Volume 2 PROVINCE OF NEWFOUNDLAND THIRTY-SIXTH GENERAL ASSEMBLY OF NEWFOUNDLAND 2nd Session VERBATIM REPORT Monday, April 30, 1973 SPEAKER: THE HONOURABLE JAMES M. RUSSELL Number 63

The House met at 1:00 P.11. Mr. Sneaker in the Chair. MR. ~PEAKF.R: Order plec1se~ ------- Tape 1324(Afternoon) HON. r.. R. OTTENJ!F.U'ER(r-<INISTER OF F.DUCAT!ON): Mr. Speaker, I have somethin~ to infoI'T'l the ~ouse about, which will be of interest to all members no doubt and of particular interest to the honourable ~ember for Labrador ·~orth,and that is the conmencement as of today of a twelve week course in sawmill operation,at Northwesc River, Labrador. It is being conducted as an extension programme of the Stephenville Crossin~ District Vocational School, the forestry

section of that school. The programme is being carried out for the Department of Rehabilitation and Recreation, the Labrador services division, It is intended to train twenty-four male members of the Indian c0111111unity at Northwest River for work in a sawmill which is located in the community. The class will consist of twenty-four students with two instructors from the Stephenville Crossine Vocational School and one assistant instructor-interpreter who is a local person living in rrorthwest River.

The programme is being offered in co-operation with Canada ~anpower and the students will receive manpower training allowances while attendin~ this twelve week course. They will be trained in various operat.ions, sawmill operations as well as related woods work such as kantar, sawer, planer operator, skidder operator and chain saw operator. PETITIONS: ~R. E. W. WINSOR: Mr. Speaker, I beg to present a petition fror.i the residents of Change Islands in Fogo District.

The prayer of the petition is that we, the undersigned, the taxpayer of Change Islands request that the ~otre Dame Sc_hool Tax Authority give consideration to the school tax now bein~ levied and that the present tax he reduced. The petition is signed, Mr. Speaker, by 207 citizens of that con,muntty and as far as I can ~ath@r there is 6192 J?-' - l

April JI), 1°73 Taoe 1324 TT!l..lch discont€'ntment toward the school tax authority of that re~ion. ~IUl'lber one,the feelini;; is that the ta.'C is too hir,h. ~:ur,her two,the feelin~ is that throur,h no fault of the citizens involved they had been assessed for two years assesment.narnely for 1971 there was no assessment ana in 1972, so this year they received assessments for the two years which,of course,is a little heavy financially for the families to pay. So I think, Mr.

Speak~r, the problem there lies that the people involved wonder why they should pay assessments although le~al but not levied a~ainst them in 1971 or if levied against them,why they were not billed or assessed for that year and that carried over ;or a two year period. Now I think the honourable Minister of Education, if I can catch his eye over there, is ~amiliar with this problem they have with the school tax authority, the two year assessments in one year. I trust that he will intercede and try to :-esol ·:c the prcb1.m:. .. · In supporting the petition, Mr.

Speaker, I ask that it be laid on the table of the House and I would refer it to the department to which it relates. MR. H.W.C. GI LLETI: ~r. Speaker, it gives me pleasure to present a similar petition with the exact same wording,with the exception that J~ - 2 the words "Chanp.e Islands" is not on this one,naturally,but Twillin~ate.

I think this was a joint effort between Twillingate and Change Islands, both coming_ unrler the same school tax authority. ~ow I have mentioned in this honourahle House before, I bel;teve, that the Notre Dame School Tax Authority is brinp.ing people before the court by the scores,and this they resent very much. Their bill,as we know,for two years is S~n.o~ and it represents a financial burden on them at this ti~e, naturally. In conversation with the person who gave me this petition, . , ~fr.

Speaker, he said that Most people felt that if it were retiuced by half they could live with it but ae it is they consider that $40.l'l0 6193

Arril :in, 197J Tare 1324 a year 19 rather hi~h for them. So! would like to support what has already been said by my honourable friend, the member for Fo1,o, and support this petition and ask that the ~inister of Education direct the Notre Dame School Tax Authority to at least be a little more considerate as far as takinp, these people before the court is concerned and if possible to reduce their rates. I ask that this petition be tabled and referred to the department to which it relates. MR. OTTENHF.IMER: Mr. Speaker, ! have taken note of the words of the honourehle members from Fogo and Twillingate.

I think the matter was drawn to my attention Friday by the honourable member from Fogo. I shall certainly have this matter looked into. The crux of the problem as I understand it is that the school tax authority having b~en established two years did not send out bills the first year and are in the second year billing people for two years. It certafnly ~~" he understood the problemR that this would occasion.

I do not want to say anything further until I have had the matter looked into but I can certainly assure both gentlemen that the matter will be thoroughly looked into and the points they made and that their petitioners no doubt made will be borne in mind. MR. ROWE(F.B.): Mr. Speaker, if it is in order,! would like to support the petition presented by the honourable member for Fogo and the mer.1ber for Twillingate on behalf of the people on Change Islands and in ~~illin~ate itself.

Sir, I think this strikes at the whole problem that we mentioned earlier in the consideration of the estinates,in that school tax authorities themselves tend to be controversial, they are troublesome an<l there is a tremendous . amount of difficulty at certain stages of the r.ame in cpllecting taxes or any form of assessments. Quite often we find that the J~ - 3 parents in certain areas are not entirely satisfied with the service that is being rendered by the school board and it is just a troublesome 6194

April 30, 1973 Tape 1324 thinp,. I think, Sir, it points out the need for cstablishin~ a centralized school tax authority or havinr, the cost of education borne by the administration itself in this particular case. This is the type of problem that we are find is cropping up in all parts of the province. I certainly support the petition. I think it points out the need for a centralized school tax authority. MR. F.R. STACG: The matter of school tax authorities is one that is not foreign to my own District of Port au Port.

There is a considerable controversy going on there at the present time and it has been going on for some time about the le~ality of the institution of the school ·tax authority there.

I think it is generally conceded that the school tax authority was legally instituted,however,there is nevertheless a general feeling throughout my area and I think throuv.hout manv other areas in Newfoundland that school tAx authorities are a cumbersome body and some other method might be derived or the Local School Tax Act might be made more functional so that people know exactly what is happening when school tax authorities are instituted. I do believe that this is under active consideration by the government and I encourage it.

With regard to the two petitions presented by the honourable members for Fogo and Twillin2ate, it would appear that there is some injustice there in that people are asked to·pay two years tax in one year. I trust that this matter will be looked after satisfactorily.

I support the prayers of the petitions and I also encourage the administration to attempt to resolve the possible injustices or the inherent injustices that school tax authorities sometimes bring upon people who do not really know what they are gettin~ into. t support both petitions and I encoura~e the governmPnt JM - 4 to have a very serious l"ok at the institution of school tax authorities. 6195

April 30, 1973 Tape 1324 J!-f - 5 MOTIONS: HON. H.A. COLLINS(MINISTER OF ~IU'IICIPAL AFFAIRS AND HOUSINC): !-fr. Speaker, I give notice that I will on tomorrow ask leave to introduce a bill, ''An Act To Amend The Newfoundland And Labrador HousinJ? Corporation Act, 1966-1967." If honourable rne~bers would permit me, with leave of the House I could table the annual report of the Newfoundland and Labrador Housing Corporation. I have several copies in my office which I will get up later. OUESTIONS: MR. COLLIHS: Mr.

Speaker, I have the answer to, I do not know the number of the.question but it is in the name of the honourable member for St. Barbe North which I will table and another one in the name of the same honourable gentleman. There is no number on this one either but I will table"both copies. ORDERS OF THE DAY: MR. NEARY: Mr. Speaker, I would like to direct a· question to the honourable the Premier. I wonder if I could borrow that book that the Prernier was readin~ at five o'clock in the mornin~. Mr.

Speaker, I would like to ask the honourable the Premfer if he has received correspondence fr01:1 the Newfoundland Fishermen, Food and Allied Workers Union,in connection with amendments that they want made to the fishermen's collective bargaining le1islation! HON. F.D. MOORES(PP.EMIER): ~r. Speaker, I personally have not received it but I am pretty sute that the Depart:l!lent of Labour has. I am not sure of the answer but I will find out and let the honourable rnember know. ... MR. NEARY: Hr.

Speaker, is the Premier aware then that on Ai,ril 27, 1973, a letter was sent to the honourable Frank·Moores,si1ned by Richard Cashin, cQncernin~ this matter? Yes, I am a#ore of that, Mr. Speaker, I nm only sayin~ that the lerislotion is presently bein~ drawn up and that is beinr. 6196

April 30, 1973 Tape 1324 taken under consideration. That was discussed in the House previously and as a matter of fact the letter was circulated in the House. ~. NEARY: Nn, this is another one, a new one. Mr. Speaker, a supplementary question. I would assume then that the govermnent has not responded to this latest letter written on April 27, 1973. MR. 1-fJORES: That is correct. Motion, second readinv, of a bill, "An Act To Amend, Revise And Consolidate The General Law Relating To The Public Revenue, The Raising Of Certain Loans Authorized By The Legislature And The Auditing Of Public Accounts." HON •. j.C.

CROSBIE(MINISTER OF FINANCE): Mr. Speaker, I rise to move second reading of this piece of legislation. This is

an act which amends, revises and consolidates the former Revenue and Audit Act, Mr. Speaker, which if this legislation is passed would become known as the Finandal Admlnlstration Act, 1973. There have been some chanp,es made in the act and I will just point out the chan~es that seem to be of some importance. The first main chan~e in the act is that there is a chan~e in the constitutional functionin~ of the treasury board which is dealt with in section (3).

The treasury board from henceforth will be co111posed of a minister,who shall be the president as is the Minister of Finance,and not less than six other members of the executive council.designated fro~ time to time by the Lieutenant­ Governor in Council. Sertion (5) provides for thP cabinet to appoint an officer called the Secretary of the Treasury Board to hold office durin~ pleasure. Before last December, Mr. Speaker, the secretary of the treasury hoard was a Deputy Minister of Finance.

This has now been chan~ed so that.the treasury board will have its own secretary and the Deputy Minister of Finance is no lonp;er connected with the JM - f, treasury board. Th~ secretary of the treasury honrd is Mr. Victor Younr, and he h~s the same status as a deputy minister of a departMent. The 6197

Anril 31'), 11)73 Tape 1124 treasury board itself, of course, is a committee of the executive council and as the House knows,the vote for the treasury board appears this year under executive council, the t>reriier's Office. The act ii;oes on to provide the powers of the treasury board or what its duties are,includin~ the determination and the conduct of collective bargaining negotiations within the public sepice and for public bodies, and the sections establish what duties the board is supposed to carry out.

The next major change is that which I think appears in section (24), subsection (4) and that is to clarify the position with respect to whether or not the treasury board can create new subdivisions of a head of expenditure during the year. This has been a matter of dispute between the Auditor General and the Department of Finance for some years and treasury board as to whether under the old act treasury board and the ~overnrnent could during the year divide ~ head of expenditure into other subdivi;;ic,c,,. uoL listed in the estimates at the start of the year.

Now subsection (4) of section (24) would make it clear that the board can from time to time make such divisions of the subheads of a head of expenditure as it considers necessary with such divisions to be referred to a subdivision of the subheads of a head of expenditure .and may,where practical,be exhibited in the estimates for each fiscal year. Now that is a change. There is a chan~e with re~pect to special warrants,in section (28). ~pecial warrants, ¥r. Speaker, are needed from time to ti~e durinr, the year jf an amount is found to be insufficient to meet the require~ents of the service durin~ the year.

Under section (28) of this act as under the old act,if there is insufficient le~islative provision for a service and no countervailin~ savings availahle from other subheads for the head ot expenditure concerned, upon the report of the minjster to' that effect the Lieutenant­ Governor in Council can on the recommendation of the treasury board order a special warrant prepared for the si~nature of the Lieutenant 6198 .N - 7

April 30, 1973 Governor. Now in the past - There are two situ.1.tion11 where a special warrant mi~ht be neerled. One where there has been an amount provided in the estimates for that service but it has been found to be insufficient and the second situation that arises occasionally is when a new service is found to be needed, something that was not in the estimates at all.

The act also provides that where the legislature is not in session or has been adjourned for more than thirty days,any expenditure not foreseen and not provided for by the legislature with respect to a new service urgently and immediately required frr. the public good, then the Lieutenant-Governor in Council can authorize a special warrant for that new service.

Now the change here is that under the previous legislation you can only obtain a special warrant if the le~islature were aot in session. tn section (28), subsection (4d),it is now provided that a special warrant can b~ f3sued with respect to a ne~d for additional expenditure even if the House is in session,but it must be tabled in the House within three days if it is so issued.

So if there is a special warrant required because there has been an underestimate for a service that waa included in the estimates,under this change a special warrant could be issued although the House is open but the special warrant would have to be tabled in three days in the House so that the House would be informed of it, otherwise all special warrants have to be tabled in any event within fifteen days after the House opens.

Now l suppose the m~jor change in this new le~islation ... to replace the old Revenue and Audit Act is section (36) which provides that money shall not he raised br way of loan by the province except under this or s011te other Act of the Legislature. Now, Mr. Speaker, this will put the House of Assembly back in the position it was before the session of 1966-1967 when the Revenue and Audit Act was amended to provi~e that borrowin~ could be authorized by the Lieutenant-Governor in Council alone without authorization of 6199 J?-' - F

April 3(), 1971 Tape 1324 the Rouse. The position since - (Inaudible). !-IP .• CRo•rnn:: No but it did not have to be authorized afterwards either. It would be approved ~enerally in the budget. ~- ROEF.RTS: (Inaudible). HR. CROSBTE: ~o that was no restriction because it does not matter -- ----- ---- what supply authorized the cabinet could borrow as much as they liked in a year whether or not it was required by the budget or not. !:here was no ceilin~ on what the cabinet could borrow and in fact there was no provision in the House for it to be reported to the House.

So the situation since 1966-1967 has been that the cabinet itself could decide what would be raised by way of borrowing. Now it did not need to have a loan bill passed through the legislature because this could be done by an order-in-council. That was opposed by the Progressive Conservative Opppsition at the time and I must admit. I w,i~ in thP T.ihP-ral r.overnment in those days and that T w~s here when that amendl!lent was made to the act.

What happened and with that power in the hands of the cabinat,of courae,it can be abused or not abused as the case may be but what in fact happened. was that a ~reat deal of borrowin~ was done, Mr. Speaker, without any information bein~ ~iven to the people of the province or the House of Assembly at all as to what had been borrowed. In any event, it was opposed then by the opposition of the day, the Progressive Conservative Opposition,and it was planked in the Progressive Conservative platfoTI'l that this power should be returned to the House of Assembly.

So under section (36) of this act it will not be possible for the P,overnment to borrow under long-term, that is deht thnt has to be repAid in a period in excess of a year,unleas it is A11thori:r.c<l hy way of

an act pass~d ~y the House of Assel'lbly. So 1f the !louae pass this le~ialation today or this week,there will hnve to he intrnrlur.ed a loan bill (the loan bill 1a now at the. printer") to nuthori7.c the r;ovcrnmcnt to borrow during the rest of .rn - 9 6200

April 30, 1973 Tape 1324 the .year. up until ~'arch 31, 1974 ,the amount that we will need as indicated by the bud~et and in the estimates passed by the House. So that is a major change in this legislation and / 0201 JM - 10 ...

April 30, 1973 Tape 1325 IB-1 this will require the House to authorize before we can authorize I,. long term borrowing. The House will have to approve and ve will have to ask the House, Mr. Speaker, to approve the amount we are going _ to borrow this year. Also an additional amount to give us some leeway because it may be found for example that next Febraury or March is a good time for borrowing money. You might want to borrciw then rather than in April or May and you may need some flexibility. In any event, that is one of the major changes here. ·That is in

section 36. With respect to temporary loans dealt with in

section 45, the Lieutenant Governor-in-Council is given the authority in

section 44 to decide what amount may be raised by temporary loan~- They are to set a ceiling for the Minister of Finance to operate within. A temporary loan is a loan that bu to be repaid, I am not sure if it says six months or a year, anyway anyone of those periods, less than a year. 'The government of course baa to borrow on a short-term from time to time. A. I mentioned when t~e estimates of the Department of Finance were being debated, t _his year we are hoping to start a regular money market programme and always have on hand some $25 million or $30 million in treasury bills.

Short term lollDJI should be turned over every week when tenders are called for that purpose. So, the cabinet will have the right to determine how much temporary borrowing will be done each year. Now, the act also makes a significant change in this respect, Under

section 45, subsection 2, the minister is directed to lay a detailed account of all temporary loans -raised pursuant to

section 44-before the House of Assembly within fifteen days after the commencement of the nex~ ensuing sessio _n. 'That

section does not appear in the present legislation, Mr. Speaker. This means that there will have to be~ report tabled in the House on all temporary loans raised during the year,under the power given in

section 44 of the act,so that the members of . the House will be fully informed as to what temporary borrowing there 0202

April 30, 1973 Tape 1325 IB-2 bu been during the year and what it has coat and the lika. So, that ia a new

section in the act. Once this act is passed, Hr. Speaker, there can only be an increase in the public debt with the express authority of the legi lature,with several exceptions: One is temporary borrowing. The second is borrowing to make payments in the sinking funds or borrowing to meet debt that is coming due, That does not have to be specifically authorized by the legislature,of borrowing to meet expenditures that are provided for without the authority of the Bouse such as meeting debt coming due and sinking funds. Under

section 51 (3) of the act, Mr. Speaker, the minister ia to make an annual report of all guaranteed loans paid in part or in whole during the year. That report is to be laid before the House of Assembly within fifteen day• after the opening of the next session and is to show the names of the individual society,organization whose guarantees have been paid, the full amount ~uaranteed and the .11.111ount. of payments ln ectch c&H~. I am not sure whether that is a new

section or whether that was there before. In any event, there will have to be a report tabled in the House each year as to any guarantees that have been paid during the year. I think the provision was in the old act. Now, those are the main changes I believe, Mr. Speaker. If the House agree to the enactment of this legislation,it will come into effect immediately. It is not one of the bill  that come into effect upon proclamation.

It will come into effect immediately and this is why we will have to pass a lone bill before the House adjourns because otherwise we will have no authority to borrow the monies we have to borrow this year. These are the main changes. There are other changes in the wordinP. of the bill and technical changes in it that have been surgested by an examination.of the legislation in the other provinces,by officals of the Department of Finance and the Treasury Board, The legislation has been gone over in detail wi~h the Auditor General. He has £203

April 30, 1973 Tape 1325 IB-3 suggested certain changes which we have agreed to. It hu bcea gone over in depth with him. That is not to say now that he approves this legislation but he has been given plenty of time . ' to go over t~e legislation and make suggestions himself. Other than that,I em not authorized to say that he approves or disapproves the legislation. If he finds any of it that he does not approve,I presume he may very well mention it in his report when he makes it at the end of the year. So this is the new Financial Administration Act, Mr.

Speaker, to revise and update the Revenue snd Audit Act, to introduce three or four very extensive changes and particularly with respect to borrowing on long term. I move second reading. MR. ROBERTS: Well, Mr. Spea~r, it should not take terribly long to state our position on this bill at least in the first instance. Whether or not there is a secona instance will depend on whether honourable gentlemen on the other stde choose toe~ int~ t~- d~n~t~ or not.

Let me begin by saying that although the bill is a very large one - it covers forty-five pages and it ha in it eighty­ six sections~ ~t is a very important one because it is the basic financial l_egislation under which the govemant of the province operates. While it is both important and lengthly, it is not terribly exciting because there is ve.ry little in it that i  new. A the minister has explained,there are throughout the bill - I have not compared it

section by

section with the old Revenue and Audit Act which was done I believe about 1949 or 1950 1 by Mr. Walter Marshall,who was then the comptroller of finance and deputy minister,and Mr. Jim Thompson of Peat, Marwick. Mr. Thompson was with Peat, Marwick, senior partner,and was retained then to advise the government. Mr. Thompson and Mr. Marshall were the government's two chief financial advisers and they worked out - I am not saying they are responsible. The government are responsible. of course,but they worked out quite good legislation which s~rved adequately over the years. It is now out of date and needs to be 6204-

April 30, 1973 Tape 1325 updated and reviaed. That ia what we have before u today, Now, leaving aida th• technical change• to which the m1n1ater raferred - the•• are fairly atraightforward - the bill, as far as I can see, only does three or four things that IB-4 are of any interest whatsoever in the sense of their new principles.

The rest of the principles in the bill, Sir, are commonly accepted and are such things as; all monies are paid into the consolidated revenue fund and the comptroller uust make sure that no money ia spent without legislative authorization and all this type of thing, atrai&htforward, quite important but do not require further debate at thia time because they are widely accepted, First of all, the bill does provide .for a secretary for the 1:easury Board other than the Deputy Minister of Finance. I think that is a reaaonable step foiward, The present gentleman there, Mr.

Victor Young, in effect has been secretary of the Treasury Board for three or four years even though he rl{d not hold the title in law. In law the old Revenue and Audit Act said that it was part of the duties of the Deputy Minister of Finance. I think it is a atep forward to have a permanent secretary. The Treasury Board has become a power-house in the government sense. I am glad that the present minister and his colleagues have carried it on.

The special warrant , as far as I can understand it,this· merely resolves a situation whereby there has been dispute between the Finance Department, the minister and his officals,on one hand~ and on the other hand the Auditor General. It seems to be quite reasonable to give the povemor-in-council power to issue special warrants in certain circumstances. These circumstances are defined in the bill and again they seem quite reasonable, not terribly exciting, not terribly , new.· It does clear up an area where there was dispute and I think that is to be commended and that is to be welcomed. ~r.

Speaker, the only change in the bill that seems to ~e of any importance is the one to which the minister referrad,of loan 6205

April 30, 1973 Tape 1325 IB-5 acts. Let me say that I welcome it. Hy colleagues and I are quite happy about this. Equally we are eepecially pleased that the minister will now be required to table reports. Mr. Speaker, let there be no misunderstanding of this bill. This bill no more prohibits the government of this province borrowing money on the credit of this province without prior legislative authorization than it prohibits the fog from coming in the narrows or the ice. Now, I am not going to say that the situation as we now have it in our law was right or wrong.

The administration brought it in,I believe in 1966. They acted then on the advice of their officals. I know whereof I speak. I was not a member of the administration but I do know whereof I speak. It has functioned for a number of years. Be it right or be it wrong,the government have decided to replace it. I do not quarrel with that at all. Sir, the bill before us now no more prohibits• the offence,and the honourable gentleman from St. John's East I hope will say a few words on this. He has been one of the major spokesmen on it.

The offence as I understood it, the offence of portion of the procedure has been that the cdbinet, the governor-in-Council,could borrow money, pledge the credit of the province without prior legislative authorization. There always had to be legislative authorization for expenditure but it would be done under the Supply Acts or; the Minister of Finance will agree with me, it could be done retroa~tively. We did it retroactively this year, Sir. The administration spent $30 or $40 million on a Labrador Linerboard Mill. Then we retroactively approved that by legislation. It is not uncommon, not wrong, not criminal.

It did not have to be done that way. There is nothing to say that the government could not have spent the money and could have waited until they brought a bill in. They may say that is inconvenient. Maybe it would have been. The fact remains that under this bill, Sir, that proce~ure can still be done. The relevant sections, Your Honour, are

section 44 and

section 620l

April 30, 1973 Tape 1325 IB-6

Section 44, Sir, authorize• the overnor-in- ouncil to borrow any money he wants, $150 thousand, billion, million,for a period ">' not to exceed twelve months, straightforward, reasonable, twelve months. The only check upon the total, Your Honour, is the amount set by the lieutenant governor-in -council who of course is the cabinet. Let me just read subsection 3, Sir. It says, .. , loan may be raised under this

section whether or not the raising thereof may have the effect of increasing the amount of the public debt of the province or of extending the term of years if any prescribed in any act authorizing the issue of any securities proposed to be repaid, renewed or refunded with the proceeds of the loan." Now, Sir. that

section read together with

section 39,which says that the lieutenant governor-in-co~~cil may raise by way of a loan in the manner prescribed in subsection l of 37,and aubsection l of 37 will be referred to in a minute, the lieutenant g.overnor-in-council,under 39,may roll over loans.

It is not the technical term, but he may raise money, such money as may be required to repay. renew or refund in whole or in part any security issued under the authority of this or any other act whether or not the raising of the loan may have the effect of increasing the amount of the public debt or of extending the tem of years if any prescribed in the act authorizing the issue of the securities proposed to be repaid, renewed or refunded.

Section 37 (1), Your Honour, simply gives the lieutenant ~overnor-in_-Council - it says, "«here in any act authority is given to the Lieutenant Governor-in-Council power to raise aoney by loan unless there is some provision to the contrary in the act, the Lieutenant Governor-in-Council may in fact exercise that power.'' So, Mr. Speaker. you read these sections together and the situation is simply that the p;overrnnent may raise, the cabinet may ,raise loans for a perioi not exceeding one year. That is a reasonable provision. I am not arguing against it, What it does 6207 ..

April 30, 1973 Tape 1325 1B-7 mean is that we are then on the hook and as Your Honour will agree, whether we borrow the loan, whether we borrow the money for one month or one hundred years,once it is borrowed it must be repaid. The credit of the province is coDIDlitted. Similarly the governor. in-council may borrow money to repay, renew or refund in whole or in part any securities issued under the authority of this or any other act. In other words, the security issued, the twelve month note issued under

section 44 can be refunded under

section 39. They may have to call in another temporary loan. All I am saying, Mr. Speaker, is that this bill is reasonable and straightforward. W-e will vote for it but let it not be thought that this bill 1a any way limits the power of the cabinet to -pledge the credit of this province without prior legislative authorization. It does not,though sections in there are reasonable in themselves. They are reasonable in context but it does not in any way limit the power of the cabinet. Even if it did, Sir, even if therewere a

section in this act saying that nothing shall be raised without prior legislative assent - and that

section is not there. Sir,

section 36,

Section 36 does not say that.

Section 36 says nothing shall be raised by way of loan except under this or some other act. This act referred to in

section 36 also includes sections 44 and 39. Ewn if we had before the House a bill saying, unless the House of Aaaembly has specifically the bill to authorize the borrowing or the making of a loan,it shall not be made, what would that mean, Sir, in a House where we have eighteen ministers in the cabinet and maybe a nineteenth? We have a portfolio held on an acting basis by the Premier. Nineteen men in the cabinet, two additional gen~lemen in quazi-ministerial positions as assistants to the Premier. Twenty-one out of a House of forty­ two! No limit• on how 1nany men c~n be taken into the cabinet.

There is no act of th'is House, Sir, that limits it. True the legislation dates from before this aJ. ,lnistration. They did not pass it. They i;208

April 30, 1973 Tape 1325 IB-8 have not changed it. They have not proposed to change it. There is nothing to prevent the Premier tomorrow waiting upon His Honour the Governor, Sir, and advising His Honour the Governor to swear iri as minister the gentleman from Bay de Verde who at present is not a minister, the gentleman from Bonavista South who at present is not a minister, the gentleman from Brugeo who at present is not a minister, the gentleman from Grand Falls who at present is not a minister, the gentleman from St. John's South who at present is not a minister.

I have named all of the honourable gentlemen opposite who at present are not in the cabinet. The gentleman from Green Bay, the gentleman from Trinity North are not ministers but they are by authority of this House holding quazi­ ministerial positions. Even if the cabinet were bound by act of legislature to borrow money only with another act of the legislature, what, Sir, does that mean when at least half of th• House, not half of the government aide, half the House can be in the cabinet, can be under pay, can be under obligation~ Mr. Smallwood when he was Premier was criticized for thia.

The criticism many people made had a great deal of merit. The present administration are equally guilty. What we need in this province in this sense is a law saying,for example, there shall be no more than twelve men in the cabinet. Out of a House of fifty-one twelve in the cabinet. Two assistants for the Premier. I am not counting the officers of the House, Sir, they are ,not part of the government in this sense of the word. 'Dley are appointed by this House or elected by this House. So, Mr. Speaker, the whole issue is a sham issue.

The Progressive Conservative Party.a great deal of it, to hear them in this House you would think that Newfoundland had her birthright sold. Well, Sir, if Newfoundland's birthright was sold,this bill will allow them to have another sale and a resale and a &209

April 30, 19 73 Tape 1325 IB-9 further sale and still a further aale because these two •ectiona, Sir,

section ·44 and

section 39,give the government the power to borrow unlimited sums of money. There is no limit anywhere in this bill. Indeed, Mr. Speaker, it specifically say• that a loan may be raised - I am reading

section 44 - a loan may be raised under this

section whether or not the raising thereof may have the effect of increasing the amount of the public debt of the province. What could be clearer than that, Sir? So the cabinet has the power under this to borrow unlimited amounts for up to twelve months. They also have the paver to borrow further unlimited amounts to pay off any loan that has been made,including the temporary loans. Mr. Speaker, let me jua~ say one other thing. The Minister of Fina;nce also when he brought in or introduced the bill,moved second reading, said that the loan bill which will come in will have in it a little leeway.

I think I am quoting him correctly. I mark down the word "leeway". Now that is a revealing phrase. In other words, the $210 or $220 million in capital borrowings that we have authorized in the supply bill there will be more than. Maybe we will have an extra $5 million thrown in for spending money, for travelling money. Even by that standard the administration are making a mockery of the principle vhich they espoused. Mr. Speaker, this is pretty well what I have to say. I am in a paradoxical position.

I shall ask my colleagues to vote for the principle of this bill because it is a piece of housecleaning, ~tis good tidying up work, Lt has updated

an act that is twenty or twenty-five years old and needed to be updated and needed to be tied together and new concepts brought in and some old ones cleaned out. I am quite prepared to ask my colleagues on this side of the Rouse to vote for the bill. At the same time, I do not want it to be thouRht for a minute. ancl I hope the ~entl'eman from St John's East, who looks as though he is about 6210

April 30, 1973 Tape 1325 IB-10 to launch himself into this debate, will address himself to this point, I do not want it to be thought for a minute that this bill changes the system. It merely changes the form and it is a sham and a piece of hypocrisy for anybody on the other side to pretend that this bill will limit the power of the cabinet to borrow money without prior legislative authorization. It will not. It does not. The sections in this bill were drawn deliberately to enabl~ the government to borrow money without having first to c0111e before the House.

I do not find that all that offensive because they must report to the House and they cannot spend the money without authorization from the House be it retroactive or be it prospective. This bill if it is put forward as being a bill to return to the House of Assembly control over the borrowing of funds for this province, if that is the reason it is put forward, Sir, it is put forward with hypocrisy because it is a mockery of that principle. This will enable -the government to borrow what they want, Sir. r~ey IIIE:rely have to call rt a temporary loan. Mr.

Speaker, it makes no difference, if my honourable friend from Bonavista North goes to the bank and borrows $50,000, it does not matter whether it is borrowed on a thirty day note or a thirty year note, he borrows it and he must repay it. If the government go to the banks or go to the money markets and say we want to borrow $100 million,"Oh, we are only short term, we are limited by

section 44 (1) c. to a period not exceeding one year so we will borrow it fo~ 360 days," that makes no difference. The credit of the province is still involved and the credit of the province stands behind that loan and when the 360 day term is up that loan must be-paid. Mr.Speaker, we shall support the bill but we shall do so in the knowledge it does not carry out, perhaps it could not carry out this pledge we heard so much about,to restore to the House of Assembly complete control over t~e financial affairs of the province. Even if it did that, Sir, it would be meaningless to do so in a House of Assembly where one half of the members are under direct 6211

April 30, 1973 Tape 1325 obligation to the Premier, the leader of the government, under direct obligation in the sense that ~ey are either members IB-11 of the ministery or are persooal or special assistants, in either case holding . office at his pleasure. We will support the bill, Sir. We shall do it with something less than enthusiasm. MR. MARSHALL: Mr. Speaker, I do not think that I can let this opportunitygo by or allow the honourable Leader of thf!

Opposition to attempt to whitewash this bill as being just a little bit of inconsquental legislation which is just a piece of house­ cleaning and perpetrates and does euctly the same type of thing and exactly the same thing as had been done by the previous administratioo. Thia is indeed a very forward reform. It is a refonr. that should not have been necessary in the first place because we should never have been in the position where the power to determine whether money was borrowed or not was taken completely away or vir~ually away from the legislature itself. First of all, Mr.

Speaker, to meet head on the statement made by the Leader of .the Opposition which was, I suggest, a statement made by a person who realizea,being a member of the pre-.101111 administration that operated under the legislation tha existing which engrafted all of the powers to bQrrow in the cabinet, which vu contrary to what went on in other provincea of Cmada,vhich is contrary to what went on in the British Partiament, which is contrary to what went on in the United States, which is coatrary to really what went on iu ch.:! days when democracy was growing in the sixteenth, seventeenth and eighteenth centuries in England.

He realizes this and I feel he must as the intelligent individual that he is, he must realize that this is so but we just heard a "mea culpa" as it was for his reasons for going along with the previous situation. First of •11 let me make abundantly clear that this change• in each situation. Previoualy, Mr. Speaker, in 1966-1967,the Revenue and Audit Act waa amen1ed to provide as follows; that 6212

April 30, 1973 Tape 1325 IB-12 , "The Lieutenant Governor-in-Council may borrow such .amounts" (I am quotin _g)"as will realize a net sum of money required for the consolidated revenue fund.'' This · obviously resulted in a complete blanket power to borrow without any legislative sanction whatsoever and it resulted indeed in most undesirable consequences pertaining.

Contrary to the statements made by the honourable Leader of the Opposition here, contrary to the statements that were made by the Liberal Party when it was on this side, this action constitutes,as I say, a radical and a very radical departure from democratic procedures. Prior to the enactment of this amendment the cabinet could only borrow where rrior statutory authority had been given except in the cases of emergencies whens• cabinet could borrow teaporary loan• for a temporary period aa the exigences of the public service required.

Here in this bill we have provided that no monies may be borrowed without legislative approval except in the one case; to refund existing andebt~ess and that is reasonable because the province would have already put upon the · borrowings which · we are refinancing. It would already have deliberated on them, number one. Number two, ' obviously there is no question that valid obligations of the province to third parties must be honoured. Secondly, it provides for temporary loans to meet the exigences of the public service.

This was a phrase which the Leader of the Oppoaition very carefully skirted. · I do not think he menti~ed it in his remarks. In other words, to meet the e111ergencies, to meet an emergency situation. It is an excape valve and it is only to be used and will only be used for that purpose. It is s:lmiliar to the legislation that exists in other provinces of Canada. When .we were in opposition, Hr. Speaker, we brought in a bill to amend the Revenue and Audit Act, to bring about this self same result. In other words, to abrogate completely - the record will show it - the power of the cabinet to borrow 6213

April 30, 1973 Tape 1325 money and commit the credit of this province without legislative sanction with certain escape valves which you have to have and which pertain in every bit of legislation from here to Vancover and I suggest in the United States and in England. At that time and that was before the days when largesses of money were given out to the opposition to do their research, we poor mortals on the other side had to do our own research ourselves.

We were greeted by the then all-powerful government and statements being made at the time, tatements I think the record will how, that such an amendment was stupid in the extreme and we we-re told that there were two reasons why this could not be. Number one, that it was the same power as was given in every other province of Canada. These were the words that were given, "In eve~ other province of Canada". They had the same powers as they had under the 1966-1967 . amendment. In other words, blanket power to borrow.

Secondly,•lt was most necessary for flexibility in borrowing." These were the reasons that were given. They just do not wah,u I will demontrate, because it just is not so. The fact of the matter is that the Financial Administration Act of Canada, that every other power, every other province has essentially the same powers of operation as is contained in this amendment and not the blanket borrowing as was represented.

Indeed under sections 29 of the Financial Ad'alinistration Act of Ontario as well as in Canada,as I will come to in a minute,but the Ontario Act says that no money shall be borrowed IB-13 by way of loan except under this or any other act of th~ le~islature. This is the same as this

section in the amendment of our Financial Administration Act, "No money shall be raised by way of loan by the province except under this or some other act of the legislature.• _ Similiarly the Federal Government has exactly the same thing. Alberta and Manitoba have exactly the same provisions. Yet ..,hen we were in the opposition.labouring over there 411d we brought in the amendment,the honourable Leader of the Opposition and most of 0214

April 30 . 1973 Tape 1325 TB-14 the other honourable gentlel!'en opposite were over here and in their own way were obviously supporting the government. The1:1e statements were mad.e and they got up and they voted against this amendment which is now brought before us. It is not, ~r. Speaker, an inconsequental amendment. In effect, it is a return of a large sector and se~ent of democracy to the legislature.

Now that was the first thing that was completely and absolutely withou .t any foundation whatsoever; the statem _ent,in support of the opposition to the amendment, by the Liberal r.overnment at the time, that every other province of Canada had the blanket power to borrow, this was untrue, it vas false and it was without foundation. 6215

Apr:f,l JO, 1973 Tape no. 1326 Page l - KRW This bill here puts the position as it is in every other province in Canada including the federal goveniment• Surely the people of Newfoundland are entiUed to the same amount of an intensity of fiscal rapomibility from its Provincial Govermnent as it receives from ite Federal Government. Anoth~r ar~ument used was that it was necessary for flexibility of borrowinJ, to administer the affairs of the province. This i• an argument that is used frequently from time to time,as a matter of cnnvenience, by the bureaucrats.

This goven:iment have decided that all the flexibility that this government need and all the flezibility we should have 1a the amount that the Legislature is prepared to allow us to borrow within a ce,:tain atip _ulated time, plus extra amounts to meet our ca.mibleDte to third parties plua,if urgencies occur, emergencies occur, there ha to be an emergency borrowing power.

Na;, the argument used by the honourable Leader of the Opposition to th• effecc that whether or JIOt Chu increuu t.he temporary borrari.Dp,llhicn may increase the public debt and therefore you have the right to iucrease the public debt by these temporary borrowings, is specioua in the extreme because obviously, if you borrow more money, any one who can add one ad one and knows it makes two,obvioualy knows(there is no attempt to hide it) that it would increase the public debt. That 1a not the point. The point is, Mr.

Speaker, that the cabinet may not borrow any more wlaa, aa I say, it is for a temporary matter, for a temporary reason and for an emergency itself. A mention was 1J1&da at the time that this wu done by tbe financial advisers to the province,at the particular time in 1966 or 1967, I am not going to comment on that one way or the other because there may or may not have been a reason for mentioning it. I do not kuov.

I am not going to get up and start screaming and yellin1 because it wu mentioned. lt does not make any difference anyway because the fact• of the matter is that whoever brings about this change, it i  _the ruponaibility of the government in power. It was a disgraceful change in itself. 6216

April 30, 1973 Tape no. 1326 Page 2 Now the argument was also used that the Legislature had to pass on the borrowing powers anyway. Yes, Mr. Speaker, they had to pass them on eventually I suppose, when you consider that it would come in in supply; you had to get supplementary supply and you had to get power to spend the additional money that had been raised, In a sense they did not have to pass on it because if there were a real short fall in their estimates that had been brought in and they needed extra money to meet the supply that had been granted, it did not really have to be passed on.

Just say that there was proper budgeting, some of it would certainly have to be passed on in supplementary supply. The point of the matter is purely and simply this, Mr. Speaker, that this was judgment after the fact; after the mo¢.es had been spent; after the commibnent had been made; after the commitment had been made from a duly authorized delegation from this Bouse to the cabinet. There is absolutely no way that this Legislature could turn around and say,"All right,we will \not sanction the borrowing which ve had aut.horized you in previous sessions to do ..

" That would in effect have been a default of our obligations and really

an act of bankruptcy on our part. It i  rather silly to say that the legislature had the opportunity to pass on it, when it had the opportunity only aftew the fact. The situation in this province is that we have a very high provincial debt. We have small resources and a great amount of needs.

Before we can get the fiscal responsibility which ideally perhaps we will never achieve but which we shoul~ aim for, certainly the people of this province have the right to know two things: (1) what the money is being .. spent for and (2) how their money is going to be raised, whether it 1a going to be raised by taxation or whether it is going to be raised by borrowing and ultimately paid back by the people of the province. It was the latter alternative that was not brought forcibly to the attention of the people of this province. It was wrong to that extent or in that area _certainly. ii217

April 30, 1973 Page 3 Now mention was made (th,re was a great attempt to try to sluff it off,which has been iDcousequea.Ual in this amesidaent) -that Chia governmac, in its liner~oard legislation, when it came back to the Bouse, it had already spent th• money, more money than had been authorized in the estillatea. If the honourable Leader of the Opposition wish to consult the orlgiaal Linerboard Bill, there was an amount put in that bill as an outside limit that the govermnent may borrow. It said then, ''Up to $50 ailliOD. n This is what it was allowed to spend and what it did pend.

Subsequently, this year, more money vu needed.so ve came in with another bill. w,~ have been couistent,u 1 ay,throughout. Hr. Speaker, I think 1 have really covered all Che point  and I vant to re-empbuize again that thia i• not just a little routilla little bill that i  lipping ~rough, a little tidying up of the l.evenue and Audit Act, cioing exactly the same thing as had been done in previous yeare. No indeed it ia not, Mr. Speaker. It 1a to return fiscal reaponaibility back to the people of this province, through this particular amendm~nt a it 1a to the Revenue and Audit Acc.

It is putting u iJ1 the ame position u all democratic countriea, ~ our dater provinces. lt is certainly noteworthy to poillt out that the Leader of the Oppoeition,who vu 011 the .other side, who agreed with the then leader when he aid that this legialation then vu atupid in the extreme, that it vu not the cue u in other prov11lCu; did ao without any knowledge •t the particular time u to what vu pertaiued in Che other Canadian Province , o there is good reuoa I would uy to vi• his remarks right new, as the remarks of a per801l wbo hu not really the knowledge of what he is speaking about. Mr. Speaker!

I wo"1d like to compliment the Hinh ter of PiDace on this very forward piece .of legislation. Quite frankly, I t:hiDk it should be en~rafted into the constitution so that it cannot be changed on a simple majority vote in the House ef Assembly becau e, Beaven kuon, with 6218

April 30, · 1973 Tape no. 1326 Page 4 the temperament of the honourable gentlemen opposite and when they get back to power in 1995 or the year 2000, the province will be put in exactly the selfsame position as it has been in previous yeara,with predictable results. Here are the results. They are practical results. Mr. Speaker. In 1966-1967 the largest amount of supplementary supply sought was $20 million, prior to this the largest amount. ln 1967-1968, when thia blanket power was given, it increased overnight to $54 million. People wondered why our debt mounted so quickly and so rapidly.

Well this i.e one of the major reasons. Jn 1970-1971. it mounted to $43 million, supplementary supply. These were irretrievable commitments of public money, Mr. ~peaker, as I pointed out before, no legislature, no responsible o~position, no single member of the House could refuse to honour when it was brought back in again. Now this year,thank Heavens,because we have a conscientious, hard-working and capable Minister of Finance, the supplementary supply was down, dot.-n, d,:,w,n, w~y; w11y down below. underneath the table as it werei you could hardly even notice it.

The fact of the matter is that one of these days when· the honourable Minister of Finance has served his time, when he gets to ninety, ninety-five and he is no longer able to mount the ateps,with his walking cane, there will be somebody else there and it might just happen to be a Liberal, Mr.

Speaker.~ If it happens to be a Liberal Government that is in, we can reasonably predict that we will be galloping away again with borrowing from the point of view of convenience, without reference to the people who are the ones who ultimately have to pay the debt,and we will see an astronomical acceleration of the public debt all over again. .. Now, Mr. Speaker, I could go on and . on and on, ad infinitum, about this particular bill,but I will not.

I think I have convinced the honourable member for White Bay South and I am quite certain that I have couvinced the honourable member for Beli Island, absolutely and completely certain. The fact of the matter is that this returna a •nvP.reign power to borrow money ~o the haDds of the people. J(R. NEARY: What is the honourable miDister drinking? 6219

--~ April 30, 1973 tape no. 1326 l!'age S MR. MARSHALL: Juet ice and water. That 1 all, water and ice. They are both the same thing, one is liquid and one is hard. But thi• restores to the people of Newfoundland the power to borrow money except in two i11stancea: to refund exiaUng indebtedoea , which is the same as they have in the federal governmeut in Ontario ad all over the place, everywhere. The only place you could c011pare aa with is probably Ilusaia or Communist China or a011ething like that where a couple of people could just spend all the resources of the provillce.

It reatorea to the people of this province the sovereign paver to borrow exc~pt to refund exiating aecuriUes, which 1 the Hae u in other area, a~d for temporary purposes, which 1a the same u in all other area, but only for emergency purposes, which ia also the aae in other areu. Kr. Speaker, in addition to con&Tatulating the honourable Minister of Finance, I hor~ I have succeeded in giYing the honourable . members of the opposiUon a lecture and a lesaou in ordinary operatiou. of democracy, which I hope they will take to heart.

If they are ever led out of the wilderness again and if they ever get in.to power again, . with a leader who speaks only himself and they have to follow aloag, without an aye .. or a aay or a wherefor or a queatioa, I do- hope tbat they vill remember this lesson and when they do get up off their 1m ... , wh• they are able to speak out and speak on th._elva, to t:h._alv• ad for themselves that they will remember what the purpose of th• dtaocratic system 1• all about. Mil. ROWE (W.N.): I do not . know what happened to t:he honourable 11ftua• Leader, Mr. Speaker, over the weekend.

He hu something burned or something. He is extremely touchy ud extremely irritable. I do aot tnow what he burned when he was eliding down over those sheets tied together but he i• very irritable and touchy toda~, ~oaaumed with a sense of vindictive­ ness and bitterness. 6220

April 30, 1973 Tape no. 1326 Page 6 Going back over the years again, aoing back to a time when

an act was passed, Mr. Speaker, allegedly taking away the authority of this House, when the Minister of Finance by the way was a member of the administration, Minister of Justice, Minister of Public Works the point is, Mr. Speaker, at that time these gentlemen thought there was nothing too wrong with the legislation at that time but now, of course. there was something wrong with it. The importance of this bill, Kr. Speaker, is evidenced by the audience that the honourable Minister without Portfolio has from his own side today.

All the while he was speaking, there were six or seven of his members, his colleagues, in this House and now there are nine. One third of the members, less than one-%hird of the members which he has with him on that aide of the House, take the time or the interest to come in here and listen to this epoch~ making piece of legislation and what it is all about, Mr. Speaker •. That is the im!'ortance his party, on his side of the House. deem this bill to have for the people of this province or for the House.

Now, Sir, the Leader of the Opposition has already made the major two or three points that should be made about this legislation. I will not be speaking very long. I will probably mention from a different angle what he has already said before. Let me say this,that in order to give legislative authority and a.anction to the stated Progressive Conservative policy, when they were in opposition and when they were outside the House looking for votes from the people, in order to do this in respect of the financial authority of this House, Mr.

Speaker, what would be needed would be an outright legislative prohibition of the government borrowing any mouey without the authority of the House. I do not know what they had contained in their piece of legislation which they brought io here as a private member's resolution. I do not remember what was io that. It was a number of years ago. The indication, the impression they gave to the people of this province was that when they got in power, what they ~221

April JO, 1973 tape no. 1326 Page 7 would be doing would be malting •ure and certain that no mre ao11ay would be borrowed by the goverm11eat, without the prior, the previous, prior advance authority of the memben of the Houae of Assembly. that was the impreHioa left with the people of this provi11ce, Mr. Speaker, 11othiug more nor leaa than that. Now I do not aay that that vu a good impre111ion to leave or that that idea vu a good 011e.

Certainly a government which are generally responsible to the Houae of a•embly in any event and through the House of Assembly to the people should have some flexibility, should have some lee,ay, •cae margiD to look after emergencie• or not even emergencies, something which might come up, which might not be an emergency natu-re but might be in the pmlic illterut to look after financially. Perhaps the govermnent •hould have the author:ity. Indeed I think the govenuiiez, t should have the authority to borrow money and then to seek the retroactive legi•lative authority of this Houae.

I do not ~ee anything wrODg with that. they are a group of responsible men, responsible generally to this House, th~ know that. they are subject to public scrutiny all the time, as all politiciau are. Certainly trust and responsibility can be reposed in thu government or any oth_er government to do what they consider to be ill the best interest of the province.

I am not saying that the idea spouted off by the Tory propagandise , when th~ vere out of office, were good OUM at all, the indication and impression being that no more IIOlleJ voulcl ever be borrowed by • . goveTDJNDt uulus it had the previous legialatiwe authodty or the previous authodty give11 to it in advance by thia Boase of Assembly ·. Certainly the impression which they gave the people 18 not realized in this bill. I think this bill is a good one. the Leader of the Opposition has already said that he thinks it is a good one. What does it do?

It is some small measure that takes e,ay as a matte~ of fora but not substance some authoriCy of the goverDJDent. Now there are enough loopholes in the bill, in the act that it will become, to run a couple of {i222

April 3_0, 1973 Tape no. 1326 Page 8 dump trucks through, Mr, Speaker, a couple of bulldozers, graders and perhaps all the equipment of the Department of Highways, because th.ere is no substantial change in effect. There is no substantial change. The Minister without Portfolio should not try to pull the wool over anyone's eyes, What it comes down to is this: When they were out of office, they said that they were going to do this, that and the other thing when they got iuto office.

Through some fluke which not even the Miniater of Finance or the Minister without Portfolio ever foresaw in a month of Sundays they got into office, Mr. Speaker, through a fluke ,and suddenly they are found in a position where they do have to giv~ some lip-service to all the promises which they had been making to the people. In any event, Mr. Speaker, they fluked into office. The people of Newfoundland put them into office; they fluked into office, which is a good thing. I mean I am del~ghted to be over here. HR. ROBERTS: It was no fluke that the honourable gentleman from St, John's North got put out of office.

MR. ROWE (W.N.): The honourable gentlema,n for St. John's North was not put out of office by way of fluke; malice aforethought, carefu~ly thought ou.t. The Premier knew that he would not squawk. He tried to put out now the Minister of Provincial Affairs but we would see what kind of a squawk there would be then. He chose the two soft touches and threw them out. That is aside from the main point of the bill, Mr. Speaker, considerably so.

Now we have an administration somewhat embarrassed by the irrupousible promises made,· the impression at least being that no'°re aooey would be borrowed by the administration, without previous and prior advance authority of this Houee. New they have to come in and do lip-service to that promise. Wha~ do they bring in? They bting in this bill which in form appears to deprive the administration of its authority to borrow money. As the Leader of the Opposition has already aid, Mr. Speaker, by way of Clause (44) of this bill: "the government 6223

April 30 1 1973 Tape no. 1326 Page 9 may borrow uch sum or s11111S as may be necessary to meet the exigencies of the public service." Who determines that but the cabinet itself. Who determines w~•t the emergencies or exigencies or the things that eaerge but the Hinist r of Finance,in his own unfettered discretion, dictator Crosbie! An exigency, Mr. Speaker, is a far cry fr011 an emergency. An exigency iJI jut something that emerge , omething that comes up, something chat may be an emergency or not.

Perhap• the Minister of Finance may freak out oue of thee fine summer night  ·or days, either on the yacht or the*1av4y Han'' or down ou the Gander liver and decide that &11 exigency hu arlen ad we need to borrow $50 million. albeit short-term fir~nri~~, but once you have borrowed $50 million, that has to be paid back, as the Leader of Che Opposition hu said - MR. CROSBIE: (Inaudible). MR.. ROBERTS: That will depend on being mi.niater. MR. R<JJE (W .N.): As the ho.iourable Leader of the Opposieion has said, if I go dawn to the bank aa I did today, Hr.

Speaker, to borrow acae mooey to pay my income tax, a short-term lom, and merely a aho~ten,that does not mean that my credit i  not tied up. As a matter of fact. it being hort-term 18 more financially embarrassing to me. l would h&ve to find the money within the nest IIIOllth or o. If ~t were • five-year loaa, I could at least say well. lee that day come when it may, perbapa I -.ill have a windfall by then or maybe I will be dead by then; let my heirs take care of it; let my estate look iftet it. MR. CIOSBIE: Never borrow money - MR.

ROWE (W.N.): Here are the government with the authority ill their own unfettered discretion, no obligaeion to account to anybody at that ti.lie (later they will account to the House) they can go out and borrow fSO 111.llion short-term financing and wi~in a year it has to be paid back. Bow 1a it goillg to be paid back? The credit of the province is bound up. the i;224

April 30, 1973 Tape no. 1326 Page 10 cr~dit of the province is obligated to that extent, whether it is a twenty-five year loan or a thirty day loan. What is the honourable Minister of Finance talking about or the honourable Minister without Portfolio? The government still have the authority, Mr. Speaker, the unlimited authority to borrow what they want and to tie up, bind up, to obligate the credit of this province. There may be a limit of a year on it. So what?

The money is borrowed so they come into the House and they say to the HousP at that time, whether the House is disposed to agree with the borrowing or not they say; ten days from now we are obligated to pay back this money which we have borrowed, which we borrowed three hundred days ago and ten days from now. we are obligated to pay back this money - MR. MARSHALL:. (Inaudible). MR. ROWE (W.N.):Well sure, there is no problem there - standard wording. It meana that the government can do what it wants to do. In any event, Mr.

Speaker, the Minister of Finance comes into thla Houae &1.1J 111i1yd, ":.ook ,IJ.: have borrowed ~50 million." some harebraiuc.! •cheme or other, That is,I am not saying that they are going to get involved in a harebrained scheme • They borrow $50 million for three ' hundred days and then they come into thie House and say that that has to be paid back next week, and we have no money. Now we do have a chance to borrow twenty-five year money by issuing a bond issue on the Mainland of Canada or in Germany or in Japan, as the Minister of Finance has ~aid, we need that to pay back this money, how about doing it?

What choice does the House of Assembly have, Mr. Speaker? What choice does it have? To use the words of the Minister without Portfolio, the choice that we would have would be to say no to the government or face bankruptajl as a province because we have not met a commitment. That is the choice thou hast. The government of the day, Mr. Speaker, has exactly the same authority to tie up the credit of this province as the government before did. All this is is a bit of lip-service, some window.dressing to make it look like that this administration is living up to the commitments, the i;225

April 30, 1973 . Tape no. 1326 11 promises that it made to the public,_ to the electorate when they were seeking the administration of this province. That in all. Mr. Soeaker. does not make it a bad bill or a bad act when it comes into l•,u it v111. We are not going to move any amendments nor anything. Let us merelv be clear u to what is going on here. Let ua be clear that this may be cleaning up some lo~se ends. This may put the legislation in Newfoundland on the same footing as the legislation all across Europe, the United States and the rest of Canada for all l know. It may be.

Let 1111 110t think that this legislation fetten in anv wav or binds in anv wav the government or prohibits the govemment from borrowing money without previous legislative authority. They ca~ do it. I would say, Sir, that the time will come when thsv will do 1 t . I do not deny that oovll'!T to th1 9 administration or any other admillistration. They are reapcmsible to this Bouse. Thay are reasonable un and raspODSible mea. They are 110t aoing to do anything stupidnor foolish, I know.

We may have our political differences, we uy have our priorities which are different, we may have a differenc philosophical outlook as to what should be d0t1e ill the province. I do Dot not think that any man on either side of this House thinks .anybody in this House is irresponsible or stupid or is going to do anything which is not in the best interest of the province, I am not saying that. lvery aam is going to do what ill in the best interest of this province, no aatcer vho is in power.

The point is that ~1 government, as the previous goyeraeat and as the succeeding govermnent will have, u the c,ther government. did have, have the power to commit this province's credit without any ceiling on it whatsoev@r. Merely by calling it a tf!'llpOrary lon clofi• iaot alcar that fact, Mr. Speaker, by one jot or tittle or one iota. That power is till there. This is a good bil; : This is a reasonable bill. Let us know what we are passing in the House. Let us not have the wool pulled over our eyes by vindictive spleen as ev:f:denced by the Minister vitho.ut Portfolio, not 6226

April 30, 1973 Tape DO. 1326 Page 12 by the Minister of Finance because he knows what he is doing. He has brought in a reasonable bill,a bill which puts us on I believe a uniform standing with the other provinces across Canada, It modernizes the act; it gives the government sufficient powers; it gives the House sufficient powers, a good division of powers between the executive arm and the legislative arm as far as this act is concerned, We did not hear any vindictive spleen out of him.

We did not hear anythinp like;this is the salvation of maa - kind compared to the stupid irresponsibility of the previous administration,because he knows what he is doing. He is not interested in trying to pull the wool over the eyes of this House, members of the pres  or the members of the public, I am sure that he will agree with that statement, Mr. Speaker, when he clues up the debate. It is a good bill and a reasonable bill. Now, Mr, Speaker, let me touch once more,finally,on one point made by the honourable Leader of the Opposition when he was speaking for this side in this debate.

All the acts in the ~orld, !iir, taking away u much authority as you want from any ~dministration of this province, are useless if a majority or nearly a majority or more than a majority . of th• member of this Houae are in some way or another directly obligated, not financially or anything like that, but as a matter of loyalty because of their pos~tion,to the cabinet, to the executive · arm. of our democratic system.

As the honourable Leader of the Opposition saidJ we have eighteer soon perhaps nineteen .members of this House who are directly in the cabinet, actually in the cabinet, We have two other gentlqen, two fine .gentlemen in my estimation,. who are,as he put it,quazi-members of the administration. They are not members of the cabinet. !l'heir loyalty, their firat loyalty, like honourable members, i• to Newfoundland and Labrador. There 1a DO doubt about that. Their next loyalty is then, aa a result of their ~227

April 30, 1973 Tape DO. 1326 Page 13 position their next loyalty i  to the adm.inietration. If the honourable member for Green Bay or the other honourable member,vho is in the position of _special, executive or parliamentary assistant, does uot agree with that, then I would submit, Sir, that they do not beloag in their positions. They have a position as special assistant to the Premier or parliamentary assistant to the Premier or executive assistant, I do not ·know what the terms are but they all mean the eame thing. They are for all intents and purposes members of the administration.

They do 11ot 1!1:t in ou cabinet meetings but they are reapouible directly to the leader of the adminietration just as in a different way · the Deputy Minister of Finance is respouible to the Minister of Finance more eo than he is responsible to this House, lo hie capacity u Deputy Minister of Finance, his loyalty is clear. There may be a slightly more divided loy.alty on the part of the honourable members who fill these other qtUJzi-administration jobs and positions, slighUy more divided.

I would say that in the pinch, when the chips were down or if t:hey are down that these ~entlemen are going to be loyal to the adainiatration. That is who they work with day after day and the leader of t:he ach1niatratiou. That is where their loyalty lies.

To bring in a bill which appun, 1D · form if not in substance, which appear! to be limitiag the authority and the power and the capacity of the adm:Lnietration in a House of Aaaellbly where a majority or just about. a majority of the members of that Bouse are either in the cabinet or are directly lCJ?.l, directly reapouible to the administration or the leader thereof, is nothing, Mr. Speaker• but a tissue of impotency. There is 11othing to it. There i• no substance to it. There is no safeguard there.

As the honourable Leader of the Opposition said, petbape what is needed in this pro~nce and in other provinces of Canada is a coDatitutional amendment, not an amendment by act of this House, but a constitutional amendment whereby the number in the adiainiatration can·only be a certain proportion, a certain perce11tage of the members of the Rouse 0228

April 30, 1973 Tape no , 1326 Page 14 of Assembly, perhaps twelve, l believe the honourable Leader of the Opposition_ said, or perhaps out of a House of fifty-one, you might go to fourteen or fifteen. 'niere should always be in our responsible govermnent system a sufficient number of members in a House, in a Legislature., to vote a government out of office. You ~2Z9

... April 30, 1973 Tape No. 1327 NM - 1 MR. WM, ROWE: have it in Great Britain where they have ay thirty ministers out of 650 members,I believe six hundred odd members. The cabinet . itself is about thirty. I believe the cabinet itself is about thirty and there may be other ministers who are not in the cabinet, sixty or so. But in any event it does not exceed more than one-tenth of the number of members of the legislature itself, the House of C011110DS. In Ottawa we have thirty ministers or something and have 267 members of the Houae.

Again slightly over one-tenth of the members of the House of Commons in the cabinet. At all times a sufficient majority of the Bouse, on all sides of the Bouse, to turf the government out of office if need be.

In this House we have about half, excluding Your Honour's presence because Your Honour is nonpartisan.above the battle, so we have forty-one and about twenty or twenty-one are either in government or in quasi- govemment position, quasi-administrative positions - one-half or a a majority, a limple majority vho owe a greater loyalty in their day_ to-day work to the government, to the executive to which they belong, than to the House of Assembly itself,to which they have responsibility. So, Mr.

Speaker, this act,when it comes into lav,will be impotent as far as substance is concemed, as far as controlling the executive is concemed, It does not do what first of all the party, the Progressive Conservative Party,said they wanted to do when they got into power. It does not do that i~ substance, although it may do it in form,and as (ar as the actual control by members of this House over the government is concerned, the bill does not even do it in form or substance. It just has no meaning whatsoever. It is a good bill. It i  a reasonable bill in other respects.

We do not need to go into all the technical chanRes of things that thie bill does in the updating and that sort of thing but as far as controlling the executive arm of government is concerned, it has no power, Mr. Speaker, .the bill has no substance and the people of Newfoundl~d, the press and the members of the House might as well 6230

April 30, 1973 Tape No. 1327 NM - 2 MR. WM. ROWE: know that. they might as well know it. I am not saying that the bill should be any different. I think it is a good bill as it stands. I think that the real problem in this House is that from a control of the government standpoint, that the members of this House do not control the government, the government has too many people in it, the government controls the House rather than the House controlling the government.

That is the real problem and that goe beyond fir.ancial responsibility, that goes beyond committing the credit of this province, that goes to the heart of the whole form of government which we have. Thank you, Mr. Speaker. MR, SPEAKER: . If the honourable member speaks now he closes the debate. MR. CROSBIE: Mr •. Speaker, it has been quite an interes.ting debate. I think, Mr. Speaker, that if this trend continues we are going to have to call the honourable gentlemen opposite the "pooh poohers," because they pent the last week or ten days "pooh poohing" the legislation that we brought before the House.

Every piece of legislation that contains any change or any reform or anything new, they try to pooh poo~ by saying that you could drive a tank through it or there is a loophole in the·bill. I do not know what happened to all the loopholes in the bills in the put twenty­ three years because I never heard the honourab~le gentleman opposite say once while they were in power that there was a loophole in any of the bills and we all know there is a loophole in every bill.

There is no piece of legislation that cannot have a loophole but obviously their campaign now is - since we are doing what we said we would do, since we are changing what we said we would change, ince we are ._ refol'lling a number of the things that need to be reformed, that their approach to it now is to pooh pooh it. "It is not important, These are not impOrtant matters. Thia is a nice housekeeping bill. This is tidying up and so on and so forth but not of any real importance and not of any great interest to the public, so all we can see now is that they are on the pooh pooh kick.

I do not know what the kick will be next year. They will have &231

April 30, 19 73 Tape No. 1327 NM - 3 HR. WM. ROWE: to adopt some other slogan next year but right now it is the loop,the loophole whirl they are on and the pooh pooh technique. Well having explained that, Mr. Speaker, I think it explains what we have had to listen to for the last few minutes and I think it is quite ingenious. Actually if I were caught in the bind that they are caught in,I would be a pooh pooher too. I might even be worse, I cannnot mention what is worse than a pooh poober. HR. WOODWARD: I he not already one'l HR. CROSBIE: The honourable pooh bahs,we are going to have to call those opposite.

Now the honourable gentleman from Lab1:ado1 North had better be careful. Mr. Speaker, many of the points that the honourable member opposite raieed I can agree with ir a way but it is ,nong to say there is not a fundamental difference in the bill that is now before the Bouse becauae there is. Th~ fact is that' until thLi legislation is passed, the cabinet did not have to be authorized by legislation to borrow. There did not have to be any act passed by this Bouse to authorize the_ goveraaent to borrow money. There did not have to be a loan bill paased and that is evident by the fact, Mr.

Speaker, that we have not had a loan bill since 1966. There bu been no bill brought before this Bouse to authorize the government to enter into a loan. There has not had to be because that power was given by the Bouse to the Lieutenant-Governor in Council. Every bond issue, Mr. Speaker, has to have a legal opinion to the borrowers, given to them by their council and by council here in Newfoundland, that the loan is legal and authorized and it is a binding obligation of the province. Now since 1966, all the lawyers have had to check,is there an Order-in-Counc:1,1 passed authorizil!g this loan?

Once this bill here is passed, the House passes it, the lawyers in question are going to have to check and see what i:-,ney has been borrowed by the province i;232

April 30, 1973 Tape No. 1327 NM - 4 MR. CROSBIE: this year? Is it within the amount authorized by t~e legislation or not? If there is any doubt about that at all or if theY, report that in their opinion this is not authorized by the House of Assembly,we will have to call the House back together again to have the legislation amended or amplified so that any legal doubt  are settled. So there is no question that this is a fundamental change in the borrowing powers of the government. Now it is true, Mr.

Speaker, as a practical fact that the government has a majority in the House of Assembly and it is equally true that it would be unheard of for the government to bring in legislation authorizing us to borrow more money and have the majority of the government of the House and not support it. If the majority of the government of the House did not support it. the aovernment would fall. We all know that this is a most unlikely event,but that doe not change the legal effect of what the Bouse is passing that this bill ia voted for.

If this Lill be pased, then leg.Hy the government must consult the House to get authority to borrow money on a long term basis for this province. A loan bill will be introduced. It is at the printers now and hopefully will be debated tomorrow. If the House did not pass the loan bill that is going to come before it, we could borrow no more money this year on long-term. Now it is true that we could borrow it short-term, temporary, under a year. There is no limit on that, that the cabinet sets the limit on what we borrow by way of temporary loan • But Mr.

Speaker, you can only borrow a certain amount on temporary loans and the reason for our not being able to suggest to the House that the House abould control the amount of temporary loans or short-term borrowing is that it is impossible to estimate how much y.ou are 2oing to need in ahort-term borrowing. That depends on whether short-term rates are less or areater than the long-term rates or vice versa or long­ tenn rates l.ess or greater than short-term rates? It depends on how well we can do long-term borrowing.

Perhaps the market might go bad during the year; we find that we cannot borrow all we hope to borrow 6233

April 30, 1973 Tape No. 1327 NM - .5 MR. CROSBIE: on the· long-term market, that the marke 0 t has gone bad. If that happena,then we would need to if:',crease n11T short-term borrowing. So it is impoSBible to know in advance how much we can borrow short-term and therefore, the House will have to trust the Lieutenant-Govemor in Council to exercise that power wisely, But in any event, Mr.

Speaker, we are also amending this legialAtion so that we will have to report to the House within fifteen days of the next session what happened by way of temporary loans this year, how much was borrowed, what the interest rates were and all the details on temporary borrowing. Now it is true,as I mentioned when I introduced this legislation, Mr. Speaker, that I; the Minister of Justice; the present Minister of Public Works, were members of the Liberal Administration in 1966 and 1967 when this amendment, which we are now reversing, vent through. That is a fact so there is no admitting it or net admitting it.

I did not really give it much thought at the time but I can tell you, Mr.

Speaker, that when I became an independent member of the Rouse and went into opposition, I soon realized the enormity of that change,because in 1970 and 1971 it was impoaaible for a member of this Rouse, certainly a member of the oppositio~, to find out how much money the government were borrowing, The pasaing of the supply bill or the passing of the estimata or the bringing down of the budget, it may reveal to you, it does in our budgets, it did not in the former budgets, it now reveals how much the province needs to borrow during the year.

We know what needs to be borrowed but under the old act we could borrow twice that and we did not have to report to the House of Assembly that we were doing it and they might never find out about it, They might find out a year or two yeara later when the Auditor General brought down hi report. But it could be two year  bdore you would find out h,ow much had been borrowed two rear  earlier. In 1970 and 1971 in this House the government refused to aay how much money it was borrowin8 long~term or to inform the member about that, It is true, we could not find out. They borrowed quite a bit more £234

April 30, 1973 Tape No. 1327 NM - 6 MR. CROSBIE: than was indicated as being necessary by the estimates or the Budget Speech. Well this is a case of whether a power is exercised properly or not and I do not think it was exercised properly in the last several years of the Smallwood Administration, probably not the fault of the honourable gentlemen opposite but the head of the adminiatration. So it is a fact that there is a fundamental change. Now, Mr.

Speaker, we must calculate in our own bill if we find that we have not asked the Bouse to authorize us to borrow ~nough, if we find say for exampl~ next February or March that the market is very good and this would be a 100d time to go for another loan but we do not have the authorization, we will have to ask the Rouse to pass another bill or if the House be not open,to call the House back together again. MJl. CROSBIE: No. AN BON. MEMBER: Inaudible. MR. CROSBIE: No, suppose a market appears good, say next February or March, for a long"'!term loan but we have used up the amount that the Bouse has authorized. MR.

ROBERTS: We can borrow it for short-term and then ratify the - MR. CROSBIE: No because if the long-term market is good,then you have to borrow then on long-term. So it may be that we will find, if we have not calculated right, that we aiay have to call the House back together again and aak the House to amend the loan bill. So there 1• a fundamental change here and I think it is a change that the Progressive Conservative Party promised when they were in opposit~on and in their campaign and which is now before the House, Now, Mr.

Speaker, nevertheless the real problem in this province is the amount we have to borrow and not how we RO about bonowing. 1 mean the real problem faced by this province is the tremendous amount of 1110ney that we have to borrow to continue moving ...

April 30, 1973 Tape No. iJ~ 7 NM - 7 MR. CROSBIE: at all forward•• a province and the last two years · was certainly evidence of that. This year is evidence of it and next year will be evidence again, We have to borrow in this province to build road  and all, to do any capital work, to make the grant of $8 million a year to school boards,and so on we have to borrow money and we have to borrow this year I think it is $20_8 million, that includes meeting ~ebt coming due and payments of sinking fund, MR. NEARY: Inaudible. MR, CROSBIE: No, it is in the budg~t. You cannot admit or deny it, it is just a fact. MR.

NEARY: We were going into bankruptcy when we were doing it. MR. CROSBIE·: Well, thank heavens that we· got here in time and they are still advancing us the money! MR. NEARY: The Minister of Finance said he knew how he could borrow it. MR. CROSBIE: If the honourable pntleman is going to start tripping me up,I cannot start discussing these problems. So, Mr. Speaker, there are one or two other points. 'nlis 1a not lip-service. I think the honourable gentleman from White Bay South called it lip service. Mr.

Speaker, on the point that both the Leader of the Oppoition and the member for White Bay South mentioned, I am not at all a supporter of the Ted Ruuell thesis that was in ''The Evening Telegr-," some weeks ago. Was he here? I did not know he was here. But that thesis is completely out of touch with reality and I do not agree with the honourable member for White Bay South when he saya(vhether or not)there is a majority of this House in the cabinet and therefore the cabinet controls the House of Assembly, I consider that of being of very little importance either.

What has changed the whole parliamentary system, Mr. Speaker, in .the last fifty years,is the evolution of political parties and political discipline, This House, whether or not half the members are in the cabinet and if you include certain officials and ~236·

April 30, 1973 Tape No. 1327 NM - 8 MR. CROSBIE: parliamentary assistants and the half on the government payroll or not, is immaterial, If the government has a majority of members in the House, the government is going to stay in power, not just because certain of them are in the cabinet and certain are parlaimentary assistants and one is the Speaker, and the Deputy Speaker and the Chairman of CoDD11ittees, that is not the reason, The­ reason they are going to stay in is party discipline and party system and party loyalty. There is a minority government up in Canada now. MR.

THOMS: He said that before - he did not agree vi.th it. MR. CROSBIE: That honourable gentleman, I never heard him say anything that was sensible at all yet. So, Mr. Speaker, it is the party system that has changed, the parliamentary system,and anyone who is so out of touch with reality today as to think that that is not the case, he is living beek 1:: the 'lictcria:: era, _ certainly not in the r:.1.-a:rdian - the Victorian era. We have today a minority government in Ottawa.

Nothing like a fifth of the Liberal members in Ottawa are in the cabinet or on the payroll, any way, shape or form but they are supporting this minority government. If ten or twenty of them deserted it, they could topple it,but does it topple? Is it going to topple? No, they are supporting the members of the Liberal Party of Canada, AN HOM. MEMBER: Whether they are in ~h~ cabinet or not. MR. CROSBIE: Whether they are in the Cabinet or not, and if there were a minority P.C. Party, it would be the same. So it is the party system that has completely changed what happened in the House of Aasembly. MR.

NEARY: That is why the minister has changed his mind, Changes all around. MR. CROSBIE: The honourable gentleman got me buffaloed. Since he was so nice to me there ten days ago.I just cannot get mad with him any more. I mean a few weeks ago,if he said anything I would really let him have it but now, you know he has obviously got something. 6237

April 30 1 1973 Tape No. l .,_:.7 NM - 9 MR. NEARY: Inaudible. MR. CROSBIE: I do not know what it is but he has got something. So, Mr. Speaker, I think it is clear that it is a fundamental change but it is also clear that the House of Assembly is under the control of the government or any government that ia here with a majority. It is just as well to face that fact and it is the_public that has to decide,in three or four years time,whether or not that particular crew deserves to go back in again. Now, Mr. Speaker, if the bill is passed,the loan will have to be authorized by

an act passed by this Houae. It will either be the Loan Ac~ or it might be

an act like the Labrador Linerboard Act or some eimiliar act, it will have to be approved by legislation. With the exception of borrowing to meet sinking fund pa~ents, borrowing to meet debt that is coming due and tempa1:ary borrowing, these will be the only exception. This is a substantial change. I do not think th~re ie sny other - y~s, there ia a s~ction. which eays that with the present debt you can substitute one class of eecurities for the other,in connection with present debt. So the result of passing this legislation will be, Mr.

Speaker, that we will have to be very careful on how much we ask to be approved by the House to be borrowed by the loan act, if not we 1'1&Y find that during the year we will have to call the House back together again and that means that the House will have to be told why it is necessary to do this and why more money is being borrowed an~.ve will have to account to the House and in the last 'four or five years the fact of the matter is that the changes ma~e in 1966-1967 made it possible for ~ the government to do what they like without accounting to the Bouse.

At least with this change we will have to account to the House of Assembly, and I think it is a large etep forward. I notice that the honourable Leader of the Opposition, who objected so vehemently to hie father being mentioned in the Bouse, did not upset our House Leader h~re, the member for St. John's East. whose father w•s Comptroller and Deputy Mtn1ster of Finance in 1966-1967. 6238

April 30, 1973 Tape No. 1327 NM - 10 MR. ROBERTS: I .did not mention; that. MR. CROSBIE: No, no, but the honourable gentleman said - MR. ROBERTS: To a Point of Order, Sir, if the honourable gentleman quotes me he has to quote me correctly. The only way in which I mentioned Mr. Walter Marshall was in reference to 1949. I did not mention him, indeed I do not know whether Mr. Marshall was, I do not recall when was the precise point when Mr. Groom became Controller,succeeding Mr. Marshall. So let the honourable gentleman quote me correctly. Not only that, I commended Mr. Walter Marshall and Mr. Jim Thompson.

I have a very high respect and affection for Mr. Wal~er Marshall. I only wish that I had respect and affection for his son. MR.. CROSBIE: Well, Mr. Speaker, I am glad we have that point cleared up. I was: just going to commend the House Leader for remaining so calm and cool and quiet. KR. ROBERT~, You notice what I said happened to be true or else the House Leader lied. MR. CROSBIE: Well the honourable gentleman is still very touchy on that issue. Mr.

Speaker, we have this excuse for the honourable Leader of the <?Pposition: He faces a major change in his lifestyle within the next few weeks and therefore, we forgive him his little brusqueness and sensitivity during the next -couple of weeks. It is a big change and when the House ia having their stag party for him - I have not heard yet - I presume that the whips will be meeting, Mr. Speaker, to discuss this i sue and select the films to be hown and ' all that kind of thing. The Party Whip can be the taster, Mr. Speaker. MR. EVANS: Inaudible. MR. CROSBIE: This is a great advance forward, Mr.

Speaker, and I therefore move second reading. On motion a Bill, "An Act To Amend, Revise And Conolidate The General Law Relating To The Public Revenue, The Raising Of Certain Loan Authorized By the Legislature And The. Auditing Of Public Accouats," read a second ti111e, ordered referred to a Co111111ittee of the 6239

April 30, 1973 Tape No. U'.!7 NM - 11 MR. CROSBIE: Whole House on tomorrow. MR. SPEAKER: Before we proceed with other business, there is just one thing that maybe I should mention, tomorrow the committee which drafted the Address in Reply to the gracious Speech from the Throne will be presenting it to His Honour the Lieutenant-Governor,at Government Houae,at noon. The collDDittee and the gentlemen at the table and myself will be there and the invitation is extended to all honourable members of the House who wish to attend.

We could either leave u a group from my office here.at approximately 11:30 or,if that is not convenient, honourable members wishing to be present could find themselve_s at Government Rouse by noon. But the invitation is there for all honourable members to attend if they so desire. Thank yout Motion second reading of a Bill, "An Act Respecting Conflict Of Interest In Matters Of Public Concern." MR. CROSBIE: Mr. r.hatrinP", this is quite an imp~rtant ~iece ~f legislation er quite a new departure in this House and therefore it may take me some time to introduce the legislation.

The members have bad this legislation now for some time, so they have had lots of time to peruae . it. It is a difficult and complicated area, breaking new ground really because we have not the precedent of legislation before any other Canadian House of Assembly in any event to go by or the Federal House, and therefore the matter should be considered very carefully. The fundamental principle of this legislation, Mr.

Speaker, is that there should be public disclosure by all members of the House of Assembly and members of the cabi~et and by certain civil servants or ._ public servants.of any interest they have that might conflict with their responsibilities as members of the House or members of the government or as public servants, Nov the principle of this bill is pub!ic disclosure and after disclosure,if any one of those gro~ps of people are in a conflict of •interest situa~ion, non~articipation by them in the discussion of that issue or the decision made on the issue, nonparticipation in the 6240

April 30, 1973 Tape No. 13~/ NM - 12 MR. CROSBit: decision or in the discussion that lead up to a decision, whether you are in the cabinet or in the House or in the civil service,in a particular position where you have got aome discretion. In other words, Mr.

Speaker, if we pass this legislation and I think the House will, it would make it impossible,for example, for a member of this House or a member of the goverrunent to own shares in Canadian Javelin or to own shares in BRINCO or to own shares in any company negotiating with the government,or EPA, and have anything to do with the action the government take in connection with those negotiations.

That is a situation that has not been the case in the past because we all know of a recent instance where it was revealed that the leader of the put administration had owned shares in BRINCO at a time over a period of years when very important negotiations betvP.en the government of this province and BRINCO were underway in connection with the Upper Churchill. Now there was nothing illegal about that situation at that ' time but with the passage of this legislation - improper yes, completely improper but if this legislation t.,ere paaed, for example, that kind of situation would be illegal.

As I see it, if this legislation paaaed,it would be contrary to the legislation for a member to have an interest in a law partnership if he is in the government and if one of these partners acts for someone doing business with the government or seeking concession from the government, it could also be a conflict of interest. In that situation that particular person should not vote or expreas an opinion on any action in connection with that client of hia lav firm,if he still retains a financial interest in the law firm. MR. NEARY: Would the lawyer have to take his name off the door? MR.

CROSBIE: No, but to ha,,e a financial interest in it. They would not have to take their name off the door anyway, but in that aituation, ~241 ..

April 30, 1973 Tape No. 1327 ~ - 13 ~f.R.Q.SBIE: whoever that person was could not have anything to do with the decision that was being made in connection with that particµlar client. That ~as certainly not the case heretofore. Now, Mr. Speaker, it is disappointing to notice some of the comments there have been on this legislation.in the press, because I think it ia not informed criticism of this legislation. There was no point anyone in this House thinking and I am sure anybody with any sense is not going to believe that this legislation can stop conflicts of interest.

There have been some awfully silly questions asked about this legislation, particularly by reporters, you know­ how is it going to stop conflicts of interest? Well,it is not. Well it is not going to stop conflicts of interest any more than the criminal code stops murder. ~e criminal code forbids you to murder ·someone. The criminal code forbids you to be a drunken driver. The criminal code forbid  you from breaking and entering another p£tbuQ 1d house. The conflict of interest legisl&tion will forbid you from taking

part in any decision where you have an interest that is in conflict, Now some people may still try to do that, it i• not going to stop them from trying to do it, All it does 1a provide a framework that makes that particular action illegal and if it is discovered that there has been an offence that makes that particular action illegal and if it is discovered that there has been an offence, we then have some legislation we can prosecute under, the same as the criminal code does or any other kind of legislation.

The criminal code forbids now·the bribina or corruption of a public official, That does not mean to say that it stops public officials being bribed or corrupted but when that is discovered then of course it is a criminal act and you can be prosecuted for it. If we had legislation like this, if we had it within the last three or four years- the situation in connection with the liquor store lease is clearly a situation where there was conflict of interest,so it would have been contrary to the act, There has been some talk by the press that municipalities are ~242-

April 30, 1973 Tape No. 1127 NM - 14 MR. CROSBIE: not covered by this proposed legislation. No, they are not covered by it, Mr. Speaker, because it is better for us to see how this works for a year or two in connection with our own affairs before we apply this generally to municipalities. I will review for the House what the present legislation is with respect to municipalities in a IIIOllletlt, the City of St. John's and the City of Corner Brook. We have to remember that this is the first time this kind of legislation has been introduced in Canada. They just introduced something in British Columbia.

I wrote out and asked them for a copy of it but I have not received a copy yet,but they have introduced s0111e kind of a bill there. This is the first bill applying anything like this not only to members of the House, to members of the Cabinet hut also to certain public servants. We can see how this worb and then can consider whether ve should apply it to municipal officials and councillors or not. Anothe~ thi:g t~~ we have considered in ~h~ case of municipalities is that aunicipal councillors, with the exception of the City of St. John'• and Corner Brook.,are not paid, ~243

April 30, 1973, Tape 1328, Pa~e 1 -- apb they do not receive payment for being municipal councillors. Should we require the people who are in that position to have to reveal whatever interest they have if they run for a 111Unicipal council or is it lik~ly to discourage a whole lot of people from running for those kinds of offices? These are some of the issues that have to be considered when the House considers whether or not it should be applied to municipalities. Just before getting to the bill, I think it might be worthwhile reviewing what the situation is in general. First, Mr.

Speaker, we do have legislation that provides,now, with respect to certain kinds of conflict of interest, the Legislative Disabilities Act which is now

chapter (202) of the Revised Statutes of Newfoundland 1970,deals in certain respects with conflict of inter~st, because in section (2) it says that no person is eligible to be elected or to sit or vote as a member of this House who holds any office, place or appointment of profit from or under the govermnent or (

b) who shall directly or indirertly by himself or by any person in trust for him or for hia use or benefit or on his account undertake, execute or enjoy in whole or in part any contract or agreement for or on account of the public service. So, Mr. Speaker, meD1bers of this House are already forbidden, first to hold any office or place of ~rofit under the government with the exceptions that are listed in section (3) and secondly; to contract by themselves or by any person in trust for them for or on account of the public· service.

Not one of us individual members of this House can contract with the government to supply them with services or for any purposes at all. That is illegal and contrary to the Legislative Disabilities Act and if we do it we lose our seats . AN HON. ~ER'. (Inaudible) MR. CROSBIE: Well there are then certain exceptions in section (3)­ we are allowed to be cabinet minister, speaker, deputy speaker, chaiman of committees, deputy chairman of committees, parliamentary f;244

April 30, 1973, Tn~e 1328, Pa~e 2 -- apb assistants, c·hief whips or chief opposition whip. We are allowed to hold a conmission in the armed forces and there is a whole series of exceptions. We are allowed to be appointed a government director to some particular corporation. We are allowed to be a member of a board of education or a board of health.

We are allowed to practice as barristers or solicitors for ttw. -,ttove-rnmen, or government departments and a peculiar exception,which we should consider carefully sometime, is subsection (10) of section (3) which permits us to be a member of an incorporated body or the firm or trading c0111pany contracting originally or by way of assig11111ent for the public service when such contract is made for the benefit of such incorporated body, firm . or company. In other words, we are forbidden personally to contract in connection with the public service or to have a contract.

I personally cannot have a contrac.t to build a road for the government, for example or the honourable ~entlemnn from Bell Island is not permitted to have a contract to sell ham to the government or whatever it might be. He is not_permitted to do that but if he incorporates and he is just a shareholder in that company he can,under the Le~islative Disabilities Act,do that, which is really very silly when vou come to think of it. You are not allowed to do it as an individual but you can if you are a member of an incorporated body - but that is the present law.

Then it goes on to list other exceptions to this rule; Your seat becom~• vacant if you violate section (2)or(3) of the Legislative Disabilities Act. There is really only one prohibition there; we cannot contract personally to deliver services or under­ take a contract for the government. That is the Legislative Disabilities Act. Then we have the City of St. John's Act, Mr. Speaker: The City of St. John's Act has a conflict of interest section. Section (28) says that no member of the council is to hold ary office ~245

... April 30, 1973, Tnpe 1328, Page 3 -- apb or place of employment or profit in connection with the council or any department of the council nor any work or service or business under the control or direction of the council. He is forbidden to have anybody else enter into a contract in ttus~ for him with the council, although again he is permitted to be a member of a company who enters into contracts to do work for the city.

It goes on to say; "Nevertheless, he shall not vote in respect of any such contract or work or if he does so vote his vote shall not be counted." So a cou11.cil member cannot vote if he is a member of a company and they enter into contracts with the council and he cannot contract with the council himself. If he acts in contravention to that,he loses his seat on the council. Under section (52) of the City of St.

John's Act, no member of the council is permitted to vote or speak upon any question before the council or any c0111111ittee where his private interest is iuanediately concerned,distinct from his public interest 9 or where he is personally interested,directly or indirectly,or an agent for anybody interested. Re can be suspended if he violates that. There are certain conflict of interest sections in the City of St. John'• Act.

Section (306) says; ''No official or employee of the city shall be a contractor with the city or interested in _any contract or work with the city." The City of Comer Brook Act has a conflict of interest section, section (14). It is not as wide as the one in the City of St. John's Act but along the same lines. The Local Government Act, section (10),forbids a person elected as a councillor from being paid any salary or remuneration out of the funds of the municipality except with the approval of the minister.

The conflict of interest sections in the Local Government Act are not very wide, they are the same as the community council section. Then we have the deal with the Election's Act which has certain conflict of interest provisions in it. Certain people cannot ~246

April 3n, 1973, Tape 1328, Page 4 -- apb be election officials. The., Public Utilities Act• Act no. (39) of 1964,has certain provisions that relate to conflict of interest. ''No commissioner" section (6) "shall be directly or indirectly empioyed by or interested in any public utility or interested in any share, stock, bond and mortgage and so on of the public utility. If a commissioner becomes so interested,his office becomes vacant. If he is interested,in section (7),and any matter before the board,he cannot sit on that matter.

The House of Assembly Act - the Liquor Corporation Act that was passed the other day has similar sections to do with members of the Newfoundland Liquor Corporation. They are not to have any interest in any liquor or beer wine or any business involving province. spirits in the There are various acts with different sections that have to do with conflict of int_erest, nothing very extensive and nothing requiring disclosure. The .House will remember that in 1972 we asslmh::J o[fice, !-:r. Speaker, on January 18, !':'72, and this was a problem that we said we would deal with.

On February 29, 1972, and that was just over a month after we took office, the government wrote Professor Allan Sinclair of the University of New Brunswick,to ask him if he would do a study for us on this question and draft an bill dealing with conflict of interest in the public service and by elected members. I sent him what material I had. His first report and draft legislation was recieved on May 15 and sent to our le~islative draftsman on May 16. There was not time to have this reviewed and legislation prepared for the last aession,so the bill is now coming before the House at this session.

On June 27, we received our firs~ draft of the conflict of interest legislation from Austin Parsons.who is our chief legislative counsel,because he felt there were certain weaknesses and ~hat the draft submitted by Professor Sinclair needed t~ be 6247

April 30, 1973, Tape 1328, Page 5 -- apb expanded an4 changed. From that first draft that was prepared by our chief legislative counsel, it went to the cabinet last· July 12, The Premier appointed a committee to study this leR1slation, it is a complicated area. The cor.imittee comprised the Minister of Health, the ~inister of Forestry and A~riculture, the Minister of Justice, the C,overnemnt House Leader and myself.

We had a number of meetin~s on this, The bill was drafted and redrafted, it went back to the cabinet, then it had to go to the Progressive Conservative caucus, it passed the test of the cacus and now it is before the Rous,. This is not· the first time that the subject has come up in the House of Assembly, Mr. Speaker, because in 1969 a resolution was presented to the House,by myself,in April of 1969, asking the House to request the govetnment to appoint a royal commission to investigate the whole field of conflict of interest and to suggest proper legislation.

That resolution was not accepted by the governm~nt. !twas amended to provide for a select c0111111ittee, a eelect committee was appointed in 1969. It had a meeting or tvo, I was on i~._the member for St. John's North was the chairman,and that is as far as that got_. The subject was then dropped because it was not one that the last administration were much interested in. It should also be noticed, Mr. Speaker, that sections (87'and(88) of the Revenue and Audit Act deal with conflict of interest situations also, where it is forbidden for officials to be bribed in connection with the revenue.

There are a number of other sections lik~ that in our legislation but nothing in general. MR. NEARY: ~- CROSBIE: ~- NEARY: MR. CROSBIE: MR. NEARY: MR. CROSBIE: MR. NEARY: (Inaudible) No. Why? It is not necessary. It is necessary. Not at all. I would like to have a look at it. 6248

April 30, 1973, Tape 1328, PaRe 6 -- aph AN HON.· MEMBER: No interruptions. MR~ CROSBIE: I will let the honourable gentleman have a look at it if he wants ittbut it will not be - As a matter of fact, I am looking at the report here now. In Professor Sinclaire's report he looked at the literature in Canada, the United States and England. It is more extensive in Canada than anywhere else, I am sorry, in the United States.

Re says that legislation in other Canadian Provinces and at the federal level,aside from the bribery provisions in the Criminal Code, is not all that different than those provisions as outlined earlier in this memorandum as being the situation in Newfoundland. In other words, the present situation in Newfoundland, where we have almost no regulation,is the position in the other Canadian Provinces and federally. The English situation appears to be as follows: Members of Parliament are required to make a declaration upon assuming office of any interest which might possibly disqualify them.

Such interests should be direct, immediate and of personal pecuniary interest. After the appropriate . declaration has been made,the member might speak to any bill in the House even though it concerns the private interests of that" member but he is prohibited from voting 1D any such matter.

Then they deal with - •·The elected officials at the local govenunent level are required where they have a pecuniary interest to disclose such an interest and are prohibited from discussing or votinp: in any matter connected therewith." In respect of Ministers of the Crown,conflict of interest provisions are largely covered by convention,based largely on statements made by Prime Ministers in the past. There is no legislation covering conflict of interest of ministers in England. They have to govern their behaviour by statements made by Prime Ministers.

The most recent such statement is one by Prime Minister Churchill.in 1952,whic~ has been followed by each administration in England since that time. ~249

.. April 30, 1973, Tape 1328, Pn~e 7 npb Perhaps it is a bit long to read them all but I will just read a couple of the principles stated by Churchill in 1952. First; "It is a principle of public life that 111inisters must so order their affairs that no conflict arises or appears to arise between their private interest and their public duty. Such a conflict may arise if a minister takes an active

part in any undertaking which may have contractural or other relations with a ~overnment department, more particularly with his own department. It may arise, not.only that the minister has a financial interest in such an undertaking but also if he is actively associated with anybody, even of a philanthropic character, who might have negotiations or other dealings with the government or ne involved in disputes with us.

Furthermore, ministers should be free to give full attention to their official duties and they should not engage in other activities which might be thought to distract their attention from those duties. 1'Each mini~ter must decide for himself how these principles apply to him.

In any case of doubt the Prime Minister of the day must be the final judge." Then it goes on to give certain principles. ''In England a minister on asaU111ing office must resign any directorship which he holds whether in a public or a private company, whether it carries remuneration or is honorary They are not required to dispose of all their investments but if they have a controlling interest in any company,then they have to divest themselvcR of their controliing interests.

They are to avoid speculative investments and securities about which they have or may be thought to have earlier confidential information likely to affect the price of those securities." The English Civil Service have their own rules and regulations which are contained within conventions,in formal understandings and procedural rules of legislative bodies. As they so often do in England, the;e is no code set out that governs conflict of interest for civil servants. ~250

April 30, 1973, T~De 1328, Page 8 -- apb Professor Sinclair says that if one could ~•ther the philosophy of the En~lish rule and translate it into legislative language, a statute would provide basically that one should disclose any potential conflict of interest upon either assuming employment or elected office, Once that disclosure had been made, one could proceed from there either to prohibit a member or official from discussing the matter on it or votin~ on it or simply prohibit him from votine, It is also possible, of course, to conclude that once such disclosure has been made,that should be the end of the matter and the potential conflict would then be left entirely to the conscience of the member and presumably as well to the knowledge of both his colleagues and the electorate.

In our legislation, Mr. Speaker, we have chosen to provide for disclosure and then.once disclosure is made to prohibit a member or official from discussing a matter or voting on it wherever there is a conflict. The American situation is a very varied one: They have all kinds of legislation. Some prohibit absolutely any contracts of any kind by an elected official or an employee of a government agency with any department of government. Others make declarations of interest mandatory.

Others go on to require discussion and voting prohibitions, ther American States provide codes of ethics which list the things that you should do or should not do. There .are all kinds of varieties in the United State , all contained irr legislation of the last ten or twelve years. Then Professor Sinclair prepared a draft conflict of :interest bill which is now being expanded upon in the legislation before the House, Mr. Speaker, what then does this legislation provide for? It provides this; First,

schedule (

a) specifies the agencies that this will apply to. It is going to apply to all aembcrs of the House which,of course,included members of the cal,inet,and to the agencies listed in

schedule _(a). The agencies ~251

April 30, 1973, Tape 1328, Pa~e 9 -- apb listed in

schedule _(

a) can be increased by Order-in-Council but the agencies listed are the Civil Service Commission, the Board of Corrmissioners of Public Utilities, the Ombudlllllan, the Clean Air, Water and Soil Authority, the Liquor ConniHion, the Worlanens' Compensation Bo~rd, the Housing Corporation and ao on. They are all various aP,encies that are listed there, the St. John's Metropolitian Board, the Provincial Plannin~ Board. There are a number of agencies listed. The cabinet can expand those agencies by order-in-council. There are certain agencies not listed. For example, Mr.

Speaker, we have not included any hospital boards, primarily, · because these hospital boards are composed o_f people who are not paid and who are at the req~est of the government undertaking a voluntary service. Therefore, we felt that it would be a bit much to ask members of such boards to have to disclose what interests they ha'll'e in any company or what interest they have in land end all the other matters thst we have to disclose whc voluntarily go into politics or who ~re paid public servants.

Our feeling vas, certainly at this stage, that it would be carrying thie thing too far if we included in these agencies the various hospital boards where people are serving in an unpaid capacity. AN HON. !-'EMBER: (Inaudible) MR. CROSBIE: Well they are paid thirty-five dollars a meeting. The chairmen get fifty dollars a meeting. AN HON. MEMBER: (Inaudible)