., l PROVINCE OF NEWFOUNDLAND AND LABRADOR HOUSE OF ASSEMBLY Volume 1 Number 125 4th. Session 34th. General Assembly VERBATIM REPORT TUESDAY, JULY 21, 1970 SPEAKER: THE HONOURABLE G.EORGE W. CLARKE

July 21 1970 Tape 1332 page li The House met at 10.30 a.m. Mr. Speaker in the Chair. MR.SPEAKER: Before we take up routine Orders of the Day,! take the liberty of drawing the attention of the House to the fact that we have in the galleries in the visitors galleries today some fifty or more Girl Guides, half of whom are from outside of the Province and the other half from our own Province. They are celebrating their, I understand they are celebrating their sixtieth anniversary of Guiding in Canada.

I know that I speak for everybody when I give them a hearty welcome to this House and hope that their visit will be enjoyable. (Applause) NOTICE OF MOTION: MR.T.BURGESS(Labrador West): Mr. Speaker, I give notice that I will on tomorrow move the following Resolution:

WHEREAS there is a great deal of dissatisfaction with reference to the recruitment of workers for the Churchill Falls Project; A!ID

WHEREAS there is a great deal of dissatisfaction with respect ~o the treatment of workmen at Churchill Falls, including in connection with the administration of justice at Churchill Falls; AND

WHEREAS it appears that the present Union contracts in effect at Churchill Falls and the enforce- ment of those contracts on the workmen involved is not resulting in effective protection for the workmen involved; BE IT RESOL~;o that this House request the Government to appoint a Commission of Inquiry to investigate the labour situation at Churchill Falls and the administration of justice in connection therewith and to report with recommendations as soon as possible. ANSWERS TO QUESTIONS: HON.J.R.SMALLWOOD(Premier): Mr.

Speaker, I table the answers to the following questions: Nos. 249,284,285,286,287, all in the name of the bon. member for St. John's West; No. 289 iu the name of the han. Leader of the Opposition. ~ Nos. 310, 337, 338, 348 all in the name of the member for St. John's West. 8027

July 21 1970 Tape 1332 page 2. ORDERS OF THE DAY: MR.MARSHALL Mr. Speaker, I should like to answer the hon. Minister of Social Services and Rehabilitation,in the absence of the Minister of Mines and Resources.if he could supply the House with details of a possible re-opening of the mines at Bell Island including the name of the proposed operator and such other details which were mentioned by him publicly yesterday. MR.SPEAKER: I suggest that this question go on the Order Paper. MR.CROSBIE: Mr. Speaker, I have a question for the Minister of Finance.

Is it correct that the Province has just floated, or within the last few days floated a $15 million bond issue? And if so would the minister tell us what the terms of the bond issue were, the interest rate and the term of the bonds at artd so on. AndAwhat price it was sold? MR.JONES: Yes, Mr. Chairman, as a matter of fact we floated a $15 million bond issue yeaterda~ on the Canadian market. I am not quite sure of the details, we do not know from Aimes & Co. yet. 1t was in two sections. One

section of the one,trans as they call it,of the bond issue has a retractable phrase in itJthat can be recalled in five years and the other will go for the full term of twenty years. The respective interest rates was nine and three-quarters and nine and one-quarter. I will be in a better positio~ probably later today. or tomorrow,to give the specific details. We started the issue yesterday morning and it was sold by yesterday afternoon. I am waiting for word back from our financial advisers as to the exa~t details.

I will be quite happy to give the House the details when I get them in a matter of a few hours maybe. ORDERS OF THE DAY: MR.BURGESS: Mr. Speaker, I would like to address a question to the Minister of Justice. Could the Minister of Justice inform as to the present status of the two ?rovincialpeople who were discharged from Churchill Falls for allegedly being the cause of a disturbance and whose case was subsequently 8023

July 21 1970 Tape 1332 page 3. dropped in Grand Falls,not too long ago. Have these people been returned to the site? MR.CURTIS: Mr. Speaker, in answer to that question;we are not returning them to the site.I do not know whether they got back on their own. MR.BARBOUR: Mr. Speaker, I would like to direct a question to the Minister of Labour: Is there any negotiation going on between Parker & Monroe Limited and the employees? MR.KEOUGH: }lr. Speaker, not that I am aware of at the moment. Negotiations had been going on since last December. As of the moment they are stalemated.

There are no negotiations that I am aware of. MR.CROSBIE: Mr. Speaker, could the minister tell the House whether or not the Govert~ent has made a decision to take over the distribution of beer from the breweries of Newfoundland?- MR.H.COLLINS: Mr. Speaker, before we get on with the Orders of the Da~ I have a question for the Minister of Municipal Affairs or the Minister of Community and Social Development. I do not know to whom I should direct it~ hut poesibly one of them could answer. When is it proposed to call tenders for the second phase of the Bishops Falls water supply? MR.DAWE: Mr.

Speaker it is under advisemen~ I do not know exactly. It is in the negotiating stage. We hope within a week or two they will call tenders for the second phase of the development. Adjourned debate on Bill No. 94: MR.BURGESS: Mr. Speaker, just very briefly,the amendments before the House, on the Come by Chance Agreement,while they do improve the original agreement to some degree they are in no way adequate,to my way of thinking, cannot supp~rt the principle of this Bill. I therefore MR.COLLINS: Mr.

Speaker. first of all Sir, let me congratulate the hon. members on this side of the House who did such a maginficent job,in my opinion,and it certainly shows the knowledge that those people have. ln my opinion they have 8029

July 21 1970 Tape 1332 page 4. done a good job in bringing the Opposition's case to this House and to the people of Newfoundland. Now, Sir, there is not too much I can say to add to what has already been said. I would suspect that anything I might say would be more or less rehash• of what has already been expounded. However, I would like to go on recor~Mr. Speaker, as being opposed to this particular amend- ment,for two reasons.

First of all there has not been adequate information tabled or made available to members on this side of the llouse for us to intelligently be able to reach a conclusion, reach a decision. This, in my opin~on,Sir, puts us in a very awkward position because by virtue of that fact we find that we cannot in all conscience vote for it. ~e also find it difficult to vote against it because I can see that the Premier from here on will be accusing us all of being anti-Newfoundland, of being unpatriotic, being everything but something good.

However, as I said;without the information which we need we cettainly cannot reach an intelligent conclusion and because of that we find that we must oppose-it. Sir, as I sai~l do not want to rehash what has been said in the past couple of days.

I am sure that all of the members would not want to hear that. 1 would just say,in my few remarks,that possibly we could all be assisted to a great extent,certainly be assisted to the extent whereby we could look at this thing from an intelligent point of view~if the Premier would agree - I know this is a dangerous thing to say possibly but I wonder would the Premier agree to having a secret session or closed session,whatever you might call it, of the House of Assembly,with all the members present,and tabl~ all of the information which the Government has~ Now on that basis I am sure han. members would be in a position,after a day or two days,after studying the various agreements which have been signed or about to be signed, On that basis we could reach a conclusion and be able to vote intelligently.

Now I know that is not a popular thing to come up with,because people generally resist the thought of a closed session anywhere,either in a council meeting or in the House of Assembly or any other governing body. But in the 80~0

July 21 1970 Tape 1332 page 5. circumstances,since the Premier is so adamant that he will not table any of ' the agreements - he has said - MR.SMALLWOOD: We tabled two here yesterday. MR.COLLINS: The two that were tabled here yesterday Mr. Speaker, tell us very little. The fact - MR.SMALLWOOD: I ta~led-four- .:. ... MR.COLLINS: There are a lot of agreements that we do not know anything about and the Premier has said that he will not table them. He has almost gone so far as to say that he would not trust hon. members on this side of the House with some of the information.

And he always hides behind the smokescreen that,were the information made available,then competitors of the oil refinery at Come by Chance, Shaheen's group competitors,would be given an unfair advantage. f course,as I said;there is a smokescreen and a red herring,if ever I ~aw one. I would challenge the Premier now,Sir, to consider what I have said and,in a private session of the House,make all of the information a't'ailable, so that all hon. members can study it and,on that basis probably,we can reach a more intelligent conclusion.

Until that is done,Sir, I will have to take the position,as has been taken by hon. members on this side of the House 1of voting against it. In doing so, I know we will be criticized as being against jobs and against Newfoundland and every- thing else,but I consider myself to be just as patriotic a Newfoundlander as any member on the opposite side, certainly just as interesting providing jobs for Newfoundlanders. I think that the people of Newfoundland will understand and agree with that. Until we have more information Sir, we must oppose the amendment. MR.BARBOUR: Mr.

Speaker, I am just going to take one momen~ if I may,Sir. at My district is only about two hours~the farthest from Come by Chance. This means that when the oil refinery becomes a reality and it will, there is no doubt about lihat, a number of my constituents will be looking for .1obs and a large number of them,! am sure~will find them because it is not only 8031

July 21 1970 Tape 1332 page 6. the oil refinery it is the other chemical complexes that will be added to Come by Chance as the years will come. Because of that.Mr. Speaker, it is not only the five or six hundred people who will find employment after the project is buil~ and starts, l.t means that they will be feeding the mouths of many more.- This means it is not only the four or five hundred people who will be finding work,they will be feeding the mouths of their families, ~ny hon. member in this bon.

House who-has the audacity to stand up on his feet and not say that it is going bring employment to the people of New- foundland is not grown up. Something must be wrong with him. 1 was amused at the hon. member for Humber East. Lukewarmly he did say this amendment has something in it but be could not go all the way and support it. I was very,very intrigued with the hon. member for Burin,who said that the Government, the Premier of this Government,was afraid to go to the Province because he would not get approval. Sheer nonsense. ridiculous, foolish, silly, stupid MR.H1CKMAN: Try it!

MR.BARBOUR: Try itl 1 hope to God he would try it and you would get your answer. The hon. member for Fortune said~ when he was in England (I wish 1 could get a trip to England, Mr. Speaker) the hon. member said; I like to draw fire, I like to draw fire. The next contract, no,it will be the signing up of the contract that will be the end of it. Mr. Speaker, the bon. member for Fortune said when he was in England, people said that they were very happy to know that the Conservative Government had won. But the posters did not say this, the straw vote did not say this, public opinion did not say this.

Public opinion had it,prior to the election,thet the Labour Party would lead,under - MR.EARLE: The people were delighted the first time a straw vote - MR.BARBOUR: Mr. Speaker, you have had your say, I am having mine -Mr. Speaker, they are now saying that this party,the great great liberal Party, the Whigs are saying,Mr: Speaker, that we are finished,if we go to the country and call an election. 8032 ,

July 21 1970 Tape 1332 page 7. MR.NEARY: The member for St. John's West resign this morning? MR.BARBOUR: Mr. Speaker, I am coming to him later. I can assure every bon. member in this House that the working people of this Province do not care how much anything cost if, by it being put there, they can find employment. Any man, any hon. member of this House,who will stand on his feet and try and bar a man from getting a job,again I say is not grown up. The hon. member for St. John's West said he was going to resign and he was standing on this by-election concerning the project in Come by Chance.

I know the people of St. John's West. I know that little Bonavista Bay lives in St. John's West. And I know that little Bonavista Bay will support this project,the same as the other forty districts in Newfoundland will support it. I am quite surprised that the member for Gander, an outharbour man like myself - who can - I am proud of it too but I am not proud of the hon. member.who stood on '1is feet just a few moments ago, the way he talked, I do not mind the junior, I do not mind the man who is not wet behind the ears,from St. John's East. I do not mind him because he has a lot to learn.

But by the time he is in this House as long as I am,and that is a little over a decade, it is eleven years, he will find out who the people want. He will find out which is the best admimistration for Newfoundland. That Mr. Speaker, is not the Whigs , that is the Liberal Government, H any hon. member in this House thinks that Come by Chance is going to be the downfall of the Liberal Government in the next election,whenever it is called-is making the mistake of his life. ' AN .HON .ME:IBER: Prove it. MR.BARBOUR: We will prove it when the election is called - take off that cap .

We will prove it when the election is called, Mr. Speaker, I said I would not tetard the progress of the House. Mr. Speaker, as I said many times,he is my member I am his constituent bwt I did not ¥ote for him. Mr. Speaker, I just want to say this I am very p~eased with this amendment. I know the legislation will pass. I know in September a number of people will 80~3

July 21 1970 T.ape 1332 page 8. be employed. year- I know in October. November,December, and all through the MR.WELLS: What year? MR .• BARBOUR: This year 1970 and 1971 and the years that lie ahead. I am very happy indeed, indeed, indeed to support this legislation. So, Sir, 8034 ..

2 I July ~. 1970, Tape 1333, Page 1 apb MR. SPEAKER: Is the House ready for the question? If the hon. the Premier speaks now he closes the debate. HR. s·."ALLWOOD (J. R.) : Mr. Speaker, I have to say,in the first place,that I am espe •!ially grateful to my l.!olleagues and other firends, on this side of the House. for their patience and fo~ebearance in this debate. They believe strongly in this great Come by Chance project, and every instinct in them impels them to enter the debate in support of it. The pressure has been tremendous.

Everyone wants to ~et into the debate, to support this project, but, in the interest of shortening the debate,they have,for the greater part, allowed me to speak for them .. I thank them for it. The last time that this House was called to meet in mid-summer,was for the purpose of giving to this Government authority to float a large bond issue, to raise the millions of dollars needed to build a railway in Labrador, to Wabush Lake. We were trying to ~et the iron mines opened at Wabush at that time. We were very bitterly attacked, savagely attacked for that.

At one point I_, myself, was not actually physically assaulted but only escaped physical assault because someone stepped in between my would-be assailant and me. Well, we warded off all attacks of all kinds,verbal and otherwise, at that time, and we stuck to our guns. We got the House to give us the authority to raise that bond issue, to at build that railway the staggering sum,at that time,of seventeen and a-half million dollars. What was the result? The result was that the railway was built. The result was that a great iron mine was opened at Wabush Lake.

The result was that a great new town was built at Wabush Lake. The result was that a great new iron mine was opened and a great mill was built. What was the result? The result was that Labrador City was built. The result was that a mine was opened there too, three miles away. The result was that a big mill was built there as well. The result was that,in the two places .. between then and now, something between eight hundred million and one thousand million dollars has been spent.

As a result of the last callin~ of the House together in mid-summer,to give the Government authority to proceed with certain industrial developments, hundreds of men have been employed, tens of millions and hundreds of millions of dollars 80~5

.') ( July .sa, 1970, Tape 1333, Page 2 -- apb of wages have been paid out, and today this Province is,not immeasurably but vastly stronp.er because of our action,the last time we called the House to~ether in mid-summer. Now the Opposition opposed us the~ They opposed us strongly. The Opposition was wrong then and we were right, just as the Opposition are wrong today and we are right again.

A somewhat amusing feature of the present debate is the fact that,of all the persons now sitting on the other side of the House, of them all, when this project was first brought before the House,a couple of years or more ago, of all those who now sit on the opposite side of the House, only four; only three of those who now sit on that side of the House, only three voted against it. There was a fourth who voted against it, Mr. Ottenheimer,but he does not sit on that side or any side of the House at the present time.

Of all t•ho sit on that side of the Rouse at this moment, only three of the eleven voted against the deal, only three of the eleven. Two of those,on that side of the House, though they had just gone across a week or less than a week before, refused to vote against it. The hon. member for Humber East and the hon. member for St. John's West both refused to vote against the deal, Two years ago they refused to vote against it. The only people who voted against it,at that tim~ were the four members of the Opposition of .whom three are still here. One has resigned.

Two on that side of the House today are two hon. members who crossed the floor. Even though they have crossed the floor,they did not vote against the deal that was brought in here t"1o years ago. The hon. member for Burin and the hon. member for Fortune Bay voted for it. MR. EARLE: (Inaudible) - ------ MR. ~.ALU~OOD: They both voted for it. They could not have been against it or they would have left. Those who were against it left,but even they did not vote against it. Only three hon. members on that side of the House today,of the eleven only three voted a~ainst it,of the eleven. Now }'r.

Speaker, we have brought before the House tremendous imrpovements , tremendous improvements,running to tens of millions of dollars additional revenue for our treasury, tens of millions of dollars additional revenue over and above what they voted for two years a~o, and they tell us they

.11 July ~0, 1970, Tape 1333, Page 3 -- apb are going to vote against it. Truly, the Gods must be laughing on OlympusJ Now I am a little tempted to describe the Opposition's attitude,in this whole ~atter,as being the worst example that this House has ever seen,of wrong-headed antagonism to an industrial development project. I am tempted. However, I have to resist this temptation, I remember the history of the Tory Party and their friends,in all of the earlier proposals for industrial development, ~is present case is by no means the worst, not the worst, bad enough but it is not the worst.

So far as we can judge, the Opposition members, and their friends across the way,are really opposed to the Come by Chance project. As far as we can judge, they really are opposed to this Come by Chance project. As far as we can judge, they do give every appearance or almost every appearance of being sincere in their opinion that the deal is not a good one for Newfoundland. So felt the Opposition, so precisely felt the Opposition when the Grand Falls paper mill project was brought in by Sir Robert Bond. So they felt then. So they felt when the Corner Brook paper mill deal was brouhgt in by Sir \ Richard Squires.

They felt exactly the same then as they do now. So they felt when I brought in the Brinco, Churchill Falls project. They gave every appearance then,as they do nowpf being bitterly and sincerely opposed to it. Again,when I brought in the Stephenville,third paper mill project, they were opposed to it. In all of these projects,of large scale industrial development for Newfoundland,the Tories and their friends have always been true to their convictions and to the~r nature, that is, they have been opposed. Their record of persistent and consistent opposition is a perfect one - a flawless one.

It is without flaw- persistent and consistent and always wrong. Mr. Speaker, there is something quite amusing about the Opposition's point blank refusal to confroru the reality of the British Government's guaranteed loan being advanced by the syndicate of British banks. This loan of $125 million is for a period of eight years, and,throughout its whole life of eip.ht years, it is guaranteed,unconditionally,by the United Kingdom Government. It is not guaranteed by the Newfoundland Government. It is not guaranteed by the House of Assembly. It is not guaranteed by the any legislation of this House.

It is purely and simply a loan advanced by British banks and guaranteed by the British so::;?

.';2 f July 2~, 1970, Tape 1333, Page 4 -- apb Government 1 and this is the only guarantee. Yet, in the face of this fact, what do we find the Opposition doing? We find them ignoring this fact, pretending that it does not exist. Rather, we find them pretending that this is Newfoundland's money, Newfoundland Government moneyJ money advanced by the Newfoundland Government, pretending that it is money guaranteed by the Newfoundland Government.

We find them putting forth suggestions of other things that this same money might be spent on,just as though we had a choice between spending it on British made machinery and other articles for the oil refinery,on the one hand, or say; on the other, badly needed roads and school or municipal services. After all, if this is Newfoundland money. Newfoundland Government money, why not? If we have a choice,why did we choose to spend it on an oil refinery and not on roads and schools and municipal services and public needs all over the Province?

As one hon. member said; ''why not start a thousand little industries?" If this is Newfoundland Government money, if we are free to spend other it any way we like,as is hinted or even broadly said on theAside, why not, why not on anything that is needed and,God knows,many things are meeded? tfuy do we not take that $155 million, $125 million,guaranteed by the British · Government,and the $30 million that we lend ourselves, why not the Newfoundland Government take the $155 million and spend it on things that are so badly and admittedly badly needed?

Indeed, we heard that precise suggestion made by one hon. member of the Opposition, the member for St. John's East. The new member for St. John's, East said; (and I jotted down his words1 " after all, we are expending, we are" (and he emphasized the word '·are") ''we are expending $155 million of our dollars.' ' Now he did not underline the word "our" but he used it.

He said; underlining the word "are·~·we are expending $155 million of our dollars.' Again he said, ''$155 million of our money." "Our money," Again we heard the Leader of the Opposition say,and I quote him precisely~ · We have all heard hon. members stand up here in this House and read petitions asking for this little road here and that little road there, we have heard them,' ' he said, ''standing up in the House here, reading petitions, asking for little roads here and little roads there," with a strong implied suggestion, by the Leader of the Oppoaition,that it would be far better if we spent this 803[

21 . July 20; 1970, Tape 1333, Page 5 -- apb $155 million on such things rather than on the refinery, the sug~estion being that it is our money, it is Newfoundland money, it is Newfoundland Government money, ignoring the fact that it is money advanced by a syndicate of banks in England, guaranteed by the British Government for the very purpose described by the hon. member for Labrador West 1 here in this House yesterday, to create jobs in England.

Why is it that the Government of Germany, through Hermes, guarantees export credit1 If you go to Germany today - to West Germany, and place an order for machinery to be manufactured in Germany, the German Government will guarantee payment to the manufacturers,so the manufacturers in West Germany are glad to accept the order. They will fill the order, they will employ Germans, they will keep the factories busy, they will manufacture the machinery. ~~y? Because the German Government guarantees repayment of the cost of the money they put out. The French Government do the same thing. The British Government do it.

You know, Mr. Speaker,that the Canadian Government do it? The Canadian Government ~ill guarantee exports,!£ a Canadian manufacturer can get an order for the delivery of machinery in South America, in Africa, in Southeast Asia or anywhere in the world. The Canadian Government will guarantee payment of that money to the manufacturers. This is done to promote Canadian exports. This is done to create jobs in Canada, Similarly, the United Kingdom Government,through E.C.G.D., Export Credit Guarantee Department of the British Government,will p,uarantee money at five and a-half percent interest. ~by do they do it?

To help British industry, to give jobs in British factories, to keep Britain going. That is why they do it. The suggestion comes from the Opposition - they have never gone so far as to put it in blunt words and say;' look, take this $155 million of your money, of Newfoundland's money, of the Newfoundland Government's money, of the Newfoundland people's money, of the public money, take the $155 million and build roads with it.'' They have not said that but their words are capable of no other

interpretation. The powerful sug~estion is made that we have a choice,in the Newfoundland Government,of taking that $155 willion and spending it on roads and schools and one hundred other things or even a host of small industries, we can take that 1 that Britain will provide it for that purpose. 8039

:21 July ~. 1970, Tape 1333, Page 6 -- apb We know that.BTitain will provide it,as Germany will provide it, as France will provide it, only to create jobs in their own land,and that we have no choice. t-le take this $155 for an oil refinery or we do not ~et it. Now Mr. Speaker, we have heard some whimsical statements made by the Opposition, on the question of the Come by Chance project's profitability. The hon. gentlemen have been blowing hot and cold on this. They have tried to have it both ways. They cannot seem to make up their minds what it is they believe.

In one moment, or at any rate in one speech from one hon. member, they ar~ue that there will be no profits. They talk then ·Of the ghastly mess there would be when the project collapsed for lack of profits. At another moment, or at any rate in another speech from another member, we hear fearsome talk of the incredible profits that are to be made out of this great project. You get both from the same Opposition, in the same day. No profits,therefore,a mess, The Government of Newfoundland will be ruined, will be dragged down into disaster - disasterous ruin.

In the next breath 1 from the same side, on the same day,you get the su~~estion of incredible profits that this great project is going to make. One hon. member,across the way there,put it at $500 million profit. Another hon. gentleman,across the way, put the profit at over $1000 million, ln fact, he spelled it out even a little more precisely. He did not say $1000 million, he said one thousand and twenty million dollars, He went just over, he went across the line, he went just above the billion, the $1000 million profit.

From the same side, who claim that there ,. will be no profit, that the Newfoundland Government will be dragged down into disasterous bankruptcy! Now Sir, I will come back to that.

July 21st, 1'170 Tape 1334 JM - 1 MR. SMALLIJOOD: -------- ·· The han. the member for St. John's Centre, the Leader of the Opposition. who is not here .1t the moment, said, (and I took his words down) "A hur,h amount of our people's money,for a piddling few johs. A hugh amount of our people's money for a piddling few jobs.' ' Then he spoke of tl1ese piddling few jobs as being the return. the re\·mrd we get, the return, these piddling few jobs, the return for selling ourselves into what, selling ourselves into what? Into bondage.

The Leader of the Opposition thinks that going ahead with this great oil refinery project means that we sell ourselves, this Province sells itselfinto. bondage, Bondage to whom? He did not say. Bondage to what? He did not say. Just bondage, slavery, we become bond,men, slaves. Then,however,he got a little generous. He wanted to show that he was not one-sided, that he was big in his thinking, that it was not entirely black, the picture, not entirely black. There was a little glimmer of bright lining to the dark cloud.

I infer that from a remark he made, which I took down, lie said it in his own quaint way, and this is the exact quotation: 'There maybe $10.00 bill in this project now, it is not all black, it is not all bad. it is not all dark, it is not all dismal." He maybe selling ourselves into bondage but after all that is not the last word on it, He has another word to add and his other word is; "'there maybe a $10.00 bill or a S20.nn bill, coming to the Treasury,over and above what came under the old agreement. 1'here may indeed be a <';1(1. 00 hill or a <';~0 .on bill in it for the Treasury, comparecl with the old deal passed a couple of years ago.

There maybe a $10.00 hill or a $20.00 bill but it is not enough, it is just not enough. " This amount I have already given and I will repeat it, this amount, this Sln . nn bill or this S2n.nn bill that there maybe: 01e does not say there will be but there maybe. ' I am not sure though of the tone) this maybe a concession. I!e maybe admitting in fact that there \V'ill be a SFJ .On hill or a s~n. on bill, 'Ihe word he used vas .. ~fay" hut I think he said it in this tone, 1!ell. so what?

So there mayhe a $10.0n bill or a ~~n.n.fJ hill but there should be a s~n.nn hill or a ~sn.nn hill.· I think, in fact. that he was admittin~ that there would be a little come into the Treasury,over and above 1~hat carw in under the old agreement. 80~1

July 21st, 1970 MR. SMALLWOOD: Tape 1334 JM - 2 But his real feelings were shown, Mr. Speaker, in this remark, the Leader of ttte Opposition, "It might be." Now I have often been heard to describe Confederation as the greatest gift that God has given to the people of Newfoundland,next to life itself,which, of course, is the great gift, With­ out life what is the good of anything( But the greatest gift,next to life,is Confederation. I am know to believe strongly in that, This is what I believe,and I believe that a great many people share my view. But the Leader of the Opposition has something to add.

He says; and I took his words down, "It might be the greatest blessing to this Province since Confederation." )low you think he is going to mention Churchill Falls, ' the greatest blessing to Newfoundland since Confederation~' Confederation was the great blessing but the greatest blessing since Confederation, the greatest blessing to Newfound­ land is Churchill Falls? ,>No. It is Wabash City? No. It is Labrador City? No. It is the new.mines opened here in this Island? No. It is the building of Trans Canada Highway! No. You are wrong. You are not even getting warm. It is the building of a thousand new schools!

No, that is not it. That is not the greatest blessing since Confederation. It is the building of thirty new hospitals? That is not it. You are not even getting warm. What is the greatest blessing to befall Newfoundland since Confederation? Is it is the starting of the great university? Is it the fisheries college? Is it twelve new trade schools? Is it the technical college? No. Is it the building of 5,000 miles of new roads? No. Is it the paving of 1,500 miles of roads? No, that is not the greatest blessing since Con·.federation.

The greatest blessing, let me read it~ "It might be the greatest blessing to this Province since Confederation if this deal went down the drain." The death of this great industrial project at Come By Chance might be the greatest blessing to befall Newfoundland, to come to Newfoundland since the greatest blessing of all,the blessing of Confederation. Enough said on that. Now we had a statement from the new hon. member for St. John's East. I did a quick flip, to use a slang. ~y mind did a quick, quick flip and I said; ,, is my hearing getting to be defectivel ls my mind slowing? Did I really under- 80<12

July 21st, 1970 Tape 1334 JM- 3 MR. SMALLWOOD: stand him aright?" ·. I wrote the words down. The new hon. member for St. John's East, "We do not know if the refinery is feasible. We do not know and Wt! have nothing to show us. l..' e have nothing to show us." Well, Mr. Speaker, we have and the hon. gentleman has, he has something to show him, all hon. members of this House have something to show them that this project is feasible. They have the Jacobs report, the report of Jacobs Engineering. They know or at least they have been told that the Canadian Government examined it and approved it.

They know that the British Government examined it and approved it. AN HON. MEMBER: (Inaudible). MR. SMALLWOOD: Who cares? Who could care less, who could care less? He is not the Canadian Government. I know what he is better than the hon. gentleman knows. I know what he is,far better than the hon. gentleman has any idea of. I know all about him. AN HON. MEMBER: Tell us what he is? MR. SMALLWOOD: No, I leave that to those who know and,those who do not know, it perhapsAis better for their piece of mind that they did not. MR. Rot..'E: He did not have too much influence on the Canadian Government, did he? MR.

SMALLWOOD: ''We do not know if the refinery is feasible, we have nothing to show us~But the same hon. gentleman said 1almost in the next breath,something which shows that he really knows and that he knows, not only knows but knows well that it is a profitable enterprise. He said something that shows that he knows. Now try to put these two sentances together, try to reconcile them. "We do not know if the refinery is feasible, we have nothing to show us.· Shaheen will make a kit and caboodle." How can he make a kit and caboodle if it is not feasible? How can you reconcile these two statements?

How do you bring them together, how do you reconcile them? How do you get a balance~· ltow do you get a balance? AN RON. MEMBER: (Inaudible). MR. SMALLWOOD: We know what he gets. We know what he gets. Then he goes on to make it completely clear as to what he means with this sentence, "The Province gets absolutely nothing in return. The Province gets absolutely nothing in return, absolutely nothing the Province gets, absolutely nothing." 80~3 I .

July 21st, 1970 MR. SMALLWOOD: Tape 1334 JM- 4 I was astounded to hear the hon. member for St. John's West suggest to this House and,even now that I am repeating his words, I find it hard to believe that he actually said them,that Shaheen can put up the price of the crude being delivered to the oil refinery. He was showing us how it could happen that the Government of this Province would get nothing out of the refinery, proving the words of the hon. new member for St. John's East. Here are the two ways in which Shaheen could see to it that the Province would get nothing.

(1) He could put up the price of the crude, the crude oil coming from the oil wells,in on the great ships. He could put up that price on the crude being delivered to the oil refinery or, and he might have said "and/or" and in addition,he could do this or alternatively he could do it but what he said was "or~" He missed a chance there. Why should Shaheen limit himself just to putting up the price of the crude~ hy should he do that or why should he limit himself just to putting down the price of the finished product? Why should he not do both? If he can do one, if he can do each can he not do both?

If he can do the one or the other, can he not do both together and do us out of even more income;or he can lower the price of the finished product manufactured in the refinery? Now does the hon. gentleman not know, does he not know, does he not, does he not know that the crude oil has already been contracted for with British Petroleum,which is one of the world's two or three largest oil companies, which is controlled by the United Kingdom Government? Does he not know that there is a contract under which B;P. will supply the crude oil?

Has he not been toldl He has not been permitted to read the contract but many have read it. Does he not know that the contract is for a fixed price? Does he not know that Shaheen, even if he wanted to, cannot raise that price; with regard to the finished products of the oil refinery going out for sale to this airline and that airline and the other airline, to this great wholesaler and that great wholesaler, to this country, that country and the other country, does he not know?

Maybe this is hardly a fair question because he could very honestly say; "No, I do not know." If I were to ask him, "Does he not know that contracts, take·or-ol'y 80tl4

July 21st, 1970 MR. SMALLWOOD: Tape 1334 JK - ' contracts have been made, signed, sealed and delivered for the sale of the finished products for sixty-five, seventy or more per-cent of the output of the refinery,at prices fixed?" He could answer, "No, I do not know that': But I will ask him another question; "Has he not been informed of it?" I will go ontfurther and remind him of this fact,that UOP examined the contracts, rhey could not have written the report without doing so. UOP satisfied them­ selves that the contracts were solid,were bonafide.

The Canadian Government examined every contract and satisfied itself of the validity of them. The British Government examined the contracts and satisfied themselves of the validity of them. The syndicate of nine banks in England and Scotland ,headed by Kleinwort-Benson,whose Deputy Chairman, who actually was the man who did examine it for Kleinwort-Benson, is now to be the Chancellor of the Exchequer, probably~in the United KingdoaGovernment,and was the Chancellor of the Exchequer when that same party were in power before.

If UOP examined these reports, these contracts for the sale of the finished products of the oil refinery,to a number of airlines and wholesalers, on both sides of the Atlantic, at a number of seaports, if UOP examine them and report favourably on them, if the Canadian Government report favourably on them, after examining them, and the British Government examine them and accept them and they have a better ~~y than anyone to find out their soundness, through their ownership or ~~r eOntrol · of British Petroleum, one of the world's great petroleum companies, if the banks in England have the opportunity and embrace the opportunity and they are all satisfied and the Newfoundland Government, the Cabinet of this Province, for two days, morning and afternoon, for two days, examine these contracts, their lawyers examine the contracts and on all hands, on all sides, on both sides of the Atlantic, all the authorities concerned agree that these are strong and binding contracts; (

a) for the purchase of the crude oil (

b) for the sale of the finished product; how then can an hon. gentleman, the member for St. John's West, stand in his place in this House and suggest that the Province may get nothing~through this five per-cent of the gross profits,because there may indeed be no gross profits, because Hr. Shaheen will put up the price of the crude or put down the price 80·15

July 21st, 1970 MR. SMALLWOOD: Tape 1334 of the finished products? What kind of reasoning is this? AN HON . MEMBER: Simple. It can be done very easily. JM- 6 MR. SMALLWOOD: "Simple. It can be done very easily." The hon. gentleman has had so much experience doing it,he knows exactly how it can be done. He knows how to run a great oil project. He knows how to cheat the Government. He knows how it can be done. He knows how the income tax people can be fooled in a matter like that. He knows how the Department of National Revenue of Canada can be codded and fooled and the wool pulled over their eyes.

He know all about that. He knows that the Canadian Government do not care a hoot whether they get any corporation income tax out of it,which they can get only if there are profits~and if there are and the Canadian Government can get them then before they get a nickel we get ours, because ours comes off the top, ours is on the gross profit.

The hon. gentleman from Humber East,with his profound knowledge of law and his vast experience in business and commerce, he knows how it can be done and~f he does,it will be his duty to tell this Government how they are doing it and no doubt, as a patriotic Newfoundland, he will. He knows how the Government can be cheated out of its rights by Shaheen and,if he knows,it will be his clear and bound~d show us and tell us,so we can do something about it. AN HON. MEMBER: (Inaudible). duty to come and MR. SMALLWOOD: Well, w~ would not hesitate to retain him. We would not hesitate to retain anyone.

We would retain an even worse enemy if it would help the people of Newfoundland and help the Treasury of this Province. AN HON. MEMBER: (Inaudible). MR. SMALLWOOD: I would appoint,but it would not be inspectors. No, Mr. Speaker, no, no,Sir. There is no way on this earth, there is no way on this earth where­ by Mr. Shaheen or his associates can change the price of the raw material coming into the refinery or the price of the finished products pouring out of the refinery.

The suggestion of the hon. gentleman indeed is unworthy, lt is quite unworthy of him because one thing one has to say about the hon. gentleman, who represents St. John's West temporarily in this House, one thing one has to say about him is that he has brains. There is no question about that, ~o one 80:16

.July 21st, 1970 MR. SMALLWOOD: Tape 1334 JM- 7 questions it. No· one but a fool questions the fact that he has brains. He has brains. He has cool, except when he is making speeches, he has cool, cool~ cold, icy cold brains and he can think. He is a thinker.

Now the thinking sometimes, well in everything except politics,it is clear but in politics it becomes clouded, it becomes faulty, it is badly flawed,indeed sometimes it is so laughable that to sit and pretend to be listening seriously to him and gravely and really listening,as one should listen to an bon. member of this House,who gets up to impart his wisdom to the House,it is difficult to keep a straight face at some of the things he says.

For · example,as I just quoted: "Shaheen can see to it that we will get nothing out of the oil refinery because he will see that no profits are made." How will he see that no profits are made? By putting up the price of the crude, going to the British Government, going to the owners of British Petroleum, the Royal Navy and saying to them, "Look, we have a contract with you for crude oil from Kuwait or what have you, we have this contract, the price is laid down." I know what the price is,by the way,and I heard absurd figures quoted here. Oh, how absurd these figures are.

If I could be completely certain that I could give the figures, completely certain that I could give them in confidence,! would do it just to watch the hon. gentleman's face. We know that it is a profitable enterprise, we know that five per-cent off the top, off the gross profits coming to the Treasury of this Government, badly needed money, will be a substantial sum and that there is no way, but no way, there is no way for Mr. Shaheen to end the profits and our share of the profits by seeing that there are no profits, fn those two vays: (

a) putting up the price of the crude (

b) putting down the price of the finished product. tlow there is another way,that the hon. gentleman did not mention,to make sure there would be no profits . but that way,unfortunately,would not only make sure that there were no profits for the Newfoundland Government it would at the same moment make sure that there were no profits for anyone;and that is just inefficient management of the refinery, that is all, 80~7

July 21 1970 Tape 1335 page 1. inefficient management of the refinery, poor technical management or poor salesmanship around the world or poor shipping or some po~r practice, mechanical practice ,commercial,financial operation of the refinery. And it would have to be pretty poor,by the way, When you look at the price of the crude and you look at the price of the delivered products and you look at the cost of turning one into the other,of processing it, lt has to be pretty inefficient management to cause the profit to disappear. Now, there was also some discussion between the hen. member for St.

John's West(! know he can hear me though he is outside of the Chamber at the moment. I would pass over and wait until he came back but I know that he can hear me) There was some discussion. for a few moments. goatees waving,beard and all, he is there, you cannot miss him, impossible to miss him, That beard, however- I am not jealous. I am not jealous.lf I tried hard I could raise a beard. I am sure I could raise a beard,if I tried hard. It would not be on top of my head,it would be around the side anyway. I am not jealous. I know I can raise a beard,therefore.I am not jealous.

If I can raise a beard and I choose not to raise a beard/why should I be jealous of someone who raises a beard? I have various ways .of attracting attention to myself,without raising a beard. I can get attention in New- foundland,you know,much more easily-although sometimes I think that raising a beard is easier than not raising a beard. But if you do not raise a beard, you have to shave every day and,if you have the kind of a tough beard that I have 1 sometimes you have to shave twice a day.

On the other hand,if you do not shave and you save the trouble and the discomfort of shaving,what is it like always to look- what? ls there any real gain in looking hirsute? ls there really? It is a hairy and a hirsute question. There was some discussion between us here,while he was speaking I asked him if he would yield Coutteously,he did yield. l asked him this question and we had a little discussion about the matter of a possible default 80~8

July 21 1970 Tape 1335 page 2. on the $125 million loan guaranteed by the British Government. Now that is an eight year loan. It is to be paid off in eight years, by the refinery, together with interest at 5~ per cent. This has to be done out of the profits of the refinery. And if there are no profits,then they cannot pay it. So, suppose that happened. Suppose that did happen, within the eight years.

It cannot happen,after the eight years because in eight years th~loan is paid off1 principal and interest, the mortgage is torn up and the great refinery is there,owing only,at that point owing only what was left of the $30 million loan made by this Government. Suppose within the eight years of the term of that British loan, the refinery is not able to pay it. Now, it is pretty difficult for us in the Government to see how that could arise, knowing,as we know,the economics of the refinery.

Just as the Canadian Government knows the economics and the British Government knows the economics and the British Banks know the economics of it, So we know the economics of it, Thus we find it terribly difficult to imagine moment coming,in the eight years,when the oil refinery could not meet its obligations and thereby in the eight years not discharge them completely and tear up the mortgage.

But suppose,in spite of our inability to see it, suppose,in spite of everything that is foreseeable, in spite of everything that is arguable, supposeJin spite of all they do in the third year, the fourth or the fifth or the sixth or the first or the seventh in any one year of the eight years, suppose it should happen that they cannot service the debt. Interest will be payable twice a year, every six months. A six- monthly p~yment of interest and principal coming up, and they have not got it,they cannot pay it.

Now, under the agreement,they are required to notify bondholders, have to notify the banks, ~n England, that when the debt comes due,three months from now; sorry but we are not going to be able to meet it.So they had so many months notice. The banks immediately RO to the British Government and say;look here,that loan you is guaranteed 1 that we made to Come by Chance,that loan looks,~r,etting a little 8019

July 21 1970 Tape 1335 page 3. sour.ue have been notified that they do not think they are going to be able to meet it. So 7 what happensi In fact,what happens! What are the mechanics? Now what is likely , to happen,in factl The oil~refinery notify them, the Ban~s in- England ·,from whom they borrowed $125 millions.

"sorry, old man, sorry, we deeply regret it:'(it will be couched in more polite words than those) ''but we cannot meet our payment." British Banks promptly inform the British Govern- the ment, ECGD. • British Government have guaranteed it 0 lf the oil refinery cannot pay,the British Government will have to pay. That is what guarantee if means. They have guaranteed,the British Banks. That is~Come by Chance do not pay it, pay it all, principal and interest, pay every nickel of it, if they do not the British Government must. That is what the guarantee means. ~rincipal and interest! Unconditionally guaranteed!

So they are notified of a default, of a prospective default. What do they do?

They promptly send -probably the first thing they do is call in BP, call in the management of British Petroleum,who are one of the world's mountainous companies,with perhaps ten, fifteen, twenty thousand retail outlets, with more oil reserves than any other company in the world, far bigger than Burma oil, far bigger than Texas Gulf, far bigger than Standard Oil, bigger than any other oil company in the world, in the amount of oil reserves they have,in more countries and more varieties of oil reserves in the wells down in the bowels of the earth, with large numbers of oil refineries around the world and tens of thousands of retail outlets.

They bought a chain in the United States the other day - I do not know, seven or eight thousand of gas stations around the United States- just pick them up like that. And the British Government control them. The first thing they do,obviously,is call in B.P.,to advise them . Now, they had their choice,at that point, of saying to BP; all rip,ht, you take them over and run them." Because,if the oil refinery cannot meet 8050

July 21 1970 'fape 1335 page 4. the debt obligation,then they can foreclose. So, foreclosing means that they can adopt a number of courses, Anyone of a number. One is to put British Petroleum in there to run it. Now, eome by Chance would be run by one of the two or by one of the three mightiest oil companies on the earth, Royal Dutch Shell, Standard Oil, Burma Oil, British Petroleum 1 one of the giants of the earth. Nothing particularly wrong about that.

If Shaheen cannot produce, if he does not make a success of the oil refinery,there are others who can and others who would be charmed and delighted to have the chance to do it. Or, if they thought they should do it more at arm's length, they have Royal Dutch Shell to deal with,which is a vast British-Dutch Company, a company partly owned in England and partly owned in Holland-, Royal Dutch Shell, probably the second biggest of all the oil companies of the earth. They have them.

They have Burma, they have all kinds of oil companies to whom they can go, everyone of whom would be interested in taking over this large project,which is,stragetically,so magnificently placed. Heaven's Sake~Mr. Speaker, surely there is no need,at this stage of the game,to point to the superb location of Come by Chance on the Atlantic Basin.

If you look at a globe,you will see that the Atlantic Ocean lap~ the shores of the United Kingdom and the Continent of Europe,right down to the Rock of Gibraltar~ then the whole western shore of the Continent of Afriea and the whole shore of Canada and the United States, Central America the Caribbean and South America, this vast Atlantic Basin. If you look at that on a globe,you will see that almost in the dead centre of it is Come by Chance that~s of this moment I am speaking here today,we are halfway across the Atlantic from New York.

In the dead centre of the Atlantic Ocean you will buildc·a great oil refinery at the head of a great bay, at the head of a great harbour, with vast amount of land,thousands and thousands of acres, Ships as large as will ever be built,will ever float on the oceans of the world,will be able to go into Come by Chance,up to five hundred thousand tons each, carrying six, eight, ten million barrttls of oil per trip, ships even of 8051

July 21 1970 Tape 1335 page 5. that size capable of going in,with a straight line run of thirty miles in which to slow down to get to the refinery. With such a location, with such a site for a vast oil refinery,there is not a great oil company in the world today that would not be delighted to step in and take it over and take on all the liabilities of it from the British Government and from the Newfoundland Government.Because,do not forget,the Newfoundland Government would have a say in the matter as well,as the holders of the second mortgage.

Indeed, Sir, the Newfoundland Government would have the opportunity,if it wished to exercise it,to come to the rescue and take the British Government out of the picture, take itself out of the picture by making its own deal with a great oil company. Nothing to stop us doing that. We would not be poor, dumb beasts waiting humbly and patiently and silently to see what the British Government were going to do. This would be the life and breath of New- foundland and we would be deeply concerned about it and about its future.

W6 do not think,for one moment,that that is going to happen, but if it happened we can handle it. A great oil refinery 1 in a great location,situate on the Atlantic Basin,will not go begging for an owner, will not go begging, if poor management by the Shaheen people unexpectedly and unbelievably should produce a failure there now. No, Sir, there will be no failure.! will tell you what there will be. I will tell you now what there will be at Come by Chance,in that oil refinery. It will start off at 100,000 barrels a day. day.

Before you know it, before you know it, it will be 200,000 barr~ls a Before you know it,it will be 300,000 barrels a day, it will be the same size as the one the minister for Supply and Services and I visited in Kotterdam,precisely the same size, 300,000 barrels a day, and,before you know it,that is what you are going to have at Come by Chance. Not in a month, not in a year; four or five or six or eight years 1 300,000,barrels a day.

That is what you are going to have, not failure but brilliant success, because it has in it,this project has in it the seeds of success,not the seeds of death, not the seeds of failur~ lt has in it all the elements and all the 80~2

July 21 1970 Tape 1335 page 6. potential of success and profit. Why should not Shaheen want to succeed? Now, let us face here,man fashion,the suggestion that by chicanery, by subterfuge,Shaheen,somehow or other,can do us out of our share. let us face that. I reject it completely,from what I know of Shaheen. He may not be a very diplomatic individual.

He may not be the man to come in on the floor of this House and with his excessive politeness,which oozes contempt · ~ather thaw politeness, Shaheen may not be that kind of a man, but he can be a brilliantly, capable and clever operator just the same, and he has proved that he is that.

Any man who goes a· couple of times -a month,with his wife ,to the White House and shares a meal with the President of the United States, in that Nation of 220 ~illions;~any man whose wife is appointed,the other day,hy the President of the United States ,to the latest great artistic commission that hehas appointed, a very talented and brilliant and gracious lady, I do not think for one mament.not for one moment do I think that Shaheen wants to do us in or to cheat us. Not for a moment, but let us suppose it. you can suppose anything no law against supposing.

Let us suppose that Shaheen,once this thing is done an hour, and the money is raised and the contract is let and the refinery is built and it begins to operate; let us suppose ,for the sake of argument,that he wants to do us;can he? He wants to,but can he~ He is determined to do us in, to cheat us,can he in fact do it? Well, let us give him credit,with the help of clever lawyers, with the help of clever tax lawyers, with the help of clever corporation lawyers,that he is able to find a way to do it, is that the end? Is that the last word?

Where will the last word always be spoken'about Come by Chance(Kere on this floor, that is where the last word will always be spoken. Let there be the least, let there be the slightest hint ar "suggestion there of chicanery,of deception,of double dealing, let there be the slightest hint of it and,if I am Premier, I will go to Mr. Speaker and ask him to call the House to~ether,so fast as to make people dizzy and to make Mr. Sbaheen,in particular,more than dizzy. 80~3

-. Ju;y 21 1970 Tape 1335 page 7 . I have respect for John Shaheen. I think he is an honourable men,not the most diplomatic; hot-tempered, sharp-tongued but a brilliant and a capable man and a man with tremendous drive; and I like a man with drive - that is one of the things that I like about the hon. member for St. John's West.! do not believe he has a lazy bone in his body- now,God Knows,he uses it sometimes, you know, not in the best way,but there is nothing laz, about him - and there is nothing lazy about Shaheen.

There is nothing lazy about me, a startling combination, Crosbie, Shaheen and Smallwood 1 what a combination. At. any rate,we have that much in common. We are not lazy,and Shaheen is not lazy. He is a driver. He is a man who drives. Ke drives his team through their leave collars- they sometimes feel like killing him. He will never~ the office any time,before eight o'clock at night. They never go out to lunch except to entertain. They have aandwiches brought i~ The meeting goes on and it goes on until eight o'clock,and they would all get up and go out and eat together.

A driver, an American driver and a sharp and a capable trader,of Lebanese descent but a third generation American. All ri~ht. I do not believe,for one moment. that he would try to do it,but God help him if he ever does. God Help Him if- it will take God to help him and God will not. He will not, God will not side with Shaheen against Newfoundland. He is not going to side with Shaheen and his company against the people of this Province. He will not be able to get any help from God. Now what are we frightened of, what are we afraid of? Are we afraid of bigness? I never met an American yet who was afraid of bigness.

I am not afraid of bigness and I am not overawed by the biggest man I ever met, since 1 have been born,and I have met some a~fully big men, big men who could put me in their pockets, who could put me in their mouths and chew me up and spit me out, who could devote one-thousandth part of one per cent of their wealth and they would buy me nineteen hundred times over. I have met them and talked to them and I have never been overawed by them. I have never met any one yet- Churchill did not overawe me. I was humble. I was grateful. Who would not be?

-· July 21 1970 Tape 1335 page 8. 1he Queen did not, the Prime Ministers of Canada did not, when I said that it was necessary,in Newfoundland's interest.to slug it out,to the last ditch, with the Prime Minister of Canada. WhPthnr I was right or wrong in tnin~tlng he was our enemy,it is immaterial at the moment. When I thought he was,I slugged it out with him, · I will slug it out with anyone,in Newfoundland's behalf, That is my job. I would be a traitor if I did not.

I am not afraid of John Shaheen because he is a big man and a clever man,and I say to him; God Help Him,that is all who could 1 if he ever tried to do us in. I do not believe,for one minute,he ever would and if he ever thought of doing it and -I do not think he would e~en think of it- but if he did think of it,there are men sitting in this Chamber today, and there have been sitting here,would tell him ~"John.for God's Sake ,do not get up against that buzz saw." We have had men, in this House, announce that they would natio1,alize the industry.

We have men in this House who have announced,here in this House, in thls present debate 1 that another Government would re-negotiate the whole thing. Do you think these words do not go to Shaheen? Do you think he does not know that? Do you think he have not got to be on his best behaviour? Do you think he is a fool? Do you think he can defy Newfoundland and defy this House and defy the Govennment? Yes, he would try, if he was a fool. He is no fool. Mr.

Speaker, just one other word on this point, this point of the possibility of the refinery failing: That other thing that I want to say is this: There is no record Ln human history of a large oil refinery ever tailing. Never happened. Are we going to start making history in Come by is first Chance,, this going to be theA large oil refinery to fail? There never has been a large oil refinery to fail since time began, or at least since the oil industry began.

They have not only not failed but they have made staggering success.llot only have they had staggering success,Sir, but they have had tremendous profits and tremendous success and endless,absolutely endless growth and success. so=.;5

July 21 1970 Tape 1335 page 9. I am going to propose to the Shaheen people something that will make the bon. new member for St. Hohn's East famous for all time. I am going to suggest something which,if they will do it ~ill mark out his name as long as Newfoundland lasts. It would affect more than just the next eleetion,this honour that I am going to suggest being conferred on hirn,it an would have~~ffect on ma~y elections, next and many after that. He said,as I reminded the House,the Province gets absolutely nothing in return, nothing from the refinery, nothing.

"Province gets absolutely nothing in return." Now what I am going to suggest is this; I am going to suggest, to the Shaheen people, that when the refinery is built,when it is completed,that they take the main building,the one into which all the workers would go to punch the time clock or even,preferably,the one into which they will go to get their cheques, their pay cheques, that in that building,they would take it that building and over the main entrance to/they would put a large sign, a very la~ge.one,say. eighty feet long and say fifteen feet deep, a huge sign right across the front of that building, so that every worker who goes in it or put,they go in and punch the clock and come out with their pay cheque, looking at it, see what they earned in the last fortnight, $380.00,for the fortnight, grumbling a little because it is not $480.00 or more.and they go out.

As they are going in they see this vast sign, "Confucius saysthe Province gets absolutely nothing in return," but it would not be Confucius, the hon. gentleman's name, full credit would be given to him, his full name and title and even his address and then,if we could not put both words there ,in imperishable letters,at least they could take on their staff an artistic painter 1 whose job would be to freshen up the paint with the inscription, so~u

July 21, 1970, Tape 1336, Page 1 -- apb MR. SMALLWOOD (J.R.): To freshen up the inscription every year so that - in fact it might be with luminous paint- so that it could be read night or day. MR. MURPHY : Neon. MR. S¥.ALLHOOD: No, I would rather see a flat surface, painted on a great sign, "the Province gets absolutely nothing in return;' in fact, it might even be better if we put it up on the Trans Canada Highway,where the road leads down.

Come by Chance oil refinery, petro chemical complex, paper mill and so on, and then underneath that this imperishable, this deathless utterance, "the Province gets absolutely nothing in return.' I promise the hon. gentleman that I will do all in my power to see that these words of the hon. gentleman become imperishable, that people will have every possible opportunity to be reminded of them, and that he will have every possible opportunity to defend himself against what he has said.

By the way, we might also put another sign from his leader, his momentary leader, his House leader, that the greatest blessing that could come to Newfoundland since the coming of Confederation would be for this to go down the drain. What a beauty that would be, what a magnificent one that would be . . As you drive into Come by Chance and a hive of industrial activity is there, and many men are gettin~ a decent living, but the greatest blessing that could happen would be for it to 'go down the drain, down the bog, down the drain, just disappear.

I am passing up a lot of these notes because I do not want to detain the House. We have all been reasonably brief,except for one hon. bearded gentleman, who does not know his own strength. In fact, he can take either way he likes, he does not know his own strength. Well Mr. Speaker, let me summarize. One, this House,with only four of its members then voting against it, this House,more than two years ago, adopted the Come by Chance refinery project. We passed it, not unanimously-four voted against it,two years ago.

Between then and now, the Government have ne~otiated- The date of the election, do you want me to tell them now? Shall 1 tell them the date of the election now? Should I give the date now? If we could have a caucus~go out now for a while -would the House be willing for us to go out for a while and have a private cancus1 I will get authority from my friends,whether or 80~7

July 21, 1970, Tape 1336, Page 2 -- apb not I am to announce the date. Will the bon. gentlemen take a chance on it? They will take a chance on it? SOME P.ON. HB-•BERS: Yes. -------- --- MR. S~.ALL~\'OOD: They know what they are doing, they know I am not going to announce it,so they can be brave. Oh they can be so brave about elections. They were not brave last fall,~r. Speaker, when they expected the election any moment. The bon. member for Labrador West announced that it was ~oing to be in January, then it dLd not come in January. then somebody said it was going to be February.

February passed and then the election was coming in March, then it was tied into the Budget, it was not going to come until the Budget came down, but, as soon as the Budget was over it was coming do~~. then it was tied into the Tory convention. Month for month, November, December, January, February, March, April,May, June, that is eight general elections, or eight prophesies of general elections. It did not come,so now they have become brave, now they are de~Andin~ it, they know it is not coming, before they were walking on egg shells, before they were walking in fear and trembling.

You see, they did not want to hear elections mentioned, now they have come to the conclusion wolf, wolf. you know, cry wolf, now they say there never will be an election. Like the old lady who saw the train, it will never go, it will never go, and when it started she said; " it will never stop.' They are the same with the election, now they have become awfully audacious, they are demanding an election now. What a fright they would get if we gave it to them.

Between the adoption of this scheme,two years ago,and now, the Government have gone out and negotiated with the other parties to the agreement, the Shaheen people, for an improvement in the terms of the project, an improvement to the treasury. Three~ in the agreement,as it stood before we brought forward the present amendment, the Provincial Treasury would receive,as result·of the existance of the refinery, approximately $88 million in the first thirty years of the refinery's life. ~our~ the Treasury of the Province will receive an additional seventy- 80~8

July 21, 1970, Tape 1336, Page 3 -- apb six million dollars,over and above the $88 million,in the first thirty years, making a grand total of approximately $164 million altogether,into the Treasury directly and indirectly,flowing from the refinery in the first thirty years. $164 million. Thereafter, at least an equal if not a larger amount of revenue would continue:to flow into the Treasury. Five: five percent of all the enterprises gross profits would come into the Treasury for ever-and- a -day. Forever- and-a -day, after the eiJ!ht year first mortgage of $125 million was paid off.

Six; they will pay to the Provincial Treasury,after the mortgages are paid off, a sum of $10 million,not provided for in the original agreement. Seven; the subsidy to be paid to the Power Commission,by the Newfoundland Government,for the first fifteen years of the project,will not in fact be paid by the Newfoundland Government . but will be paid by the Shaheen interests,in a way that is set forth in a letter that I have tabled in this present session.

Eight; this estimated sum of $164 million, to be received into the Treasury of this Province,in the first thirty years, this estimated $164 million does not include any other revenue that would come into the Treasury as a result of a doubling or even a trebling , of the size of the refinery. This $164 million also does not include any additional revenue that would come into the Provincial Treasury 1 as a result of the operation of petro-chemical factories that would follow the establishment of the refinery itself.

This amount of revenue,into the Treasury 1 of $164 million dollars, does not include the additional revenue that would come into our treasury,as a result of the operation of a paper mill at Come by Chance. This sum of $164 million refers only to a 100,000 barrel oil refinery and nothin~ else. As such, Mr. Speaker, as such, it is one of the greatest business deals ever made by the Government of Newfoundland,since its establishment in 1832. This is the ~reatest $30 million expenditure ever made by the Government of Newfoundland.

For these reasons and others that I could put forward,if we were not so pressed for time, I appeal to every hon. member of this House, every hon. member) in the name of Newfoundland, in the name of Newfoundland people, to vote for these

July 21, 1970, Tape 1336, Page 4 -- apb amendments,not against, to vote for this r,reat project, not against it. to vote for the great developments that will follow upon the establishment of an oil refinery,not against them. When this vote is taken,after my remarks, let us all vote for Newfoundland. MR. SPEAKER: It has been moved and seconded that this Bill be ~ow read a second time. Those in favour '' aye," contrary " nay," In my opinion the ' ayes " have it. SOHE HON. HEl-!BERS: Divide. MR.. SPEAKER: Call in the members. Those in favour; The hon. the Premier, the bon. Minister of Labour, the Hon. Mr.

Lewis, the hon. Minister of Highways, the bon. Minister of Municipal Affairs, Mr. Noel, Mr. Smallwood, the hon. Minister of Labrador Affairs, Mr. Hodder, Capt. Strickland, the bon. Minister of Education, the bon. Minister of Public WOrks, the hon. Minister of Finance, the bon. Minister of Community and Social Development, the hon. Minister of Provincial Affairs, the bon. }!inister of Public Welfare, Mr. Canning, Mr. Barbour, the bon. the Minister of Health, the bon. Minister Mr. Hill, the bon. Minister of Supply, Mr. Lane, Mr. Saunders, Mr. Wornell. Those against the motion; Mr. Marshall, l'tr. Collins, Mr.

Earle, Mr. Hickman, Mr. wells, Mr. Crosbie, Mr. Myrden, Mr. Burgess. MR. SPEAKER: I declare the motion carried. Before we proceed further, it has been moved and seconded that this Bill be now read a second time and the motion is carried. lihen shall this Bill be referred to a Committee of the \.fuole House? MR . ROBERTS : That "'ould be by leave.~r. Speaker, but we would then propose to adjourn·the House until 2:30p.m. MR. SPEAKEP.: Is it agreed? SOHE HON. '1-!EJ-fBERS : Allreed. HR. SPEAKER: He will read the Bill on the second readinl'!. A Bill, '·

An Act To Amend The Government Of ~ewfoundland Refinin~ Company Limited(Ar.reement)Act, 1968, And To Ratify, Confirm And Adopt An 80CU

July 21, 1970, Tape 1336, Page 5 - apb Agreement ~~de Be~een The Government, Newfoundland Refining Company Limited And Other Companies And To Make Provision Respecting Other Hatters Connected Therewi. th. • · (Bill no. 94) • On motion, Bill read a second time, ordered referred to a Committee of the Whole House presently by leave. On ~otion, that the House at its rising do adjourn unt:U 2:30 p.m., Mr. Speaker left the Chair: 80 0 1

PROVINCE OF NEWFOUNDLAND AND LABRADOR HOUSE OF ASSEMBLY Volume 1 Number 126 4th. Session 34th. General Assembly VERBATIM REPORT TUESDAY, JULY 21,1970 SPEAKER: THE HONOURABLE GEORGE W. CLARKE

July 21st. 1970 Tape 1337 PK - 1 The House resumed at 2:30 P.M. HON. E. M. ROBERTS: (~tiNISTER OF HEALTH): Mr. Chairman, before we begin the committee consideration of Bill No. 94, the matter before the committee, perhaps we will agree in committee, normally a

schedule to a Bill, as Your Honour is well aware, is called as a

schedule and adopted or not adopted as the committee wishes. Since this

schedule is quite complexed and indeed as is most of the printed Bill we have before us, we,in the Government,would prefer to have it called clause by clause, 1hen a clause could be discussed and,if there was to be an amendmentoit could be offered and it then could be voted and put to the vote. If that is the committee's wish,eould we proceed that way, Sir? MR. CHAIIDfAN: Order! "A. Bill,

An Act Further To Amend The Refinery Act, 1970." On Motion Clause I carried. MR. WELLS: On Clause II, this is really covered in the Bill and I suppose there is no point in debating it twice. · It is the provision for the Government loaning,directly to the promoters,the $30 million,instead of the original requirement that they raise it. This is the provision of the Bill 1 to alter the provisions of the previous Act,that would require the moaey to be raised by Shaheen as one of the prior conditions.

Our position on this is well known.that we oppose it, and oppose it strongly­ but it can be more thoroughly dealt with as the other aspect of it is contained within the schedule. MR. HICKMAN: Mr. Chairman, during the debate on this Bill there is a pretty clear indication given to this bon. House that this loan is being guaranteed by E.C.D.G. and not by this Government. And, I feel, Mr. Chairman, that should be spelled out,with great particularity,in

section two. I would,therefore,move that there be added to sub-section two the following sentence; follwing after the word "company"-'provided however that Her Majesty, the building company or any crown corporation shall not guarantee directly or indirectly any loans, bonds or any securities made or to be made under the agreement for any sum in excess of the said $30 million." 80G~

July 21st. 1970 Tape 1337 PK - 2 MR. ROBERTS: Mr. Chairman,from this side of the House we will not be able to accept that amendment, I am afraid. I think the Amendment, .. there may be a point in making it, and I think the point is mad~ so be it. But,as I understand it on the advice of our law officers,we are not able to guarantee any sums of money, as the Government,at anytime without expressed legislative authority. Legislative authority can be contained in a number of legislation enactments, supply Bills, or a Bill such as this and so forth.

But the fact remains that under this Bill, as it is drafted, if it becomes Law, we are only going to be able to guarantee $30 million Canadian, that is that. Therefore, the Amendment,! really submit, is not of any value. The hon. gentleman may disagree. He may very well be quite strong in his disagreement, but the point is we are not in the position to accept the Amendment. We do not think it is needed and,therefore,we tend to oppose it. MR. WELLS: Mr. Chairman, I do not know why it only sets forth what the Government says is the position anyway. I cannot understand the minister's refusal to accept the amendment.

Basically I agree with the opinion he has given or quoted on the Law that the Government's obligation under a guarantee can only arise by virtue of a statute. Now we have a general statute on the Books of this Province, called "'rhe Revenue and Audit Act," whiah we amended two or three years ago to allow the Lieutenant-Governor in Council to give a gurantee without the specific statutory approval in an individual instance, so that - MR. ROBERTS: We can do it under the Industrial Development Corporation. There are a number of general statutes. MR.

WELLS: ln theory and in practice and in fact, lf the Government wanted it to, ~ could give a guarantee on behalf of the Province and the Province would be bound either under the provisions of The Revenue and Audit Act or under the provisions of The Industrial Development Corporation's Act. 'that could happen. MR. ROBERTS: No, Sir. 80G3

July 21st. 1970 Tape 1337 MR. WELLS: It could in fact happen. MR. ROBERTS: It cnnnot happen. PK - 3 MR. WELLS: The Amendment proposed by my hon. friend,the member for Burin,would certainly prohibit that because it would be an expressed statutory statement to the contrary.

So that it could happen that, if, for example, the financing,as it is now proposed,is not sufficient and the building company wanted to borrow another $20 million, the Government could guarantee it without calling this House together, under the provisions of the Industrial Development Corporation Act and the Revenue and Audit Act would not bar it because we have had an amendmen~ two or three years ago,that permitted this to be done. So that is the purpose of the Amendment proposed by the member for Burin, and I agree with it.

And if the Government is prepared to stand on what they said. as being the case,then they should not be,in the slightes~reluctant to accept the Amendment. MR. ROBERTS: Mr. Chairman, to speak to the legal point,we have authority under a number of Acts to guarantee money. However, any money advanced or guaranteed under those Acts must still be approved by

an Act of the Legislature and I specifically mentioned Supply Bills, any money that we advanced MR •. WELLS: After the event. MR. ROBERTS: It can be indeed, Mr. Chairman, if the House is not opened, of course it can be guarantees as such, Mr. Chairman, as the hon. gentleman will well recall 1we pas~all of these,by Order-in-Council,subject to ratification by the Legislature. If in fact they are not ratified to Gurantee Sales, the banks who accept the guarantees know that, so be it. We have no intention - MR. WELLS: Not under the Industrial Development Corporation Act. MR.

ROBERTS: The Industrial Development Corporation has no funds for that and funds must be provided by means of either an estimate or a supplementary estimate. In each case Legislative action 80G4

July 21st. 1970 Tape 1337 PK - 4 MR. WELLS: After the event •••.•• MR. ROBERTS: Of course, if the House is not in session, the Government cannot be - MR. HICKMAN: The Industrial Development Corporation can borrow funds. MR. ROBERTS: That is right. Of course the Government of Newfoundland can borrow funds. MR. WELLS: On the Government's guarantee. MR. ROBERTS: It may help the hon. gentleman to know that we have been told by the Law officers,with respect to this Act or any Act,where we have a special statute involving a project 1 that is our entire power,to guarantee for that project.

That is with special reference to the N.I.D.C. in this case. Mr. Chairman, the Amendment is really quite meaningless. He do not propose to accept it. The only guarantee by this Government~direct or indirect,is $30 million Canadian-that is all the Government's money will be in it. It will be secured by a second mertgage, That is what we undertook to do right at the start. That is what we are doing now. The only difference in this

section and the early one is the first one,Mr. Shaheen had to shop around and find buyers. We have now undertaken that obligation and, as Mr. Chairman has seen from today's Evening Telegram, we have recently sold,very successfully,a bond issue of $15 millions Canadian. The $30 millions~ we only have to find $25 million because, of course, we have $5 millions in already- the $5 millions with which my friend from Humber East District is intimately familiar - causing his leaving the Government. MR. WELLS: For that reason, and that reason only. MR. ROBERTS: I agree.

I would not want to misrepresent the bon. gentleman in any way. MR. SMALU.TOOD: For that reason and that reason only. MR. WELLS: That is the only reason why I am intimately familiar with it, because of my having left the Government. soc5

July 21st. 1970 Tape 1337 PK- 5 MR. ROBERTS: So we have to find $30 millions, of which we have found $5 millions, at least, $25 millions to go. We raised an issue of $15 millions early this week, Mr. Chairmen, on very good terms. Our financial people tell us really you know, we have no problems. It is far better this way. This is an advantage, Mr. Chairman, far better this way than to have our paper being flooded about the markets, as has happened, not with Mr. Shaheen but it has happened to other people in the past. MR. RICK}~: Mr. Chairman, I still do not quite follow the hon. minister's argument.

It states categorically that there is no intention, but no intention on part of Government,to guarantee,directly or indirectly, persumably that word. "indirectly" covers the Crown Corporations as well. MR. ROBERTS: \ole could not guarantee indirectly,.~·. ¥R· RICKMAN: That there will be no guarantee directly or indirectly by the Government of Newfoundland in excess of $30 million. Now this proposed Amendment covers that very situation. Mr. Chairman, it is not meaningless. And I do this, do accept the fact that the principle of the Bill has been approved.

And I would assume that it is Government's desire and anxiety, as much as it is on anyone on this side of the Rouse, that all the safeguards and provisions will be written into this Act,to assure that the clear-stated intention of the legislature is ' .~rried out. And I submit, Mr. Chairman, this is precisely what this Amendment does, it carries out,beyond any shawdow of a doubt,the clear intention of the Legislature,in voting for this Bill on second reading this morning. MR.

CHAIR}~: The motion is that Clause II be amended by adding the word5"provided, however, that Her Majesty,the building committee or any Crown Corporations are not guaranteedJdirectly or indirectly,any loans, bonds or securities made or to be made under the agreement for any sum in excess of the said $30 million. Shall the Amendment carry? The motion is defeated. Shall Clause II carry? 80CG

July 21st. 1970 Tape 1337 PK - 6 MR. CROSBIE: Clause II, Mr. Chairman, the new Clause II replaced the original Clause II,naturally, of the Bill that lvas passed in 1968. (I am sorry

section five of the Bill of 1968, the original.tBill) . There are several substantial difference- I do not know whether this questioa has been asked, because I was a bit late getting into the House this afternoon. The new Clause starts of,"notwithstanding anything to the contrary contained in the Revenue and Audit Act .:• I do not know whether anyone as yet explained why it is necessary to put that clause in" ••. or any other Act of La~ that Her: Majesty may lend or cause to be lent to the building company." AN HON. MEMBER: Inaudible. MR. CROSBIE: Right, but if you would just note that.

I have a couple of more points to be made. MR. ROBERTS: Inaudible. MR. CROSBIE: Well, all right then go ahead. ~- ROBERTS: Simply, Mr. Chairman, I asked the draftsman exactly the same question and was told that in their advice and their view it was necessary for the purposes of the drafting. I do not understand why. MR. CROSBIE: But, why? MR. ROBERTS: I, Mr. Chairman, I do not know, but the men who drafted this, the Government's law officers,told us that is the way the Bill should read. Therefore, that is the way it does read.

As the Premier ~uat put it, that is the way the Deputy Minister advised us that it read. Now we take the responsibility for it, of course; it is our Bill. But we are acting on the advice of the law officers. This was drafted by our own draftsmen, not by anybody else. MR. COLLINS: Perhaps the Minister of Justice could read it. MR. ROBERTS: Mr. Chairman, I do not know if my colleap.ue wishes to speak on it or not. MR. WELLS: Mr. Chairman, let us remember what the Revenue and Audit Act . is. The Revenue and Audit Act is the financial Bible by which the Government 80C7

July 21st. 1970 Tape 1337 PK - 7 MR. IVELLS: lives. It is the trustees by which they have the authority to ~anage the funds of the Province and the specific terms under which they collect taxes and manage the funds and spend it on behalf of the people of this Province.

Now we are putting a clause in here saying, "notwithstanding the Revenue and Audit Act." So that goes out the window, NO longer are they bound by the provisions of tne Revenue and Audit Act, which basically governed what any Government must do with the funds belong to the people, We are saying now "notwithstanding that or any other law, this will be done." Unless there is a specific reason for it, I do not think it should be there- cme with which the House will concur, Now ror the minister to stand up and say; the law officers say we should put it in, why that is not the reason.

Before we concur with it, I would like to know why,the real reason. MR. ROBERTS: Mr. Chairman, the real reason,as I understand. it, is just what I said, But if the committee wants to let those words stand, I am quite willing to check again with the law officers 1 to see what is necessary. We will have the law officers brought up and we will check on that. MR. WELLS: So we will let those two lines stand. MR. ROBERTS: Yes. the operative

part is "Her Majesty may,pursuant to and in accordance with the Agreement." But, I certainly do not know why they are there, except I was told that they were necessary If my learned friends opposite feel perhaps they are not necessary, I again will confer with our law officers. I will be bound by their decision, Mr. Chairman. MR. CROSBIE: Well, Mr. Chairman, the hon. minister is going to check into that. But, as far as .

I am concerned 1 I do not think any legislation in this House should pass,which states that "notwithstanding anything to the contrary contained in the Revenue and Audit Act anything should be done. Everything done by this Government should be done in accordance with the Revenue and Audit Act. That is the reason we have a Revenue and Audit Act. 80G8

July 21st. 1970 Tape 1337 PK - B MR. CROSBIE: I will move an Amendment so that those words will come out, but we will wait first to see what the law officers of the Crown state . I just note this,that in the or1~inal Act of 1968, those words are not there. The

section just starts "Her Majesty may for the purpose of the agreement lend or cause to be lend." The words did not have to be there in 1968, the law officers of the Crown did not recommend them in 1968, and I fail to see why they are recommending them now. MR. ROBERTS: The words are completely different, the original Bill said "for the purpose of the agreement,"and this one says "pursuant to and in accordance with the agreement." MR. WELLS: Essentially similar. MR. ROBERTS: Lawyers who sent their children to University ••••••.• MR. CROSBIE: Mr.

Chairman, I would perfer while I am up that I would speak and then when the minister is up he speaks, or when he is finished speaking I will get up,and I speak- I think it will be clearer. Now other parts of this Clause. There is a fundamental difference between this clause and the old clause five and that is this - there are several fundamental differences.

The old clause five "gave Her 'Majesty power to guarantee a sum of $30 million, the loan or the bonds to be for a term of fifteen years." Now the clause that we are considering gives the Government power to lend or cause to be lend to the building company or to guarantee any bonds or other securities whatsoever of the building company." In other words, it is not now restricted to bonds or other securities ~it can be promisory notes. MR. ROBERTS: Of course. MR. CROSBIE: It can be something ~ar less than bonds. It can be a bank I loan itself.

And it goes on to say "to be for such term, at such rate of interest and so on, as the Lieutenant-Governor in Council decides." The original says to be for a term of fifteen years. So now,if this clause is passed, the Government can lend this money or guarantee this money for any term,that the Government decides. It could be for two years. It could 80G!l

July 21st. 1970 Tape 1337 PK - 9 MR. CROSBIE: be for one year. It could be for six months. It could be for fifteen years. It could be for thirty years. It could be for any length of time. It could be for fifty years. That is not good enough. Why, Mr. Chairman, should this House surrender to this Government the power to decide for what length of time the $30 million is going to be loan to this project?

When this project was originally being discussed the promoters of the project told me, as I said in second reading yesterday that, this project - the whole indebtedness to the project would be repaid within two and a-half to three years,there is such a cash flow from an oil refinery. That the whole thing could be paid off within three years, but certainly by five years. They said then that they wanted twenty year loan from the Government, because they wanted the use of the money during the twenty year period, although the project could have had paid off the Government's loan in five years.

It was settled then that it would be fifteen years,as a compromise. But now,as the fifteen years is taken out 1 and as I said yesterday on second reading, and the Government has not yet explained, unless they explained it before I came into the Bouse this afternoon, what is the term of this $30 million loan going to be? Is it correct that the Government now have arranged a two year or three year bank loan? MR. ROBERTS: No, that is completely wrong. That is not correct. MR. CROSBIE: Well the minister can answer.

Is there a loan now arranged by the Government, is that $30 million loan now arran~ed, if so, what are the terms? Under this clause here it can be a one year or a two year or a three year loan and some future government, the Government of 1972 or 1973, will then have to arrange to borrow $30 million to repay the bank or whoever the short term lenders are, to go on the money market,in 1972 or 1973; have to raise $30 million to repay a short term loan, or is the loan arranged to be for fifteen or twenty years? This is wrong, Mr. Chairman. 8070

July 21st. 1970 Tape 1337 PK - 10 MR. CROSBIE: The Government should face the obligation itself of raising this $30 million loan on a lon~ term bases, so that some future government is not going to be crippled in two years or three years time by having to go out to the bond market .-and raise $30 million for this purpose, in addition, to raising the money they are going to need to carry on public services and to do other things. So that needs explanation. The term of the loan should not be left like this.

In the original Bill it was fifteen years, there should be a specific term of the loan now decided by this House. MR. ROBERTS: May I deal with that point. Well, Mr. Chairman, the bon. gentleman is quite correct when he points out the difference between Clause II and

section five of the original Bill. I have already touched on that,in my remarks with the hon. the member for Humber East a little earlier. The term of the loan is not set. The term of the loanffrom us to Provincial Building Company Limited,the loan which will be secured by the second mortgage, the Government will be the mortgagees of that loan, Provincial Building Company which is a Crown.Corporation will be the mortgagor. The equity of redemption under the agreement will be assigned by 8uilding to Operating, which is another Crown Company.

The .term of the loan will be a maximum of fifteen years,with prepayment clauses. Because, Mr. Chairman, the sooner this loan can be paid off the sooner we are off the hook. We are anxious,naturally,to have the loan paid as quickly as possible. MR. WELLS: Why is not that maximum in the Bill? MR. ROBERTS: Because, Mr. Chairman, we w.ere bound before to fifteen years and there is no such thing as fifteen year money. MR. WELLS: This has got nothing to do with the markets now. MR. ROBERTS: Mr. Chairman, I MR. WELLS: The Government is lending · this •••• 8071

July 21st. 1970 Tape 1337 PK - 11 MR. ROBERTS: If the hon. ~entleman will give the same courtesy that his colleague asked for himself, I will try to deal with it. The only two parties in this deal now are us and us, Provincial Building on one side,being a Crown Corporation, the Minister of Finance presumably~on the other,in behalf of the Government. The loan will be advanced, it will be secured by a mortgage. It will be secured by a mortgage that provides for the repayment within a maximum of fifteen years. It is not put in here as such, Mr. Chairman, simply because it may be that it is fifteen years and a mont~.

Fifteen years from when? Fifteen years from today? Fifteen years from the pay-out period? Mr. Chairman, would the committee be relieved to have the assistant deputy minister of Justice? Well, anyway that is why it is not _there. The other point, Mr. Chairman, I believe the hon. gentleman raised was;why are the words, bonds or _ securities or so forth; again these are the words that are normal in this thing. We intend to issue Government bonds, as a matter of fact we have already raised most of the money we will need for this and we have our own cash flow, Sir.

Again, we cannot be bound, our financing at any given time is a combination of long-term bonds and short-term bonds, bank cre4its and so forth. This is quite normal~ Mr. Chairman, it would be quite wrong to bind the Government any other way. 8072

July 20th., 1970 Tape no. 1338 Page l Hr. Wells. Hr. Chairman, we are talking about two different terms. In one instance, we are talking about the terms for which the Government will borrow the money. In the second instance, we are talking about the term for which the Government will loan us •• MR. ROBERTS: I agree but the bon. gentleman ••• HR. WELLS: Just a minute. The minister has now said that under no circumstance will it exceed fifteen years. Well,.Gkay, put it in there, Put it in there and that, in no way, affects the Government's ability to borrow - in no way.

Put it in there that it is not to exceed fifteen years, if his statement to the committee is correct. Put that in there and it will. in no way, hamper the Government's borrowing of the moaey. They can still borrow it on a two year term or a ten year term because,as far as the leaders are concerned, it has no bearing oa this proposal at all. It is just borrowing for the Government. What the minister is saying has no bearing on it at all ••• MR. ROBERTS: I ag trying to deal with the other point the bon. gentleman ••• HR. WELLS: That it will be repaid within fifteen years.

If the term thea will certainly not exceed that, there is nothing wrong with putting it in there. HR, ROBERTS: Hr. Chairman, if it is to be put in, it should be more appropriately in Clause (8) . because, of course, the mortgage is subject to Clause (8) of the agreement. 1 was dealing with two points only, because the bon. gentleman's colleague had raised two quite different points: bow we find the money,on the one haad, aad ·b6w we lend it to put Building Company in fuads,on the other. MR. HICKMAN: Hr. Chairman, again while we are oa Clause (2).

We have been told that the total borrowings,by someone, presumably the 8073

July 20th., 1970 Tape no 1338 Page 2 Mr. Hickman. building company~for the project,will be $155 million,of which $30 million will be raised and guaranteed - or raised or guaranteed pursuant to Clause (2)fwhich is presently before the Committee. This leaves $125 million to be raised through ECDG and the tObl amount of $155 million wjll then be spent on the Come-by-Chance proposal.

Now there is a danger, I suspect that Government would be most anxious to avoid., T.hat would be that next week or next month Government borrows $30 million,under Clause (2), lends it to the building company or to Shaheen Natural Resources or both - they start work and use up the $30 million,without touching the $125 million that is to be raised through ECDG. To guard against that - I have not got the word{in front of me, but I have seen it in other legislation - there is a provision, a legislative provision where this only forms part of a larger sum.

I am sure that the Assistant Deputy Minister of Justice can recall these types of Bills and agreements. It is provided that when the funds are raised, the total funds,and the total funds should be completely raised, the full $155 million should be raised before one cent of this $30 million is handed out to anyone. The draw-down then ranks, pari passu.

In other words~ if $30 million is twenty-one per cent of the total borrowings, the progress payment is required for $5,000 • Then twenty-one per cent of that amount comes out of the Government's direct borrowing and the remainder comes out of the borrowings from ECDG. If that is not done, if that legislative protection is not written in, Mr. Chairman, Government could very easily find itsif in a most embarrassing position,where the $30 million of the Government's monies are gone, spent,and ECDG money still has not been raised or there is a change of policy in England.

There is a change of interest rate in England. The interest rate increases to 807~1

July 2lth., 1970 Tape no 1338 Page 3 Mr.Hickman. suddenly render this project unviable or there is a completely new policy decision,made as a result of the international i this European group of financiers,who go back to the British Government and say; "if you are going to join us, we have got to draw in our horns on our credits that we are nov advancing to create jobs in our various countries.w Where is Newfoundland left then? Newfoundland is left not only holding the bag but having sunk the $30 million in of its money first. It has no choice then but to go ahead and complete it itself.

The amendment i~ quite sirple. Simple, if you were a draftsman like the Assistant Deputy Minister of Justice. The provision is made. No. (1), the total amount of $155 million must be bor- rowed before ~ne cent is advanced.· No. (2), when that is done, as progress payments are made on account of the loan, the progress payments ha made in direct ratio to Government's involvement and ECDG's involvement. I would like to hear from the bon. minister as to whether or not he agrees that that is the safeguard which is necessary to protect the Province. MR. ROBERTS: Well Mr. Chairman, it is a .necessary safeguard.

It is not necessary in the Act,in my view or in our view. These two agreements - let us be clear, Hr. Chairman, let the committee be clear. I thought my bon. friend was but he did not seem to be too clear. The project will be built by Provincial Building Company,Limited,which is a Crown corporation - 100 per cent of the shares are held by the Crown. I believe there are only three. One is held in my name. One in the name of the Premier and one in the name of the Minister of Justice. There are, I believe, five directors.

My colleagues, the Minister of r~mmunity and Social Development, Supply and Services, Justice, the Premier and myself. We will build it. We will sign the contract with Procon; U.K. 80:'5

JalY 21st.- 1970 Tape no 1338 Page 4 Mr. Roberts. Limited or Procon Great Britain. We will sign, also, the two financing contracts. One with the Kleinwort Benson·· Syndicate, which is guaranteed by ECDG - the British Government's Export Credit Guarantee's Division-and the other a mortgage which we will sigri in behalf of Provincial Building, with the Government. They will be signed back to back. I can assure the bon. gentleman that there is no possibility of our signing any documents which will leave the project short of funds. It is a real danger. You know, it could happen.

If we were just to put $30 millions tomorrow into Provincial Buildings - take it out of our cash reserve - put it into Provincial Buildings, you know that could happen then. It could be another Cape Breton - the terrible one that Bob Stanfield and Mike Smith got Nova Scotia into. all the feasibility studies in the world, all the experts, the millions of dollars, all down I the drain. This one; we will have a turnkey price, which they did not have in Nova Scotia,and the project will be fully funded, Mr. Chairman, before another nickel is put into it by the Government.

Of course, the first call on our $30 millian, Mr. Chairman, is the $5 million paid under

Section 6(1) of the original Act. So, I do not think it is needed. It is a real danger, but I can assure you that it is of which one~we are aware. We have the draw-down schedules. Our financial people have them. We are arranging to have the funds necessary, as we need them. W hen we sign the financing agreements, they will be back to back. MR. HICKMAN: Will the draw-down agreements provide for pro rata? MR. ROBERTS: Yes, they will. They might not be exactly pari passu. 807G

July 21st., 1970 'Iape no 1338 Page 5 Kr. Roberts. You know, I do not know what they will be until we can sit down with lleinwort in detail and work out the precise financial agreements. We will have to sit down with Procon and see in precise detail how much - you know, will they require $5 on signing or $5 million on signing. You know, really, these are the construction agreements that we want to get at. HR. HICKMAN: That is a completely different issue, how much Procon requires. MR. ROBER'IS: It is but it is relevant - we have the draw down schedules. We know how much is needed, and we have the money available.

It will be going in close enough to pari passu but it will not be - not uecessarily worth $30 millions - let us say four to one. We are not going to say that out of every dollar put in . twenty cents is from ours and the rest of it, eighty cent, is from the British ones. As needed the money will be available. Some of the money is to be spent in Nevfoundland. It will be raised in one form of currency. Some of the money spent in the U.K. will be in another. Again, Mr. Chairman, we must have - the point the bon. gentleman raised, is valid, It could happen.

But I can assure him that it is not going to happen because we will not be party to any agreements othe-rwise. MR. CROSBIE: Mr. Chairman, that is all very unconvincing. MR. ROBERTS: I would not know how to convince the bon. gentleman. HR. CROSBIE: If the hon. gentleman is able to convince me - if he is reasonable and sensible and makes sense ••• MR. ROBERTS: The hon. gentleman is beyond convincing. MR. CROSBIE: I will agree,but in the last agreement,that is now being amended; it was provided that the money the Government was advancing, the $30 million and the other monies to be put up, raised by Hr.

Shaheen, although they would be monies owed by the Building Corporaion,

July 21st., 1970 Tape no. 1338 Mr. Crosbie. would be advanced pari passu. MR. ROBERTS: No! No! MR. CROSBIE: Yes. _MR. ROBERTS: What was the clause please1 MR. CROSBIE: It is in the agreement. MR. WELLS: It is in the agreement. Page 6 _HR. ROBERTS: No, give me the ~lause of the old one. I honestly do not know it. It is not (8). HR. WELLS: It is to be advanced in accordance with the first •• HR. ROBERTS : Ah! hah! It is the same clause as in·here. HR. WELLS: No it is not. MR. ROBERTS: Yes it is. MR. WELLS: In accordance with the terms of the second mortgage. HR. ROBERTS: First and second mortgage. MR. WELLS: No!

MR. CROSBIE: I can look up the second. We will come to it later. _MR. ROBERTS: Yes, all right. It is not (8). You see (8) is the repayment clause. MR. CROSBIE: And I see no·• reason why that should change just to give the bon. minister flexibility - flexibility to put our $30 million in there before the $125 million. That is the flexibility that is required. Now there are other questions which need to be answered. Under the interim financing arrangement, $5 million was advanced to the project, to the Shaheen group,or between $4 million or $5 million.

The bon. minister says that out of this $30 million that the Government i• to raise to loan D the project that money will be deducted •• MR. ROBERTS: The first $5 million, yes. MR. CROSBIE: Or the Government will be repaid. But what is to happen 8073

July 21st., 1970 Tape no, 1338 Page 7 Hr. Crosbie. with other monies owed down at Come-by-Chance now,in connection with the work that has been done there to dtel There has been more than $4 million to $5 million work done down there. There are contractors and others owed money down there ~ho have not been paid out of that $4 million or $5 million. There are some suggestions that there has been, perhaps, $8 million or $10 million spent on this work already. Where is that other ••• HR. ROBERTS: No! No! HR. CROSBIE: Well several millions. HR. ROBERTS: No, not even several millions. HR.

CROSBIE: Well, perhaps, the Government would guess. It is at least over $1 mi~on. Let us say it is $1 million. Suppose the Government gets back its $5 million and this project is now going to cost $155 million, and there is $125 million to be raised in England and $30 here, suppose there is only $1 million more spent at Come-by-Chance - where does the other $1 million - where is that going to be paid from? Becauae the Jacob Study says that the cost of the thing is $155 million - the Procon contract is $155 million and that excludes the two large tanks down there now and certain other works done there.

So where are these extra monies coming from? That is the question I hve for the minister. HR. ROBERTS: Well may I deal with that 1 My understanding, Mr. Chairman, is that the price with Procon, {which is what~ $155 millions\ includes sufficient funds to pay the bills that are outstanding at Come-by-Chance now. They amount to - I do not have an exact figure. It is, as the Premier says, over $1 million, It is not $50,000. My understanding is that the contract with Procnn,which includes a substantial number of Canadian dollars for use on so-called local costs, as defined, will be paid.

Now if I may slip back for a moment to another point made by the Q n'"'n

July 21st., 1970 Tape no 1338 Page 8 Kr. Roberts. ~mber for St. John's West. He said that in the original agree~nt it was provided •• MR. CROSBIE: Page fifteen. MR. ROBERTS: I got it in front of me, and I will read it. Because what it says is that when the Government loan is made, the $30 million, advances there~under to the building company, shall,subject to the first mortgage and the second mortgage,be promptly made as required from time to time as progre3S payments for the construction and equipping of the plant. Mr.

Chatrman, as far as I know, we do not propose to amend that but I am looking through the Bill. fDl. WELLS: Page eleven of the new Bill. MR. ROBERTS: The new one the Government loan shall be advanced to the building company in the manner prescribed in and pursuant to the second mortgage for the construction and equipping of the plant. MR. WELLS: No indication of progress payments or anything. MR. ROBERTS: Mr. Chairman, you know, I agree. The words, "progress payments• are in one. They are not in the other. I do not think there is any significance difference in it. MR. WELLS: I do. MR.

ROBERTS: Well the hon. gentleman may. The words are different •. I a~r@e~ .the words are different. But the amendment - well let us speak to that amendment when we come to it. We are getting somewhat confused. We will come back to Clause (2). The price with Procon. Mr. Chairman, I am told 1 includes provision for all bills properly incurred,now outstanding. MR. MARSHALL: Hr. Chairman, if I may direct a question to the minister. I am not quite clear on this $155 million,which we were told was the turnkey price. Now ia Procon, therefore, going to be paid less than $155 million. 8080

July 21st., 1970 Tape no 1338 Page 9 Hr. Marshall. Do we rededuct then from the $155 million, the $5 million out of that has been previously paid - is this carect? MR. ROBERTS: Procon will either assume the liability for the outstanding accounts ~f Provincial Building, which I think is the mechanical way it will work, but I am not sure again, Mr. Chairman. We have not be~able at this stage to get at the firm construction agreements.

So, I cannot say whether the money will be paid from Provincial Building to Procon or from Procon to the present creditors or whether it will be paid directly from Provincial Building to the creditors on assignment from Procon. I am told that the $155 millions price does include provisions for the so-called local costs. It does not include the $5 millions. That has been paid. MR. EARLE: Mr. Chairman, would the minsiter, perhaps, sum it up this vay. When the gentleman from the Shaheen organization and others were before the Chamber, there was a question asked as to how the $155 million was arrived at?

One of these gentleman in replying, I think it was Mr. White, totalled it up how the increase had been arrived at,and he got it up to about $135 million. In so do~ng, he had added twenty per cent on to the final cost of the project rather than on to the original cost. The original cost was something like $86 million. The final coat was $155 million. So, there is a difference of several million in his calculation. Now I am wondering if this several million,which we questioned at the time ~s to take care of all this additional money which has been spent to date!

In other words,is there a slush fund provided in this $155 million to pick up all the odds and ends which are auound7 MR. ROBERTS: Mr. Chairman, I do not have nor have I seen a detailed 8081

Jyly 21st., 1970 Tape no 1338 Page 10 Mr. lobert8: breakdown of how Procon arrived at their price. 1 do know three things: (1) that the price is a reasonable one for the facilities which Provincial Buildings are to acquire for the project; (2), that we are told that it includes all costs necessary to put the project in a state of operation. I said a little earlier,including those entailed to date, of course properly incurred. If any ~ere improperly incurred, I do not know of any. If there were, then that would not be covered. They do include local costs,for argument's sake.

They do include labour and so forth and so on, (3), Mr. Chairman, I do know that the price we have in Procon or from Procon for the construction d6this project is sufficient. How do I put it? The income that we will get , the income the company will earn from its sales, is aufficient to amortize cost to Procon,within the period of time to be provided by the first and second mo~ages. I may add, sir, that not only are we satisfied to that,aod people will doubtles~ cast aspersions upon our satisfaction,and so be it! You cannot do anything about that, Mr. Chairman.

But I might add that the Government of Canada have looked at this,from particularly that angle,and also,most importantly, the Kleinwort Benson group in London,who are putting up the money and even moreso the gentlemen at the ECDG, because if it is not repaid,according to the terms of the first mortgage, which is eight year from the start of operations,as defined, then the call can be made upon the Export Credit Guarantee [epartment to pay. So, they are the people who·will have to be satisfied. They are satisfied,rutd so be it! But I think the slush fund is really quite an offeft~Lve fund. Ia any event, Mr.

Chairman, I am told that it covers any c·Jsts - local costs. 8082

July 21st., 1970 Tape no 1338 Page 11 HR. HICKMAN: TheTe is one, Mr. White, Mr. Bomer White - if bon. members will refer to Hansard of the 21st, it gave some indication of what Procon - I believe this was the only real indication we got of what the Procon contract will cost and this is found on page 2385. Mr. Chairman, it seems that we will have to go into the price one or have some~else tell us anyway. The announcement that was made in the pressJof a contract of $60.3 million pounds stirling ~s the size of financing requried for this plant. This will be the size of the contract with Procon.

Now this will convert into Canadian dollars approximately $155 million. This covers a lot of things other than just the hardware of the piant. This covers such items as; catalyst, chemicals, spare parts and a lot of other necessary things - things that aee normally considered. when you consider just the building cost of the plant. Sut we do have with these people a contract for a complete refinery. Mr. White did not volunteer at that time - maybe it was because he was not asked. _MR. ROBERTS: It is a wonder he was not asked, because he was really asked just about everything else. MR.

HICKMAN: Well after a while,when you were not getting any answers, you might as well quit. MR.. ROBERTS: I do not think the bon. gentleman wanted answers so 11UCh. MR. RICKMAN: It is most unusual - I am sure the hon. minister will admit - it ts most unusual in a building contract, with a contractor who is not dkectly concerned itself with the financing. I presume,so long as Procon is satisfied there will be in the till sufficient monies to pay the $155 million that they would charge for building this plant, they are not too concerned where it comes from. MR.. ROBERTS: They want to know it is there. 8083

Jul~ 21st., 1970 Tape no 1338 Page 12 MR. HICKMAN: It is most unusual to include in a building contract an undertaking on the part of the builder that he will assume responsibility for paying past debts that have been incurred. MR. ROBERTS: No it is not. MR. HICKMAN: Well where do you draw the line? Will the bon. minister tell us this? Will the past debts that have been incurred - are these just for local debts - debts for labour and materials bought in Newfoundland or will it be caught up in a proposal that it covers ttefull development costs1 MR. ROBERTS: No it does not cover. It does not cover. MR. HICKMAN: I am sure the bon. minister is aware of the trouble the American

interpretation of development costs and the Canadian are poles apart. MR. ROBERTS: The answer • Mr. Chainnan, and I am only to familiar with what the bon. gentleman is referring to. My understanding is that it covers cost of the project and ~bat would not include development coats. The project is defined in the agreement at some length and that is the cost of it.

What Brocon are doing,in effect,is taking over a project, you might say, under construction, A~though the construction has been completed and it might be .05 of 1 per cent, "they are stl.l taking over a projece which has begun and the work that has been done, insofar as it effects the overall things on ·site, is, of course, in accordance with the Ralph M. Parsons etc., etc., designs which we own and which Procon are going to build to MR.

HICKMAN : On the same theory - to fillow the same argument, then Procon should also pick up a percentage of the $5 million, not all of it, but whatever amount of that $5 million is related to what is on Cite. HR. ROBERTS: What difference whether Procon picks up the $5 million and gives it to us or whether building company gives it to us? We

July 21st., 1970 Tape no 1338 Page 13 Hr. Roberts. get our $5 millions back and then the $5 million is built on to the debt. The building company pays it off. MR. HICKMAN: The original intention, Mr. Chairman, as I understand it,was that out of the $30 million that would be raised, the first charge on that $30 million would be the $5 million that had been advanced by way of interim financing. _MR. ROBERTS: That is not only an intention.

Section 6 (1) of the original Act requ~s that. Mi. HICKMAN: It follows, therefore, that,when the $30 million is raised, there will only be $25 million availab~for the construction of the plant. That is correct. MR. ROBERTS: _MR. HICKMAN: But under this new proposal 1 I a~ correct on this. Under the new proposal none of that $30 million will be used to repay the $5 million. MR. ROBERTS: Oh yes! Oh ye•! Five millions of it is used. MR. HICKMAN: If $5 million out of the $30 is used. there will be $25 million plus $130 million. MR.

ROBERTS: I honestly do not have it in front of me and I am not going to trust my memory · to the amount of the first mortgage financing. MR. HICKMAN: MR. ROBERTS: $155 million. Let us accept this •• But I know what the cost of the project is? MR. HICKMAN: The cost of the project is $155 million not including the $5 alTeady spent. Is that correct? It is MR. ROBERTS: i cannot answer that. I do not have the feasibility in front of me. _MR. HICKMAN: This is what the Jacobs Engineering report indic:ates - it reports that it is $155 plus $5 million. 8085

July 21, 1970, Tape 1339, Page 1 -- apb MR. HICKMAN: Plus all the other expenses, so that if the $155 million is the fixed price, and the $5 million is not to come out of the $155 million, how _can any of the $5 million come out of the thirty raised by Government if there is only $125 coming from E.C.G.D.? How can it? HR. ROBERTS: ----- ----· I did not hear, could the hon. gentleman try again? MR. HICKHAN: Hay I go back again Mr. Chairman?

I know it is only $5 million, but when you get caught up and talk about $155 million, you sometimes might be inclined to drop $5 million on the floor somewhere and forget it is there. MR. ROBERTS: Does the hon. ~entleman think I took the $5 million? MR. HICKMAN: The simple fact is this, we are told, and why I repeat it is because I would like the hon. minister to correct me when I go wrong, that the total contract price with Procon is $155 million,fact one. MR. ROBERTS: That is correct. MR. HICKY<AN: Fact (2), out of that $155 million, Procon will not repay t