March 3,

HOUSE OF ASSEMBLY PROCEEDINGS

Vol. XLII No. 4

The House met at 2:00 p.m.

MR. SPEAKER (Dicks): Order, please!

On behalf of hon. members, I would like to welcome to the

public galleries, twenty-eight Grade VI students from St. Mary's Elementary

School in the District of St. John's South, accompanied by their principal, Mr.

Eric Hiscock and their teacher, Mrs. Matilda Cluett.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Accompanying this class, are ten students

from St. Peter's School, Black Tickle, Labrador in the District of Eagle River,

accompanied by their teacher, Sister Barbara Kenney.

SOME HON. MEMBERS: Hear, hear!

Oral Questions

MR. SPEAKER: The hon. the Member for Humber Valley.

MR. WOODFORD: Thank you, Mr. Speaker.

My question is to the minister responsible for Municipal and

Provincial Affairs.

Every year, Mr. Speaker, his department usually has a capital

works program. I would like to now ask the minister if he will have this regular

capital works program this year consisting of approximately $57 million to $59

million for infrastructure for municipalities in the Province, or if the money

used in that regular program every year will be used for the so-called new

infrastructure program?

MR. SPEAKER: The hon. the Minister of Municipal and

Provincial Affairs.

MR. REID: Let me correct the hon. member's last comment.

He made the comment that for the past number of years we have had $56 million

approximately in the budget for capital works. Well, I quite agree with the last

couple of years, in fact, since 1989, we have gone from $53 million to as high

as $63 million in the budget in comparison to the previous years of $28, $32,

$25, $25, and $25, so we have not done too badly. This particular government has

put a tremendous amount of money into capital works and as the hon. gentleman is

aware, because I suppose of his experience in Cabinet himself, we are presently

into the budgetary process and I am not at liberty yet to say whether, or how

much money, we will have in the capital works budget this year. I will say

though, Mr. Speaker, that the government is planning to put a sizeable amount of

money towards the infrastructure program this year. The basis of that

infrastructure program and the criteria will be made available to municipalities

and other agencies across the Province by the end of next week, giving them

ample opportunity to apply for money under the other program called the

Canada-Newfoundland Infrastructure Program.

MR. SPEAKER: A supplementary, the hon. the Member for

Humber Valley.

MR. WOODFORD: Yes, Mr. Speaker, the minister is right,

they are putting more money into the capital program. They put in exactly what

they took from municipalities over the last five years.

Mr. Speaker, the minister didn't answer my question. My

question was: Will there be a regular capital works program this year - whatever

it is, whether it is fifty, sixty, seventy, one hundred or whatever - or will

that same funding be the total allocated by the Province for the new

infrastructure program? That is the question I asked the minister and I would

like to have an answer.

MR. SPEAKER: The hon. the Member for Municipal and

Provincial Affairs.

MR. REID: Mr. Speaker, it is a budgetary decision. It is

something that we are in the process of doing now, almost on a daily basis. My

estimates have not been addressed yet from the municipal affairs point of view.

When we get to that I'm sure that the hon. Member for Gander, the President of

Treasury Board and the Minister of Finance, will discuss this with me and the

rest of the Cabinet colleagues and we will then make a decision on whether or

not there will be a capital works allocation for this year. I will say, Mr.

Speaker, that out of some of the capital works money - I suppose the total for

the Province, I don't know where else it would come from - we've made a

commitment to the Federal Government and municipalities that we are putting at

least $25 million into the infrastructure program. So to be able to say that and

make that announcement, that we have found $25 million this year, as far as I am

concerned is a good announcement. What other monies will be made available will

come out of the budgetary process and I guess you'll have to wait until budget

day to find out exactly if there is going to be a capital works program or not.

MR. SPEAKER: A final supplementary, the hon. the Member

for Humber Valley.

MR. WOODFORD: Final supplementary, Mr. Speaker.

Would the minister be able to tell the House or confirm to

the House that the so-called new monies that will be used by the federal

government for this infrastructure program in the Province will be actually new

money and not monies that will be taken out of the Atlantic Canada Opportunities

Agency. Could he confirm that to the House?

MR. SPEAKER: The hon. the Minister of Municipal and

Provincial Affairs.

MR. REID: I can't confirm that one way or the other, Mr.

Speaker. I don't know, I don't negotiate with the minister for ACOA. The only

federal minister that I have any connection with is the Minister of Housing,

that's Mr. Dingwall. There is no counterpart to me as a federal minister unless

its Mr. Eggleton and he is not responsible for ACOA. I can't answer that

question, I don't know. I can honestly say, I don't know. If there is going to

be a reduction in ACOA money that is something that I guess you'll have to

address with the Minister of Industry, Trade and Technology or the President of

Treasury Board, because I am not able to answer that question.

MR. SPEAKER: The hon. the Member for Burin - Placentia

West.

MR. TOBIN: Mr. Speaker, I have a question for the

Minister of Health.

Mr. Speaker, just recently the minister met with a group of

people from the Burin Peninsula, regarding the health care services (inaudible)

of the council. I understand he heard loud and clear from the people of the

Burin Peninsula that they want the board to remain with the same

responsibilities that it presently has.

Can the minister tell me now when he will be making the

announcement as to the make up of that new board?

MR. SPEAKER: The hon. the Minister of Health.

DR. KITCHEN: Thank you, Mr. Speaker, and thank you hon.

member for the question.

I will be meeting with the CEO's and Chairs in the general

areas of Eastern shortly, and will inform them first what our intentions are.

MR. SPEAKER: The hon. the Member for Burin - Placentia

West.

MR. TOBIN: Mr. Speaker, will the minister confirm to me

now that the make up of the new board will be responsible for the health care on

the Burin Peninsula - that there will be a board set up that will be responsible

for health care on the Burin Peninsula - and will he assure me now that all of

the services presently provided by the Burin Peninsula Health Care Board on the

Burin Peninsula will continue to remain on the Peninsula?

MR. SPEAKER: The hon. the Minister of Health.

DR. KITCHEN: Thank you, Mr. Speaker.

Mr. Speaker, I can't answer specifically on details on the

Burin Peninsula, but let me tell you the generalities of the reorganizing system

that we're putting in place.

The purpose of reorganization is to make sure, given the

financial circumstances of the government, that we keep as much of the health

care dollar where it really needs to go, and that is in looking after people who

are sick, and less money available in the formalities and administration of the

system. So what we are really trying to do is to keep front line health care as

intact as we possibly can, and perhaps to even enhance it, and by reorganization

to save money that's not as essential. So he can try to interpret that, but next

week all will be revealed.

MR. SPEAKER: The hon. the Member for Green Bay.

MR. HEWLETT: Thank you, Mr. Speaker. I have a question

for the Minister of Industry, Trade and Technology.

The media has reported that the Minister of Industry, Trade

and Technology recently made a phone call to MP Jean Payne regarding an overdue

loan with Enterprise Newfoundland and Labrador. Doesn't the minister regard his

personal involvement in this matter somewhat unusual?

MR. SPEAKER: The hon. the Minister of Industry, Trade and

Technology.

MR. FUREY: No, Mr. Speaker, I don't think it's unusual.

This is a case of a client of Enterprise, prior to her becoming involved in

public affairs as a Member of Parliament, having a loan - her company having a

loan. The loan wasn't attended to. There are a number of records that show that

Enterprise tried to deal with this. It wasn't dealt with. They notified me that

they couldn't reach the Member of Parliament. I reached the Member of Parliament

and, in fact, there is a meeting tomorrow morning with the senior people at

Enterprise to try to deal with this.

MR. SPEAKER: The hon. the Member for Green Bay.

MR. HEWLETT: Thank you, Mr. Speaker. Given the minister's

recent involvement, and given the fact that the loan was allowed to languish in

arrears for some time, I must ask the minister, was he involved in this loan

arrangement from the very start?

MR. SPEAKER: The hon. the Minister of Industry, Trade and

Technology.

MR. FUREY: I guess government was involved, Mr. Speaker,

but the hon. member is exercising a labile mind. He makes the case that I

shouldn't have gotten involved. Had I not gotten involved he would have switched

tactics and jumped up and said: Why hasn't the minister gotten involved? We did

the responsible thing, Mr. Speaker. It doesn't matter if it is an MP or a PM. If

there is money owed to the people of this Province, the minister has the

ultimate responsibility through this House, and I acted on it.

MR. SPEAKER: A final supplementary, the hon. the Member

for Green Bay.

MR. HEWLETT: Thank you, Mr. Speaker. As I understand it,

the loan in question was for the purchase of certain equipment and it was also

backed up by certain personal guarantees. Would the minister be able to tell me

if ENL has repossessed the equipment concerned, or has ENL acted to collect on

the personal guarantees?

MR. SPEAKER: The hon. the Minister of Industry, Trade and

Technology.

MR. FUREY: No, Mr. Speaker, Enterprise has attempted to

recover the equipment. We cannot find the equipment. It was stenographic

equipment and computer technology equipment used in court reporting. We have not

been successful in identifying where that equipment is. I have said publicly

that if we cannot, if the corporation cannot reach a satisfactory arrangement

with a mutual repayment

schedule satisfactory to both parties, we intend to move

on the personal guarantee, and I intend to do that.

MR. SPEAKER: The hon. the Member for Humber East.

MS. VERGE: Thank you, Mr. Speaker. I have a question for

the Premier. Can the Premier assure the people of the Province that none of the

$50,000-a-year salary supplement he got as Leader of the Opposition was paid in

cash?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: I can't do that any more than I could

assure the House that none of the salary supplement paid to Mr. Peckford every

year was paid in cash. I don't know. I have no idea where the money came from or

how it was paid, so I can't assure the hon. member of that any more than I could

assure how much Mr. Peckford was paid by the party when he sat in the House. I

can't do it.

MR. SPEAKER: A supplementary, the hon. the Member for

Humber East.

MS. VERGE: Thank you, Mr. Speaker. The Premier has said

on earlier occasions, he got his $50,000-a-year salary supplement from the

Liberal Party, and the Party, in turn, got the money from private donors. Is the

Premier suggesting that his own case is different from that of his former

Minister of Tourism and Culture primarily because the Premier laundered his

money through the Liberal Party?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: The hon. member's comments are offensive

and insulting. Maybe people in the House have forgotten why there was a salary

supplement and maybe they ought to be reminded that it was because I gave up my

law practice and became the Leader of the Liberal Party, while the man who sat

here at that time, aided by advice from the hon. member, no doubt, refused for

six months to call a by-election, in order to prevent me from taking the seat in

the House. The Liberal Party agreed to pay me a salary to offset that and

continued to do that. Now, while that same Premier, at the time, Mr. Peckford,

his name was, and hon. members opposite sat there in the Cabinet and endorsed

that interference with the democratic process, in the meantime, that same

Premier collected his salary from the government and a salary supplement from

the Conservative Party at the same time and said nothing about it. And, in the

meantime, they make all these kinds of comments merely because I was open and

frank. I disclosed it from the very beginning and told the whole world about it

from the very beginning. It is too bad they are not sufficiently familiar with

honest practices to understand how it really works.

MR. SPEAKER: A final supplementary, the hon. the Member

for Humber East.

MS. VERGE: Thank you, Mr. Speaker.

The Premier said of his former Minister of Tourism and

Culture that no benefit accrued either to him or his donor but the minister

should still resign because of public perception. Now, by the Premier's own

standard, shouldn't the Premier have resigned long ago? Because many people in

the Province perceive that contributors, contributors of cheques, or cash, to

his salary supplement have benefited substantially from the Premier's exercise

of power, to wit Tom Hickman who has told several people that he contributed

generously to the Premier's salary supplement, got three lucrative hospital

construction contracts despite the fact that his was not the lowest bid after

the Premier overruled advice of public servants. Why the double standard,

Premier?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, slanderous statements of that

nature would be actionable in defamation if they are made outside the House. The

hon. member sits and hides behind the screen of this House to make offensive,

false, slanderous, statements for the purpose of trying to aggravate the

government at the time. I will not allow her to do that. I will just demonstrate

to the world how lacking in integrity the hon. member is by these statements.

MR. SPEAKER: The hon. the Member for Humber East.

MS. VERGE: Thank you, Mr. Speaker. The person who is

hiding information from the public is the Premier who has consistently and

persistently refused to divulge to the citizens of this Province the list of

contributors to his $50,000 a year salary supplement which he received when he

sat in this House of Assembly as the Member for Windsor - Buchans, and Leader of

the Opposition, right up until he was shamed into giving up the salary

supplement when the 1989 election was called.

Will the Premier at long last now apply to himself the same

standard he is applying to his former minister and table the list of all the

contributors, people who gave cash and cheques, to his $50,000 a year salary

supplement?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the mere fact that some

people want to spend their lives digging worms doesn't mean that I have to spend

valuable time dissecting them and counting them for them.

It was this government that brought in legislation that

required political accountability, despite the promises from the other side for

years and years, and they did nothing about it. It was this government that

brought in the election act that cleaned up the election processes in this

Province. It was me, Mr. Speaker, who announced to everybody, when I sought the

leadership of the Liberal Party, that I was doing so on the basis that the

Liberal Party would be making up my salary to roughly - and here was the basis

on which it was done - the level of a Supreme Court judge at the time. They did

that and continued to do that until I won the election as Leader of the Liberal

Party, when it ceased to be done.

That is the basis on which it was done. It was open and

disclosed to everybody, and it was paid by the Liberal Party out of its own

general funds, without anybody making any contribution specifically for that

purpose or for any other purpose. It was paid out of the general funds of the

Liberal Party.

I operate on the assumption that Mr. Peckford's were paid out

of the same funds. Now, I don't know. Maybe some people made special payments to

Mr. Peckford, I don't know. I operate on the assumption that it was paid out of

the same general funds, and I have no basis for thinking otherwise. Maybe it

wasn't. But I have sufficient integrity not to make the kinds of false and

fraudulent allegations that the hon. Member for Humber East is making today.

MR. SPEAKER: Supplementary, the hon. the Member for

Humber East.

MS. VERGE: Thank you, Mr. Speaker. I would like to ask

the Premier: Did Jim Chalker, the chairperson of Hydro, and the lawyer whose

firm is now making big money on Hydro privatization, have a

part in raising,

coordinating or paying the Premier's $50,000 a year salary supplement?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: To the best of my knowledge he had no

part

in raising it. I asked two or three people to make sure that anything that was

done was done clearly, properly, any management of any payment of any account

would be done properly, that there would be no offence. I have great confidence

in Jim Chalker as a man of great competence and great integrity, and I have

great confidence in his doing that. I asked Mr. Chalker and a chartered

accountant to ensure that anything that was done or paid would be paid in an

entirely proper way.

MR. SPEAKER: Supplementary, the hon, the Member for

Humber East.

MS. VERGE: Thank you, Mr. Speaker. So the Premier just

confirmed that Jim Chalker did have a key role in the $50,000 a year salary

supplement arrangement.

Why is the Premier making such a show of taking to task the

former Minister of Tourism and Culture when he himself has done much worse? Is

he hoping those who are hunting elephants will be diverted by rabbit tracks?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: I don't mistake elephant hunters for worm

diggers. I recognize worm diggers when I see them.

MR. SPEAKER: The hon. the Member for St. Mary's - The

Capes.

MR. MANNING: Mr. Speaker, my questions today are for the

Minister of Environment and Lands. Madam Minister, have you ever received a

donation from Bristol Communications Incorporated?

MR. SPEAKER: The hon. the Minister of Environment and

Lands.

MS. COWAN: Thank you, Mr. Speaker. I do not know who

gives me donations. Those are received by the district association for

Conception Bay South. I would have to go to the treasurer or the president of

that organization to find out if I have received anything.

MR. SPEAKER: The hon. the Member for St. Mary's - The

Capes, a supplementary.

MR. MANNING: I would like to remind the minister of the

importance of the exact wording of my questions.

My next question is: Have you ever, Madam Minister - ever -

received a donation from either Browning Harvey Limited, bottlers of Pepsi Cola

here in Newfoundland and Labrador, or any affiliate of the Canadian Soft Drink

Association?

MR. SPEAKER: The hon. the Minister of Environment and

Lands.

MS. COWAN: Again, Mr. Speaker, my comments would have to

be the same. As a Minister of Environment and Lands, it is a very awkward

position to be in because almost any company I would deal with in Newfoundland,

could potentially become involved in something in the environment department, so

I have chosen not to know who donates to the association.

Certainly I have received no personal donations from those

individuals, and if they have donated to the association then the questions

would have to be directed in that area.

MR. SPEAKER: A final supplementary, the hon. the Member

for St. Mary's - The Capes.

MR. MANNING: Would the minister inform the House tomorrow

of the exact amounts of her donations from the companies I have mentioned above,

and whether those donations were by cash or cheque.

MR. SPEAKER: The hon. the Minister of Environment and

Lands.

MS. COWAN: I don't know if I can or not, because I don't

know if they have made donations; so I would have to see, indeed, if they had

made donations. As far as I know, I am not required to disclose, at this

particular stage, any information in the House, but if I receive instruction

otherwise, I will.

MR. SPEAKER: The hon. the Member for Kilbride.

MR. E. BYRNE: Thank you, Mr. Speaker. My questions go to

the Minister of Industry, Trade and Technology.

In view of the public discussion and public questions on the

credibility of the government on recent resignations from the Premier's Cabinet,

I ask the minister: Has he received any contributions from any public relation

companies in the Province of Newfoundland; if so, what companies he received

those donations from.

MR. SPEAKER: The hon. the Minister of Industry, Trade and

Technology.

MR. FUREY: Mr. Speaker, I am quite prepared to lay all

donations that were given to me on the Table of the House for the entire time

I've been elected if every member is prepared to do that.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

A supplementary, the hon. the Member for Kilbride.

MR. E. BYRNE: I would remind the minister that he is a

Cabinet Minister and law maker in this Province, and that public perception and

credibility is of extreme importance.

In view of that fact, I would like to ask the minister

another question: Has he received any donations from public relation companies

in this Province? If so, what companies? Has he received any donations from the

Canadian Soft Drink Association or its affiliates, and if so, how much?

MR. SPEAKER: The hon. the Minister of Industry, Trade and

Technology.

MR. FUREY: Mr. Speaker, as I recall, we are not required

to make public any donations under the old act. That's why we brought in the new

act, to make it transparent, clean and acceptable to the full public.

Mr. Speaker, let me say this. All donations that came for my

campaign went to my political executive assistant. They were all in the form of

a cheque. They were all recorded, and my documents and receipts were all filed

properly and I got an acknowledgement and a commendation from the Chief

Electoral Officer in the manner in which I conducted myself.

MR. SPEAKER: The hon. the Member for Ferryland.

MR. SULLIVAN: Thank you, Mr. Speaker. My question is to

the Minister of Environment and Lands.

The minister stated in the House, on Tuesday, that the

government changed its mind on returnable bottle legislation because returnable

bottles is an outmoded method of dealing with such litter, and she has been so

advised by the Council of Ministers of the Environment in Canada.

Now I have received information since Tuesday from every

single province in Canada, and all have not only returnable bottle legislation,

but many have returnable containers of every sort. Some intend to strengthen

that legislation in the near future, and none have indicated any willingness to

divert from that.

Now the minister stated, on November 2, 1993, on CBC Here

and Now , just one month before the anti-litter campaign started, and just

four months ago, and I quote, she stated: ` We would be the last province in

Canada to institute such a policy and I think it is very, very important that we

do this.' Will the minister now tell this House the real reason for changing her

mind?

MR. SPEAKER: The hon. the Minister of Environment and

Lands.

MS. COWAN: My goodness, Mr. Speaker, what misinformation

the gentleman has! Yes, there are provinces in Canada that have deposit-refund

bottles, we know that. I have mentioned that in the House and said that many of

them are now sorry they went that way. Three provinces are investigating the

same approach as we are - Ontario, Nova Scotia, Manitoba, and we make four, are

looking at the litter-type program and the recycling program that is part and

parcel of it; and yes, I did say that we were the last group in Canada, I do

remember saying that, and I was mistaken. I thought, indeed, we were the last

group in Canada at that point to bring in deposit-refund legislation - that is

what I had been told but unfortunately, I had not been told correctly.

MR. SPEAKER: A supplementary, the hon. the Member for

Ferryland.

MR. SULLIVAN: Thank you, Mr. Speaker.

Of course, the others provinces she is speaking with are

bringing in legislation, but they have target amounts on what a company must

return; every company is held responsible in legislation and I have copies of

that legislation.

Now, the Minister of Industry, Trade and Technology stated,

and was quoted in The Evening Telegram on Wednesday that the Minister of

Environment and Lands and the former Minister of Tourism and Culture listened

carefully to his advice, which was to protect the 100 or so jobs at Browning

Harvey Ltd., bottlers of Pepsi Cola in St. John's. Now, the Minster of Industry,

Trade and Technology stated that he looked at the least painful way to cause a

clean environment without loss of job or disruption. Now, will the minister tell

this House which statement is correct, her statement in the House on Tuesday or

that of the Minister of Industry, Trade and Technology in The Evening

Telegram on Wednesday?

MR. SPEAKER: The hon. the Minister of Environment and

Lands.

MS. COWAN: The reason, Mr. Speaker -

MR. W. MATTHEWS: Make up your mind.

MS. COWAN: The reason, Mr. Speaker - my mind is clear on

my role as Minister of Environment and Lands, and I look after the environment,

I don't look after employment. I have not commented on employment but employment

is an issue, thus, Cabinet placing the Minister of Industry, Trade and

Technology on the committee, so that his group can explore the impacts on small

businesses and on large businesses here in the Province. As well, we have on the

committee, which I neglected to say yesterday, the Minister of Municipal and

Provincial Affairs so that we could look into the recycling and the waste

management part of the program.

Mr. Speaker, it absolutely amazes me that the member opposite

is in such a state over this. I mean, he seems really to be upset and I wonder

why. Fifty per cent of the litter is pop bottles, there is another 50 per cent

out there that we have to get back into either recycling or properly disposed of

in a waste disposal site.

AN HON. MEMBER: Five per cent.

MS. COWAN: I am sorry, 5 per cent; yes less than 5 per

cent is bottles - I can't read my writing here. So we want all litter picked up.

I have been watching when I go to other provinces and I look, Mr. Speaker, to

see what litter is on the side of the road and I notice, for example, in New

Brunswick and P.E. I., that yes, the pop bottles are picked up but the chip bags

are still there, the fast food bags are still there and you know, Mr. Speaker,

what makes this all such a joke - the hon. member doesn't give a hoot, what I am

answering, he doesn't care to know what the truth is, all he wants to do is try

to undermine what is a very good program for government, for the Province, I

should say.

MR. SPEAKER: The hon. the Member for St. John's East.

MR. HARRIS: Thank you, Mr. Speaker.

My question is for the Premier and I have a question

concerning his January trip to the Far East.

I would like the Premier to tell the House what business

people accompanied him and how they were chosen. And is the Premier prepared to

make a full report to the whole Province of Newfoundland and Labrador as to

opportunities and business contacts that were made that might be of interest to

business people other than just the ones who were accompanying the Premier?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the people who came, I'll

provide a list of them. There is no difficulty doing that but I don't have it

right off the top of my head. I can name some of them: Mr. Walter Tucker was

there from the BAE Group; Mr. Bishop from Bishop and Forbes; Dr. Clarke from

C-core; George Lee from CORA Group; Bob Kimberlin from HMDC; Dr. Ho from Terra

Nova Fisheries; Vic Young from Fishery Products International. There were some

others, Mr. Harold Baba from Canadian Helicopters; Herb Davis from Ultimate

East, that is all I can think of, off the top of my head, at the moment. They

were chosen simply on the basis that they wanted to go. Whoever wanted to go, it

was known that we were going - we had been asked by some to make the effort and

once we agreed to do it then others requested and when they requested to come

they were simply added on. So anybody who wanted to, pretty well, were able to

come. There was one other person who had written me beforehand who wanted to

include Singapore and focus on Singapore, and focus on Singapore, and I couldn't

do that. There was one other person who wrote me wanting to participate but on

the basis of primarily finding investment opportunities, as I recall, in the Far

East. I told him that the focus was to try to create investment opportunities

here and that on another occasion I would be happy to try to help out. But

anybody who wanted to could come, and as far as I know, nobody who expressed an

interest was turned down.

AN HON. MEMBER: They had to pay their own way.

PREMIER WELLS: They had to pay their own way.

MR. SPEAKER: The time for Oral Questions has elapsed.

Presenting Reports by

Standing and Special Committees

MR. SPEAKER: The hon. the Member for Burgeo - Bay

d'Espoir.

MR. GILBERT: Thank you, Mr. Speaker.

At this time I would like to present the report of the Social

Services Committee on Bill 58, "An Act To Amend The Automobile Insurance Act."

Orders of the Day

MR. SPEAKER: The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, I will ask that you call Motion

1 first and then we will go into Order No. 2 which is the bill, "An Act To

Regulate The Electrical Power Resources Of Newfoundland And Labrador." It is

Bill No. 2 and it will be introduced at second reading by the Premier.

Before I do so, Mr. Speaker, I wonder if I may be permitted

to move that the House do not adjourn at 5:00 o'clock. I say this is simply

being done in discharge of our undertaking to allow whoever is to speak for the

Opposition, I assume it is the Leader of the Opposition - my friend for

Ferryland confirms that - to allow the Leader of the Opposition time to finish

his remarks today. If you could put the motion there is one other matter which I

will need to address in that connection.

MR. SPEAKER: Order, please!

It is moved and seconded that the House do not adjourn today

at 5:00 p.m.

All those in favour of the motion "aye", those against "nay,"

carried.

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, if I may raise one other point.

Today is Thursday and our rules provide for the procedure which we call the Late

Show. I have had a word with my friend for Grand Bank and he raised a point with

which I concur, let us assume by 4:00 or 4:15 - it is now 2:37 - the Premier is

entitled to speak for an hour, and let us assume he takes the hour. The Leader

of the Opposition may not be finished by 4:30 so my suggestion is that we have

unanimous consent to postpone the start of the Late Show until the Leader of the

Opposition has finished, if that is acceptable to the House.

MR. SPEAKER: All those in favour of the motion to

postpone the commencement of what is called the Late Show until after the Leader

of the Opposition has completed his speech today, all those in favour of the

motion "aye", those against "nay," carried.

MR. ROBERTS: Would you call Motion 1 before you call the

bill?

MR. SPEAKER: Motion, the hon. the Minister of Justice to

introduce a bill, "An Act To Amend The Automobile Insurance Act," carried. (Bill

No. 8)

On motion, Bill No. 8 read a first time, ordered read a

second time on tomorrow.

Order 2.

Second reading of a bill, "An Act To Regulate The Electrical

Resources Of Newfoundland And Labrador." (Bill No. 2)

The hon. the Premier.

PREMIER WELLS: Thank you, Mr. Speaker.

In introducing this legislation I want to take a little bit

of time to lay out, not only the content of the bill and what the bill proposes

to do, but to spend some time explaining the basis on which the bill is being

brought forward, the reasons why this particular bill is being brought forward

at this time.

First, the Strategic Economic Plan provides for a

restructuring of the economy of this Province. The electrical production,

transmission, distribution, and delivery is a significant part of our economy.

In the process of restructuring the economy we want to create the most

favourable climate we possibly can for the private sector, and this bill is

intended to provide for the putting in place of a regulatory climate that will

do two things that will ensure that the interests of the citizens of the

Province in having a good, adequate, and reliable supply of hydro-electric power

available to them at the lowest possible cost, at the same time that it

maintains a reasonable regulatory regime to enable the private sector that is

engaged in the provision and transmission and distribution of electric power to

earn a reasonable return, and so make it an attractive climate for investment.

That is really the purpose of this bill.

Secondly, I might point out, Mr. Speaker, that the bill is

needed and sensible legislation without regard to privatization. Even if we were

not privatizing Hydro this bill could be brought forward on merit anyway. It

puts forward a sound and rational basis for regulating the management of

hydro-electric power in the Province. So it is important in itself, quite apart

from its significance as far as the privatization of Hydro is concerned.

While it is good sound electrical management legislation,

there is nothing in it that deals specifically with privatization at all,

nevertheless this kind of framework is absolutely essential if we are to have

two separate private electrical utilities not exactly competing, but to a degree

competing, and working cooperatively to provide the entire electrical power

supply that the Province needs. We need in place a regulatory regime that can

deal with any difficulties that could arise, particularly in circumstances where

one of the utilities - Hydro - would be generating about 90 per cent of all of

the power consumed in the Province, and the other utility would only be

generating about 10 per cent, and that other utility would be distributing to

about 85 per cent of the costumers in the Province and Hydro would only be

distributing to about 15 per cent of the customers.

So there is a substantial interaction between the two

utilities. That of course is why the government felt it best to proceed with a

merger of the two first as being in the best interest. When that wasn't able to

be achieved readily we proceeded to seek privatization on its own. It is

important that we put in place this good hydro-electric legislation in any

event, but in fact I believe it is essential if we are to have a good regulatory

regime in place to manage the electrical utility industry in circumstances where

there would be two competing and cooperating private sector companies delivering

the electrical power of the Province.

In order to lay out clearly the scheme and the purpose of

this statute members might want to follow along in their copy of the bill. The

first three or four pages are just the usual

definitions and preliminary

provisions. I won't go into that in any detail. They define the terms as they

are used in the act.

The area that I want to deal more specifically with is

Part I

and it starts on page 7 of the bill. In this area we are declaring what will be

the power policy of the Province. I should note that this part substantially

tracks the Electrical Power Control Act as it presently exists. Incidentally, I

should mention at the outset that there was an error in the printing. The short

name of the act is going to remain the Electrical Power Control Act, not the

Electrical Power Resource Act.

This

section 3(

a) is to be found in the existing Electrical

Power Control Act, so substantially it pretty well tracks what is there. The

approach is similar. It declares the power policy that the House determines to

be the policy for the Province, and the Public Utilities Board and the

electrical utilities involved must manage their affairs consistent with that

policy. The first one provides for the way in which the rates are to be charged,

and I think that is pretty well verbatim what is in the existing act, so we are

not suggesting any change in roman numerals i, ii and iii of paragraph (a).

Item 4 is new. Item 4 in effect says that from here forward

it is unfair to the industrial sector in the Province to saddle them with having

to subsidize the delivery of rural electrical rates in the rural areas of the

Province. At the moment, all of the customers in the Province, acting

collectively, with the exception of those in diesel areas, pay the full cost of

generating and distributing the power they consume. In the diesel generating

areas it costs so much more that it is unfair to people to expect them to pay

for it all. So the electrical consumers of the Province generally subsidize it

so that customers in the rural areas have exactly the same rates as customers in

the general areas, up to 700 kilowatt hours per month, beyond that they still

get a subsidized rate. And, when you look at it, the customers in the rural

areas of the Province are subsidized to the extent of about - I think, $28

million is the amount of subsidy in this current year. So it is a fairly

substantial subsidy.

Now, in the past, the industrial sector - the paper mills,

the Come-By-Chance refinery, and other heavy industry in the Province,

subsidized that power. We think that this places an unfair burden, a kind of tax

on the industry that is unfair, that places them in a situation where it is more

difficult for them to compete. So we are asking the House, as a matter of

policy, to separate the industrial customers from the residential and general

service customers. Let the residential and general service customers pay their

full costs and the industrial customers pay their costs of the power that is

generated so that there would be no cross-subsidy. We think that this will help

our industries better compete. Everybody knows the pressure that the paper mills

are under in the Province today, everybody knows the pressures that the refining

operators are under in the Province today. So it is important that we treat our

industries fairly for the purpose of protecting the jobs of the people who work

there. It is important that we do that.

So item 3(

a) is a change from what is there now. It would

provide that the rates `should be such that after December 31, 1999, industrial

customers shall not be required to subsidize the cost of power provided to rural

customers in the Province and those subsidies being paid by industrial customers

on the date this Act comes into force shall be gradually reduced during the

period prior to December 31, 1999.' So we phase out their contribution to the

subsidy. That is not to say, Mr. Speaker, as the Leader of the Opposition did,

that the subsidy is going to be cut out. The subsidy is not going to be altered

at all, it will remain. It is just that the industrial customers would not be

contributing to it. The subsidy would remain exactly as it was. What the

Opposition Leader was saying was that it was going to be cut out altogether.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Wait until you see the whole picture.

Now, all of us will pay. All of the people in the Province

will, in the end, pay more - that's right, all of us. What we are saying is that

it places an unfair burden on industry to ask them to do that. We are

diminishing their ability to compete. What we want to do is improve their

ability to compete and that is the purpose of this. We think that that is a

worthwhile purpose, Mr. Speaker, and we are asking the House to endorse it.

Now, paragraph (b), is entirely new. It takes the approach

and fundamentally adopts the principle that all of the sources of power in the

Province and all of the facilities for the production, transmission and

distribution of power in the Province are to be used in the public interest. It

puts the public interest first. It doesn't exempt any source of power at all,

whether it is generated by Kruger in Deer Lake, Abitibi in Grand Falls,

Newfoundland Power somewhere or Hydro somewhere else, all sources of power in

this Province are intended to be used for the overall public interest with no

other limitation on it except as is maybe spelled out in this act. I'll mention

a couple shortly. But that is the assumption under which it operates.

Now, from time to time, in the management of an integrated

electrical system, you could run into situations where entrenched contracts or

contractual positions between a power company and a user or something, gives a

preferred position to one or the other group. So what we are providing in this,

is that the Public Utilities Board would have the ability to supervise the

complete management and control of all power sources and facilities in the

Province to ensure that they were managed in a manner consistent with this

policy.

Here is what we are proposing be established as the basic

power policy for the Province: that all sources and facilities for the

production, transmission and distribution of power in the Province should be

managed and operated in a manner:

One, `that would result in the most efficient production,

transmission and distribution of power'. They have to operate efficiently. We

can't continue to maintain inefficiencies, because that finds its way back to

the ultimate consumer in the rate. So where there are inefficiencies we have to

try to weed them out, and that will be a task the PU Board will have to deal

with.

For example, if there are inefficiencies between the

operation of the two power companies, it will be part of the task of the PU

Board to see that those two power companies work together in such a way as to

provide for the most efficient production and management of that power so as to

result in the lowest possible cost.

Secondly, `that would result in consumers in the province

having equitable access to an adequate supply of power'. Now, `equitable' is

intended to ensure that there is fair treatment. `Equal' is not always

necessarily fair, but the principle is, it is to be equitable.

For example, at the moment, all residential customers in the

Province pay exactly the same. All those who are on the grid pay exactly the

same for their power. That's equal and equitable, both. In the case of the

customers in the rural areas, they pay the same for the first 700 kilowatts, but

more for the amount beyond that, and the idea is to make sure that we give

customers in that area access to the basic power needed to run a household at

the same price - at an equal price with everybody else - but not put in prices

that would induce them to use electric heat instead of oil or wood, which would

be lower cost than electric power in diesel generating areas because it is so

costly to run diesel. That's equitable. That ensures equity and fair treatment,

at least, if it is not equal treatment. In the circumstances, we believe that,

at the very least, should be done to ensure equitable treatment. Well, that's

the concept that's enshrined there.

Thirdly, `that would result in power being delivered to

consumers in the province at the lowest possible cost'. That is the specific

direction as the power policy of this Province, and the PU Board will have to

look at this and interpret it in the future and say: Our mandate is to make sure

that we run an efficient operation, people are treated equitably, and we produce

the lowest possible cost consistent with reliable service. Now, you can cut

corners and have weak systems in equipment, and have blackouts three times a

day, and you would have even lower cost, but you wouldn't have a very good power

system. So it has to be consistent with reliable service, but the companies that

are engaged in the delivery of power must do so in a way that produces the

lowest possible cost.

Fourth, `that would result in a producer having priority to

consume the power it produces, subject to

Part III.' Now, let me tell you what

the significance and importance of that is.

Two companies, in particular, generate a great deal of the

power and energy they consume. Kruger, in Corner Brook, through the Deer Lake

Power Plant, generates a great portion of the power it consumes. Abitibi,

through its power facilities at Grand Falls and Bishop's Falls, generates a

significant portion of the power it consumes. We feel that in terms of

ordinarily managing the power for the Province, it would be unfair to take that

from them. That's theirs. They built their industry on the basis of that. It

would be unfair to say: Well, we can get lower cost power by taking Deer Lake

power or Grand Falls power from them and putting it into the general grid, and

forcing the two paper companies to pay the same as everyone else. That could

well put those two paper companies out of business, and they have been there and

operating in that circumstance for fifty or sixty, and - well, more than that -

in the case of Abitibi's mill, about ninety years, and in the case of the Kruger

mill in Corner Brook, about seventy years. So this provides that a producer

would have the priority to consume the power that it produces. The subject to

Part III that is mentioned there is emergency situations. In emergency

situations, the emergency controller would have the right to access that power

too if it were necessary to meet the emergency circumstance. That is what that

subject to

Part III means in that context.

Fifth, `where the objectives' - those four objectives that

are set out in the first four that I have just read - where those objectives

`can be achieved through alternative sources of power, with the least possible

interference with existing contracts' - in other words, where there are existing

contracts, if those objectives of the lowest possible cost power, reliable power

and so on, can be met through alternative sources, we are saying to the PU

Board: Avoid interfering with existing contracts; because you want to try to

make life as easy as possible for people without creating unnecessary

difficulties. So, no unnecessary interference with contracts, but if it is

necessary to achieve the objectives set out in the first four, then it is

entirely appropriate to interfere with existing contracts.

Then, the

summary direction at the end is: `where necessary,

all power, sources and facilities of the Province are to be assessed and

allocated and reallocated in the manner that is necessary to give effect to this

policy;' in effect, the Public Utilities Board is in the ultimate control of it,

and we think this is the way it should be. All power and facilities in the

Province must first and foremost meet the general needs of the Province. That is

why they are there. It is the nature of power -

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Well, we didn't exempt any power. Whatever

it does, it does. We didn't exempt anything. We didn't exempt Kruger. Kruger has

been there since 1924. Abitibi and its predecessor, AND, and Price have been

there since 1904. No power is exempt. There is no basis for exempting anything.

AN HON. MEMBER: (Inaudible) taking back control of

Churchill?

PREMIER WELLS: No, we are not taking back control.

Churchill will continue to operate. But whatever is necessary, whatever the PU

Board has to do, it will do, with any power in the Province, but this is not

taking back control. It is not altering -

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Pardon me?

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: It is not doing anything with the power.

It is setting in place a management regime for the Province - all power in the

Province. If we say we are not prepared to exempt Abitibi, which has had rights

for ninety years, and we are not prepared to exempt Kruger, which has had rights

for seventy years, why should we exempt Churchill Falls which has had rights for

only thirty years?

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Whatever it does, it does, sobeit. All

power in this Province must ultimately be under the control and management of

this Legislature, it doesn't matter where it is or who generates it.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Well, this legislation is putting in place

a general management of power system that will provide for the sound management

of power in the Province, all power in the Province. We think the nature of

power is such, it is so essential for the orderly running of society and the

efficient management of society, and the efficient operation of our economy,

that it can't be allowed to be assigned privately or controlled privately. It

must be managed in the overall public interest and that is the purpose of this

piece of legislation. So you can see why I say that it doesn't matter whether we

are privatizing or not, this is good legislation anyway, but it is also

essential legislation if two private systems are to work.

Now, Mr. Speaker, to move on.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Pardon me?

AN HON. MEMBER: All power generated in this Province

(inaudible).

PREMIER WELLS: All power generated in this Province. It

doesn't matter who generates it or where or by what means. Diesel, wind power,

hydro-electric power, all power generated in this Province comes under this

control.

AN HON. MEMBER: Peat power?

PREMIER WELLS: Peat, any kind of power. Now let me move

on to the next item.

This provides something that in most other statutes - and

what I just read - many other provinces have something similar to that in their

statutes too. Many provinces have provisions similar to what I just read; many

provinces have a provision similar to (

c) which we have not had and is a

sensible and logical thing to have, it provides for what happens in an

emergency. For example, what would we do this afternoon if Bay d'Espoir went out

and Bay d'Espoir was not available for power generation in this Province for six

months before they could get it up and running again, what would we do? We do

not have enough power in the Province to meet all the needs, who would have

priority? Would we close hospitals, schools, legislatures, factories, plants,

street lights, what would we do?

There is nobody and no means in place at the moment to make a

decision. Now it is less of a problem but it is still a problem, that is right

it is a real problem, most provinces have emergency provisions, we haven't had

any. It is less of a problem where you have a Crown owned utility that you can

immediately give directions to the manager to do something if that Crown owned

utility got control of enough of the system to regulate it, but what about where

you have another private utility that is distributing to 85 per cent of the

customers so there is no real means of controlling it or set standards or rules

or priorities. Do we give health institutions and schools a priority over

businesses and factories, if something catastrophic happens and a major source

of our power went out? Well that is what this is intended to deal with.

In the event of an emergency arising from the loss of use of

generating facilities, a shortage of water etc., any of these things, it enables

the emergency controller to determine the priorities, allocate and re-allocate

power available and make all other necessary provisions for the supply and

distribution of power so long as the emergency exists. We think it is essential

and good sound provision to provide for an emergency.

Paragraph (d), really accommodates the fact that in the case

of privatization, the provision for essential employees and the essential

employees agreement that presently exists between Hydro and its union, under the

Public Service Collective Bargaining Act, when Hydro is privatizing, would come

under the Labour Relations Act instead of the Collective Services Bargaining

Act, so we felt that this was the best way to make provision for essential

employees, and the only employees who are deemed essential under this agreement

are those involved with the running of the diesel plants, because you can't

leave those exposed. The ordinary Hydro employees are not. I don't think that

any of the normal hydro-electric employees are involved in the essential ones,

so what we are providing and suggesting is that because of the nature of

electrical power and the character of it and the complexity of it, it is really

best if the Public Utilities Board be the body that determines who are essential

employees, so we are assigning that responsibility to the Public Utilities Board

instead of the Labour Relations Board and we are suggesting that that should be

part of the policy of the Province.

In (e), this is the one that would authorize, would state as

a matter of policy that the Province's position is: all of the income tax that

is rebated to the Province under the Public Utilities Income Tax Transfer Act,

should go back and be contributed back to cover the cost of power so as to lower

the cost of power.

Here is what happens at the moment. Hydro, as a Crown

Corporation, pays no tax so the federal government, gets no tax in respect of

hydro operations paid back to us. They rebate to the Province the income tax, or

85 per cent of the income tax that is paid by Newfoundland Power is given back

to the Province, the Province has kept that as part of its normal, governmental

revenues. Now, if Hydro is privatized, Hydro will then be subject to income tax

and it would be a significant sum perhaps and it would be paid back to the

Province. That could cause an increase in the cost of power so what we are

suggesting is whatever income tax Hydro pays to the federal government and is

rebated will be paid back, and from now on whatever tax Newfoundland Power pays

to the federal government and is rebated would also be paid back to the

consumers, in effect. It goes back to the companies but it goes back right to

the base charge so that the cost of power to consumers is rebated.

AN HON. MEMBER: (Inaudible)

PREMIER WELLS: The Minister of Finance could probably

tell me but he is not here. I will find out. My guess is, I think $10 million or

something we get back, $10 or $12 million. Maybe it is more than that.

AN HON. MEMBER: It was $9.6 last year.

PREMIER WELLS: About $10 million was right, $9.6 million.

I would expect that Hydro would be significantly more than

that, so what we are proposing, in order to ensure that it goes back to the

consumers in a fair way, what we are saying is, the total amount that comes back

to us will be rebated to the power companies in proportion to their extent of

generation. In other words if Newfoundland Power generates 10 per cent of the

power they get 10 per cent of the rebate and Hydro would get 90 per cent of it

because they would generate 90 per cent of the power used in the Province, so in

that way it goes right back to reduce the cost of power and goes right back to

the ultimate consumer, so that rebate in tax goes right back to the consumer.

Now, on the surface that might make it look like it would

cost the Province the loss of that $10 million in revenue.

MR. SIMMS: It is the same consumer.

PREMIER WELLS: It would look like the provincial

government would lose that much in revenue but the fact is a privatized Hydro

would pay approximately the same to the Province so that together we would get

out of provincial taxes about the same amount we are getting now from Power and

the federal rebate in respect to Newfoundland Power at the moment. Give or take

it would be neutral, perhaps a couple of hundred thousand less, or a relatively

modest amount less. Give or take it would be neutral in terms of the provincial

governmental revenue position, but the full rebate would go back to the

consumer.

The final paragraph in the policy

section - you will note in

a subsequent

section that the PU board is being given responsibility to ensure

that planning for future power supply is done, and we are stating now that as a

matter of policy, planning for future power supply of the Province shall not

include nuclear power. We are saying to the PU board and those engaged in the

electrical utility industry: in planning your power do not plan nuclear because

we think the potential risks are too great and the costs are very high at the

moment. If the circumstances change in the future that policy can always be

changed, but for the moment we are saying to them: from now until you get

direction otherwise, do not plan nuclear. Look at what has happened with Ontario

Hydro, look at the mess they are in at the moment, partly because of their

nuclear circumstances. We are saying to them for the time being there is no need

to plan nuclear power, exclude it.

The next couple of clauses are pretty standard. I think they

are in the act now. The next significant thing that I want to comment on is

Part

Part 11 provides for the planning, allocation, and re-allocation of power

and facilities.

Section 6 is entirely new and it spells out that the Public

Utilities Board will have the authority and the responsibility to ensure that

adequate planning is done for future power supply. Each utility, it is

contemplated, would do its planning and would be required to produce to the

Public Utilities Board information on its planning and receive directions on

planning from the Public Utilities Board. The whole of

Section 6 deals with

that.

Section 7 is entirely new and what it provides is that where

any producer or retailer is concerned that it may not be able to generate enough

power to meet the anticipated power needs of its customers, and its perspective

customers, in the manner required by this act, that is the lowest possible cost

power, it may request the Public Utilities Board to conduct an inquiry into that

matter. The government could request the PU Board to do it, or the PU Board

could do it of its own accord under subsection (3).

Then they are required, under 8(1) to hold a public hearing.

So the whole matter has to come before a full public hearing so that everybody

who has an interest in the cost of power in the Province has a means of

expressing a view on how new future power supplies should be developed. That's

part of the overall planning. Instead of it being done now, quietly, in Hydro's

offices, or in government offices, or in the Department of Mines and Energy, it

will be done in a way that has, in the end, to be very public and transparent,

and require planning before the Public Utilities Board. This is what 8(1)

requires.

Now subsection (2) is a very important section. It is

entirely new, and what it provides is that: "Where, after the conduct of an

inquiry, the Public Utilities Board is satisfied that a producer or a retailer

is not or will not be able under the existing supply and allocation contracts or

arrangements to satisfy the current or anticipated demands of its customers for

power in the manner required by this Act" - and that's the key phrase, in the

manner required by this Act - "the Public Utilities Board may, subject to

subsection 11(3)" - and I will get to that in a moment - "allocate and

re-allocate any or all power produced in the province and may order another

rates, timing, duration and amounts that the Public Utilities Board determines,

to the producer or retailer which would otherwise be unable to satisfy such

demands for power that the Public Utilities Board considers to be necessary to

implement the power policy... " of the Province; i.e., everybody in the Province

having equitable access to power at the lowest possible cost.

Now where you have two utilities, as we would in the case of

privatization, operating on an interconnected basis, particularly where one does

90 per cent of the generation and the other only does 10 per cent, and the

distribution is reversed the other way, where you have that you have the

potential for having great imbalance unless you have this kind of a clause. In

any event, even without that circumstance, we think that this is a good, sound,

basis for managing hydroelectric power in the Province. It's essential where the

two companies will generate in that manner.

Subsection (3) provides also that it can cover facilities as

well, distribution, plant, equipment and facilities, and order the use of that.

Subsection (4) would enable a company, not just in connection

with getting additional power, but ordinarily to require that another company

enable its facilities to be used in order to ensure fair transmission and

movement of power throughout the Province on a lowest cost basis.

Subsection (5) is an important one as well. "A producer or

retailer directed by an order made under subsection (2) to deliver power to

another producer or retailer shall, within the limits of its capacity..."-et

cetera- "notwithstanding that the producer or retailer may as a result have to

reduce the amount, or cease the delivery altogether, of power then being

supplied to another customer or the amount of power then being consumed for its

own use." They shall comply with the order, notwithstanding that it may

interfere with another arrangement, if the Public Utilities Board determines

that that is what is necessary in order to ensure that the power policy that

I've already described is met.

Section 9 deals with compensation (inaudible). What it

provides specifically is that any person being directed to divert power to

another user be compensated for the cost of that power, a reasonable allowance

for the capital employed in the generation of that power, and the third thing is

sort of peripheral, but it has to be fair. A customer of any company that was

caused to divert power, or that company itself, may well have to cease to use a

section of transmission line or distribution line because it can't any longer

send that power, and it may have been designed or put in place simply for that

purpose. For example, if the company were directed to divert power from Hope

Brook, the cost of building that line into Hope Brook mines was exclusively for

Hope Brook, if they were directed to divert that power to some other source then

who is going to pay for the cost of that line? Whoever put that line in there is

now -

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Well they made a contribution. Alright but

I use that as an example assuming the Province didn't. It would be unfair to the

owner of that facility simply to have it rendered useless. So they are entitled

to be compensated for the un-amortized balance of the cost of that line on such

basis as the PU Board would determine. The purpose of the act is to try and be

fair. To give priority to the public but also to try and be fair to all parties

involved.

Subsection (2), is really only consequential again in

relation to the use of facilities and so on.

Subsection (3), deals with another problem. It may well be

that where a power company is building a facility, a particular mortgage or

security had to be given or assignment of power contracts had to be made, in

order to get the money to build that facility. Well if the company were directed

to divert that power they may not - this would affect the security and there is

no longer a flow of money to protect that or the security, the contracts that

were assigned had disappeared and been rendered valueless. So subsection (3),

really enables the Public Utility Board to use its discretion and make it a

condition of the diversion of power that comparable security be given to the

party that lost its security. Again its simply an attempt to be fair to

everybody involved.

Section 10, provides that there is no liability for

compliance with the order. If somebody breaches a contract or fails to meet

another obligation as a result of having to comply with the PU Board order, in

this regard, there is no liability if the action is taken in the public

interest. If it's essential and fair in the public interest.

Section 11, you will recall that there was an exception to

what could be used, what could be re-allocated. It may well be that

circumstances may exist that in order to raise the money to build, say, a new

generating facility you had to give a mortgage or assignment of contracts are

put in place at twenty year contract. In order to build a transmission line to a

new paper mill or a new mine or something of that order, you may have to enter

into a long- term contract to raise the money to do it. Well if that is

necessary and if the Lieutenant-Governor in Council thinks that that is

necessary then the Lieutenant-Governor in Council can issue a certificate to

that effect or if the Public Utilities Board is of the opinion that it is

necessary in order to raise the money to build such a facility, if the

Lieutenant-Governor in Council thinks it's necessary in order to establish an

industry in the first place to commit to a long-term power then there is a right

in the PU Board to authorize a contract in excess of ten years but not exceeding

thirty years.

Any such contracts, as may be especially licensed or

permitted in that way, power under those contracts are not subject to the

re-allocation. That is the only power that wouldn't be subject to the

re-allocation. Everything else would be but anything that was done in that way

specifically with the specific prior authorization of the PU Board, where the

license was given, that would not be subject to reallocation and management. In

any event the term could not exceed thirty years.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Yes, that would be subject to emergency.

That is not exempt from the emergency provision but it would not be subject to

general re-allocation for the greater good. If somebody commits, in order to

build a new paper mill on the Northern Peninsula, to a supply of power for a

twenty year period and people invest in the mill to do that and it is necessary

to have that firm power there in order to get the mill there and the

Lieutenant-governor in Council certifies it then the PU board can issue a

license for that longer term but not exceeding thirty years. The companies can

enter into contracts for up to ten years on their own but anything over ten

years they have to have a special approval of the PU Board, but in the case of

an emergency all that power comes under emergency management.

The next couple of clauses, 12 and 13, are sort of

consequential clauses on the operation of those principles. You can see then

that

section 14 provides that: "This Part applies to all contracts for power

generated in the Province whether the contracts for the power were entered into

by producers or retailers before or after the coming into force of this act." So

it does apply to all power in the Province.

Part III is the part dealing with an emergency. I've pretty

substantially indicated the general nature of that. It provides that this Part

applies to all power in the Province, whether it was given this special licence

under

section 11 or not. It is still covered under the emergency provisions and

subject to the direction of the emergency power controller.

Section 16(1). Where the Lieutenant-Governor states or

declares that a state of emergency exists, then the power controller comes into

play and that power controller - and it may be one individual or it may be a

committee of two or three. The statute provides for a person, but they tell me

"person" includes many persons, or singular includes plural, so it could be a

committee of three. So rather than make the act cumbersome with saying `or a

committee,' et cetera, they say all that is necessary is to do that. The

Lieutenant-Governor in Council could appoint a committee. We would have to

decide in the future which was the best way to constitute the emergency power

controller.

That power controller basically has the authority, in 16(2)

to: "(

a) establish preferences and priorities between different users or classes

of users; (

b) allocate and re-allocate power and, if necessary, interrupt or

decrease delivery of power...; (

c) regulate, and if necessary, restrict and

prohibit the generation, transformation, transmission...," et cetera; and

finally, in (d), "do, or order or direct to be done, any other thing the

emergency controller considers necessary for the proper generation,

transmission, distribution, supply and use of power in the circumstance." I

believe we need that to ensure that if we end up with a catastrophic

circumstance at some time we can properly manage the power in the Province.

Section 17 is essentially only an elaboration and a spelling

out of detail to ensure that nothing is missed on the powers of the electrical

power controllers.

Subsection (2) spells out clearly the only preferences, and

this doesn't exclude it absolutely, but it creates a preference. What it says

is, notwithstanding subsection (1): "... wherever it is reasonable and

practical, taking into account in particular public health, safety and security,

consumption by a producer of the power it produces" - like the paper mill in

Corner Brook or Grand Falls - "shall be the last, and power being delivered

under a contract in respect of which a licence has been issued under

section 11

shall be the second last, interrupted by the emergency power controller...."

That is not to say they can't interrupt it, they can, but it says, leave those

as the last to be interrupted.

Section 18 really only deals with the orders of the emergency

controller and provides that they are to be obeyed and who is responsible, and

it provides that there is no liability for compliance with the order.

Section 20

also provides for fair compensation for disruption of power in those

circumstances.

Section 22 really provides for a framework within which the

existing situation can continue to exist unless the Public Utilities Board were

to order otherwise, and it provides that it is the Public Utilities Board and

not the Labour Relations Board that does it. The balance of

section 22 is really

primarily procedural and consequential.

Part IV deals with the question of governance of the utility

companies. At the moment there is no restriction on who can own Newfoundland

Power or Fortis, the parent company of Newfoundland Power. Any one individual or

group of individuals could, for example, get control of that company tomorrow.

There is no restriction on it. What this clause would do is put limitations on

them so that there couldn't be control.

When we first talked about the possibility of privatization,

the government considered the possibility of putting an absolute limit of 15 per

cent on the interest in Hydro shares, that no ownership could exist beyond 15

per cent, and we talked generally about that in public comments that were made.

Then, as we looked at it and merger wasn't to take place, we had to look at the

situation where only Hydro would be limited in that way and that didn't seem

quite the right thing to do, if there were two private utilities, they should

both be treated essentially the same, so there should be the same limitation on

Power and Fortis as there should be on Hydro. In fact, one shareholder has just

over 16 per cent of Fortis shares now; It is OMERS, the Ontario Municipal

Employees pension fund.

AN HON. MEMBER: Retirement Services.

PREMIER WELLS: Retirement Services. They have just over

16 per cent of Hydro now, so obviously, we either would have to grandfather

OMERS, cause them to be reduced or take some other such action if we were to

apply the 15 per cent. We could have said 17 per cent but that was sort of an

unusual thing. We discussed it with the two companies and with the financial

advisers and they said: Well, look, some provinces have 20 per cent as the

control, why don't you simply go to 20 per cent? So we changed it from 15 per

cent to 20 per cent.

The second thing that we did differently was, instead of

putting an absolute prohibition on it - it is conceivable that maybe ten,

fifteen, twenty years from now it may well be in the public interest to allow

some investor or group of investors acting together, to own more than 20 per

cent, if it is in the public interest, so what we have provided is a prohibition

against it unless there is prior leave of the Public Utilities Board. Then we

provide that the Public Utilities Board, where they feel that it would not be

contrary to the public interest, may permit more than 20 per cent to be held by

a person or a group; but it is only after a public hearing before the Public

Utilities Board. And then, as sort of a safety, we provided in the end, that the

Lieutenant-Governor in Council could override the Public Utilities Board.

Because the Lieutenant-Governor in Council, of course, represents the elected

body that acts in the interest of the Province, not the Public Utilities Board.

But the Lieutenant-Governor in Council could only act after they had been

through a full hearing before the Public Utilities Board. So we feel that that

is probably, generally speaking, the best of both worlds.

On to

section 24. We felt that the actual company that

carries on the hydroelectric business should not be able to carry on other

businesses or engage in other business activity that might jeopardize its

financial security or imperil the assets, the hydroelectric assets. So,

sub-section (1) of

section 24, provides that `a retailer shall not engage or

invest in or carry on any business or activity other than the business of the

production, transmission, distribution or retailing of power and the business or

activity that is generally related to it.' So, a power company like new Hydro or

like Newfoundland Power could not engage in that business.

Now Fortis could, because, of course, it is the company that

owns 100 per cent of the shares of Newfoundland Power, but they couldn't pledge

the assets or imperil the assets or put the financial viability of the company

in jeopardy by causing it to undertake business activities that -

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Pardon me?

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: I don't know that they are operating in

the name of Newfoundland Power, I wouldn't think so - but maybe they are, I

don't know.

AN HON. MEMBER: But Newfoundland Power is certainly 100

per cent owned by Fortis.

PREMIER WELLS: Yes.

AN HON. MEMBER: And Newfoundland Power (inaudible).

PREMIER WELLS: Yes, but that doesn't jeopardize the

financial security of Newfoundland Power, it is independent. It may jeopardise

Fortis if they did, but I think Fortis made money. Some of Fortis' operations

may or may not have made money.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Well, that is not my understanding.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Yes, I will. Fortis Trust or Fortis

Properties may have lost money but Fortis Inc. has not lost money. Fortis Inc.

didn't lose money, Fortis Inc. made what Newfoundland Power made, less what they

lost in Fortis Properties or Fortis Trust. So, if that is what the directors and

shareholders want to do with the shareholders' dividends on their investment,

that is up to them. As a matter of fact, I say to hon. members, if that kind of

structure exists I have no quarrel with it because they don't imperil the

assets, and at the same time, they are using the substantial financial resources

of Fortis for business investment in the Province. I would like to see it, and I

don't mind if they lose money on their first venture, as long as, in the end,

they work to making profits because we would like to collect a little bit of

tax, too, from profits they would make. But I would like to see that because it

helps strengthen our private sector economy.

AN HON. MEMBER: (Inaudible) Light and Power and they have

spent it on all kinds of contributions, in charitable things and everything else

within the Province.

PREMIER WELLS: But that is up to them. It is their

shareholders' money. It is not the consumers' money. The point is, they could

have simply paid out to their shareholders. They had a right to do that, but

they didn't, they reinvested some in the Province and I say, well done. I hope

they reinvest more, to be honest with you.

MR. ROBERTS: Fortis Inc., according to its statements,

made $30 million a year.

PREMIER WELLS: So that prohibition is there against the

company actually engaged in the management of the power facilities from engaging

in business that could put the power company into jeopardy.

Section 26 is a quirky thing that arises from the fact that

there are a couple of operations in this Province that still have 50-cycle

power, and the advisors tell us that there is presently a provision in the Hydro

Act that provides for Hydro changing the `periodicity' - if anybody understands

what that means - the periodicity in alternations of current. I don't know why

they didn't say `frequency', but apparently frequency is something different. I

don't understand how, but the word they use is the periodicity - that is, those

companies that have 50-cycle power. Sometimes a converter is going to give out

and they are going to have to change it and this authorizes them to do it and

provides for the circumstances. It is essentially an incorporation into this

statute of a provision that is presently in the Hydro Act, but it affects both

companies, not just Hydro, because Newfoundland Power has a 50-cycle customer,

too, in North Star Cement in Corner Brook, a 50-cycle customer of Newfoundland

Power, although the power is supplied through Newfoundland Hydro.

The remainder of the act is essentially general provisions

that I need not go into in any detail. It can be done in the committee stage.

The final provision to which I would draw member's attention is

section

Section 34 says that this act supersedes every other act ever passed by this

Legislature to the extent that any other act may provide anything to the

contrary. "An Act or contract, whether enacted before or after the commencement

of this Act relating to a producer or a retailer shall be read and construed

subject in all respects to this Act, which in a case of conflict shall,

notwithstanding a provision to the contrary contained in another Act or

contract, prevail over a general or special Act enacted or a contract entered

into prior to the commencement of this Act."

(2) "A contract referred to in subsection (1) includes a

contract authorized by or entered into under

an Act."

Well, Mr. Speaker, that is substantially it. It remains only

for me to say that this statute, itself, in a sense, is not directly related to

the privatization of Hydro except we couldn't really efficiently and effectively

run two separate power companies in the Province without a controlled system of

this nature in place. Whether there were privatization or not this, I think,

would be a good piece of legislation, in any event, and I ask hon. members to

consider that.

Tomorrow I intend to make my contribution to the second

reading of the Privatization Act and I should tell hon. members why. I have to

go out of the Province on Monday, Tuesday and Wednesday of next week to meet a

prior commitment. The commitment was to address a major group of mining

companies from all across Canada, in Toronto, and to address and meet with other

companies on a business promotion effort in Toronto that unfortunately was

scheduled at this time before the scheduling for this debate took place. So I

have to be away and I felt it better to introduce the Privatization Bill even

though we hadn't finished second reading on this bill at this stage, if we

haven't by then. Assuming we don't, I felt it would be appropriate to get the

second reading started on the privatization act while I could take whatever

responsibility I have for the proposal by presenting it to the House.

I would ask hon. members to - and ask hon. members opposite

to support second reading, to support this bill. I'm pleased to ask them, in

moving second reading of this bill, I'm pleased to ask all hon. members to

support it, because I think it is in the best interest of the people of this

Province. Then, we can debate tomorrow what we do with the privatization of

Hydro, and in days after that. That is quite another question. This piece of

legislation, I believe, is clearly in the best interest of the Province and I'm

pleased to ask hon. members to give it their full and wholehearted support.

Thank you.

May I also say something else. Thank you for the very

moderate level of interruption and interjection during the debate. I do

appreciate it. Thank you, indeed.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: Thank you, Mr. Speaker. First of all, I want

to apologize to the Premier for not being here for the early part of his

comments. I got delayed over at CBC television doing a lengthy television

interview about my views of the Premier. We had to do several takes.

AN HON. MEMBER: What was it, you didn't think much of

him?

MR. SIMMS: No, I was -

PREMIER WELLS: (Inaudible).

MR. SIMMS: That's right. I'm not a harsh person like

that. So I had to get them to do it over again, Mr. Speaker.

PREMIER WELLS: I should say to the hon. member, the media

have asked me to come out and do the same, so I will have to leave during his

speech to do the same thing.

MR. SPEAKER (L. Snow): Order, please!

I wonder if the hon. member could allow me to introduce the

questions for the Late Show before he gets into his debate?

The first question is from the hon. the Member for Menihek: I

am not satisfied with the answer given to me by the President of Treasury Board

re severance pay to public employees.

The second question is from the hon. the Member for Green

Bay: I am not satisfied with the answer to my question to the Minister of

Industry, Trade and Technology concerning an ENL loan to MP Jean Payne.

The third question is from the hon. the Member for Humber

East: I am not satisfied with my question to the Premier concerning the

$50,000-a-year salary supplement.

The hon. the Leader of the Opposition.

MR. SIMMS: Thank you, Mr. Speaker.

Again, I apologize to the Premier for not being here for the

earlier part of his comments, but I did have somebody taking some notes for me

so I could try to follow what he had to say at the beginning.

Let me put his mind at ease right at the outset. We will not

be supporting this piece of legislation, we will not be supporting the piece of

legislation he intends to introduce tomorrow. So he doesn't need to make any

further pleas, he doesn't need to have any anxieties about what we are going to

do or anything else, because we will not be supporting it. Now, there are some

obvious things in this piece of legislation that aren't quite as, I suppose,

offensive, as we find in the other legislation, but I can tell him there are

things in this legislation that we have some problems with. As it is all really

part of the same package on the overall issue of privatizing Hydro, we will be

opposing this legislation. As far as I know, everybody on this side - well, I

can't speak for everybody on this side, but certainly, everybody on this side in

the Official Opposition will not be supporting it.

Mr. Speaker, I also want to say that a lot of the points I

want to make on the privatization issue I will leave until tomorrow's debate,

and I will try to contain my remarks to this piece of legislation as best I can

while addressing some of the points that I understand the Premier made before I

came into the House, and some of the things I heard him mention since I came

into the House.

He makes at the beginning some misleading comments and

misleading statements when he made reference, I understand, to it being part of

the overall plan, and was understood in the Strategic Economic Plan of the

Province. That is totally incorrect and not accurate at all. I am sure he would

know by now, because he and I debated that point, about the matter being somehow

contained in the Province's Strategic Economic Plan.

PREMIER WELLS: Not `the matter' (inaudible) stated

specifically (inaudible).

MR. SIMMS: Yes, but the impression the Premier is trying

to leave, though, is that somehow this was contained in this Province's

Strategic Economic Plan. I know how he works, and I know what the impression is

he is trying to leave. The reality is there was absolutely no reference to

restructuring or the privatization of Hydro in that Strategic Economic Plan. He

knows that. In fact, if anything, there was reference in the Strategic Economic

Plan to the future continuation of Newfoundland and Labrador Hydro. I refer him,

in particular, to page 53 of his Plan,

section 85, where he talks about actions

the Province will take dealing with energy matters: `Through the Department of

Mines and Energy, and Newfoundland and Labrador Hydro, we will prepare a plan

for energy efficiency, the development of various energy sources, to ensure the

future balance of energy supply and demand for the Province', and so on.

On another page, I guess it's the next page, 54, under

section 83, actions the Province will take, he makes mention of, in talking

about the shortfall in the future: `One option for meeting the shortfall beyond

the year 2000 is the development of the Lower Churchill', etcetera, etcetera. It

goes on to say: `Any feasible industrial activity would have to be accommodated

in Labrador, but it is dependent on an agreement between Newfoundland and

Labrador Hydro and Hydro Quebec.'

There are other references, as well, to the Strategic

Economic Plan, but there is no reference, no mention, of restructuring or

privatization of Newfoundland and Labrador Hydro. So we should make that point,

and I want to make the point, because I understand he alluded to it when he

introduced the legislation.

Another point I want to make is that he gives the impression

that somehow the advisors, the Province's financial advisors, recommend this

approach and this privatization, and that, too, is totally misleading. In fact,

he said himself, in his speech to the Board of Trade - I am sure he remembers it

well - he talked about Hydro's Board of Directors and its advisors pursuing the

assessment being the other issue they were looking at at one time further, and

ultimately advised the government that the status quo was obviously a viable

option, but if the government wished to privatize, it could do so by either

privatizing Hydro on a stand-alone basis, or by first merging with Fortis and

then selling their shares.

Now, first of all, they didn't recommend privatization on a

stand-alone basis as their first option. They did not recommend privatization

stand-alone as their first option, these advisors. Here's what they did say.

They did, however, advise that the combination with Fortis Newfoundland was

preferable to a stand-alone privatization from the point of view of government,

taxpayers, and rate payers.

Now, the implication there, clearly, is that the worst

possible option would be the stand-alone option.

PREMIER WELLS: No, the worst possible option would be the

status quo.

MR. SIMMS: No, no, no, no. The best possible option was

status quo, I would argue with the Premier, and I suggest that's what they told

him, too, but, in any event, we can argue that 'til the cows come home.

Mr. Speaker, he talks about providing a reasonable supply at

a reasonable cost. That's what this legislation is all about. The only problem

with it is that privatization adds a completely new element to the cost, and

that is the profits of shareholders. That's an element that we do not have in

existence now with Newfoundland Hydro.

The most efficient way to deliver electricity from a cost

standpoint to the people of the Province is by a Crown corporation, I would

argue - one that is not controlled by shareholders who are solely interested in

getting the greatest return on their shares. I would argue that it's much more

efficient to do it through a Crown corporation.

Now, I suspect one of the reasons that the Premier, for

example, is introducing this bill, and not the minister, which does surprise me

somewhat - the minister responsible for public utilities - is because for many a

year this whole concept and this whole idea has been a bit of a personal pet

project of the Premier, and he knows that. When he was Chairman of Newfoundland

Light and Power, I understand that he went so far as to prepare some ideas for

legislation that, in fact, are very similar to what we have here today, and

spoke to a previous administration, I think, in that regard, trying to encourage

them to pursue those ideas.

PREMIER WELLS: (Inaudible).

MR. SIMMS: Yes, I see. Well, that's what the Premier says

today.

PREMIER WELLS: The record is there.

MR. SIMMS: Well, I never heard the Premier mention this

before. Talking about the record that's there, you never told anybody before

that you had put together some draft ideas and thoughts for legislation on this

whole idea. You didn't mention that before.

PREMIER WELLS: I don't boast.

MR. SIMMS: You don't boast. You don't? Since when? You're

setting a new example are you? I look forward to the rest of the three years

that the Premier has in office, not to hear him boast. So, Mr. Speaker, make no

mistake about it, this has always been a pet project of this Premier, no

question about it. Now he says: no, I can't boast about some of the things I did

before in the past, but that is the real truth of the matter and that is why

he's the one who is taking the lead on the issue and not the Minister

responsible for Public Utilities. You would think the minister over there would

be the one introducing the legislation. You would expect, if the Premier had the

confidence in the minister, that he would be asked to present that legislation.

So the Premier, in my view, is merely trying to accomplish today, as Premier,

what he couldn't accomplish when he was Chairman of Light and Power. That's the

point I make.

Mr. Speaker, on the issue of industrial rates,

section 3(a),

- that whole

section 3(a), pages 7 and 8 - the provision that phases out the

contribution of industrial customers to the rural electrical rate subsidy is a

benefit for industrial consumers, no question about it and it is one that we do

not disagree with. In principle we don't disagree with that but the point we

make and the provision that is in this legislation is not because of the concern

with the cost of electricity for industrial consumers, that is not the reason

that provision is in there. In my view its because the government wants to

soften, in the early years, the impact of the higher increases that might be in

place if that subsidy wasn't there, if that subsidy wasn't removed. It's the

intent of the government to try to soften the increase in higher electricity

costs that would inevitably result from the sale of Hydro. That is the purpose

for having it there, it is not simply to provide some benefit to industrial

consumers.

There are three principles, Mr. Speaker, for determining

electricity rates; one, is the forecast costs that would be put forward;

secondly, it is the ability of a utility to maintain a good credit rating; and

thirdly, a just and reasonable profit for the shareholders. Those are the three

basic principles for determining electricity rates. Up until now Hydro rates

were determined on the basis only of the first two principles, that is the

forecast costs and the ability to maintain a good credit rating. The electrical

rates charged by Newfoundland Power, which as we all know is a private company,

were however based on all three principles, including the profit to the

shareholders, Mr. Speaker.

Therefore, Mr. Speaker, what we have seen and what we are

going to see as a result of this activity -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: It's too bad the Minister of Finance didn't

take the Premier's advice and stop interrupting and everything, he'll get a

chance to speak in the debate - but those are the three basic principles. The

big difference here of course is that Hydro did not have to satisfy shareholders

but new Hydro will now have to satisfy their shareholders.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Yes and their bondholders too in Newfoundland

Hydro's case but in the case of Newfoundland Power the big group that they had

to satisfy were their shareholders and that is the same group and the biggest

group that the new Hydro Company will have to satisfy. So, Mr. Speaker, what

that meant was that the electricity rates charged by Newfoundland Power, because

it had to satisfy the shareholders, were considerably higher. The rates were

much, much higher than the Hydro rates ever were and much higher than those

approved by the Public Utilities Board.

Mr. Speaker, I made a point at a press scrum yesterday, it is

in today's paper, a great headline by the way, which tells the story I think to

everybody if you took the time to read today's headline; "New electrical act

burns consumers" : says Simms, and that is precisely what will happen. I made

the point that there will be in this legislation a removal of the rest of the

subsidies, the rural subsidies that are in place. I said that in fact, that was

going to mean in the end, in the long run, higher electricity costs for the rest

of the consumers in this Province. Premier Wells says, as usual: that is utterly

false. It is either utterly false or its wrong or its inaccurate or he must

correct the hon. member, in this case he said I was utterly false. It was

utterly false that the cancellation of the subsidy to rural consumers in this

Province would not mean that the rest of the consumers would have to pay higher

rates. How so? Well I said that it would and he said that it would not because

the Public Utilities Board has to deal with it, there has to be a hearing.

That's his explanation for saying what I said was false. Now can you believe

that for a minute? Of course, there would have to be a hearing of the Public

Utilities Board. I don't know why the media didn't ask him that but -

AN HON. MEMBER: Oh, oh!

MR. SIMMS: I'm frustrated when I see that kind of

response from the Premier to a perfectly legitimate criticism of this

legislation because of the removal of the rural subsidy. It is going to mean

rate payers are going to have to pay higher increases in their electricity

rates. The Premier says that is false because the subsidy for consumers would

continue at the same level unless and until the Public Utilities Board has a

full hearing. They have hearings all the time on electricity rate increases.

That is how silly and weak the Premier's arguments have become.

Then, Mr. Speaker, I made the point that in this legislation

as well the act will provide for tax concessions for electrical utilities. Now

including Light and Power, and certainly for the new company, there will be

sizeable tax concessions in here, and I said they amount to $30 million or $35

million. I didn't know what the exact amount was. We had an estimate done. That

is from the federal 28 per cent corporate tax that the utilities now pay and

that this new utility as a private company would have to pay to Ottawa, and will

pay to Ottawa. Those monies come back to the Province and the Minister of

Finance gleefully takes that $30 million and throws it into the mix, general

revenue.

I said, under this legislation what will happen is that those

funds are going to be given back to Light and Power and Newfoundland Hydro.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: No, they are not going to be given back to the

rate payers. It is going to be given to the new company, and the minister knows

what I'm talking about. Don't mislead. It will go back to the two companies.

They will get a tax break, another tax break, significant. Not enough to give it

to the new Hydro company, but they are also going to give it to Light and Power,

which is what they had to do.

AN HON. MEMBER: You (inaudible).

MR. SIMMS: Yes, I brought that up, because you couldn't

do it for one and not for the other. I say to the minister, just listen to this,

I said that will mean $30 million, $25 million, out of the public treasury given

to those utilities, and the Premier says: That is a misrepresentation. Why is it

a misrepresentation? He says it is a misrepresentation because the millions of

dollars will be directed back to the consumers. Which is the same little flick

the Minister of Finance tried to portray out there. It flows back directly

through the utilities to reduce the price of power.

AN HON. MEMBER: Right on.

MR. SIMMS: Okay. Let me ask the minister now, while he is

in the mood to applaud, will he not acknowledge that the $30 million - let's use

that as the figure - will be taken out of the general revenues of the Province -

AN HON. MEMBER: Oh, no!

MR. SIMMS: Oh no? Where are you going to get the $30

million? It comes from the federal tax that comes back to you. It comes out of

your general revenues. You will give the utilities $30 million. So they will

keep the increases in electricity down in the early few years, at the early

stages so it won't be noticed, that is the intent and that is the plan, and the

Premier says: No, that will go back to the consumers because the electricity

rates won't be so high.

Who in the name of heavens is going to replace the $30

million out of general revenue? Who? I will tell you who. The taxpayers will

replace it.

SOME HON. MEMBERS: Hear, hear!

MR. SIMMS: Mr. Speaker, so who are the taxpayers? Who are

these weird, strange people out there, the taxpayers? You know who they are?

Taxpayers are public servants, they are us -

AN HON. MEMBER: They are the rate payers.

MR. SIMMS: - every single person in this Province. They

are the rate payers, you are correct, the Minister of Finance. So you talk about

a trick? You talk about slick? You talk about smooth? That is what is happening

here, Mr. Speaker, with this piece of legislation. The Minister of Finance and

the Minister of Energy and the Premier want us to stand to a person on this side

of the House and support this legislation? Not on your life.

AN HON. MEMBER: I will explain it.

MR. SIMMS: You will explain it, yes. Like you are trying

to explain the threat you've made to the public servants of the Province on

severance, I guess. You got yourself into a dilly of a pickle on that one. Why

don't you come out and announce immediately you are not going to do that. Put

these people out of their anxiety. That is terrible for you to be doing it that

way, absolutely terrible.

Anyway, Mr. Speaker, so what will happen here because of the

reduction of that subsidy is in fact there will be an increase in the cost of

electricity for all consumers in this Province. We all know that and we

understand it, even members opposite understand it and know it.

AN HON. MEMBER: Oh, oh!

MR. SIMMS: Well, we don't know. We don't know how much it

will be.

AN HON. MEMBER: Yes you do.

MR. SIMMS: I can only go by what the Premier says - well,

let me use his own leader's comments. The Premier talked about 1.5 per cent I

think for the first five years on average. But what he said also was that this

is an increase above and beyond the normal increase that the Public Utilities

Board may apply, under normal circumstances. Every year you go to the PUB you

get rate increases, because you can factor in all of your costs, and in the

legislation we are going to debate tomorrow I will point out there are a lot of

other things that could be factored in that would not normally be factored in.

You talk about a sweetheart of a deal. You talk about tax holidays. You talk

about concessions. You wait until you go through that privatization legislation,

Mr. Speaker, and you will find there is a lot of it there.

Another point I want to touch on is dealing with essential

employees,

section 3(d), page 9 of the Act. Now in my own, humble view, whatever

that's worth - not much to the members opposite, but to others it is - in my

humble view, I say to the President of Treasury Board, I really have a problem

because I think it is essentially inappropriate and not proper to have a group

of people, management group, administering regulations such as these, electrical

distribution power regulations, and other matters, Public Utilities Board -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: That isn't what I am saying. I didn't say

that. Just wait until I finish now. Don't get too anxious. What I am saying is

that I think it is essentially incorrect and inappropriate to have the Public

Utilities Board make the determination as to what are and what are not essential

employees. That is the kind of an issue -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Well, the Labour Relations Board. They are

made up of people representing both sides of the issue, plus a neutral chairman.

The Labour Relations Board deals with matters like that. Who on the Public

Utilities Board would have the expertise or the training and the familiarity as

the people on the Labour -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: That's right. They would know nothing about

that sort of thing. As wonderful as they might be, as individuals and persons,

it just doesn't make any sense, and I just make the point because I don't think

it's appropriate. I don't know how the union feels about it down there. They may

agree; they may have some problems with it. I haven't had a chance to talk to

Mr. Clarke about it, but it seems to me that it is inappropriate to give this

kind of power and authority to a group of people who are basically sent there to

listen to presentations being made about rate increases and the like.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: What is the labour relations -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Pardon? I'm sorry, I can't hear the hon.

member.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: I say to the Member for St. John's South,

surely, with his knowledge of the labour movement, surely he supports the

concept of the Labour Relations Board dealing with matters concerned with labour

relations, such as designating essential employees, and those kinds of things,

because the people on the Labour Relations Board have people who have some

background, or some expertise, or some training - the union representative, the

management representative, and a neutral chairman - but the Public Utilities

Board is not there for that purpose.

MR. MURPHY: Are you saying the Public Utilities Board

would not be manned by people who don't understand what is essential in the

electric field?

MR. SIMMS: Yes, that's quite possible.

MR. MURPHY: Oh, come on.

MR. SIMMS: Well, listen. I remember when I was in

Treasury Board. You don't just sit down and argue what's essential and what's

not essential. It becomes a lot more complicated and complex than that. The

Minister of Finance can, I am sure, confirm for the minister, or the Member for

St. John's South - not yet the minister, one who hopes to be the minister, I

suppose - the Minister of Finance could tell the Member for St. John's South

that the question of determining essential employees is not just a simple matter

of saying: Oh, yeah, here is the argument; here is that argument. Okay, you're

not essential, or you are essential.

It's not as simple as that. It's very complex, and he knows

that. So my point simply is that I think it's inappropriate. If it's acceptable

to everybody, well then that's fine; I guess you can't do much about it, but I

just think it's an inappropriate function of this Public Utilities Board. It is

now a function of the Labour Relations Board in the most cases, and they have

those representatives who are neutral and, in the case of a chairman, usually a

neutral chairperson, and that's where the responsibility should lie. I just want

to make that point, Mr. Speaker, in passing.

Another point I would like to make on the - I don't know how

you would pronounce it, or how it's been referred to in this debate - the

PUITTA. It must be a way of saying it short. How do you say it?

AN HON. MEMBER: PUITTA.

MR. SIMMS: So I can call it PUITTA, I say to the

minister. I thank the minister.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Yes, I did already mention it, but I hope the

minister won't be offended if I mention it again.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Oh, yes, I do have other comments, but I want

to repeat once again, because I'm not sure the Member for Fogo even understood -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Mr. Speaker, it's not hard to tell when the

cat is away how the mice will play. When the Premier was here - he even thanked

us at the end of his speech for remaining so attentive and listening and being

quiet. Ever since I've stood - and I shall report this to the Premier, I tell

members opposite, I will give him the names, I will pass along your names. I

will tell him about the interference and the interjections. The hon. Member for

Fogo needn't go out and get his hair cut or anything expecting a call. He is not

going to get the call. Not going to get it. He is down on the bottom. It is too

late for him now to go on a diet. He is not getting into that Cabinet.

Anyway, I want to repeat it for the Minister of Finance

because I firmly believe that is nothing more than a tax break for the new

company. I firmly believe it will relate to increased electricity costs, down

the road in particular, for all consumers in this Province.

AN HON. MEMBER: A decrease.

MR. SIMMS: No, an increase, not a decrease. It will mean

a decrease for industrial consumers, but I will tell you, it isn't going to be a

decrease for householders in this Province. If the Minster of Finance gets up to

try and argue that point, I mean, surely he doesn't think people in Newfoundland

are that green and that stunned that they wouldn't see through that kind of an

argument.

Maybe that is their tactic, maybe that is their plan, to try

to now convince people that all this is not going to mean an increase in

electricity rates. I can see it now. I can see the brochures which I know are

being developed now, I can see the television ads which I know are being

developed now, I can hear the radio ads which I know are being developed now. To

try to sell this package, to try to ram this down into the throats of the people

of Newfoundland and Labrador. Because they've taken such a beating on the issue

they figure the only way they can do it now is to spend tens of thousands of

dollars of taxpayers money in some kind of a publicity campaign and ram it down

their throats. I can see it coming.

AN HON. MEMBER: Oh, oh!

MR. SIMMS: It is too bad, Mr. Speaker, that the Minister

of Finance doesn't show the same temperament that we on this side show when he

speaks. We don't interrupt him. The boss is gone. The cat is away, the mice will

play. I say to the Premier, scratch the Member for Fogo off your list, sir, when

you are thinking about your replacement. Scratch him off, he has been

interjecting the entire time I've been speaking. Not been very courteous at all.

The argument that I make on the PUITTA or PUITTA clause, as

the Minister of Finance recommended I call it, is simply that what is happening

is that you are taking it out of one pocket - or it stays in one pocket, I guess

- the utility, it will be taken out of the other pocket, the taxpayer. It is

deception is what it is.

The Premier missed the argument. I know he won't like it and

he will screw up his face and everything like that. The fact of the matter is

the rate payers will pay in the end. He tried to defuse my argument or my

criticism yesterday in the newspaper today, I noticed, because he says that it

was a misrepresentation and that the benefits, the $30 million or whatever the

amount might be that goes to this new company and Newfoundland Power, will feed

back directly through the utilities to reduce the price of power. What he didn't

say is where the $30 million is coming from. It is coming from the general

revenues of the Province which you have received back from Ottawa, so who pays

for that? The taxpayer. Who is the taxpayer? The taxpayer is the rate payer in

the Province. So what is the difference?

Either way, the people of the Province are going to pay. This

is only a short-term thing anyway. In the end, the longer it goes on, as we move

towards three or four years after implementation, we will see what really is

going to occur.

Mr. Speaker, moving to

Part II of the legislation. I just

want to touch on some points in

Part II. The first point I want to make is that

I think perhaps

Part II is even more significant for what it doesn't say but it

has the potential to be more significant than the other parts of the

legislation. On the surface it appears

Part II simply gives the Public Utilities

Board the power to allocate and re-allocate power from one producer to another,

on the surface, that is what

Part II looks like. However, there are other

provisions, clauses 7 and 8, page 11, which allow the Cabinet to ask the Public

Utilities Board for an inquiry into the adequacy of the supply of power to

producers and retailers in this Province. In that event, the Public Utilities

Board may re-allocate power and may require a producer to make its transmission

and distribution plant, its equipment and its facilities, available for the

transmission and distribution of the power.

Now I want, and I would hope that some time during the debate

the Premier or whomever he might designate, somebody, would clarify for us

during the debate the intention of those particular sections to which I refer. I

have a reason to raise it, I won't say what the reason is yet because I want to

hear clarification and an explanation; we didn't hear it when the Premier

introduced the bill, that specific point, I want to hear that.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Well, will it for example, allow the Public

Utilities Board to transfer power generating and transmission assets from one

private utility to another?

AN HON. MEMBER: No.

MR. SIMMS: Absolutely not.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: It does not say that in the clause though.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: But it would not allow for the transfer of

power generating or transmission assets from one private utility to another,

right?

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Would it for example, and if it is not in the

clause maybe there should be some consideration to making sure that that doesn't

occur in the future. Would it, for example, allow the Public Utilities Board to

transfer power generated on the Upper Churchill for example, to supply

electrical demand in this Province?

SOME HON. MEMBERS: (Inaudible).

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Well, the question was, would it give the

authority to the Public Utilities Board to transfer power generated on the Upper

Churchill, that is what I am asking and he said he would check and get -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Well that is a matter for debate. We will see

what the answer is first; I don't want him to just toss it aside by saying if it

did, it did and if it doesn't, it doesn't. That isn't the issue, we need and

deserve a better answer to the question than that so I hope he will further

pursue it.

Now, Mr. Speaker, I want to make a few comments on

Part IV,

section 23 of the legislation as well, and that is the 20 per cent ownership

question that I heard the Premier refer to, and try to explain I guess, during

his introduction of the legislation. For example, the only argument that

Newfoundland Power would have to present to the Public Utilities Board in order

to ever get control of new Hydro, the only argument is that it would be more

efficient and less costly for the two companies to merge, would that be

accurate? That would be the major argument? I don't want him to answer it now

but -

AN HON. MEMBER: (Inaudible).

MR. SIMMS: 20 per cent role?

AN HON. MEMBER: No, (inaudible).

MR. SIMMS: No. Nothing would prevent merger of

Newfoundland Power for example with the new Hydro company sometime down the

road.

PREMIER WELLS: If there were no limitation at all or if

we put in just a simple absolute prohibition against any one company owning more

than 15 per cent, if we just left it at that. No one person or company can own

more than 15 per cent in it than there would be nothing than would prevent

merger of the two companies. That still would not prevent merger of the two

companies.

MR. SIMMS: Okay, that is the question I wanted answered

and that is the answer I wanted to get from the Premier. There is nothing in the

legislation that would prevent the two companies from getting together some time

down the road. Nothing in this legislation would prevent that from occurring.

That is an interesting observation, I guess, and will no

doubt plant some questions.

PREMIER WELLS: We certainly (inaudible)

MR. SIMMS: Well, we would not.

PREMIER WELLS: We felt it should be merged to begin with.

MR. SIMMS: Yes, I know. So this is another way to do it

then, is what the Premier is saying.

PREMIER WELLS: (Inaudible).

MR. SIMMS: Well, we will leave it out there now and we

will see what people think of it. I also, in terms of the legislation, on the

points I have made on the legislation, as I said at the beginning and the

Premier may have gone by then, that I want to save most of the points I want to

make on the privatization, the overall privatization question for tomorrow

morning when he brings in the other piece of legislation.

I have said that in my view, in our view, this legislation is

obviously related to the privatization of Newfoundland Hydro. We are firmly

opposed to the privatization of Newfoundland Hydro, therefore we will be

opposing this legislation as well, Mr. Speaker, because it is all interrelated

and in order to give the government an opportunity, at least, to reconsider its

approach in this entire question, I asked yesterday, I think it was, in the

House of Assembly in Question Period, whether the Premier would consider holding

some public hearings to give people a chance to have some input. The Premier

said a firm, flat, no.

Now, Mr. Speaker, there are a lot of people out there who

really have a hard time understanding the logic behind that answer because the

Premier has shown on occasion in the past his willingness to allow for public

consultation and input through public hearing processes on issues dealing with

accounting, for example, which is going on right now, public hearings, a public

committee of the House listening to the public input, the smoking issue, a very

important issue. He had no problem sending a committee around the Province to

hear people's views on that. The electoral boundaries, for heaven's sake, not

only did they send them around once, they sent them around twice.

AN HON. MEMBER: And probably again.

MR. SIMMS: Maybe again. Who knows? I dare say at a cost

of - I do not know - I think their budget the first time was a couple of hundred

thousand dollars, if I remember.

AN HON. MEMBER: $250,000, I believe.

MR. SIMMS: There was certainly in the area of $250,000

spent on that, so I want to ask the Premier why he would not be prepared to

consider having public hearings on this particular piece of legislation, one of

the most significant issues to come across the desk of anybody in the House of

Assembly in years, why he would not consider allowing the opportunity to the

public, and to the people, to have their say, to have input, instead of planning

and plotting another public relations program in their secret agenda?

I do not know if the Premier addressed this in his opening

remarks because I did not hear them all, but we hear that the government is

intending, or is at this very moment planning a public relations campaign,

getting the brochures ready to go to every household in the Province, planning

the advertising campaign on radio, the advertising campaign on television, and,

I suppose, in the print media. I do not know. I just hear it. I was saying that

even though the government is not prepared to have public hearings with a select

committee of the House, which would cost a heck of a lot less, he is prepared to

spend tens of thousands of taxpayer's dollars, if it is true, and I do not know

if it is, but if it is true, tens of thousands of taxpayer's dollars to try to

ram this down their throats, the people of Newfoundland, when he has not even

given them any chance for any input or consultation. It is not logical. It does

not jive with other actions he has shown in the cases I have talked about.

He even referred to it a couple of days ago in the Throne

Speech, about how he spoke to the federal government and he felt very strongly

that we should not be going out and telling people: here it is, take it. We

should be consulting with the people. Yet when you ask him to use that same

approach on an issue like this particular one he says a flat, no. So, what is

the reason for that? Why the stalling on that particular question? Why not allow

for some public input and consultation? Why not allow the public to have a

chance? Maybe the government will have a better chance of explaining its side of

the story, because Lord knows they've done a terrible job up till now. I don't

think there's much denying that, or much argument about that, unless there is

some other agenda to try to force this thing through the Legislature as fast and

as quickly as he possibly can.

As a matter of fact, Mr. Speaker, we received the legislation

two days ago and here we are into second reading already. We received the other

bill yesterday, here we are into second reading on that one tomorrow. It's

pretty obvious they want to speed it up. I thought I heard him on one of the

newscasts saying that he didn't expect to get this process completed by the end

of March. Maybe he could clarify that, or the minister, who