PROVINCE OF NEWFOUNDLAND AND LABRADOR HOUSE OF ASSEMBLY I Volume 1 Number 127 4th. Session 34th. General Assembly VERBATIM REPORT THURSDAY, JULY 23,1970 SPEAKER: THE HONOURABLE GEORGE W. CLARKE

l . July 23rd. 1970 Tape 1346 PK - 1 The House Met at 10:30 A.M. Mr. Speaker in the Chair. PRESENTING PETITIONS HON. W. N. ROHE: (MINISTER OF COMHUNITY AND SOCIAl. DEVELOPMENT): Mr. Speaker I beg leave to present a petition to this hon. House from the Placentia area. Strickly legally speaking, Sir, perhaps this petition is not in the correct form to be presented to this House. It is not specifically directed to this House and many of the matters in the petition refer to the Federal Government, the Parliament of Canada 1 and refer to matters which are under the jurisdiction of the Parliament of Canada.

Nevertheless, Sir, perhaps it is not a time to quibble on legal l formalities in this manner. I was presented with this petition a day or two ago~in the Lobby of the Confederation Building,by some people from the Placentia area. The petition is signed by 1781 persons. The petition is in a type- written form. Obviously, typewritten beforehand and t~en distributed for signature by those people who wish to do so.

The petition reads as follows: It is titled, "The Petition Of Special Concern For the Citizens of the Placentia Area." "Whereas the events and circumstances of the last nine months have brought the co~munities and the people of the Placentia a~ea to a pitch of concern and crisis; And

whereas to this date and at this time there is no sign of the total committment which can save this area, we the undersigned concerned citizens of the Placentia area do hereby request the Hon. Jean Marchand, the hon. Don Jamieson and (my name is used) to lend their efforts to the designation of the Placentia area as an area of special concern. 81 i" ·(~ ... ·:..

1 July 23rd. 1970 Tape 1346 Pk - 2 from MR. ROWF.:(H.N.) "lve requestnthese ministers a total commitment to the survival of the area. We request the immediate infusion of Federal funds on a massive scale in the immediate future; " And

whereas at this point there are no formal procedural agencies for communicating to the people, businessman, unemployed citizens and young; '' And

whereas the task force is an informal politicized institution avoiding public contact, we the undersigned citizens of the Placentia area request the immediate dissolution of Hr. Jamieson's Argentia task force .. _ and its replacement by a formal procedural agency permitting direct access by the citizens of this area to the Government and in particular to the Department of Regional Economic Expansion. We the undersigned request these things as reasonable concern committed citizens. We speak for the good of this area and we make the good of this area our only ambition. " Mr.

Speaker,as I mentioned at the outset, a number of these things are for the Yederal Government alone and,if not alone,then the Federal Government perhaps,with arguments and persausion . peraented by this Government to them. The first point mentioned the designation of the Placentia area as an area of special concern. By that I would irna~ine a special area under the DREE concept is meant.

The position of this Government,ever since the special area concept was first annunicated about a year or so agoJhas been consistently to ask the Federal Government to designate as many areas in this Province as possible,· as special areas, and the Argentia area is one of those areas which we consistent!~ in the Provincial Government,have asked DREE and the Federal Government to have designated as a special area. This desire to have the Placentia area become a special area,under the DREE program,is nothing novel or new,Your Honour.

It has been our consistent policy and it will continue to be our consistent policy in the future. We want to see the Argentia area become a special area and to recei~e Federal money for the provision of infrastructure and public services in the future, and also to enable industry to be attracted there. 81G3 . '

July 23rd. 1970 Tape 1346 PK - 3 MR. ROWE, W.N. The second point mentions,Sir,namely: the Ar~entia task force,is again purely Federal in nature because it was appointed by the Federal Government. However, Sir, there are one or two thin~s I would like to say about it. AN HON. MEMBER: Inaudible. MR. ROHE, W.N. I am presenting the petition to the House, as I was asked to do so, by the people l>7ho presented it to me. MR. HICJ.Ooi'AN: There \.•as a ruling in this House last year, to this hon. House,that any hon. member presenting the petition must report- he cannot speak against it. MR. ROl-lE, W.N. Well, Mr.

Speaker, if::the hon. gentleman thinks I am speaking against it perhaps he can rise to a point of order when I am finished. I may support it and I may not, as events turn out. The Argentia task force, Sir, MR. SPEAKER·: I also want to point out- that the hon. member only has five minutes. MR. ROHE, W.N; I will be finished in about thirty seconds, Sir. The Argentia task force a~ain ~ is ~ Federal matter,as I have mentioned.

But what I would not like to see, Sir, aa a member of the Provincial Government this task force used, as I mentioned two days ago, used as a political scapegoat or a football in any action or lack of action taken in the Argentia area. The task force has done its job, it has worked conscientiously over the passed several months and it has ~otten from Ottawa certain concessions by way of money. MR. HICKMAN: 1 would like to speak on a point of order.

The last sitting session of this House,Your Honour ruled that in presentin~ a petition or rising to speak in connection with a petition an hon. member can only speak in support of it but not against it. I submit that the hon. minister is obviously not supportin~ this petition at this time, Conseouently, the remarks are out of order. ~ffi. SPEAKER: It is correct, if the person is presentin~ a petition he adds his opinion to the prayer of the petition and,therefore,he obviously cannot 81G4

July 23rd. 1970 Tape 1346 PK - 4 HR. SPEAKF.R: speak against it. He has to sign the petition and also he has to support the prayer of the petition, othen,ise, he would not be presenting it. Also, we have five minutes in order to present it, There is not suppose to ·be any debate enrendered. The custom haf' ,:1;rown up whereby certain parties or certain hon. members are permitted. yt is not due to any rule, the custom nasjust r,rown up, as hon. members stand and support the prayer of the petition.

The whole question, I may take this opportunity,without cutting in on the hon. member's time, to say this that I trust that before this House sits aj'!ain • we will have an opportunity or there will he a proposition to change the rules regarding petitions, because very rarely are petitions presented to the House in the manner in which they are suppose to be presented. Matters concerninr the Federal Government are not in order. Matter which involving the expenditures of money are not properly in order.

That eliminates,! think,ninety-nine point nine percent of all the petitions that have been presented in this House for sometime. But the custom has grown up in this Legislature whereby petitions for roads and bridges, other than grievances,have been put before the House and accepted and the custom .is so well established that there is no way of preventing it right now. But, as I think, we have to formulate rules slightly different from the custom)that has grown up in the House, if we are not going to engender a debate on a particular subject. Will the hon. member please continue . MR. Rot.JE, H .N.

I would like to conclude, Mr. Speaker, by saying that apart from the misgivings I have on the motive behind the Argentia task force portion of this petition~! support this petition wholeheartedly. It outlines our own policy, as a Provincial Government,on a special area idea for the Ar,:1;entia area. We wish to have Argentia and the surrounding area designated a special area - and we will be devoting all our powers and all of our arguments to that end in the future,as we have done in the past. I move, Sir, that this petition be received. 81G5

July 23rd. 1970 Tape 134(• PK - 5 HR. SPF.AKF.R: ?·love and seconded that this petition be received and referred to the department to which it relates. HON. G. A. FRECKER: (NINISTER _OF PROVINCIAL AFFARIS): Mr. Speaker, my friend and I are in a rather embarrassinp. position. First of all, when this petition was presented in the lobby of Confederation Building on Tuesday last, I was undergoing a medical examination and consequently could not be presented. I appreciated very much the fact that my colleague, the Minister of Community and Social nevelopment,was able to be presented.

I, also, appreciate the fact that since he received the petition,he willinply consented to present it here to this House. I find myself, Mr.

Speaker, in a most embarrassinP. position because, whilst I support the first part of the petition wholeheartedly and can say without fear of contradiction that the Provincial Government has ~iven its full support to the idea ennunicated therein,that the Argentia area should be declared a special area, Also, that the local committee of the task force have petitioned for the same recognition and,at a meetinp. held about a week ago at Dunville, the "1-Thole task force committee, made up of Federal, Provincial and local representatives,unanimously endorsed the idea that the Argentia area, the Placentia area,should be desirnated a special area.

I can only go that far and say that insofar as I am concerned, as the member for the district, I will continue wholeheartedly to work towaras this recognition of the stricken area as a designated one, so that it may receive very special assistance. Now having said that, Mr. Speaker, I should like to put on record, witb -:your permission, the names of the personnel of the task force. Before doin~ that I should like to point out to the hon.

House that from the very beginning a ~roup,made up of the mayors of the four Town Councils and the Chairman of the Municipal Council of Fox Harhour,through me,madc arrangements to meet with the hon. the Premier. He met with this committee, including clergy and certain personnel from the Base, includinr. the Consul General of the United States and Mr. John !,~elan, who is A very 81C6

July 23rd. 1970 Tape 1346 PK - 6 MR. FRECKER: able and competent offical at the Base, but a Newfoundlander, and myself. Ke gave us three hours of his time,at night. Further than that, we had a meetinR t.Yith }lr. Jamieson, the hon. Mr. Jamieson,at his house, a three hour meeting,two weeks laterJand subsequent meetin~ with the hon. the Premier. The Premier is remindin~ me, Mr. Speaker, that I only have five minutes to go, and as this is an impossible situation, I will not go on any further with the explainin~; but I want to ~et these names on the record because it has a tale to tell.

The Government of Canada is represented on the task force by the following people and their positions; Hr. Ted Irwin, senior representattve of Manpower Consultative Service; ~r. Donald Lawerence, ~fana~er,Canada Manpower; Mr. Rupert Prince, Regional Representative of Industrial Development Service, Department of Fisheries and Forestry; Mr. Gerald Knight, District Director, Department of Public '!-1orks; Mr. Robert Chancey, District Director of Ag~iculture, Depart~ent of Agriculture; Mr. Allen Baker, special assistant to the Minister of Transport; Mr.

Eric Facey, special assistant to the Minister of Transport; The United States of America, represented by Mr. Richard Straus, Consul General of the United States·, Captain C. McCarthy, Commanding Officer of Ar~entia Naval Station; Placentia Economic Improvement Committee represented by Mr. John A. Whelan; Chairman, "lr. Thomas O'Keefe~ Secretary, Mayor. L • .I. Miller, Placentia; Mayor Cyril Pittman, Jerseyside; Mayor Ronald Kelly, Freshwater; Mayor William Hogan, Dunville; Mr. J. T. Foley, Chairman of the Community Council Fox Harbour; the Government of Newfoundland and Labrador,represented by Mr.

Zenon Sametz, Deputy Minister of Community and Social Development; Mr. Herman Batten, Office of the Premier; Convenor of the Newfoundland Government Group, Dr. R. Barrett, President of the Fisheries College; _ Dr. A. Burna, Dean of Engineerinp. ~emorial University; Mr. E.P. Henley, Director of Tourist Development; Mr. Clifford Russell, Chairman Fisheries Loan Board; the late Ross Younp, of the Newfoundland Fisheries Authority. and Mr. Herbert J. Coomhs, Deputy Minister of the Department of Provincial Affai-rs,- 81C7 1

July·23rd. 1970 Tape 1346 PK - 7 MR. FRECKF.R: who acts as ~ecretary of the Provincial Committee. Althour,h I was not officially a member, being a member of the Governmen~ I attended every meeting and acted as a sort of a catalytic a~ent to keep the thing movinR, and have consistently promoted the very ideas that we are now accused of doing nothing about. May I have another two minutes to get somethinp, else on the record, Mr. Speaker, one minute? The Department of Manpower, Mr. Speaker~ I am thinkin~ about the record rather than anythinp political in this.

I consulted the Consul General,the day before yesterday,and asked him if he could give me some information as to what had happened the people who had been phased down, so that 1 could report it to this House. \ath his permission, I would like to table this information; Approxil'llately 527 Newfoundland civilian employees of the Naval Base were terminated during the most recent reduction in force,necessiated by budr,etary restrictions.

All of these 527 are registered with Canada Manpower for other employment, ei~hty-two found new employment, eight enrolled for Vocational Traininp. and five were wives of United States Military personnel,who had since left the Province, 211 former employees were entitled to pensions, and this is the point I want to make at the moment. Two hundred and eleven of the 527 former employees were titled to pensions and eleven additional were ~ntitled to disability retirement.

Pension payments are as follows: Retirement for service; three received in excess of $4800, tH'O between $4000 and $4200, seven between $3600 and $3800; fifteen between $3000 and $3400; fifty-seven between $2500 and $2900; seventy­ HR. SMIJ..WOOD: Is this.-yeariy? · MR. FRECKER: Yearly, yes. Seventy between $2000 and $2400: fourteen receive approximately $1900: ten $1800; twelve $1700; five $1600; two $1500; four between $1200 and $1400: six $500 and $700; four with lesser amounts.

Retirement on disability,eleven,in excess of $420~That is 211 . ..... :.: altogether who have received retirement allowances, thus reducing - 81£8

July 23rd. 1970 Tape 1346 PK- 8 HR. HICK?fAN: Would the t.on. minister, if I am not infringing on his tine. permit a question1 It is for the purpose of clarification only, with respect to the pensions , will be or have been awarded to many of the former employees of the U.S. Base, these pensions~as I understand,vere not contributor - do any of these pensioners have to pay a substantial sum to the pension fund in order to qualify? MR. FPECKER: I understand ·tl.e hon. member's question, Mr. Speaker •.

Mv understanding is, I have to ascertain this, my understandinp. is that these amounts would be the amounts that they are receiving after they have made up back payments for what you might call establishing themselves in the pension fund,established at the Base for Newfoundland civilian personnel, because it was late in coming, I think, it was 1962 or so, and those who wish to participate in it had to buy back. I think theRP are ones that boup:ht back. MR. HICIOIAN: Inaudible. MR.

FRECKER: That is my understanding, but I am subject to correction there, if the hon. member would wish me to do so, I could ascertain that and give him the information this afternoon, Mr. Speaker, with your permission. Now there is one other point, ~r. Speaker, that I think is worth getting on the record and that is the part of the Hanpower Department in this business. Immediately, (this is a release from ~r.

Don Lawrence, the upon Manager of Manpower) immediately, the release of the layoff at Ar~entia Naval Base, Manpower set up an office,through the courtesy of Captain McCarthy,and commenced interviewinF candidates who would be laid off. Four hundred and seventy-one interviews took place and our man remained on the job,assisted by the Personnel Office of the Naval Base,until the 30th. June, 1970. During this time 120 job offers were made to persons being laid off, with seventy-nine refusals. The big problem that we encountered was '. that the majority of the people being interviewed did not wish to leave the area.

Visits were made by myself, that is Mr. Lawrence, to ERCO,and I personally visited Argentia with !-fr. Otto Lessing, President of Xewfoundland Pulp and Che1'1icals, and 81G9

July 23rd. 1970 Tape 1346 PK - 9 MF .• FRECKF.R: was assured by Mr. Lessin~ that he could absorb the persons laid off, who were still capable of carryin~ on their present vocation under construction conditions. Methods of commutin~ were discussed with ~fr. Lessing, the possibility of a bus operatin~ daily or the purchase of a car from the old Newfie Bullet to transport people from the area to Come-by-Chance.

This was temporarily set back by the present situation at Come--by-Chance, but the possibility of late fall jobs still exist for quite a number. 'Arrangements were made, - persons who had not worked on the Base, from the five towns affected by the layoff, will be able to have people visit our office at the Base. However, because of the distance involved little use was made by these clients. Manpower is opening a temporary office in the old R.C.M.P. Building in Placentia and should be in operation Monday, 27th. of July.

One of the main purposes of the office is to · reinterview the clients,with regards to any new possibilities of job prospects but mainly to ascertain the tradinp. needs of the communities involved. During our stay at Argentia we placed thirty people at various locations, (that is their own officials) within commutinp. distance. Authoriz~two mobility grants to move two clients, one to Toronto and one to the Goulds, St. John's West. Besides the thirty persons placed, six persons were placed in training courses.

We have been actively involved, since the news was first released,and will remain active to work on behalf of not only the persons affected but residents of the towns surrounding the area. Now I support the first part of the petition, if I am not allow to oppose I cannot support the second part, Mr. Speaker. Thank you~ MR. T. A. HICKMAN: Mr. Speaker,in supporting this petition,what the hon. the ~inister of Provincial Affairs says,w~th respect to the task force, may very well be correct.0n papet,at least this task force is comprised of very competent and representative men.

But, obviously somethin~ has gone wrong, Mr. Speaker, when you have a petition signed by approxi~atelv 1800 residents of the Argentia, Placentia area. I understand that the 8170

Jult 23rd. 1970 Tape 1346 PK - 10 MR. HIC~lAN: communication between the task force and the people of the Argentia- Placentia area 1 to say the very least? leaves a p:reat deal to be desired. Quite recently a ~roup from the task force or employees of the task force were to go to the Argentia,... Placentia area to talk to the people of that area about local involvement and to try and convince the people of that area that there was a great deal of local involvement them required on their part and to try and persuade~to do so, Mr. Speaker, that very little persuasion l.rould be necessary.

T suspect, Unfortunately, and to the ~reat surprise of"the people of that area, the very group who carne down to try to encourage local involvement did not see fit to tell the people in the Argentia- Placentia area that ~hey were coming and consequently people were totally unaware or the lar~e majority of the population were totally unaware of the presences of the involvers,to speak to the people~with whom they wanted to become involved. And I suspect, Mr.

Speaker, this is one of the very unfortunate errors that have been committed by the task force,in that there is almost complete and total lack of communication between the task force and those wh~that force must serve and serve exclusively. Mr.

Speaker,in supporting this petition,again may I direct to the Rouse, because I assume that all hon. members of this House are most anxious, certainly any responsible member of this House has to be most anxious that the spectre of unemployment that faces the people of the Argentia.-, Placentia area be dealt l-Tith, if at all possible, and dealt with quickly and efficiently and effectively and dealt with in every conceivable= manner and that every conceivable approach be used.

One thing that I have noticed and I suspect that other hon. memhers is have too 4 that during all of the pronouncements,from the task force and from others involved in the rejuvenation of the Argentia areaJthat we have completely and absolutely overlooked the fact that this Province is the only Province of the ten in Canada that is being grossly discriminated a~ainst insofar as the expenditure of defense monies are concerned by the Government of Canada. 817J

July 23rd. 1970 Tape 1346 PK- 11 ~m. HIC~~~: Here we have in .Argentia,a Naval Base with naval installations, and is precisely what it was desi~ed for. But the fiF,ures that are contained in a brief, a very commendable brief that was submitted to the Prime Hinister of Canada last year or this year, I have forp;otten which, by the Royal Canadian LeFion in Newfoundland~dealt with this very aspect and brought to the attention of the Prime Minister of Canada and the Government of Canada this ~ross discrimination that has been taking place for twenty years against this Province. I think it is very relevant, Hr.

Speaker, to this petition that last year the total expenditure in the Province of Newfoundland,~y the Government of Canada for defense purposes, Newfoundland and Labrador was $4.5 million, as compared with $145 ~illion, $145 million in the Province of Nova Scotia; $59 million in New Brunswick and tiny Prince Edward Island, has a population of less than the city of St. John's, $11.5 million spent in the Province of Prince Edward Island. Now, Hr.

Speaker, this has an employment factor that is quite significant hecause.in the Province of Nova Scotia where there were 13,865 servicemen stationed, there were 6,324 civilian employees. In Newfoundland~where there wen;at the time this brief was prepared ., 424, there were 125 Newfoundland civilian employees. I do not sugp.est for a minute, Mr. Speaker, that the Government of Canada be asked to close out the Naval Base in Halifax and move it kit and caboodle to the Argentia Naval Base.

But, if we are to believe what all Newfoundlanders think and what obviously the United States of American has believe up until now,that Newfoundland does have stra~egic position in the defense of ~lorth America, certainly more strategic than the city of Halifax, lf we are to accept the position put and the debate on the Come-by-Chance that,a~ain because of our strate~ic position on the trade route to the world as opposed to other Atlantic Provinces' ports, if we are to accept that, then obviously strategically we have an advanta~e over the Province of Nova Scotia. 8172

July 23rd. 1970 Tape 1346 PK - 12 HR. HICKNAN: If,for instance,the Government of Canada is anxious to try and alleviate some of the unemployment that faces the people of the Arp;entia- Placentia area, tlu~n · . one very real way of doing that is a realip.nment of the defense forces in the Atlantic Provinces. Supposing we took a third from Nova Scotia 81'4'3

July 23rd, 1970 Tape 1347 JM- 1 MR. HICKMAN: one-third from Nova Scotia and one-third from the Province 'of New Brunswick, we can leave Prince Edward Island, and bring to the Province of Newfoundland just 3~000 or 4,000 or even less servicemen,to be stationed at a fully equipped naval base 1 just think of the benefits it would bring to Argentia, not only permanent employment - MR. SMALLWOOD: Just look at the benefits they did bring to Argentia. MR.

HICKMAN: The benefits that the Government of Canada,because I understand that this task force is-seeking a way to maintain, if it is not seeking a way .. ': ~ - . .· .... to maintain and create permanent jobs in the Argentia-Placentia area then it is not serving the purpose that it was intended and obviously the petitioners have something to go on.

Now you have this fully equipped naval base at Argentia, if it moves in, if one-third of the service perso : stationed in New Brunswick and Nova Scotia were transferred by the Government of Canada to the naval base at Argentia,there is one advantage,over and above the advantages that came from the U.S. Naval Base,because under U. S. Naval regulations all purchases where possible had to he made State Side· Under Canadian defence regulations, all purchases for the requirements of a defence establishment must be purchased in Canada,with preference given to the local area. So, Mr.

Speaker, apart from the ratio of about one for every three serviceman of permanent civilian jobs that follow on any naval base, over and above that there would be the other benefits, direct benefits which will accrue to the people of the Argentia- Placentia area. This is not,I submi~, ·Mr." Speaker, an unreasonable request. This was invisaged in the terms of union,when we were to have a defence force in the Province of Newfoundland, but nothing has happened.

We watch the Canadian forces year by year dwindling away in this Province and never a word spoken by the Governmen~ Now we have the last clear chance to re-establish the rights that were given us at the time we became part of this Confederacy . I submit, Mr. Speaker, and I draw to the attention of the task force and to the Government of this Province that one very real benefit, one very real entitle- ment, and it is an entitlement that this Province has and if we accept the 8174

July 23rd, 1970 Tape 1347 JM - 2 MR. HICKMAN: position that has been repeated in this llouse,time and time again,that the Placentia Bay area has a strategic position that is better than any other part of Eastern Canada,then,obviously ,strategically we are on the right track, morally we are on the right track. I submit, Mr.

Speaker, that if the Government of Newfoundland fearlessly and without any concern for embarrass­ ment that this might cause to the Ministers of the Crown in Ottawa, if it would lay our case,either through.the task committee or as the Government itself,squarely in the laps of the Government of Canada and say; "Give us a piece of the defence pie both for economic reasons and strategic reasons~ tht•n this would be one way and one very effective way to meet the crisis that presently exists in the Argentia-Placentia area." MR. SMALLWOOD: Mr.

Speaker, the heart of this petition is something that the Government and the Opposition and I would think all Newfoundland would heartily support. The prayer of this petition is that that area be designated a special area. That is the heart of it,and how can anyone disagree? How can any New­ foundlander disagree? Of course we support it. We do more than support it, Mr. Speaker, we demand it.

We have demanded it, we have urged it emphatically with the Government of Canada, not by making speeches here in this House, that is not the way to get things done with the Government of Canada,it is not the way to get things done in any Province~if the Government of Canada is to do it, just make speeches in the local House, in the Provincial House.

The way to get it done is to deal directly with the Government of Canada. lhis we have done and this we continue to do and we do it emphatically and we do it in such a way as to leave no doubt in anyone's mind,in the Canadian Government,as to what we demand and what we want. We want that area to be designated a special area. But, Sir, that is only one of a number of places that we want, that we demand shall be des~gnated. Now eight areas have been designated in this Province to be special areas; the St. John's area, extending from St. John's to Witless Bay in one direction and St.

John's to Carbonear,including those two places in the other direction. That is special area ·number one. Special area number two is an area centred at Come By Chance. Special area number three is Central Newfoundland,from Gander to Bishops Falls 81 4' ~

July 23rd, 1970 MR. SMALLWOOr: Tape 1347 JM- 3 inclusive and including Botwood and Lewisporte, a sort of triangular heart of the Island. Special area number four is the Port Aux Choix-Hawkes Bay area, a small area. Special area number five is Humber Arm of Bay of Islands. Special area number six is Stephenville to Flat Bay, the other side of St. Georges inclusive. Special area number seven is a big slice of the Burin Peninsula and special area number eight is the Goose

section of Lake Melville. Now these are the special areas. This is about half the special areas of the whole nation of Canada, it is more than half of all the areas in the entire nation that have so far been designated and that eight 1 though it is more than half,is not half enough for Newfoundland. We need at least another eight. We have demanded that a number of them be designated,in addition to the eight. The Government of Canada have so far agreed in principle, agreed in principle to add three to the eight, three of those we have demanded.

We have demanded more than three but they have agreed to add three to the eight. The three they have agreed to add are the Bonavista Peninsula, not perhaps right down to the base of it but the outer end of the Bonavista Peninsula, draw a line across say from Trinity to Kings Cove or something of that order, every­ thing North of that line, that would be area number nine. The Baie Verte Peninsula would be area number ten and the area of Port Aux Basques to Burgee, inclusive,would be area number eleven.

We have also ask to have the Place~~ia-Argentia-Dunville-Jerseyside­ Freshwater-Fox Harbour and Point Verde area designated another area. So far the Government of Canada have not done so,but we continue to demand it. We think it ought to be so declared. We agree with the prayer, the main prayer, the constructive prayer, the creative and constructive part of the prayer of this petition. We could not agree more heartily than we do. This is what we have been demanding,not by making speeches in this House, not by signing petitions but in a very emphatic manner.

Now, Sir, let me say this in conclusion: The whole idea of the DREE program is,in the main, in the main now, there are a couple of other aspects to it, They will help relocation of people from one part to another part, they will give industrial incentives to approved industries,no matter 814'6

July 23rd, 1970 Tape 1347 JH..: 4 MR. SMALLWOOD: where they go in this Province, ·anywhere,whether in a designated area or not, anywhere they will go in this Province.they will give approved industries large cash grants, gifts and loans.

But the essential part of the DREE plan is this; in the approved areas, the special areas 1 to pour money in.to build schools, to put in water and sewer systems, to pave roads, to build trade schools and in other ways to make that designated special area an attractive place into which industry maybe enticed and if industry is enticed in there then the other part of DREE comes into operation and they will give large cash grants, But mostly, except it be a mine where you have to go where the minerals are, unless it be a paper mill where you have to go more or less where the timber is, unless it be something where you have no choice as to where you go, unless it is something like that ordinarily industry will move only into an area that is attractive, that has schools and homes and water and sewage and paving and hospitals and schools and what have you because,otherwise, industries will not move in there.

Now unfortunately,from the DREE point of view.the Placentia area has all these things. lt has schools, it has a hospital, it has water and sewage, it has paving, it does not have a trade school. That is one of the things that DREE gives that that area does not have but,generally speaking,the area in question is already incomparably better than many areas on this Island of Newfoundland.

So the DREE idea does not help very much in that particular regard 1 nevertheless we want it to be designated a DREE area, So speaking for the Government, as the Leader of the Government, as the Premier of this Province,! say now publicly what I have said repeatly in private, I say now publicly; ''we want this area to be designated a special .. DREE area, So,wholeheartedly,I can support the main prayer of this petition. MR. HICKMAN: Would the bon.

Premier indicate to the House whether or not there has been any committment by the Government of Canada to extend the DREE areas or the designated areas beyond • those contained in the agreement already signed? MR. SMALLWOOD: Yes there has. There has been an agreement by the Government of Canada,in principle ,to accept three of those we have recommended to be 8177

July 23rd, 1970 Tape 1347 JM - 5 MR. SMALLWOOD: added to the eight, the three I have already mentioned and,in mentioning them, I said that they had agreed in principle and I added"in principle"and then I said a third time "in principle." MR. HICKMAN: Committment was the word I had used. MR. SMALLWOOD: They have in principle committed themselves, in principle yes, to those three. Add those three to the eight and that would make eleven. Already the eight we have are more than half of all the designated special areas in the whole Canadian nation. Now they started off, I think, by suggesting three.

At the beginning the DREE people in Ottawa suggested that the number of special areas in this Province be limited to three, the number be limited to three. We got it up to eight and eight have been designated publicly but we also tried to get more than eight and we have so far succeeded in getting three more, in principle three more,making it a total of eleven. MR. CROSBIE: Mr. Speaker, I think what we need a defence force to defend us against such tremendous breaches of the rules of this House such as have occurred here this morning in connection with this petition.

Now when it came to the Minister of Provincial Affairs, of course, it was wholly excuseable because the hon. Minister is representing the district that this petition is about and I had no objection to it but the rest of it has been be most irregular but I will try not tohso irregular as some of the others because there is already a resolution down for debate. MR. SMALLWOOD: The hon. gentleman should begin his reform right now because he has to reform himself and he is going to start obeying the rules. I hope the hon. member for Burin is properly censured, I hope he feels very humbled. MR.

CROSBIE: I can even excuse the Premier this morning, Mr. Speaker. MR. SMALUlOOD: I was within the rules. MR. CROSBIE: In any event>in connection with petition,it is all very interesting and I think, Mr. Speaker, the time has come for a thorough discussion in this House of the position of the Argentia-Placentia area- what is being done - MR. SMALLWOOD: Why not have that tomorrow on private members day! MR. CROSBIE: We hope to have that when we come to private members day. With respect to the petition, passing over defence forces and whatnot for the moment, 8178

July 23rd, 1970 Tape 1347 JM- 6 MR. CROSBIE: we all agree, I believe, that this should be an area of special concern, 1be Premier has said that the Government agree and they want it to come under the DREE program. We all support that. lt maybe some help to the area.

I also support the part of the petition that suggests that the task force be replaced by a formal procedural agency.permitting direct access for the citizens of this area _to the Government, in particular the Department of Regional and Economic Expansion, or something along that line,because quite obviously if 1 as the hon. member for Burin said;· 1,800 people of the area feel it should be done ,there is a weakness in communication between the task force,which is composed of twenty-five or thirty people,and the people of the area.

There needs to be some one person, pe~haps several persons,who anybody with a complain or question and whatnot can contact,who are fully familiar with what is happening in the area. Probably the trouble is that the task force is too large and dispersed among too many agencies and it is therefore difficult to pin responsible. So I think there is something to be said for that part of the petition too. But since we hope to debate or discuss, not really debate - it is not to score points that the resolution has been suggested but just for the sake of these problems and what might be done.

I will not say anything further at this time except that I support the petition or we support it~on behalf of my colleagues. MR. HICKEY: Mr. Speaker, I would like to add my support to the petition. MR. SMALLWOOD: Good! good! I was worried that the hon. gentleman might oppose it. I am so happy to know that we have his support,and the people of Placentia will be happy. MR. HICKEY: I am sure, Mr. Speaker, the hon. the Premier could never think that I would no~ support something coming from the area of Placentia,where I spent close to five ·years, I could not possibly fail to support this petition. I support it, Mr.

Speaker, not just as a member of the House but as one who lived in the area and who _has some idea and some appreciation of what those peopl~ are now faced with. I support it for another reason;inasmuch as the re4uest that the area be designated as a special area. I find one 8179

July 23rd, 1970 Tape 1347 JH - 7 MR. HICKEY: particular thing rather confusing 1inasmuch as there is some· indication that the Department of Regional and Economic Expansion have some doubts as to the future economy of that area now,and for that reason~possibly,the area is not coming under the DREE program. However, Sir, I would point out that this Governmenthavedesignated Placentia area as a growth centre,under the centralization program,which is partly financed by the Federal Government.

Now I find it rather difficult to understand why a department of the Federal Government now have some doubts as to the future of the economy.when,in fact, they have approved the expenditure of public funds,under other headings,for that area. Again,with regards to the closing of the base, I think all of us now are speaking about something, it is like as though we are trying to lock the door when the horse is gone. Now this Government and the Federal Govern- ment were well aware that this base would not last forever.

There were constant reminders,by the news media, by the various agencies of Government,of the possibility of this phase-out or phase-down and, Hr. Speaker, next to to nothing has ever . been done for this area,in the way of industry, nextAnothing has been done for this area in the way of the fishing industry,despite the constant request of various people and various organizations of that area. I think the Government have a committment to those people and have a greater committment now.

I think now it is time for them to attempt at least to bail themselves out from what can only be termed gross neglect in the past, I hope to have some other things to say when the subject is debated. However, I would like to go on record as wholeheartedly supporting this petition. On motion, petition received. MR.

SPEAKER: I would point out once more that when we begin to relax the rules of the House,even in a small way,what it leads to is,we would be one hour of this session debating something,when there is a motion on the Order Paper which deals with the same subjectjin anticipation of this,plus the fact that our rules s~ate most clearly that there will be no debate on a petition when presented to the Hous~. We allowed it in one instance, we let it go a little further and consequently we have spent an hour debating something when there is a notice 8180

July 23rd, 1970 MR. SPEAKER: Tape 1347 JM - 8 on the Order Paper of the same subject to be brought before this House in this present session. It is something that needs clarification and some firm ruling. MR. SMALLWOOD: Mr. Speaker, I rise to a point of personal explanation and I hope the House will indulge me while I make it. I made a statement a moment ago that the eight special areas that have been designated constitute more than half of all the special areas that have been designated in the whole of Canada.

I have been informed since then,by my colleague, the Minister of Community and Social Development,that what I ought to have said is that these eight are more than half of all that have been designated outside of Newfoundland and,thereforeJconstitute about one-third of all that have been designated in the nation of Canada. MR. COLLINS: Mr. Speaker, before we get away from petitions, I have a petition which I would like to present on behalf of some three hundred residents of Peterview, which is in my district.

The prayer of the petition is that the existing water supply be extended to include some thirty-eight families in the Wigwam Point area. MR. SMALLWOOD: Is Peterview in the special area number three, is it within the boundry? MR. COLLINS: Yes, Mr. Speaker. I was going to refer to that. The people who have signed the petition indicate that those residents ~ho are now outside the area where the water is supplied,have to find water in ditches or brooks which evidently have become contaminated. They have contacted the Department of Health.

I have not seen the report yet but I would suspect that I will be receiving it pretty soon. I do not know what the Minister- can do about this particular project 1 this year~ut certainly,if it is not possible to extend the water. then I would recommend to him that a very ·close look be taken at the situation,to determine if the water supply which they are now using is actually fit for human consumption.

In connection with what the Premier just mentioned, since it does fall within the special area for purposes of the DREE program,if we cannot get something done with it this year then certainly hopefully it can be 8181

July 23rd, 1970 Tape 1347 JM ._ 9 MR. COLLINS : included in the program next year. It gives me great pleasure, Mr. Speaker, to support the prayer of the petition and I would ask that it be tabled and referred to the Department to which it relates. MR. ABBOTT: Mr. Speaker, I would like to support this petition. I was representing Peterview, part of Gander district, at the time that the water was installed. At that time the cost exceeded the expectations or the vote for that amount,therefore,the number of families who have petitioned the House now for the extension were unable to receive the water supply.

It was obvious then that sooner or later the wells in that area would be contaminated and now, as the petition reads,the wells have become contaminated and it is very imperative that water should be extended, the water line extended and the families who are involved should receive the same services as those who are receiving the services. The people themselves are hard working people and I am sure they feel and I feel that they should too receive the water services,as soon as the Government finds it possible. I have much pleasure in supporting the petition. On motion, petition received.

PRESENTING REPORTS OF STANDING AND SELECT COMMITTEES: MR. ROWE: Mr. Speaker, I think this is as good a time as any for me to report to the House on a matter which concerns, I think, every member of the House in that several thousand indeed, some twenty tho,usand of our high school students are involved.

I am very happy to be able to report that,according to the latest advice I have had from the responsible officers in the Department of Education ~he results for the public examinations in grades nine, ten and eleven will all be in the mails on August 3rd,making it the earliest time in the eighty odd year history of public examinations in Newfoundland, the earliest time that the results have been available. There are several reasons for this.

Gne,of course, is the reorganization of the Department of Education.' the other is the increasing use of the computers and the third reason would be the fact that we have 1 for the first time this year,repatriated the grade eleven examinations. previously they were always examined, read by .. the Atlantic Provinces 8182

July 23rd, 1970 MR. R0t-7E: examining board in Nova Scotia, land. Tape 1347 JM - 10 This year we are handling them in Newfound- I am very happy to be able to make this report, Mr. Speaker, because it means~among other things,that students in grades nine and ten will have a full month in which perhaps to do some remedial work~here that is possible, in their schools or through their homes or in other ways.

It also means that, for the first time in our history, potential . university students, matriculants and going into the university.will have a full six weeks and in some cases perhaps seven weeks,again in which to make their plans for the university and in some cases,! would hope,to do remedial work)where necessary. While I am on my feet, Mr. Speaker, I would like to report to the House on another matter of educational interest to the Province.

The president of the University and the scholarship committee of the Memorial University of Newfoundland have recommended to me, as they are entitled to do under the law, that scholarships, a number of senior scholarships be awarded to the following persons: the enior ubilee cholarship which is,I suppose, our most prestigious, certainly our oldest local scholarshiptis recommended to be awarded ~nd I might say I have accepted all these recommendations) to Douglas Bruce Sheppard of Cormack,who is persuing a career in science at the University; the Doctor Barnes, the Doctor Arthur Barnes 8183

July 23rd, 1970 Tape 1348 JM- 1 MR. ROWE: scholarship, again one of our senior scholarships,to Mr. Ian Eric Morgan of Seal Cove in Conception Bay. Mr. Morgan is now in his third year,doing a double degree course in bachelor of science and bachelor of eduction. The Doctor William M. Blackall scholarship, to Mr. Joseph Price of Rural Route No. 1 in Burin. Mr. Price is in his third year,in a bachelor of arts in education course. The Doctor Vincent P. Burke scholarship,to Miss Linda E. Snow of Freshwater, Carbonear. Miss Snow is in third year of bachelor of arts education. The Rev.

Doctor Levi Curtis scholarship.to Mr. Jeremiah Joseph Jesso,who comes from Red Brook, Marches Point,in the Port au Port area. Mr. Jesso is in his third year in bachelor of arts in education. The Doctor Arthur Barnes scholar- ship,to Mr. Frederick Wayne Moore of 5 Lookmore Street, Lewisporte. Mr. Moore is in his fourth year of a bachelor of commerce degree at the University. The Doctor William M. Blackall scholarship, fourth year, is awarded to Miss Ida Perpetua Marrie of Mount Carmel, Salmonier,in St. Mary's Bay. Miss Marrie is doing a bachelor of arts education,in the fourth year. The Doctor Vincent P.

Burke scholarship 1 for the fourth year,to Robert James Crewe of Whites Road in Deer Lake. Mr. Crewe will be doing his fourth year in a double degree program, bachelor of arts and bachelor of education. Finally the Rev. Doctor Levi Curtis scholarship,to Miss Martina Mary Broderick,who comes from Haywards Cove in St. Brendans, Bonavista Bay. Miss Broderick will be in her fourth year of a bachelor of arts eduction. One final comment on this report, Mr. Speaker.

I would ask hon. members to note, I am sure they have already noted this fantastic development I that has occurred in Newfoundland 1 in that practically everyone of the names that I have mentioned as winners of senior scholarships, Government scholar- ships,at the University, very extremely valuable scholarships, that practically everyone of those students come from some small community,scattered all over Newfoundland- Seal Cove in Conception Bay; Cormack; Freshwater; Rural Route , in Burin; Red Brook, Marches Point,in Port au Port: you might say the only large communities involved are Lewisporte and Deer Lake .

This is, of course, in tremendo•1s contrast to what happened a few years ago,when almost invariably winners of scholarships came from the very largest of our communities. 8184

July 23rd, 1970 Tape 1348 JM- 2 NOTICE OF MOTION: MR. MARSHALL: Mr. Speaker, I now give notice that I will on tomorrow ask leave to introduce the following resolution: WHERFAS the Electoral District of Ferryland has been without representation since the resignation of the former Minister of Fisheries; AND

WHEREAS the Electoral District of Ferryland is now the only Electoral District in the Province without at least nominal representation in the House of Assembly; AND

WHEREAS it is essential to the welfare and interests of residents of the Electoral District of Ferryland that they be so represented; THEREFORE

BE IT RESOLVED that this House urge the Government to implement the necessary procedures immediately to cause a Bye­ Election to be held for the Electoral District of Ferryland as soon as possible. ANSWERS TO QUESTIONS: MR. SMALLWOOD: Mr. Speaker, question number 252 on the Order Paper of April 6t~,in the name of the bon. the member for St. John's West. The question is in three parts. In answer to the first part, the purpose was to enable the NIDC to repay debts and interest and also to enable the payment of the deposit of $1. million in the Franklin National Bank. The answer to the second

part is that we had no correct or realistic figure anticipated or expected when the estimates were prepared and presented,so the authority consisted of a special warrant from His Honour, the Governor. The answer to the third

part is,as in the second,that we could not estimate or anticipate the amount that would be needed. This is a decision that was taken subsequentlyJso we put into the estimates a token vote of $100,000, which was a commonplace thing to do. ORDERS OF THE DAY: MR. HICKMAN: On Orders of the Day, Mr. Speaker, I would like to direct this question to the bon. the Premier: In view of the statement yesterday by Mr. W. D.

Mulholland, President of BRINCO, that the implementation by the Government of Canada, the tax reforms proposed in the White Paper, the proposed development of the Churchill Falls seems unlikely to proceed, why did the Government not appear before the Common Standing Committee of Finance, Trade and Economic Affairs,as other Provincial Governments are now doing, and publicly support the position put by Mr. Mulholland? 8185

July 23rd, 1970 Tape 134R JM - 3 MR. SPFAKER: This would be more appropriate to go on the Order Paper - if somebody wishes to answer? MR. SMALLWOOD: Well, Your Honour, the session does not have very many more days or perhaps even hours to continue,so perhaps I might be permitted to say briefly that the Government have made very strong representations to the Government of Canada on the matter of the White Paper proposals.

The Govern­ ment have been in very intimate touch with BRINCO and Churchill Falls Power Corporation and with the Iron Ore Company of Canada and with Wabush Mines and they have all made very strong representations to this Government, the Govern­ of this Province,and we in turn have passed those representations on,together with our own. We have taken a very strong stand indeed in connection with certain aspects, not all, but certain aspects of the White Paper tax proposals, and that is all they are.

They are only proposals He have strongly opposed some of them, very strongly, and we continue and we will continue to do so. MR. HICKMAN: Mr. Speaker, I would like to thank the hon. Premier for the answer. I think one of them, Mr. Speaker, I directed the hon. Premier's attention to the fact that almost weekly now on television we see Provincial Governments publicly making representations to this Standing Committee of the House of Commons. Is it the intention of Government to, maybe the hon.

Minister of Finance can answer this question,particularily in Yiew of the fact that it is my understanding that I.O.C. is holding in abeyance any plans for expansion in Labrador West,of its mining operations,until this matter is settled, is it the plan and intention of the Government of Newfoundland to follow the lead taken by other Provincial Governments in publicly appearing before this Committee,which has been given the responsibility of recommending to Government­ is it the intention of the Government of this.Province to publicly appear before this committee and uut_ the Government's position? MR.

SMALLWOOD: The bon. gentleman is now debating it. MR. HICKMAN: I am only helping the bon. Minister of Finance, Mr. Speaker. MR. JONES: Mr. Speaker, in reply to the questionmark• question, it was a decision of the Government of Newfoundland that we would not make any representation before the Standing Committee. My reason for recommending that 81~6

July 23rd, 1970 Tape 1348 JM- 4 MR. JONES: decision was briefly this,that we thought we could make a more thorough job by preparing a brief for submission directly to Mr. Benson, the hon. Mr. Benson, This has been done. The brief consists of some fifty Q~Res.We have had the help of a firm of tax consultants in Montreal, in Bssisting us in presenting this brief,and we have approached it probably from a much more technical angle than it would be possible to do before the Standing Committee.

Now I am not saying that to be disrespectful to the Standing Committee. lt was just that we thought that this approach would be better,for the companies concerned, Rather than to·make the presentation at a public hearing, we decided to go directly to Mr. Benson. MR. HICKMAN: Would the hon. Minister of Finance indicate to the House whether I this brief will be laid on the table of the House or made public? MR. JONES: I do not know. Personally I would have no objection~if Mr. Benson has no objection. MR. CROSBIE: Mr.

Speaker, I have a questio~ for the hon. the Premier; There was a report yesterday, I do not know whether the Premier heard it, from the principal of the Mohawk Hockey Stick Company that is proposing to establish in Stephenville,to the effect that - MR. SMALLWOOD: No, I did not hear it. MR. CROSBIE: Well, is the Premier aware of the fact that there was a report from this company,that they have submitted a new proposal to Government,in connection with the proposed hockey stick factory7 1s that correct and has the Government made a decision as to whether that proposal is acceptable?

What is the status of that prQject now? MR. SMALLWOOD: The answer is no, ~es, no. No we have not heard that he made any such statement. Yes he has submitted a proposal. No we have not decided on it. MR. CROSBIE: But does it look hopeful? MR. SMALLWOOD: Reasonably so, yes. MR. HICKEY: Mr. Speaker, I would like to direct a question to the hon. the Premier. Would he indicate to the House whether the Government plans to lend any monies to Canadian Javelin,in connection with the $370. million dollar 8187 )

July 23rd, 1970 MR. HICKEY: Tape 134R JM·- 5 project proposed for Julian Lake,in view of their decision to-? MR. SMALLWOOD: The answer is no. There has been no request that we lend any money and ,if any request is made,the answer is no, we will not. MR. HICKMAN: Mr. Speaker, a question to the hon. Minister of Justice 1 in his capacity as House Leader. In view of the approval that most ,if not all, interested groups have indicated to the new Solemnization of Marriage Act, why was that Act not introduced at this session of the House as promised in the speech from the Throne? MR. COLLINS: Mr.

Speaker, before Orders of the Day I have a question I was going to direct it to the Minister of Education but possibly,in his absence? I can direct it to the Minister of Community and Social Development. MR. SMALLWOOD: From father to son. MR. COLLINS: Yes. I have been told that the planned construction of the extension to the district vocational school at Gander, as announced by the Minister some time ago,is now in doubt. I wonder can he indicate to the House if the construction is to go ahead or not? MR.

ROWE(W.N.): The question should be directed to one of the involved departments, in this case, Public Works or Education~who could answer that, I think ,in any event ,it requires notice and should be':'orir..the:-Order Paper. MR. HICKMAN: Mr. Speaker, I have a question I would like to direct to the bon. the Minister of Fisheries. What steps has he taken or his officials or the Government with reference to a brief which was submitted to him,on May 7th, 1970 by,the Lords Co~e Improvement Committee,requesting an improvement in fishing - MR. ROBERTS: Order Paper. Mr. Speaker, on a point of order.

It is a question for the Really you know. Mr. Speaker,on Orders of the Day it is a perfectly normal convention and where questions are in order we are delighted to answer them. Surely,Your Honour, this is a question for the Order Paper and it should be tabled and would be dealt with by the Minister,who, I am sure, will answer it as best he can and as quickly as he can. MR. HIC~~= On a point of order, Mr. Speaker, the bon. the Premier has indicated,just a few minutes ago 1 that this session of the House is very rapidly 81~8

July 23rd, 1970 MR. HICKMAN: Tape 1348 JM - 6 coming to a close and that he had indicated that questions'that are now ask, if at all possible.would be answered, I had hoped that the hon. the Minister of Fisheries tollowing the policy laid down by the hon. the Premier a few minutes ago on behalf of Government,would see fit to answer this question. MR. SPEAKER: May I say this,in connection with this series of question, we have today allowed a little laxity in questions which could more properly be placed on the Order Paper.

The length of the session; I do not know how long it is going to be or how many days but it has been indicated that possibly we could relax a little,in which questions could be asked orally on Orders of the Day. I have allowed that to be done today and,if the Minister wishes to take notice of the question instead of answering it now,it is perfectly his right to do so.

MOTIONS: On motion of the hon. the Premier, a Bill, "An Act Further To Amend The Agreement Made In Pursuance Of The Government-Newfoundland Pulp And Chemical Company, Limited (Authorization Of Agreement) Act, 1960, And To Make Certain Statutory Provisions Relating To That Agreement," read a first time, ordered read a second time presently by leave. COMMITTEE OF THE WHOLE: Bill No. 94: Shall Clause 2 carry? MR. CROSBIE: Mr. Chairman, in connection with Clause 2. Clause 2 replaces Clause 2 in the original agreement and it has a number of sub-clauses.

I have no other questions now down to sub-clause (d),which says that the Government will cause the Building Company to construct the plant,in accordance with general plans and specifications,to be furnished by Refining and approved in writing on behalf of the Government, by a person designated by the Government.

Now in connection with approval of plans; is there a person yet designated by the Government or,if not, who is the Government planning to designated,because it will have to be quite a capable person,who is familiar with the construction of oil refineries ,if he is to perform any service at all for the Government? MR. ROBERTS: Mr. Chairman, at this point we have not appointed,in writing or 81t;9

July 23rd, 1970 MR. ROBERTS: Tape 1348 JM - 7 in any other way,a person to approve the plans and specifications that Refining have furnished to us. It is our intention to approach Jacobs Engineering and ask them if they•will accept this L ob~igation and,you know, accept the designation and give us their advice. We did not want to approach them nor have we approached them until they have submitted their feasibility studies. But the other change in the clause, the Committee might notice, is we have deleted the name of Hr. Conroy. That is because Mr.

Conroy either has or is about to retire from the service of the Government. Accordingly we just deleted him but,as of this moment,we have not officially designated any person for the purposes of this d(l). MR. CROSBIE: Who is furnishings the plans and specifications? Are these being furnished by Procon or UOP or whom? HR. ROBERTS: They have been furnished to us by Refining, Hr. Chairman, and, of course, Procon have them. It was on the basis of them, (they are a book,so thick) Procon computed their bid. They were prepared, or whatever you want, by a firm known as Ralph M.

Parsons,Limited,of San Francisco, I believe, - MR. SMALLWOOD: Ralph M. Parsons Inc. MR. ROBERTS: Ralph M. Parsons Inc., I am corrected. American companies are not Limited they are Inc. and they are a firm with an international reputation. Ralph M. Parsons Inc. of San Francisco are the people who have prepared the plans for us. MR. CROSBIE: Mr. Chairman, on this same point, just to get this clarified. Their plans and specifications had to be prepared or are prepared and there will be changes as the thing goes along and it ·will have to be prepared by engineers or someone with engineering ability.

Now that firm or person is now presumably Universal Oil Products. Now Ralph Parsons were going to be the people who were going to do all the engineering and supervise the construction, but they are not doing that any longer. They did prepare certain plans and specifications ~hich are still being used,but Parsons is being replaced by whom then? UOP is it? Are they the engineers who are going to supervise construction? HR. ROBERTS: Hr. Chairman, if the bon. gentleman means supervising it from the 81~0

July 23rd, 1970 MR. ROBERTS: Tape 1348 JM- 8 buildings point of view or if he means the construction itself, I am not sure, Provincial Building Company,Limited have bought from Ralph M. Parsons not the plans themselves because,apparently the title must remain with Ralph M. Parsons. This is,I gather,standard in the oil industry., We have, however, bought the right to use these plans for the Come By Chance Refinery,and they are unique, Apparently each refinery is unique. These plans are now mandatory with Procon. Procon's obligation is to build and to turn over to us a plant. MR.

CROSBIE: But who sees that Procon does it properly? MR. ROBERTS: Right, that is what I have said. We will have our own firm,who will be in a position comparable to that which, for example, Sandwell are to assume, I understand, at the Melville project in Stephenville, He will have our own firm 7who will report to us and Provincial Building as to whether or not the contract Procon have made with us is being carried out according to the letter, so forth and s9 on. MR. CROSBIE: That is Mr. Jacobs, is that who you said? MR. ROBERTS: We have not appointed a firm yet but Jacobs would certainly be on the short list. MR.

HICKMAN: Would the bon. Minister indicate to the House the total amount paid to Ralph M. Parsons for the preparation of the plans and specifications and for the acquisition by Government or Provincial Building of the right to use these plans? MR. ROBERTS: I think, Mr. Chairman, and I speak from memory, that the plans themselves we paid under our agreement with Ralph M. Parsons, one-half million dollars but I am not sure whether it is U.S. or not. NOW in addition there was a contract with Tyssen,part of which would have involved preparing plans and specifications,but our actual payment to Parsons Inc.

I think was one-half a million dollars. MR. HICKMAN: Well, what the hon. Minister says obviously is correct,that the original contract was with Tyssen,who would have the plans prepared through Ralph M. Parsons. A substantial payment had to be made under that contract. MR. ROBERTS: That is correct. It was made, yes, part of the $5. million. MR. HICKMAN: So would the Minister indicate to the Committee the total cost~ 8191 l

July 23rd, 1970 MR. HICKMAN: Tape 1348 ~e have $500,000 1 paid for the right to use the plans - JM -·9 MR. ROBERTS: The right to use and the right to have them for repairs. MR. HIC~~N: Plus the amount paid to Tyssen for the preparation of the plans1 MR. ROBERTS: Our payment to Tyssen,I am told, Mr. Chairman, was about $1 million.

So if you wish,the total investigation at that stage, because Tyssen did more than prepare plans, Tyssen also had prices and their price was considerably higher than Procon's,in the long run, by the way, but the payment to Tyssen was $1. million, I assume U.S, but I am not sure as it might have been Canadian. MR. HICKMAN: -so that is $1.5 million altogether. MR. ROBERTS: $1.5 millionJsure,which is less than one per-cent of the cost. MR. CROSBIE: In this connection, Mr.

Chairman, there was a report in the Newfoundland Government Bulletin,in October 1969 1 that the work todate at Come By Chance had cost $8. million and that included design,engineering for the refinery,done by the Tyssen group and the sub-contractors, Ralph M. Parsons Company and Universal Oil Products Company, $1. million; temporary cargo wharf $310,000.; surveying of the refinery in tank site, soil test, removal of bog, building of access roads $869,000. and so o~Different other items are listed.

This being so, I wonder would the Minister tell us,in connection with this clause, $869,000. was spent surveying, soil test, removing bogs and so on, when was it discovered that the site of the oil refinery had to be change~ in view of the fact that there was $800,000. spent down there by October,on this kind of site work~nd would the Minister also- 81D2

July 23rd. 1970 Tape 1349 Pk - 1 MR. CROSBIE: The minister also - MR. SMALLWOOD: Inaudible. }~. CROSBIE: Surveying on the refinery, in tank site, soil tests, removal of bog and the buildinp of access roads. ~ffi. ROBERTS: Mr. Chairman, I cannot answer the question, I will get the information and give it to the committee later. Presumably,a part of the money spent on site work and surveying • one of the reasons for the surveys would be to do the test to make sure that the refinery was located in the right place. This is normal in every enJ!ineering contracted.

T.he classic one was the bridge, the Curtis Bridge,Causeway Bridge on the Dildo run,on the New Horld Island. The Minister of Highways can name some other classics, but,Mr. Chairman,that is quite in order. We paid to have soil surveys done. They revea]ed a state of affairs that caused the~ you know, the proposed building to be moved a number of feet or yards. I will find out the date and tell the committee. I do not know it off hand. }ffi, CROSBIE: In this connection, this $8 million, this totals up to what appears to be monies that are not included in the $l55 million contract to Procon.

Therefore, where is the $8 million coming from? You see, the overall project development expenses and cost of marketing development was $3,200,000. .... ... ! . ·· ···-:. MR. ROBERTS: That is not in it. MR. CROSBIE: This is what was forwarded to Shaheen. MR. ROBERTS: No, no. MR. CROSBIE: Presumably the overall project,development expenses and cost of marketing development,$3.2 million. A million to the Tyssen Group and Ralph M. Parsons,is that included in the $155 million which Procon now has? MR. ROBF.RTS: Mr. Chairman, Oh! I am sorry the hon. J!entleman is not finished. MR.

C'I!.OSBIE: Or is this adding up the $8 million. If this is not included, I feel sure that this stuff is not included in the $155 million,then the 8193

July 23rd. 1970 Tape 1349 PK - 2 MR. CROSBIE: project must be costing at least $163 million. Where is this $8 million r,oinr, to come from? MJ!. ROBERTS: ~r. Chairman, I think the hon. ~entleman is confusing two thin~s. The things which we paid for,out of our $5 million, Provincial Buildin~,as the Premier said the other day,that is included in the $155 million. Now some of the items,that the hon. gentleman read from the Bulletin,would be included in the $5 million, as for example, the Tyssen Contract was paid out of the $5 millions. I believe the half million for the Ralph 1-1. Parsons plans was paid out of it.

Again, some of the money that the hon. gentleman referred to, as being in the $8 million, was laid out by Shaheen Natural Resources,from the1r own resources, and is not included in the $155 million. I assume they will recoup that, in due course,out of the profits that they will get under the a~reement for operating the refinery. Presumably they will have a nice little tax loss situation set up for the first few year$ until they write off their development expenses,in the same way as any company starting business would write of their taxes.

I have not got the Bulletin in front of me, but,as I recall it, and it is only recollection, the amount . said they are included some of the $5 millions which will be included in the $155 million, included other expenses which are entirely the responsibility of Mr. Shaheen and are not in any way involved in the $155 million. MR. CROSBIE: t-lell, there is one item here you see listed, two - 605,000 barrel capacity,crude storage tanks completed, $1,781,000.

Now the Jacob's Engineering Study says specifically that these two - 605,000 barrel crude stora~e tan~s plus other work at Come-by-Chance,that has been done,is not included in the Procon Contract. So there is $1,781,000 there. MR. S~ALWOOD: It is in fact. MR. ROBERTS: ~r. Chairman, all that I can say is to repeat - MR. CROSBIE: Perhaps the minister might get a copy. I can send him down a copy; ~. ROBF.RTS: If he would. 81!)4

July 23rd. 1970 Tape 1349 PK- 3 MR. CROSBIE: He mip,ht have it just to check it. ~m. ROBERTS: Repeat the statement the Premier made to the committee after checking, when the committee was meetin~ Tues~ay afternoon. That the $155 million fip.ure t-dth Procon does include a payment of $5 million. Canadian Provincial Building, would not included anythin~ over and above that, but since the tanks have been paid for out of the $5 millions we are p,etting our $5 millions back. There is nothing in the $155 million that is tar~ed for payment of two- 605,000 gallon tanks at Come-by-Chance.

There is an item, $5 million payable to Provincial Bulldinp: Company Limited,to discharge a debt the Provincial Building has to N.I.D.C. 'HR. HI~.AN: Hell, Mr. Chairman, on that not!e,the figures seem to be changing and getting more confusing all the time. He have $1.7 million paid for the tanks by Provincial Buildings. MR. ROBERTS: I did not say $1.7 million. It is - MR. HICKMAN: tvell. MR. ROBERTS: tvhat is it? ~m. HICI~: Yes,$1.7 million. Or was it $1.7 million or $1.8 million in the Bulletin? MR. CROSBIE: The two tanks? $1.781. MR. HICKMAN: Call it $1.8 million.

On Wednesday, I think, the bon. minister gave the fi,ure,something in the vicinity of $2 million had been paid to Shaheen Natural Resources. MR. ROBERTS: But I said something in the vicinity of it. I think,if you did some quick arithmetic, it will come out to $1.7 million. I am not sure whether the half million we have paid to Ralph M, Parsons has come from Provincial Building or from Procon. I am not sure, so that is another half million. MR. RICK}fAN: I mean this is why the figures now seem to be - MR. ROBERTS: I can do arithmetic too. MR.

HICK'fAN: If we accept $1.8 plus approximately $2 million for development - MR. ROBERTS: Or $3.8 million. 81!)5

July 23rd. 1970 Tape 1349 PK - 4 MR. CROSBIE: It says $2 million here for development, marketin~ development. HR. HICKMAN: But I am talkin~ about what was said here on Hednesday, $1.8 million plus $a million _ that is $3.8 million plus $1.5 million for Tyssen and Ralph N. Parsons that is $5.3 million right there lJithout including any other expenses. MR. ROBERTS: I am not sure Procon- I know we own the Ralph M. Parsons plans because our a~reement with them had a clause that if we did not ~o ahead with them we would have the right to buy. I think the hon. ~entleman will recall that clause.

Now I am not sure whether the half million to seaure the title was paid by Provincial Building. I have not got the minutes in front of me. I do not know, or whether it was paid by Procon,who had to have the plans and who have had access to them for months, in preparin~ their bid, just as the Tyssen and the other company,the Franco Ge~an Group,had access to them in preparing their bid,the one which we rejected. MR. CROSBIE: Hell, Mr. Chairman, MR. ROBERTS: I am sorry Mr. Chairman, I used the title incorrectly, secure the right to use them. MR.

CROSBIE: I just wanted to refer to this a~ain, The Jacob's En~ineering Company gave the Government a feasibility study 1 May 6th. 1970,and the Government tabled it in the House. These are the people we are depending upon to protect our interest or clear the project as feasibile,and the hon. minister says they may be our representatives to correct construction as it goes along. Now in this feasibility study they stated,in Para~raph 7,that "Procon has a firm-price contract to build a refinery." Then they ~o on~ •• "the fixed .. price excludes the cost of two 605,000 barrel crude tanks.

He are told,in the Newfoundland Government Bulletin,that these tanks cost $1,781,000- excludes some site preparation and tank foundation and engineering up. to this point. It also does not include tarrifs. Now the hon. the Premiler says that the two tanks - 81~6

July 23rd. 1970 Tape 1349 MR. S"".ALU!OOD: Everything including the kitchen sink, but excluding duties. PK- 5 1-IR. CROSBIE: Is in the Procon contract. So here is $1,800,000 minimum, a ~istake apparently in the Jacob's Feasibility Study, on which we are relyin~ for the feas ·ibility - to check out the feasibility of the project. I mean there statement and the Premier's statement are absolutely conflicting. HR. ROBERTS: Not necessarily. ~. CROSBIEc Unless the Procon contract has been chan~ed since. 1-'R. ROBERTS: !-•r. Chairman, you know there appears to be a conflict, I do not think there necessarily is one.

I am told the Procon contract includes $5 millions to Provincial Building. At no point in the Procon contract does it say "x' thousand or ''X" million for the site work that has been done or for the tanks. So it is quite correct to say that there is nothing in the Procon to pay for the tanks. At the same time it is equally correct to say that there is something there to pay us our $5 millionsJ which is what is paid for the tanks. The tanks were done by a Belgium firm of Graves and S.A. or something, who apparently are as good as anybody in the world at building large tanks. MR. EARLE: Mr.

Chairman, I think the ~reat confusion is arriving at what has actually been spent and what has not. The Provincial Building apparently has advanced,on the bridge financing,aoproximately $5 million to this date, This is as I understand it. It has been spent either through Shaheen or somebody else. I would like to ask the minister if he knows,to the best of his knowled~e 1 if there are any substantial or large outstanding amounts which have not been paid, which will have to be recovered first from the financinp, when it is now raised to $30 million? 'HR. ROBERTS: Mr.

Chairman, I do not have a detailed list, I think there are some accounts, I do not know what substantial means, I think we had the fip,ure,the other"day,of roughly a million, which Procon 1·ill have to pick up. There is one item that has been in dispute for sometime and it is reflected further down in this agreement. That is the question of 81:J7

July 23rd. 1970 Tape 1349 PK - 6 »R. ROBERTS: certain expenditures made,alle~edly in relation to the dock, the dock for the refinery. You know, there are discussions with the Government of Canada to see if they will assume them, because expenditures were a necessary preliminary. If not,there is a provision further down where the Government "May" .A person does not say the Government. are buiding, "shall"_ the Government "May' .I think the other accounts that are outstanding are Pro con - In my understandinp,, .,.,e will pick them up as part of their $155 million.

They are taking over a project which is entrain,even though it is that far along,out of a road that far. HR. EARLE: Is there any truth in the report that there are $2 million to $3 million owing on the project as of to date? MR. ROBERTS: I have not heard the report, so I cannot say. I know the Provincial Building Company,Limited,has no properly incurred debts, because Provincial Building Company,Linited,could not go beyond $5 millions,as authorized by the legislation. That is the limit Provincial Building has gone to.

Newfoundland Refining, I believe, has incurred some debts that are are their responsibility, but some of which I gather~to be caught up in the cost of the project and quite properly so. MR.. MARSHALL: I am a wee bit confused on the bases of whether or not this project is going to cost $155 million or over $155 millions. we have the assurance that it will cost $155 millions,and from the total amount of $155 million all monies expended on interim financing will come back to the Government,through Procon or some other agency. Will they be ••• ~. SMALLHOOD: All money spent. Is this $5 million? ~.

MARSHALL: Specifically $5 million under the interim financing. Now in order to allay the doubts of any members on this side of the House and any doubts in the agreement itself, if this is the situation, I would suggest that we could provide,in this sub-paragraph(

e) after the word - "project " the following words, "provided that all monies advanced pursu::.nt to the interim financing authorized to be advanced under

Section 6 of the Act to be first paid from the proceeds." This would spell it out loud and clear,that any monies advanced on interim financing would come out of this $30 million. I 81!)3

t .. July 23rd. 1970 Tape 1349 PK- 7 MF. 1'-tARSHALL: do not see the reasoning of the Government of spending over $155 m:f.llion of our money, to a foreign concern which is goinp, to pay it back,when ~t can 1 set of against the $30 million that we are advancing to them. MF. ROBERTS: Mr. Chairman,the hon •. gentleman weuld probably ask leave to withdraw the amendment. I would refer him to 6(2) of the Original Act, He was not in the House, but it was enacted Sir. Because any amount lent or cause to be lent,under sub-section l,and that is the $5 million,shall be repaid forthwith upon receipt of the loan or proceeds of the bonds referred to in

Section 5.(and that is the $30 million)and shall be a first charge thereon. I really think the amendment is quite superflous and probably he will consent to have it withdrawn. The point is covPred and, I think, covered indisputably or irrevocably and finally,interminably~ to withdraw it? So he will consent MR. CROSBIE: Mr. Chairman, I would like to ask the minister;for a number of months there the Government stated and Mr.

Shaeen and his ~roup stated that the financing of this project was bein~ provided by a consortium of four European companies, Tyssen_of Dusseldorf~ Brown Bovcri & Co.,Ltd, Sulzer Bros, Waagner Biro - and Ralph M. Parsons is doing the desi~ and would supervise construction and so on. Now for a number of months it was stated that this was all arran~ed, that these were contracts and agreements in the "in" group. Then, in March, the Government went to Europe and came back with the English people, their proposal, in other words Lowell Products and Procon.

Were there · ever agreements signed with these financial people? If not, why were we told that this is all arranged and the whole thing was firm and the late Ralph Parsons of California was to do the plans and the great Tyssen was going to provide the money and the great Spiro was going to provide the money or whoever it was? MR. ROBERTS: }fr. Chairman firm arrangements were made. There were no agreements signed. There is a world of difference between an arrangement and a contractual agreement. Ralph M. Parsons did do the design work. 81S9

July 23rd. 1970 Tape 1349 PK - 8 MR. ROBERTS: The Tyssen Firm and the others in the consortium did prepare a price. The various agencies of the Government involved,the counterparts of the British E.C.G.D.,were prepared to_,guarantee the loans in the normal export credit way. When we got to Paris we decided 7 in li~ht of the British offer,not to accept the Franco-German, it was the consortium of the Franco­ German companies with Swiss and Austrian participation. There were two reasons for it,as we explained either at the time or at second .reading debate here.

First,of all, the interest rates were considerably above. I believe, the German portion, which was the largest portion,was. tb the order of eight and a-half per-cent, Deutschemarks 7 and secondly the price that Mr. Tyssen and his associates wanted was,in our , view, too high. Thirdly, there -.rere some interesting features in the contract,such as overruns would be on us and so forth. It was not a firm price turnkey contract.

Accordingly, the ministers, the five of us who were in Paris,decided that we could pass up that offer and reluctantly we left Paris,went to London and accepted a much, much better offer from Procon with the U.K. cover •. MR. HICKMAN: ~r. Chairman, during a committee's of the Bill there was some discussion and,I think.approval in principle by the bon. Minister of Health;when the time comes to distribute, to pay out the funds that are borrowed,either through E.C.D.G. or the direct guarantee,that steps have to be taken to protect the Province so that our $10 million does not go first.

I do not know if the bon. minister challenged me to draft an amendment or not. But, MR. ROBERTS: No,actually, it will be in the financin~ agreements. MR. HIC~~= I realize that, Mr. Chairman, but that is too late then. This House has adjourned, and legislation has been passed. So to make it absolutely certain,and this will help Government's bargaining position when­ ~. ROBF.RTS: Our bargaining position is not bad. MR. P.ICKMAN: This will help. I speak with some knowledge in this,that . if you can hold the legislation in front of the people with whom you are 8200

July ZJrd. 1970 Tape 1349 PK - 9 MP.. HICKMAN: bargaining, and say. "Gentleman you can talk from now until domesday, but the simpJe fact is~ here is the legislation. This limits our authority, this must be accepted by you; Then the hon. Minister of Health will not have to waste any time arguing -and debating- and there is one gentleman on the Shaheen team that can debate for days and days,over - MR. ROBERTS: That was the Minister of Health. ~. HICKMAN: Over one comment, and debate is not even the word, it will take him that lon~ to p;et it out. I would move,therefore,that there follow (what clause is it?) Clause 2(

e) be amended by striking out the semi-colon after the word "council" deletine the word "and" and substitutinp: therefore the follow, ''and no portion of such monies shall be advanced by Government or any Crown Corporation to Building Company or paid out by Building Company until all funds required for the project has been raised and when all such funds have been so raised the $30 million will be advanced and spent by the Building Company in direct proportion to the ratio the said $30 million bears to the remaining funds borrowed for the financing of the project.~ MR. CROSBIE: It sounds excellent.

It sounds excellent. I will second it. I would like to speak just for a moment in support of that. That is a very wise amendment, Mr. Chairman, and I would imagine the Government is ~oinp: to consent to the amendment being passed. Obviously, ~r. Chairman, the:Government does not want,! hope,to advance the $30 million the Government is putting in until the Government knows that $125 million is definitely raised in England and that the money is bein~ advanced at the same time. MR. SMALLWJOD: The hon. gentleman can bet his hope of Heaven on that. MR. CROSBIE: Right!

The purpose of the Amendment is to prevent oar $30 million all being spent on this project before any of the $125 million is spent on it over in the U.K. I do not know if the minister has any objection to that. He has already said that that is the procedure that will be followed. 82i.H

July 23rd. 1970 Tape 1349 PK - 10 MR. RODERTS: Mr. Chairman, I do not think anybody in the . committee would disagree with the thou~ht. Indeed, it is an necessity,as we said, either in the committee or at second reading, the agreements will be back-to-back and they must be. He are not going to put $30 millions into a project none of us as individuals would sign,the five men who will be called upon to si~n these mort~ages · the financing agreements. None of us would sign unless we were sure that we had $155 million.

We are not going to sign a contract with Procon for $155 million , when we have only got $30 million. MR. SHALLT-JOOD: We do not think the refinery can be built on $30 million. MR. ROBF.RTS: People may feel, Mr. Chairman, that we are stupid or any number of things they may feel about us, but, surely to Meavens,we are not that 'stupid. MR. HURPHY: Generous, I guess. ~. ROBERTS: Generous? Mr. Chairman, the hon. member of St. John's Centre, the Leader of the Opposition ,who, I am afraid l,_must say, represents me in the House,lit was not my doing Sir! The hon. gentleman has never been accused of being p.enerous.

However, Mr. chairman, we are not able to accept the Amendment. Quite basically, quite briefly, we think it restricts the financial agreements, Financial a~treements 'Will be worked out, be tabled in the House according to the Amendment we accepted the other day, and so they will be seen and be proper, I can assure the House that none of the five of us are going to sign any financing agreement with the British banks,Kleinwort-Benson and so forth, that does not give us $155 million to fund the project, and our $30 millions will ~to in according to the draw-down schedule.

I said the other day, I did not think it was pari passu, A~ain, while I have not got the

schedule in front of me, I do not think it· is pari passu, which is what the Amendment would have. The reason for that,quite simply,is not nefarious, Mr. Chairman, Kleinwort-Benson and behind them always the shadow of the British Government­ The hon. gentleman is smirking. ~m. MURPlN: A great joke the whole thing. Newfoundland is going to be the sucker, Sp~nd all of our money first. Carry on. 82112

July 23rd. 1970 Tape 13~9 PK- 11 MR. ROBERTS: Mr. Chairman, the bon. ~entleman is an all-day sucker, I will agree, but let us leave that aside. MR. ~ruRPHY: Oh, brilliant! brilliant! brilliant! HR. SHALLHOOD: The bon. gentleman is gettin~ to be awfully cocky. MR. ROBERTS: Is he not? MR. S ~ALUIOOD: I think he expects to be Premier in the next ten years. ~m. ROBF.RTS: Oh, no sitting next to him, MR. SHALLHOOD: In the next decade or two. MR. ROBERTS: In the other place yesterday, sitting next to him was the man who is going to take care of the hon. gentleman's aspirations. Unfortunately, not his own. Mr.

Chairman,to come back to the point, behind all of this stands the E.C.G.D. and they will dicta'e the final terms of the financial agreement, simply because they are guaranteein~ ~e British financing. I must say the smirk really is, it is worthy of the hon. gentleman, Mr. Chairman' · I would think it is quite worthy. However, if that is the way it is going to be,the Amendment, I think, goes too far and we are not therefore prepared to accept it. MR. HICKMAN: l'lr.

Chairman, am I to understand from the hon. minister that his only objection and Government's only objection to the proposed amendment is that,by the use of the word, "direc~ratio ~- ~1s means that the payments must rank pari passu,in so far as- MR. ROBERTS: As I heard it read out,that is what it does mean. MR. HI~~: Well that can be very simply rectified by saying;substantially/ in direct porportion. That gives the hon. minister the leeway that he requires. And, if that is his only objection, we know from him that,(and I would presume that this is correct).

Government is in complete accord, that none ot•the $30 million will be advancei until the full amount has been borrowed and the full sum ·of $155 million is available. MR. S?-f.ALl.WOOD: Available. Available. But not received. In other words 821!3

July 23rd. 1970 T~pe 1349 PK - 12 f.fR. S~AUHOOD: the ap,reement sip,ned with the bank that the money is there. MR. l!ICKHAN: Mr. Chairman, all I am tryinr to do is to now tie down in this agreement some of the statements that have been made earlier in this debate, as part of the principle of this Bill. t-1e have been assured that the $30 million will not be touched until the rest of it has been raised. HR. ROBF:RT~: That is correct. t-fR. RICKMAN : Now it is switched to the word "available." Available is to be substituted for raise. But, Mr. Chairman, surely MR. S11ALLWOOD: Ah, look! Ah, stop the nonesense. MR.

HICK~AN : I am not goin~ to stop. of course 1 anytime that you try, in this Le~islature,to out into le~istative wording what has been stated in it second reading.is nonesense. And then you ask why there is some suspicion. Why there is some doubt, as to whether or not ·•this financing has been completed? Some doubt as to whether or not. MR. ROBERTS: Mr. Chairman, ~'ould the hon. gentleman yield for a minute1 He can have the floor back. First of all, I am not in any position to accept the Amendment I have not seen, That is point one. The hon. ~entleman has not done me the courtesy of even notice. Now, secondly_ MR.

HIC~AN: I accepted your request to be the rip,ht one. MR. ROBF:RTS: You know I expected a little in advance, Mr. Chairman, Secondly, we are now dealinp, with an Agreement between a number of parties,and we are not ~oinp, to consent to any chan~es in that, that have not been approved by all the parties. Thirdly, }tr. Chairman, if the bon. ~entleman will let me have a draft this afternoon, I '-Till undertake to see t.ohether it is acceptable. I do not think . we,as a Government, are going to accept the pari passu thing.

Sir, I will undertake to consult with the other parties in the Agreement, to see if it makes any. if they will·a~ree to allow us to insert a clause. But, you know, to come right back to it, !"r. Chairman, the Ar:treement is an a~reement that was worked out. We are not ~oinr. to amend it unilaterally. You do not have an a~reement then- you have one in Law _ but you do not have one in reality. 82ti 4

July 23rd . 1970 Tape 1349 PK - 13 l-fR. ROBERTS: If the hon. ,:!entleman wishes,! will try and find out, I happen to ar,ree with and the Government happens to agree,and the Government are ~oinl! to ensure that the $30 million is not spent and then we diseoverr the writ blanks or somebody says;'wel~we are awfully sorry ola man, we are FOin~ to spend our $125 million somewhere else. Reasonable •

July 23rd., 1970 Tape no. 1350 Page 1 Mr. Roberts. to vote right and proper and if the other party is in agreemen~ well,we will go along with it then too. The pari passu thing is, as I have explained, a different quintal of fish altogether. The word "substantially" does not take care of it, Mr. Chairman. The $5 million has to come out first and so forth and so on. It is not the sort of thing that can be drafted on the spur of the moment. MR. SMALLWOOD: Mr.

Chairman, while the minister is conferring on this point, I would like to clarify my use of the word ~available." The British money and the $30 million money and the construction contract will all be signed simultaneously,back-to-back,and,by being available,what I mean is that the agreement has been signed with the British banks - the money is available. It is there. We do not have it in our bank here. It is in the British banks. It is drawn down according to a draw-down schedule. That is what I mean by available.

As the Minister of Health has said; there.is not a chance in hell or out of hell that this $30 million or any part of it or $25 million it is, (It is $30 milllon, less $5 million already spent) his $25 million , not a nickel of it will be spent - not a nickel of it will be spent until first the financial agreement is signed.with the syndicate of banks in England. The signing of the agreement,with the syndicate of banks,means that the money then is available. AMailable in specific amounts to be drawn down, you know, as progress payments. Now that is what I meant by available.

In other words the agreement is sgned, sealed and delivered, the money is there. -It is .r marked for Come-by-Chance. When that is done and not before, money will be spent of the $30 million that has not already been spent, because, of course, $5 million of it has been spent. So of the $30 million, $25 million will be available and of the $25 million not a nickel to be spent until the financial agreement~is signed with the syndicate of British banks, headed

July 23rd,, 1970 Tape no. 1350 Page 2 Mr. Smallwood. by Kleinwort Benson and the construction contract all of them signed together bac~to-back. Now can I make it any clearer than that. MR. HICKMAN: Following along with the hon. the Premier ' s remarks, it is possible to enco~ass all of his objections in this amendment. and I direct it, particularly, to the bon. Minister of Health. Supposing the amendment read this way: ~subject to

section 6 (2) of the Act ",which takes care of the $5 million and after the word "raised!' the funds required for the project had been raised or irrevocably committed. Then when all such funds had been so raised or irrevocably committed,the $30 million will be advanced. There you have the commitment. It does not mean that you have to have the money in your pocket but it is irrevocably committed. Surely, Mr. Chairman, this committee is not being unreasonable to ask that that assurance be given to the House. If what the bon.

Min&ter of Health says is the correct position, the Government now has a signed, sealed and delivered agreement and consequently will not accept any amendment to this agreement unless the other parties-thereto are prepared to go along with it, then obviously we are wasting our time. What is the point of coming to the Legislature and asking for ratification of this agreement? Surely any of the parties dealing with Government must have been told or would have to be told that everything that is agreed to is a tentative agreement and that the Legislature in the final analysis is all-supreme. MR.

ROBERTS: It says so in Clause (16) of the agreement. MR. SMALLWOOD: We have accepted some amendments. MR. HICKMAN: To the agreement? MR. SMALLWOOD: Yes. MR. ROBERTS: No, we have not accepted ••• MR. HICKMAN: To the Bill, there have been some amendments accepted :

July 23rd., 1970 Page 3 Tape no. 1350 Mr. Hickman. tentatively. But, Mr. Chairman, if we do not have the right to amend the agreement and if the position is as stated by the bon Minister ~f Health,that there will be no change in this agreement that forms part of and is the

schedule to this Act, then he might as well do us all the courtesy of saying;"this is it." We might as well all go home. MR. ROBERTS: Mr. Chairman, the bon. gentleman from Burin is too good a lawyer to, you know, mean what I understood him to say. MR. HICKMAN: To mean what I understood you to say •• HR. ROBERTS : What I understood him to say. We have before us an agreement that has been entered into among a number of parties. There are parties on two sides, because three of the five signatories, I think 1 are creatures of Government and the other two are Shaheen or subsidiaries of Shaheen. MR.

CROSBIE: Creatures of Shaheen. MR. ROBERTS: I am sorry. Creatures of Shaheen, of course. It is a perfectly good legal term. The Legislature have the right to amend this agreement. Of course, the Legislature have the right. But I do not think that the bon. gentleman would maintain that that would then be binding on the Shaheen companies, because it would not. Well that is my point. We have an agreement with them. The purpose of the Bill is to ratify an agreement • Any agreement that is made between the two parties can be ratified if the Legislature or the Bouse so wishes.

If the Bouse unilaterally changes it, the Government are then in the position of not having an agreement with the Shaheen company. The Government are in the position of having an agreement ratified by the Bouse that Mr. Shaheen may or may not accept. It is an old case. It is the old question, really, of which comes first the chicken or the egg. What we have done here is said that we are not 8

C) i' 8-r.. ,,

July 23rd., 1970 Page 4 Tape no 1350 Mr. Roberts. able to accept amendments unless the other party agrees to them. We have accepted amendments to the Bill. We did not bother to tell or consult the other party because the Bill is a Government matter. One amendment to the Bill has produced a change which I shall come to at the proper place.- quite a major change which improves Newfoundland's position even further.

But on this one here, I will undertake to consult with the other parties and, you know, if the words are acceptable to our lawyers and to theirs, then we will gladly come back and either the bon. gentleman will move it or we will move it. Mr. Chairman, let us be quite clear. We are not going to stand here, as a Government, and unilaterally amend an agreement. It is no longer an agreement. We then, if it is amended by the ,, House, we have to go back to Mr. Shaheen and say; do you or do you not acceptf' He will say, "'yes" or "no. 11 I do not know. Be has no choice except to say yes or no.

He cannot say:"well yes, but.'' There we are, Mr.Chairman. I think that is a clear statement of our position. Nothing new, radical, dangerous or in any4ay nefarious in that. To me it is a perfectly straight matter. _MR. CROSBIE: Mr. Chairman, in connection with the proposed amendment, I support it and in supporting it .• I am being consistent, because two years ago, I was against the principle of the Government advancing $5 million in interim financing to the Shaheen group,to be used on this project when we had no assurance that everything was going to go ahead.

Now it is the same principle, exactly, involved in this clause except as the Premier pointed out, the bon. member for Burin's amendment can only apply to $25 million of the $30 million, because $5 million of our money is already spent down there without the $125 million being raised or anything else. That is what I was against two years ago. So that $5 1t1illion of th~ $30 million here is gone. 8 C) • J "" ..

July 23rd •• 1970 Tape no 1350 Page 5 MR. Crosbie: So the bon. member's amendment ooly applies to $25 million of this $30 million,in any event. I thought it was the wrong procedure two years ago. I think it is the wrong procedure now. I am consistent in that vi~. I still think it would be better if this were put in the agreement,but the minister assures us that the Government are not going to advance anymore of the $25 million ••• MR. SMALLWOOD: Not a nickel. MR. CROSBIE: Unless the other money is all lined up.

Now the Government's past record might make one query whether that will be the case. because t~o - ~rs ago the Government advanced - within the last two years. the Government have advanced $5 million without having anything else lined up at all. There have been so many changes since 1968 1 when that $5 million started to be adwanced1 that it is incredible ~hat at one time Mr. Ralph M. Parsons group - Tyssen was financing it - at one time it was $103 million. Then it went to $130 million. Then it went to $155 million. All with our $5 million gone. That is what I vas against two years ago.

That is what I am against nov 1 because one of the reasons why the Government have to go ahead with this project is that it has $5 million into it already. When the opportunity came up on May 22. 19701 to drive a harder bargain; because we had $5 million gone that we cannot get back without it going ahead. the Government did not drive a hard bargain. So. I agree with the amendment. I have one other amendment to suggest - the aame Clause. MR. HICKMAN: Do I understand froa the bon. minister that he wishes this to stand until be has an opportunity to •• MR. ROBERTS: Yes. Mr.

Chairman. first of all. the Assistant Deputy Minister of Justice has made some significant improvements in the language and we are looking at words like; "extension loan" and whatever 82~0

July 23 rd., 1971 Tape no. 1350 Page 6 Mr. Roberts, the other one is, which are defined in the agreement. Secondly 1 if it could stand, sir, until after the lunch break,and I will undertake to try to have some sort of answer for the committee. MR. CROSBIE: Well on that same clause, Mr. Chairman. There are some words put in this clause that were not in the 1968 agreement. We are on d 2(

e) f MR. ROBERTS: Okay, yes. MR. CROSBIE: Same clause. Now about half way down it says that the $30 million, the proceeds will be applied to the cost of the project. Such cost includes an addition to the cost of construction and equipping of the plant, the cost of design and engineering of the plant, architects, consultants' fees, cost of financing, interest on financing. Now here is what is added: "and all other fees and costs that are approved by the Government and Refining." Now that was not in the 1968 agreement. I do not see any reason why it should be here.

Why should any of the $30 million be used for other than the things I have mentioned? What are these possible fees and costs that may be approved by the Government and Refining? I would like to move, unless the minister can give a good explanation, that those words be taken out. MR. ROBERTS: Mr. Chairman, the only fees offhand that I can think of,that are not covered,are ones that all the learned members of this House will appreciate; particularly, the fees of the lawyers connected with the project. The word •• MR. CROSBIE: Very understandable •• MR. ROBERTS: I do not get it. I do not get a fee out of it, Mr.

Chairman. In any event that is why the words are there and also there may be fees and costs properly incurred that are not •• MR. CROSBIE: A significant omission in 1968 the lawyers' fees. MR. ROBERTS: Well, perhaps, that is a commentary upon the social values . of the draftsmen of the original Bill, Mr. Chairman, but I think that is why 8211

July 23rd., 1970 Tape no, 1350 Page 7 Mr. Roberts. they are there. Again I do not think they are unusual words. They are new, but I do not think they are unusual or different from words you see in agreements of this sort all the time. HR. CROSBIE: Who approves for the Government, when it says;"that are approved by the Government and Refining?• Does that mean the Cabinet or one minister or whom? Where this agreement says that such and such must be approved by the Government• - in actual fact, how is it going to work?

Is it the Premier who will appcove it or will it go to the Cabinet or will there be a Cabinet committee or some minister in charge of getting approval for the Government? MR. ROBERiS: Mr. Chairman, I cannot say what machinery the Government will have. Where it says Government - anything else, of course, would require an Order-in-Council or Minute-of-Council,which is the Caginet - the full Cabinet. I assume - not assume - I know we will have our own firm of engineers and, you know, our people to report to us, and it will be on their recommendation.

Now whether or not that is exercised by a minister or whether the Cabinet oboose to delegate that power to an official. I do not know. That is something we will have to do when we get underway. MR. MARHSALL: Mr.

Chairman. can we go back now to Clause (d),pending the consideration of the amendment of the bon. member for Burin~ In Clause (d) (3), there bas been a change;"structural work and all permanent buildings comprised in the plant.'' For the life of me, I cannot see why you have the permanent buildings included here and why you do not have the whole project as such that it would cause prime contractors to invite tenders for structural work on the project as such, MR. ROBERTS: Mr. Chairman. there is a perfectly obvious reason for 8212

July 23rd •• 1970 Tape no. 1350 Page 8 Mr. Roberts. the change, It is almost amusing 1 because as Clause (3) read in the original agreement, it would require.for argument's sake 1 if a contractor gets a contract,in at the project,then wants to build outhouses or kitchen camps,literally it would require him to call subcontracts for that. So we are told by the lawyers, and that is why we changed it. It now reads, structural work which is the same on all permanent buildings, If there is any permanent installation - we have to go through this route.

We do not propose - the engineering field shacks would even have to be - Mr. Chairman, that is too broad. So we refined the words somewhat. MR. MARSHALL: With respect, Mr. Chairman. 1 think it should be as broad as possible - as it possibly can be. We refer to the project,throughout the agreement,in its broad aspects, and I think it shald be here.

I think we have a duty to see that all tenders. where public monies are involved. are called,with respect to every single phase and every single nickel and dollar that is being put into this project, Now I want to mention this because I do not want to see or I should nat want to see a repetition of the situation which occurred down in Come-by-Chance ~th Newfoundland Refining Company, in connection with the wharf. 1 speak of this as a matter of public knowledge.

It is a case that is before the Supreme Court now1 1969, no. 113, if any of the members wish to see it,between Lundrigans Limited and the Continental Insurance Company. This particular case arose out of the loss of a wharf down 'n Come-by-Chance or a portion of the wharf,which Lundrigans had entered into a contract to erect with Ne'l.lfoundland Pulp and Chemical Company which, of course' is a Shaheen interest, plant. These are the people who are managing the 8213

July 23rd., 1970 Tape no. 1350 Page 9 Mr. Marshall. Now I was absolutely astounded to see that such terms and conditions could be arrived at in nny contract. MR.. CHAIRMAN : The committee is not supposed to enter into discussions of anything that is before the courts and yo~ cannot do that directly or indirectly, MR. MARSHALL: With respect, Mr. Chairman, and because of the reasons I give that I am not allowed to continue on with, I would move that this particular agreement be changed to embrace the all embracive words the project itself. Because we want to avoid the situation in this Province.

One of the reasons why we are in a state of economic - a medieval state, economically,is the fact that tenders are not invited as widely as they should be invited. We shald at all times exercise our opinions and our rights in this Legislature to assure that every single person, be he the big fellow or the large fellow; has the right to bid on a contract. In this particular case, I think, the people of Newfoundland should have an equal right with the large entrepreneurs here. I would say that we have to make it as all-embracing as possible.

I would have preferred the eminently reasonable suggestion of the bon. member for Burin, but I now move then ~hat the words; " all permanent buildings comprised in the plant," be changed to the words, "of the project." MR. CHAIRMAN: Motion is that Clause (

d) sub-clause (3) on page nine be amended by deleting from the second line thereof; "all permanent buildingS COmprised . in the plant,M aaa by 8u0StitUt~ng, therefore, "the project," On motion amendment lost. MR, HICKMAN: Mr. Chairman, with regard to the hon. minister. •hen he is consulting over the lunch hour with the other parties to this contract, would he inquire of them whether or not they have any objection to the proposal that was debated here on Wednesday 8211

July 23rd., 1970 Tape no. 1350 Page 10 Mr. Hickman, concerning the public opening of the tenders that will be called under (D) (d)J I have reason to believe that they have no objection to it, That is the only reason, I understand, why Government would not accept it on Tuesday. MR. ROBERTS: I will ask them, sure. MR. HICKMAN: Procon is not a party tD this contract. MR. MARSHALL: Mr. Chairman, I would like to direct another question to the minister. Subsection (c), sub-paragraph (1) 30,000 barrels. Now is that supposed to be 100,000 or - what is the reason for that1 MR.

ROBERTS: If the bon, gentleman will refer to the original Act 1 he will see the reasons for that. The original Act - it was Clause (

b) and it was 301 000, It was just incorporated bolus-bolus. There is nothing - it is just that the draftsmen copied the same sections, The original Act looked at two different schemes, a project of less than 301 000 or a project of more than 30,000. 8 C) 1 "' ;:.. .)

July 23rd, 1970 Tape 1351 MR. MARSllALL: Should we not have it taken out, 100,000 of them~ MR. ROBERTS: No, not necessarily. Why change it~ MR. HARSRALL: '!'_hat is what you invisage 100,000. JM -·1 MR. ROBERTS: Yes, the 30,000 is throughout the whole thing and why change it at this stage. On motion, Clause stand. Clause 3: MR. CROSBIE: We are now on the new Clause 3, I believe, right? MR . ROWE(W.N.): Except for in 2 there is that amendment to be approved. MR. ROBERTS: Yes, we approved everything in 2 except that one

section or one part rather. MR.'CROSBIE: The new clause 3, MR. ROBERTS: These are the Government's covenants. MR. CROSBIE: The new Clause 3 amends the old Clause 3 which are the Government's convenants !he first thing that must be noticed about this Clause, Mr.

Chairman, is that the Government's convenant in the original agreement, number 3(a); •that until the expiration of fifteen years from the date the plant goes into production or until such time as refining shall have exercised the option to purchase all the issue shares of the holding company and so on, the Government shall pay to the operating company an amount equal to the excess, if any, over the amount of 2.5 mills per kilowatt hour actually paid by the operating company to the Newfoundland and Labrador Power Commission for electrical power to operate the plant - - MR.

ROBERTS: Would the bon. gentleman yield for a moment as there is something I forgot to tell the Committee about 3(a)2 Mr. Chairman, I do apologize and I thank the bon. gentleman. Earlier we tabled a letter representing an agree­ ment between the Government, I think, and Can-Carib Company, That agreement had an intervention by Shaheen Natural Resources, it did not have a guarantee.

We have subsequently had further conversations with Shaheen Natural Resources,as a result of which Shaheen Natural Resources will now guarantee completely, irrevocably, finallypnder all conditions the performance by Can-Carib and if Can-Carib does not perform then Shaheen is on the hook. This is the significant 821G

July 23rd, 1970 MR. ROBERTS: Tape 1351 JM - 2 improvement to which I referred earlier. Our lawyers and Mr. Shaheen's lawyers are now working out the terms of the draft,which has gone through a number of things. So the letter we tabled will have to be replaced with a new one,which will be the same except that the intervention clause will read very much differently, very much more strongly. As soon as it has been done.and the officers of Shaheen Natural Resources in Newfoundland have authority, I am told, to sign; we will table the letter we expect that will be presumably this afternoon,at some stage.

The point is though, Mr. Chairman, the hon. gentleman will carry on and we all know what he is going to say, so be itJ But I do not want anybody to think that Shaheen Natural Resources have now guaranteed or have undertaken to guarantee that the Government will lose absolutely no money whatsoever on the power contract,so that is why we have agreed to leave 3(

a) in there. Sorry but I do thank the hon. gentleman. HR. CROSBIE: Well, Mr. Chairman, that is an improvement to that letter but I will come to that. But the noticeable fact remains, you see,if the project at Come By Chance or if Mr. Shaheen is to pay the difference between ·;2.5 mills and the real cost of the power delivered at Come By Chance,! cannot understand why.-:the proper course to have followed would be to remove this obligation of the Government from the agreement altogether. lfuy should this torturous route be adopted?

Our Government is committedlunder this agreement,to pay to the operating company at Come By Chance the difference between 2.5 mills and the cost,which maybe 6 mills or 7 mills, it may amount to one million or several million dollars a year. Well, if the project is going to pay cost for power, the obvious thing to do is just remove that obligation of the Government.Then the oil refinery enters into an agreement with the Power Commission to buy powerfur whatever the Power Commission will sell it for,at cost. But instead of that the obligation of the Government remains here.

The Government,from the Treasury~is going to have to spend a million or two million dollars every year, pay that out to the oil refinery to make up this difference between 2.5 mills and - 821'7

July 23rd, 1970 Tape 1351 JM- 3 MR. SMALLWOOD: If there is no difference they do not have _to pay anything out, do they? MR. CROSBIE: If there is no difference they do not have to pay anythin~ out but- HR. SMALLWOOD: They have provided,but have no difference. MR. CROSBIE: Look, this whole thing is ridiculous, Mr. Chairman. Out of the air somewhere, why and to whose advantage is dragged in,as some formula,where Shaheen subsidiary is going to get a monopoly on the sale of all gasoline products to the Power Commission. MR. ROBERTS: No. MR. CROSBIE: Yes.

This is an agreement where Canadian-Caribbean Oil Companies - HR. ROBERTS: It says that if the Power Commission and Shaheen, Can-Carib or whatever it is, do not agree. It is not a monopoly. MR. CROSBIE: All that this manoeuvring is designed to do is to provide a rationale or an excuse for the Power Commission to become a captive market for oil from the Shaheen group.

The letter here tabled in the House says, paragraph 1, "Subject to the provisions of the Golden Eagle Act, we will undertake to sell to the Power Commission,and the Government shall cause the Power Commission to undertake to buy from us,its requirements, up to approximately 5,500 barrels pe~ day,of residual fuel oil produced by Provincial Refining at Come By Chance, such specifications to be agreed upon between us and the Power Commission." The Power Commission is going to be obliged to buy its oil from Canadian-Caribbean Oil Comp~ny,Limited, all,ostensibly,to provide a vay for the Shaheen people to meet the cost of this power subsidy.

Now why is all this torture - MR. SMALLWOOD: Without changing the Act. MR. CROSBIE: Why not change the Act? We are changing the agreement now in a dozen different ways and it was announced that the project is now going to pay cost for electric power but our Government is still on the hook on this agreement and Mr. Shaheen's group is given the monopoly of selling oil to the Power Commission. I mean, anyone who looks at it can see right away that this is just a subterfuge to give them a captive oil market of up to 5,500 barrels 821J

July 23rd, 1970 MR. CROSBIE: Tape 1351 JM - 4 per day. lben there is a very complicated formula worked out as to how the Power Commission is going to buy the oil,at some kind of a lesser cost,that will meet supposedly the subsidy cost involving the power. We do not know whether it is really going to meet it. The cost to the Power Commission,of delivering power to Come By Chance, I would say, maybe six or seven mills per kilowatt hour.

The Premier will get up and say, "No, it is not six or seven mills per kilowatt hour, it is four mills because you take the cost benefit." When a man buys a beer and he pays the liquor tax and another man buys a pair of socks and he pays the SSA tax and when you take all these things into account for twenty years, that means that the real cost to the Power Commission is not seven mills, it is only four mills." This is not so. The actual cost to the Power Commission of selling and delivering the power, in cash the cost to the Power Commission is six or seven mills.

So I say that this is not worth the paper it is written on, this is not going to meet the real subsidy cost involved in giving power at two and one-half mills to the oil refinery. If the oil refinery project is feasible it does not need a subsidy on power. Why should a project that could make $500. million dollars over fifteen years get hydro-electric power for two and one-half mills, less than half, perhaps a third of the real cost, why? Then the Government,to make the thing look better,now.come up and say, "Oh, we are gettiqg around this." How are we getting around it?

We are going to make the Power Commission buy all its oil from Mr. Shaheen ~hat is some way to get around it)and work up a little formula where it is supposed that he is supplying the oil that saves the Power Commission $1. million or $2. million dollars a year and meets the cost of the power. That is fantastic. If this is entered into as it is here now, Mr. Chairman, the Government, from the- Treasury,is going to be paying $1. million or $2. million dollars a year,every year~to meet this obligation here and we will never know whether the Power Commission is getting it back from Canadian­ Caribbean Oil Company.

MR. SMALLWOOD~ Why not? Why will we not know, why not? MR. CROSBIE: Well, how will we ever know? 8~1J

July 23rd, 1970 Tape 1351 JM- 5 MR. SMALLWOOD: Well, why not? MR. CROSBIE: Anybody who reads that letter will know why we will never know, because it is so eomplicated and so difficult to fathom that anybody can pretend that it is anything. That is why we will never know. MR. SMALLWOOD: What that letter means is that they, Can-Carib, will pay the difference and if they do not Shaheen Natural Resources will. MR. CROSBIE: It is certainly a bit better with Shaheen Natural Resources guaranteeing it. But why should all that be done, Mr. Chairman, that is my point? MR. S}~LLWOOD: So as not to change that Clause. MR.

CROSBIE: If the project does not need two and one-half mill power,and it certainly does not on any feasibility report that you see, it might need two and one-half mill power if it would just about break even, it might make $100,000. a year and it might not~then you would say, ·~ell, perhaps it needs two and one-half mill power." But when it is going to make $10. million or $12. million a year or $40. million,as in the study I saw two years ago, a cash flow of $40. million a year, why do they need to scallop us for $1. million or $2. million dollars a year, the taxpayers of Newfoundland? MR.

SMALLWOOD: They do not and they are not going to. MR. CROSBIE: Well then let us take out Clause 3(a). MR. SMALLWOOD: No, there are good reasons for not taking it out. MR. CROSBIE: Clause 3(

a) should come right out of the agreement. MR. SMALLWOOD: Why agree to take it out? MR. CROSBIE: Let us take out this power subsidy properly, cleanly, the way it should be done, forget this nonsense with Canadian-Caribbean in giving them a monopoly on oil purchases by the