question of public accountability and the need for government involvement in this, our most important resource, our most important economic industry in the Province, is being sacrificed, but this is also happening along side a time when so many people in our Province are suffering from unemployment, so many people are suffering from a lack of resources, the difficulty that people face in getting through month to month in paying their bills, people on social assistance, people going on UI, people looking for make-work projects, and these are the people of our Province who are being invited to .buy shares and play the stock market on the fishing industry.

We would say, Kr. Speaker, it was a sad day, not only for members of the NDP who have been raising these concerns, but certainly for any people in the Province, people working in the industry, people living in communities who had some hope that both levels of government, provincial and federal, had a very central involvement and there was a degree of public· accountability in the direction of the fishery but this was lost. The day the sale was announced was the day that we lost a potential instrument to control our own future. The legislation that is being brought before the House presents all the details.

The legislation No. 39 R2084

is going to facilitate this turnover. The concerns I think are important to put on the record for this debate. I would like, on behalf of my leader, to give notice that if and when the NDP becomes the government of Canada or the government of this Province, FPI will not stay long in private hands. Our philosophy is indeed one of maintaining public involvement in the economy. It may not be too long before FPI will come back into public hands and a new restructuring will allow for greater public accountability involving both levels of government. Thank you, Mr. Speaker. MR.

SPEAKER: The hon. the member for Stephenville. MR. K. AYLWARD: Thank you, Mr. Speaker. It is a pleasure to speak to the FPI Bill today and to give some comments as to the reasons why government is putting such a venture into private hands. Before I get into the real essence of my remarks, I would like to comment on the NDP philosophy on this issue. I do not mind that party philosophizing about public ownership and public control, but they should not be condemning the deficit.

Because if you are going to continuously talk about putting companies into public hands and public ownership, then you are talking about more money from the public purse, you are talking about more funding from the treasury of this Province. To give such a point of view takes away the argument that government L2085 May 11, 1987 Vol XL should control its deflcit, that they are spending money too fast on the wrong things. I have a problem with their views, but I am sure they wi 11 try to make their views clearer,, at least I hope so, to the people of the Province who look upon this party as a third party.

Hearing their position they would probably have a difficult time, because they do not state clearly what they would do if they were the government, which is the role of a party in this Province if it is to exist politically. It is the role of the Opposition to eithe1~ give an alternate view or a similar view of the government. We in the Liberal Opposition have taken the view that the privatization of FPI should not go ahead at this time, and I say this time because we do not rule out the privatization of it.

But we say that FPI should be allowed to perform for a number of years before being handed over to the private business. We do not see a good track record, we see one year of good profit and then we see government deciding that they are going to give it to private business. It would not be so bad if it was a company or a business that did not have such a stake in the Province's economy, but this industry and this company has a gigantic stake in the future of the Province.

It has a gigantic stake in what this Province is all about, in the history of the Province, in the present state of the economy of the Province, and in the long-term future of our Province, how it will be shaped and how it will go. What concerns me and concerns the Liberal Opposition is that the No. 39 R2085

provincial government has decided very quickly, after FPI has made a quick prof it, to go and turn this business, which has so many implications to the future of the Province and to the workers who work in these plants and in the fishery, over to the private sector. I have a problem with it, because, Mr. Speaker, I have a business degree from Memorial University and I am well trained. That School of Commerce has produced many good graduates, and hopefully they will look upon me as that one of these many, many days down the road, but that has yet to be proven. But one of the things they taught us, Mr.

Speaker, was, if you were in business, whether a company or a private individual, before you were looked upon as being successful you had to have a track record which showed that you were good at what you did, that you had accomplished a number of things, and that you were successful in terms of that type of business. If you had a proven track record, Mr. Speaker, it was easy enough to sell your company, it was easy enough to sell your ideas or your philosophy.

I have a problem with the way this government has decided to give away to the private sector the control of that enormous resource so quickly for reasons of profit, and that is fine, I have no problem with profit. The minister says that in the agreement he has some mechanisms that will help keep a social conscience within the selling of the FPI. When you take this gigantic, this important company and you give it to the private industry who, again, have L2086 Kay 11, 1987 Vol XL different motives and rightfully so, then I have a mjora problem with that.

You not only give it to them, you leave the future of many people in their hands. Again I would not argue with it if it was a different type of business, but this is so important to this Province that there is no need to do what is being done right now. Three or four years down the road, after you have a proven track record, would be the time, as far as I am concerned, to make such a move. This company would be long es-tablished and would have a proven track record. We do not know if they can handle the tough times yet. We have not seen that and I am very wary.

I have the greatest confidence in the management of FPI, the only thing is this is one of the most complicated industries in the world. It is also, within an economy, within a Province that is very complicated. MR. TULK: A point of order, Mr. Speaker. MR. SPEAKER: A point of order, the bon. the member for Fogo. MR. TULK: I hate to interrupt the bon. gentleman from Stephenville. It is probably not a legitimate point of order as such, but are we going to have this racket going on over there, these little chitchats and so on, where you cannot hear a person speak in this place, until August?.

I mean, this place is deteriorating to the point where it has -become not a bear pit but a kindergarten class with the teacher out. MR. SIMMS: Mr. Speaker, to that point of No. 39 R2086

order. MR. SPEAKER: To that point of order, the hon. the Minister of Forest Resources and Lands. MR. SIMMS: Mr. Speaker, there is nothing, of course, in parliamentary practice that prevents members from having a conversation and so on. It happens quite frequently on both sides of the House. However, having said that, I do not think there is a point of order. I think the bon. member has perhaps raised a realistic point and the bon. the member for Stephenville should be able to at least hear himself speaking. Perhaps I can convince my colleagues here to speak a little quieter. MR. DOYLE: And over there, as well.

MR. SIMMS: My colleague did not hear me, but I did say that it happens on both sides of the House. HR. SPEAKER: There is no point of order, but I would ask the bon. members to my left if they would please keep the noise down. The bon. Stephenville. MR.. K.

AYLWARD: Thank you , Mr:-. ruling. the member for- Speaker-, for- that As I was saying befor-e my bon. colleague helped me out by making sure I am being hear-d, I have a major pr-oblem when I see a business that is so important to the futur-e of this Province being put into pdvate hands and which will be used in the futur-e solely L2087 May 11, 1987 Vol XL for- the pr-ofit motive.

I have no pr-oblem with the profi t motive, but as a young man in this Province who has seen many of his people move away because of the lack of employment oppor-tunities and the ups and dowm: of the economy, a lot of that based on the fisher-y itself and the downturns of that fishery, I see now our- control of our- futur-e, of our- destiny being taken away and being thr-own into the hands of people who have their own motives, and r-ightfully so, and being thr-own, I believe, at the wr-ong time.

Because we could be into a situation wher-e, in a ~~ouple of year-s time, we could have crisis on our- hands when that: private company star-ts making decisions. Even though there are conditions attached to this agreement and the privatization of FPI, when a company is handed a pr-ospectus that company goes to the public mar-ket, they become a private company. You can have your­ r-egulations, you can have your­ conditions, but you have to r-emember- it is now a private company, it is a company that will oper-ate as best they know how to show a pr-ofit and to make money, and they will do it whatever they have to.

That is how you oper-ate in pr-ivate business, that is the way you alway oper-ate. This gover-nment has made a conscious decision to g,ive this company that type of endor-sement, they ar-e letting them have contr-ol of these 8, 000 employees who now will have to and who will participate, and, mind you, I have no problem with that, in the stock plan and who will now be under the scrutiny and under the leadership of the management of FPI. While that may be ver-y good management and while it may be that they have the r-ight intentions and that they No. 39 R2087

want to do the best they can - they probably have just as much social conscience as any member:- of this House when it comes to the fishery of the Province - they will now be a private company and a private company has a different philosophy. You now have a company which will deal with problems in a different manner. The thing is that they do not have total control over:- what is going to happen.

They made a profit this year, that is fine, congratulations to them, but many of the things that will occur in the future they have no control over:-, such as the economic ups and downs, they will be subject to the market. When a company that was bailed out only three or four:­ shor:-t years ago, $300 million from both the provincial and federal governments, has a one year:- track record of profit and is now going to be thrown into this free market, I have many concerns as to what the results are going to be; what employees and what the Province will face a couple of years down the road.

If a downturn occurs and it is drastic, what will the result be and how will they respond? I have a problem with handing this business over to the private sector:- so early, without a proven track record. That is the philosophy we have on this side, and I feel it is the right one. I feel this government should have watched this company over:- a three or:- four:­ or:- five year period and then decided, based on the challenges met, if they performed adequately enough to be handed over:- to the private sector:-. Because then you have a proven entity that has been able to meet the challenges in a very tough market.

Because the Newfoundland and Labrador:- f isher:-y is a very tough market, it has faced many difficult times; it has L2088 Kay 11, 1987 Vol XL faced outside controls for:- pr1c1ng and so on which they have no power:­ over:-. So they will now be subject to this market because of this government's action. We have stated and we will continue to state that it should have been at least a four or:- five year period, where you could have seen how the company performed. Typically, that is what is done in business. A proven track record it is called. This has not being done and this concern we have to express.

We really do not know what the future will hold. Nobody can know that, but you can certainly do a lot more homework and a lot more research, and you can certainly do a better­ evaluation of the situation to see how a company per-forms. We have not seen that, we have seen a company get an infusion of money, per-form for- a year-, and