June 6,

HOUSE OF ASSEMBLY PROCEEDINGS

Vol. XLII No. 56

The House met at 2:00 p.m.

MR. SPEAKER (Dicks): Order, please!

Statements by Ministers

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

MR. DECKER: Mr. Speaker, I am announcing the cancellation

of the public exams for the school year.

The ongoing teachers strike and the complications surrounding

it has made it impossible to conduct successfully the public exams for the

1993-1994 school year. This decision was taken only after careful consideration

and consultation with stakeholders throughout the education system. Numerous

cases have been made to me as to why the exams could not be carried out. The

following are some of the key concerns expressed:

Superintendents cannot guarantee the security of the exams.

There is no guarantee that striking pickets would permit

students to enter the examination area.

Difficulty with securing supervisors for the examinations.

No guarantee that the exams would be marked.

Students are threatening to boycott examinations due to lack

of preparation and review time.

Students have expressed concern over exam content which has

not been covered since the beginning of the strike.

Mr. Speaker, another aspect of the yearly examination process

is the scholarship examination. It is our intention to proceed with this exam as

scheduled. Details will become available in due course. The decision to dispense

with the public exams for this year was not taken lightly. The Newfoundland and

Labrador School Boards Association and School Board Superintendents have

endorsed the cancellation of public exams.

The Department of Education has been assured by Memorial

University that arrangements will be made to accept graduating students for the

fall semester. I am confident that a similar arrangement will be finalized with

other post-secondary institutions in the Province. Meanwhile, the department is

continuing to work with the various school districts to finalize marks for

students based on their marks to date.

Mr. Speaker, as you know, there was a demonstration of

students today. I spoke with them on my way to the House and I am tempted to say

to them that I listened and acted swiftly, however, as tempted as I am to take

advantage of making a political point I have to admit to the students that this

decision was made over the weekend after we had a lot of consultation with the

stakeholders, so I cannot take the credit for listening all that well, although

I do listen even time someone makes a point to me.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Waterford -

Kenmount.

MR. HODDER: Mr. Speaker, I want to thank the minister for

forwarding the copy of his Ministerial Statement prior to the opening of the

House this afternoon. I want to say on behalf of the Opposition that we

understand the perspective of his government, and we do also acknowledge that

students' study routines have been seriously disrupted since the beginning of

the teachers strike; parents have been trying their best to cope with the

situation, as are students. In particular, of course, those students who are

taking the Level III courses, the eighteen courses, who are eligible for public

examinations - they have been very, very concerned, particularly since they have

not, in some cases, finished the course content, and the public examinations

would have had the effect of evaluating them on material that they had not

properly completed. These students feel that they were inadequately prepared for

the public examination process.

Mr. Speaker, the minister must now decide how those students

who are eligible for graduation will receive their Level III diplomas, and how

their final marks will be indeed tabulated. While the measure announced today

will get the students through the immediate problem of admission to Memorial

University, we are not sure what the students will face -

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.

MR. HODDER: - when they apply for admission to other

institutes of post-secondary learning and, Mr. Speaker, all of us hope that

there can be a negotiated settlement to the teachers strike, and that can occur

in the next few days. While that will not affect the cancellation of the public

examinations, it certainly will let us complete the school year in a more

adequate fashion; and I say to the government that a settlement to the teachers

strike is needed in this Province, and is needed immediately.

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

have leave to address the House?

AN HON. MEMBER: No.

MR. SPEAKER: No leave.

Oral Questions

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: Thank you.

Mr. Speaker, we are, or will be asked to deal with a piece of

legislation in the next day or so, which will help to accommodate the

privatization of Newfoundland and Labrador Computer Services. I understand it is

on the Order Paper. Yet, the public, and we in this House of Assembly, know very

little about what is exactly going on. Not many months ago - well, I guess it

was, actually, a fair number of months ago now that I think about it - I think

it was in June of 1993 that the ads first appeared in the paper where, the

government asked for proposals from investors for the purchase of Computer

Services.

Some time later, I know in the last few months we have been

told, the public was told, that the government had now commenced discussions on

a bid, or on the bid put forward by NewTel. May I ask the Premier, is NewTel the

only bidder that the government is talking to and, has the government, in fact,

made the decision to sell NLCS to NewTel?

MR. SPEAKER: The hon. the President of Treasury Board.

MR. BAKER: Thank you, Mr. Speaker.

It was announced some time ago and discussed in this House,

that of the four bidders for NLCS, a decision was made to proceed through the

final stages with a consortium comprising; Bell Sigma, Anderson Consulting and

NewTel. Their proposal was judged to be the best proposal, providing details

could be worked out. The decision was made on the basis of the development of

the IT industry in the Province, the proposal that would provide the most new

business for this Province, the proposal that would provide the most long-term

jobs and be of greatest benefit to the existing IT industry in the Province

through contracting of work and so on. So it was a rather complex decision. It

was decided to proceed with this one consortium rather than the other three.

Discussions have been ongoing ever since in a rather intense fashion. It's a

complicated deal to put together, but we are attempting to have it finalized

before the end of June. At this point in time, there have been no major hitches

and it seems to be going fairly well in terms of the consultations or the

negotiations with Bell Sigma, Anderson Consulting and NewTel.

MR. SPEAKER: A supplementary, the hon. the Leader of the

Opposition.

MR. SIMMS: Thank you, Mr. Speaker, a supplementary.

I thank the minister for that little bit of information but

again, the point I make is that we really don't know anything of any detail. Let

me just ask him this, according to the Auditor General's report, Newfoundland

and Labrador Computer Services has total assets of around $10 million and the

book value of shareholders equity is about $6 million. May I ask the minister

this: Have you in fact agreed upon a price for Newfoundland and Labrador

Computer Services? In other words, how much do you expect to get in net proceeds

for the Provincial Treasury from this particular sale, this privatization?

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

MR. BAKER: Mr. Speaker, I'll try to explain again. This

is not like selling a house or selling a piece of property. The main purpose in

this privatization was the development of the IT industry in this Province, the

bringing to the Province of a lot of business and the creation of new jobs in

the Province. This is the main criteria, Mr. Speaker, that have been used in

terms of the negotiations with all of the consortium, finally settling on this

one consortium to go through the process with. The main consideration is the

development of the IT industry in this Province, the creation of new jobs, and

the bringing of a lot of new business to the Province. That is the main

consideration.

I would like to say to the hon. member that I understand that

there is a value. There is a building, for instance, and there is a main frame

and so on, but the real value of that business goes far beyond that. The real

value of that business is the value of the employees who are working there and

their expertise that we must keep here and expand. That is the real value of

that business and you can't simply go talking about book value.

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: A supplementary, Mr. Speaker.

I appreciate the lecture by the minister, I understand that,

but there is no reason why we couldn't ask the question. I merely asked the

question: What proceeds do you get expect to get for the treasury? If you can't

tell us then simply get up and say: We don't know yet or we can't tell. Because

the problem is we have not yet had a statement from the government about what it

expects to achieve through the sale of Newfoundland and Labrador Computer

Services; nothing in this House and nothing of a detailed nature outside this

House. That is precisely the reason for the questioning here today.

Now, we assume that the government is interested in more than

just the cash for the treasury. We understand that. We also understand that

Newfoundland and Labrador Computer Services operates in the realm of IT, or

information technology for those who aren't as knowledgeable of this as the

minister, and that is rapidly expanding economic activity everywhere in the

world. So, clearly NLCS could be the vehicle to launch us into that global

market in a pretty significant way.

The minister has told us that here is what he expects or he

thinks. Can I ask him specifically: What steps is the government taking to

ensure that a privately owned NLCS remains a Newfoundland company - tell the

House that and the people of the Province that - and what detailed steps, in

fact, it intends to take to ensure that it will be in position to participate,

if you want, and compete for a slice of that global activity that he talked

about? What detailed specifics are there? Will he provide them to the House of

Assembly in a statement before the House closes?

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

MR. BAKER: Thank you, Mr. Speaker.

I wasn't questioning the Leader's right to ask the question,

and I gave him information requested in his question. I would say to him that I

have now explained to the House what the main purpose of this privatization was

and what we hope to accomplish out of it.

Obviously, Mr. Speaker, the negotiations have not been

completed yet. Upon the completion of negotiations this House will be given full

information as to the amount of new business coming in, the guarantees that this

new business will come to the Province, the guarantees of new jobs, the

guarantees of contracting out, and the development of the rest of the IT

industry in the Province and so on, the assurances that this will not be a

predatory company, but will be a company that goes after international business.

In that regard, Mr. Speaker, Anderson Consulting is the largest firm in the

world, and have access to a lot of business. Bell Sigma has access to a lot of

business in Canada. So all of these details, when the deal is worked out, will

be made available to everybody.

We cannot go making pronouncements on it at this time because

the negotiations simply have not been complete, but I can assure the hon.

gentleman that everything he mentioned in his question is a consideration, and

in due course he will see exactly what has been negotiated as soon as the

negotiations are completed.

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: Thank you, Mr. Speaker, a final supplementary.

Regrettable, I say to the minister, that will probably occur

after this House has closed, and that is one of the problems with it; the public

really have no access or no information to some of the things he is telling us

about today in a very general, general way.

He talks about Bell Sigma, and he talks about Anderson

Consulting. That will lead to whether or not the questions along the lines as to

whether or not the new NLCS, NewTel, or whatever it is going to be called, is

really interested in competing globally, or whether it is more interested in

locking up the local market.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Yes, and he just explained that.

What I want to ask him is this: In order to provide

information to the public and the people of the Province, presumably there are

some plans submitted as to what NewTel will do with this new operation. Will

those plans be made public before a final decision or deal is made, or will it

be done only after the deed is done; if the minister understands my question and

my concern?

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

MR. BAKER: I understand the hon. gentleman's question; I

don't understand his phraseology about the deed being done and the nefarious

implications that are generally carried by a phrase of that nature. I regret

that that is the approach taken by the Leader of the Opposition.

This is a deal that is being put together for the benefit of

the Province, and everything will be explained. I would like to say to him, that

I have no objection to having the House open to do it, but I will guarantee him

that if the House is not open, full disclosure will be made through the media to

the public. I will make arrangements for him to, for instance, examine

officials, if he wants, in terms of the details of the deal. Everything will be

totally open. If we do reach a successful conclusion in this negotiation it will

be a superb deal for the Province. If we do not reach a successful conclusion to

this negotiation, then we have the ability to go back to other people who bid on

the privatization to see if, in fact, they could offer us a bit more. This will

all be totally open if a deal is reached.

I don't want to cast any doubt, at this point in time, on the

fact that a deal should be reached. I mean, negotiations, although they've been

long and intense, there are a lot of complex problems that have to be worked

out, and all indications are, at this point, that we will come to a successful

conclusion very shortly.

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

West.

MR. TOBIN: Thank you, Mr. Speaker.

I have a question for the Premier. In the business

section of

Friday's Telegram , the Premier is quoted as saying that people can expect

a very significant announcement on the development of Terra Nova within the next

few months. In that same news item, Petro Canada denied there would be any

significant announcement during that time frame. I would like for the Premier to

clear up the confusion. Would he be able to tell me: Will government and Petro

Canada announce an agreement on the development of Terra Nova sometime this

summer?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, I don't know what the

Telegram said. I can tell the House my view of it and the positions, the

opinions, that I have expressed and the views I have expressed on various

occasions, that in recent months the government and representatives of the

owners of the Terra Nova oilfield, the owner interest, have met and we've had

some discussions. I'm confident that we will see plans for an orderly

development of that field. I doubt that there is going to be anything in the

next few months. I don't recall that I've ever suggested that anywhere. I would

think, though, that perhaps - I don't know. I would say we will know where we

are going within the year. We should have some idea of where we are going and

what is likely to happen or what is not going to happen. There is every

indication, every reason to believe, that each of the oilfields out there will,

in a reasonable order, be developed and we will see development. The most

probable one for the next stage of development is Terra Nova.

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

Burin - Placentia West.

MR. TOBIN: Mr. Speaker, it has been fairly obvious for

some time now that the government wants to take quick action on the development

of Terra Nova and try to get the oil flowing in that field as well. I would like

to ask the Premier then: In order to get something going on the Terra Nova

field, has government discussed the mode of development, and is there is a

possibility, or has it made a decision, as to whether or not it would be

expecting Petro Canada to use a present floater system that is somewhere in

existence now?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: No, Mr. Speaker, no decision has been

made. The government has indicated to Petro Canada and to the other owners that

from government's point of view, we see the development of the offshore oil

fields as, in a sense, a partnership. The government and people of this Province

have a real interest in the development and the outcome of those fields as well.

We understand the incentive and drive on the part of the participating owners.

They want to generate the maximum level of return they can with the least level

of exposure, in terms of capital investment and operating costs. It may well be

less costly to develop it by one mode than another. The government can't alone

look at the cost. We have to look at a variety of factors and we have so advised

the oil companies. I don't expect we will be in a position to make a decision in

the immediate future, and I can assure the member that a decision has not as yet

been made.

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

for Burin - Placentia West.

MR. TOBIN: Mr. Speaker, the Premier says he is going to

have to look at all the issues. If there is going to be a floater system for

Terra Nova versus a GBS, obviously there will be some sort of a trade-off in

terms of economic development and jobs for royalties. I wonder if the Premier

can tell us if government is close to an agreement with Petro Canada on

royalties, and can he tell us how much the net revenues would be? That is with

the adjustment for equalization put in place. How much do you anticipate will

flow to the Province annually over the life of the development?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the Province is nowhere near

an agreement with Petro-Canada or anybody else with respect to royalties and we

are not in any position to estimate at this time the flow of royalties to the

Province.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Speaker, a week ago during debates on

the Estimates, I put some questions to the Minister of Works, Service and

Transportation dealing with the Public Tendering Act, and specifically,

exceptions to the Public Tender Act as tabled by the minister in accordance with

the legislation in the House of Assembly. Now, the minister didn't seem to be

too aware of those difficulties, nor did he have concern, and his response to me

was that I should have brought them to his attention.

Well, I did that a week ago and the minister has now had a

week. Can the minister now tell us the reasons for these particular exemptions

and some of the ones I pointed out? Specifically, why did Works, Services and

Transportation purchase $6,000 worth of gasoline without going to public tender,

for snow clearing operations? Obviously, that could have been planned. Why did

the Department of Fisheries award a $60,000 contract to the Town of Englee and

some local contractor instead of going to tenders? And, why did Newfoundland

Hydro lease a shredder for $14,600? What was such an emergency that needed to be

shredded that they couldn't call tenders?

Would the minister give us the answers to those questions

now, a week after being notified of them?

MR. SPEAKER: The hon. the Minister of Works, Services and

Transportation.

MR. EFFORD: Thank you, Mr. Speaker.

Every single day, the Department of Works, Services and

Transportation and all agencies of government go through quite a number of

tenders. It has been the history of government in the past to write and ask for

exceptions, or at least get exceptions to public tendering, and that has been

done all down through the years of governing. There has been no change within

the Department of Works, Services and Transportation in recent months to make

any exceptions to the normal rule.

There are some, as the member quite clearly pointed out, that

if you look at them at face value, do not sound reasonable, but when you go back

through the history and check out why was this done, there is a reasonable

explanation. Now, I have tabled each monthly report over the past several months

in this department, several hundred over that period of time, but I can't

explain each individual one at this particular time.

By the way it was not a week since the hon. member gave them

to me.

MR. WINDSOR: It was last Monday night.

MR. EFFORD: I gave to the officials of the department,

the next day, the particular ones he gave me, and asked the people in the

department to go back to the individuals concerned, whether it was Newfoundland

Hydro, the university, or whoever, and give me a full explanation as to why

these exceptions were made. I intend to bring that back to the House of Assembly

on an individual basis and give a full explanation to the House.

I am sure, as the hon. minister has experienced as a minister

in the former government, and as he knows full well, there is a reasonable

explanation for all those exceptions to the Public Tendering Act.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Speaker, there is a reasonable

expectation that officials will try to get around the Public Tendering Act

whenever possible and that is what we are seeing here.

Obviously, the minister is not as concerned as he would like

us to believe he is about these exemptions. The fact that he tables the

exemptions for the month does not mean that those are legitimatized by that. The

minister is responsible for them and when he sees these exemptions it is his

responsibility to know why they are there and to ensure, if there is an

exemption, that it is a valid exemption in accordance with the act, and I

suggest many of these are not. Would the minister now tell us, Is the act still

enforced, is it selectively enforced, or does it only apply to those who don't

want to try to get around it?

MR. SPEAKER: The hon. the Minister of Works, Services and

Transportation.

MR. EFFORD: Thank you, Mr. Speaker.

Let me tell the hon. member that this minister, and this

government, are much more responsible to the administration of the Public

Tendering Act than ever his government was, in seventeen years of full

operation. We take great pride in the department to ensure that the Public

Tendering Act is followed to the letter of the law. We are far above any other

province in Canada with our public tendering system.

The hon. member knows quite well that on many occasions when

there is an emergency you have to give exception to the Public Tendering Act.

When we bring one of the ferries in for refit in an emergency we cannot take

thirty days to call a public tender when we need to get that ferry back in

operation. I am quite proud of the department.

AN HON. MEMBER: What about the Ashley Building?

MR. EFFORD: The Ashley Building held the Department of

Social Services. The Department of Social Services requested an expansion to

their present office, which was in the same building, and that was an exception

given on that basis.

I have no problem defending anything in my department when it

comes to exceptions to public tendering.

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

for Mount Pearl.

MR. WINDSOR: Thank you, Mr. Speaker.

Would the minister like to tell us, if he is so determined

that the act is being enforced, why he - or the previous minister - awarded a

tender for three health care centres to one contractor who was not the lowest

bidder? Would the minister like to explain that? Would he like to tell us why he

refuses to come before the Public Accounts Committee and answer for that?

SOME HON. MEMBERS: Hear, hear!

MR. WINDSOR: And would the Premier tell us, will he now

take the handcuffs off the members of the Public Accounts Committee representing

that side so they can deal with it when the matter is not before the courts? It

is only in discovery - and it will be months and months yet before it can get to

the court. There is no reason why the minister should not appear and answer for

that breach of the Public Tender Act.

MR. SPEAKER: The hon. the Minister of Works, Services and

Transportation.

MR. EFFORD: First of all, there were no public tenders

called; public proposals were called. Very clearly, according to the legislative

law, you can call public proposals.

Secondly, when I got the call to go before the Public

Accounts Committee, I checked with the Attorney General in the Department of

Justice. I was advised not to appear before them until in due process the courts

were heard.

That is the manner in which I operated, and I have not

changed, nor will I change, that position.

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

MS. VERGE: Thank you, Mr. Speaker.

I have questions about arts and culture which I will direct

to the Premier since there is no minister responsible, and the acting minister

is not present this afternoon.

The government owns and operates six Arts and Culture Centres

at a net annual cost of about $5 million, with the St. John's centre being by

far the most expensive in costing about $2.5 million a year. Is the government

going to divest itself of all six Arts and Culture Centres, including the St.

John's centre? Specifically, is the government going to transfer administration

and control of the St. John's centre to the St. John's City Council, or some

board of volunteers?

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

MR. BAKER: Thank you, Mr. Speaker.

There is an effort under way to privatize some of the Arts

and Culture Centres in the sense that they are obviously community assets and

perhaps better use of the facilities can be made if, in fact, they are owned and

controlled locally.

Discussions are being held at the present time, I think, with

two groups, town councils, one in Stephenville, the other in Gander. These

discussions are still ongoing and I don't believe there has been any conclusion

to them yet, but the money is in the budget for the complete operation of all

Arts and Culture Centres.

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

Humber East.

MS. VERGE: Thank you, Mr. Speaker.

I would like to ask the Premier, or the Minister of Finance,

how an Arts and Culture Centre can be privatized and continue to operate as an

Arts and Culture Centre; and again, specifically, is it the government's

intention to divest itself of the St. John's Arts and Culture Centre?

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

MR. BAKER: Mr. Speaker, it can be done fairly simply. As

I indicated to the hon. member, perhaps the purpose of these buildings can best

be solved if they are not under the control of St. John's, if they are not

within the government system. If, in fact, the towns - in the case of the Town

of Stephenville and the Town of Gander - actually have control of these

facilities, they can provide certain services with their own work force and so

on with regard to ongoing maintenance, and provide the service to the community

in making decisions as to which community activities can best take advantage of

these centres, without having to live with government restrictions and

government guidelines. The community itself can decide the best use for these

buildings, and they can function as Arts and Culture Centres, because the

communities want the Arts and Culture Centres. They will survive, and not only

survive, but will get much greater use in terms of the community - that is what

we believe.

Mr. Speaker, as I said, we have been talking to two

communities. We have not made any decisions in terms of the other Arts and

Culture Centres. If we get expressions of interest from other councils and so

on, then certainly, we will consider them, but we are not out there actively

trying to divest ourselves of all of these Arts and Culture Centres, including

the one in St. John's - no, the answer is no.

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

for Humber East.

MS. VERGE: Thank you, Mr. Speaker, a supplementary to

either the Premier or the Minister of Finance.

The government is now spending about $5 million a year, net,

on the six Arts and Culture Centres. After the government unloads the centres on

either municipalities or boards of volunteers, will the government continue to

subsidize the centres at the present rate or to any extent at all?

The last minister, the Member for Mount Scio - Bell Island

talked about phasing out provincial subsidization over three years and cutting

the centres loose at that point. Is that the current thinking? For example, is

that the current thinking for Stephenville or Gander?

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

MR. BAKER: I don't know the exact details of either of

these negotiations. I do know that government's continued support, at least for

a certain period of time, is a point that has been discussed I believe with both

these councils, but that's a matter of the negotiation back and forth and there

are arrangements that can be made other than that, I say to the hon. member,

that don't involve continued subsidies or that do involve continued subsidies.

These are things that are being discussed and it's not a simple matter of

saying: Here it is, take it and that's it. No, it's not as simple as that. We're

into negotiations with these councils and as soon as we complete one of them the

House will be advised of all the details of what they've agreed to, and it will

be done with their agreement.

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

Extern.

MR. J. BYRNE: Thank you, Mr. Speaker.

Mr. Speaker, my question is for the Minister of Municipal and

Provincial Affairs. Two years ago the government passed over responsibility for

fire-fighting on the Northeast Avalon to a regional committee representing the

city and town councils. The system hasn't worked because the whole show is being

run by the City of St. John's. It is pretty obvious now that the councils are

not going to be able to work out their problems. How long is the Minister of

Municipal and Provincial Affairs going to let this problem fester? Will he take

action to ensure that all councils have some credible say in the management of

the regional fire-fighting services and are not simply (inaudible) for the City

of St. John's?

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

Provincial Affairs.

MR. REID: Thank you, Mr. Speaker.

The member is absolutely correct. This is a problem that has

been haunting me, I suppose, since last May when I was appointed to Cabinet.

I just received a letter - I was reading it in fact just a

second ago - in which the Mayor of St. John's basically asked me to speak to him

before I go to Cabinet and ask for direction on what to do with the

fire-fighting services. My note is: Clarence, please arrange for me to speak to

John Murphy before I go to Cabinet. It's been a real dilemma as far as my

department is concerned and as far as I'm concerned.

I'm hoping, quite honestly, that within the next two to three

weeks - now I made that commitment some time ago if you remember and I couldn't

fulfil that commitment at that time - but I'm seriously saying to you and to the

House, that within the next two to three weeks I'm hoping to be able to make a

recommendation to my Cabinet colleagues, and at that time, I'll be free to make

a public announcement on what exactly we're going to do with the Northeast

Avalon fire-fighting service.

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

John's East Extern.

MR. J. BYRNE: Thank you, Mr. Speaker.

The minister knows that the town councils have refused to pay

portions of the bills sent to them by the City of St. John's. The City of Mount

Pearl is the latest to withhold payment. Has the formula used by St. John's to

apportion cost to the various towns been approved by Cabinet? If it hasn't, are

the towns under any legal obligation to pay the bills?

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

Provincial Affairs.

MR. REID: The answer to the second part of the question,

whether it has gone to Cabinet yet and there has been a rate set, is no.

To answer the hon. member's questions of whether or not the

small towns must be made to pay what is considered to be their fair share, the

answer to the question is yes.

I ask the hon. minister and I ask my colleagues and you, Mr.

Speaker: Should the people of Corner Brook, Carbonear, St. Anthony or Wabush pay

for the fire-fighting service on the Northeast Avalon? The answer is no, of

course not. So someone has to pay the bill and the bill will be paid by the

people who are demanding and getting the service.

The question of whether they are compelled to pay is a

question of, I suppose, the service provided. I think if municipalities on the

Northeast Avalon refuse to pay for the service then it's going to be detrimental

to the service, and it could possibly cause problems that could, I suppose,

ultimately cause a death or a bad fire or something in one of the areas. My

personal feeling is that they should at least continue on paying what they've

been paying for the past two or three years and give me a chance, along with all

the mayors who have been meeting on a regular basis, an opportunity, to sit down

and iron out a solution to this. No, I'm not going to stand in this House and

say that there's no responsibility now in the Town of Paradise to pay for

fire-fighting service. Every community in this Province has a responsibility to

pay for the services that are provided for them. That's where I basically stand

on it, and I don't think that anyone in this House should have an argument about

that.

MR. SPEAKER: A brief supplementary. Question Period has

almost expired.

The hon. the Member for St. John's East Extern.

MR. J. BYRNE: Thank you, Mr. Speaker.

The towns on the Northeast Avalon have been paying three

times what they are legally required to pay I would say to the minister. The

towns on the Northeast Avalon believe the cost-sharing formula devised by St.

John's has no relation to the services they receive. Will the minister insist

that the formula is changed so that the towns are assessed fairly on the basis

of services received?

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

Provincial Affairs.

MR. REID: I will make a commitment to the hon. member,

Mr. Speaker, and I will say this: When the final decision is made by this

government and the formula is approved, we will feel that it will be fair to the

people on the Northeast Avalon. Now I can't go any further than that. This

government doesn't make decisions that are not fair to people provided with

services in the area. I can't say what the cost will be, but I will say, quite

honestly, that people who live on the Northeast Avalon and avail of that

service, as far as I am concerned, should pay for it.

Now if that cost is too high in comparison to other areas on

the Northeast Avalon, yes, that question should be addressed. I am dealing with

that, I am talking to the hon. member, I am talking to my colleague from

Waterford - Kenmount, I am talking to my hon. critic almost on a weekly basis on

that question. It is a dilemma, but I am hoping, quite seriously, to be able to

resolve that dilemma in the next couple of weeks.

Thank you.

MR. SPEAKER: Question Period has expired.

Presenting Reports by

Standing and Special Committees

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

Labour Relations.

MR. GRIMES: Thank you, Mr. Speaker. Pursuant to

section

12(1) of the Workers' Compensation act I table the annual report of the Workers'

Compensation Commission for the year ended December 31, 1993.

I draw attention, for all hon. members, to a couple of

points: That when they study the report it indicates that reported injuries for

the calendar year 1993 were down by 16 per cent, which is a real decrease of 14

per cent, in that there was 2 per cent less activity in the workforce, as

reported through Workers' Compensation.

The employer assessments increased to $101 million, up from

$92 million in 1992. More of the services were provided through regional offices

as a result of restructuring. The unfunded liability decreased from $144.6

million down to $134.1 million, so that the funding position of the Commission

has actually improved in the calendar year from 48.1 per cent in 1992 to 54.8

per cent in 1993.

The only other noteworthy indication, Mr. Speaker, is that

the one other real indication of success is that not only have the number of

injuries and the number of claims been decreasing, but also the duration of

claims is also reported to have decreased in this annual report covering the

calendar year 1993.

MR. SPEAKER: The hon. the Minister of Social Services.

MR. LUSH: Mr. Speaker, I would like to table the annual

report of the Department of Social Services for the fiscal year 1991-1992.

Notices of Motion

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

MR. ROBERTS: Mr. Speaker, I give notice that on tomorrow

I shall move that a select committee be appointed to review the issues for

consideration by the Legislature identified by the Commissioner of Members'

Interest in his report of 25 April 1994, and to make recommendations with

respect thereto, and that the committee report to the House by 30 September

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

MR. HARRIS: Mr. Speaker, I give notice that I will on

tomorrow ask leave to introduce the following resolution.

WHEREAS the Newfoundland pony represents a significant

element of the working heritage of our Province, providing transportation,

working power in the woods, in the fisheries and in farming, and being the

virtual engine of outport and rural life for hundreds of years;

AND

WHEREAS the Newfoundland pony is a distinctive breed of

horse unique to our Province, having developed from various strains of Moorland

ponies and other horses brought here in the seventeen, eighteenth and nineteenth

centuries, and through natural breeding and adaptation evolved characteristics

especially suited to our climate and the needs of our people and communities;

AND

WHEREAS economic changes and the lack of recognition and

protection for this important part of our living cultural heritage has caused

the number of Newfoundland ponies to dwindle to the point where there are less

than one hundred breedable animals;

THEREFORE

BE IT RESOLVED that the House of Assembly urge

government to recognize the importance of the Newfoundland pony by introducing

legislation establishing the Newfoundland pony as a heritage animal;

AND BE IT FURTHER RESOLVED that measures be taken to assist

in the establishment of the Newfoundland pony as a recognized breed, including

providing or endorsing means of acknowledging individual animals as Newfoundland

ponies;

AND BE IT FURTHER RESOLVED that government protect

Newfoundland ponies from being exported from the Province for meat and take

steps to encourage the growth and development of the Newfoundland pony

population.

Petitions

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

MR. WOODFORD: Thank you, Mr. Speaker.

I would like to take this opportunity - although it might

seem that it is a bit outdated it is not, because there are concerns addressed

in this petition that I have received mostly from students, but some parents as

well, from the Deer Lake, Cormack, Reidville area, as it pertains to education

and the exams.

Mr. Speaker, last week I rose in the House and presented a

petition on behalf of students and parents from that area, and in that petition

some of the parents, Mr. Speaker, said they would advise the students, if there

was no settlement within a couple of days, to boycott the exams. Now that was a

little over a week ago.

Yesterday I met with a group of ninety-eight students,

graduates and parents in the Deer Lake area, and they asked pretty well the same

thing - at that time they had other concerns as well - but this time they were

more categoric. The petition of the undersigned concerned parents and students

committee of Deer Lake went on to say that the Government of Newfoundland and

Labrador cancel all public exams for the school year 1993-'94.

Now, Mr. Speaker, the minister rose in his place today and

said that they would cancel exams for this year, so that really addresses the

prayer of the petition with regard to exams themselves, but there are other

concerns that they asked me to raise as well, if the exams were cancelled. Some

of those, Mr. Speaker, were addressed by the minister today in his statement.

Students, Mr. Speaker, are wondering - and the minister

addressed it in the last part of his statement - about Memorial University. They

would be accepted no doubt, but what about universities outside the Province?

Has the minister, or will the minister, ask universities outside the Province,

such as UNB, Acadia, Dalhousie and some of the other universities, for special

consideration for Newfoundland students for this year?

I have had some reports from students saying that they were

looking at it and there is a possibility that they may give special

considerations. One of the students in my area had a letter from Dalhousie

saying that she would be accepted. So it is a bit conflicting, Mr. Speaker, and

I would ask the minister in his capacity as minister to -

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: I would say that he got, according to his

statement, a guarantee from Memorial University that no student would be turned

down for admission this September. But make sure to ask the other universities,

because a lot of students in the Province have made application to universities

outside the Province, for special consideration for students from Newfoundland

and Labrador, so that they will be accepted into the programs for September.

The other concern expressed was the scholarship exams. The

minister has stated that they will go ahead. That is positive and I hope that

the minister will keep his word because there are a lot of students out there

looking forward to writing the scholarship exams. It means a lot of money, it

makes the difference as to whether some of those students will be able to go to

university this fall or not. So I would ask the minister to also address that

particular concern.

Now, Mr. Speaker, having said that, there is a price to pay.

There is a price to pay somewhere down the road for not writing exams, and that

price is going to be paid by students and it will be paid by parents. It will be

paid by parents because of the money that will be allocated to students this

fall who will go and find out, probably after the first semester, that it is

just too late. It will be paid by students because they will probably be

accepted into universities or post-secondary institutions not knowing what the

exact mark is.

That leads me to the other question, the big one: Where do

students and how do students get a graduation certificate this year, and if you

did get one, what is it based on? What is that graduation certificate based?

When, somewhere down the road, whether they go to university

or look for employment for instance, how are they going to be evaluated and what

kind of a mark will they be given in their final year in high school? That is a

question, I think, that is going to have to be addressed by the department and

the minister involved, and I'm sure that after the dust has settled, and with

the exams being cancelled today, that some of those other questions will come to

light and they will be asked by both parents and students.

I would say to the minister, take the situation -

MR. SPEAKER: Order, please!

The hon member's time has expired.

MR. WOODFORD: Thank you, Mr. Speaker.

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

MR. HARRIS: Thank you, Mr. Speaker.

I support the remarks of the hon. Member for Humber Valley in

raising the concerns of students as to what is going to happen now. I think we

all support the decision by the minister, in the circumstances, of cancelling

the public exams. It was the only thing to do, particularly since the anxiety of

students. The uncertainty to students up until today, of having to write exams

as early as this Friday, was a great source of stress for them, and the obvious

release of that stress we heard in the noises that we could hear from outside

the Chamber coming in when the students realized the full import of what was

said by the minister.

There are still a lot of questions that have to be answered,

and I don't want to see the minister and the government use this cancellation of

public exams as an excuse now not to sit down and seriously negotiate with the

teachers some solution to this strike, that is going to take into consideration

the needs of students.

The students who were concerned about the exams have been

relieved. The students who wanted to have some exams because their midterm marks

were so poor that they felt they weren't going to pass, are still concerned

about what is going to happen to them. There are a number of students who wanted

the exams, or felt the need for an opportunity to upgrade their marks to be able

to complete their school year. That is a serious question that has yet to be

answered: What happens to them?

What happens to the students, Mr. Speaker, who are going to

have to go on next year to higher courses in science and mathematics in

particular, who aren't going to have the grounding that they would have

otherwise had because they missed not only a month of school, but the review and

the intense period of learning that goes on in the last month or so when

students and teacher both are focused on all of the things they have to know to

not only be able to write exams, but to be able to go on to the next course,

whether it be a higher degree of mathematics, courses for which prerequisites

are very important, and a good solid grounding is there?

So the needs of students are still being left out so far of

the equation when we are dealing with the teachers and the government over this

strike. I want to suggest to the minister, to the government, and to the NLTA,

that in trying to devise a solution to this strike they may also consider the

option of finding a way of helping those students who do need some assistance to

either upgrade their marks or to understand and to learn the things that were

left out of the last month of school.

Perhaps, Mr. Speaker, given the fact that the government is

saving an enormous amount of money on a daily basis, they will have some

flexibility in using some of that money to pay teachers beyond June 24, perhaps,

to assist those students who need the help of teachers in order to complete

their school year, in order to understand the work that they were supposed to be

doing, and to progress to the next semester. Perhaps that is something that the

Newfoundland and Labrador Teachers' Association and the Minister of Education

and the Minister of Finance, in negotiating this issue, can have, not just the

government's interest and the teachers' interests on the table when they sit

down and make the decisions, but also the interest of students and the fairness

to students in trying to find ways of helping those students who may not have

the burden of public exams - and I am sure that is a great relief to them all,

and they would be quite happy not to have to write exams. What about those

students who need a little help, Mr. Speaker, to make sure that their school

year is completed satisfactorily so they can have the confidence that they need

to go on to the next year and not feel left behind?

It is all very well for some students. Some students are

lucky, that things come quickly and easily to them. Other students are fortunate

enough to have parents who hire tutors for them. But what about the vast

majority of students who need the help of teachers and our education system in

order to learn the things they need to learn, and have a satisfactory basis for

the future? They should be helped, too, and the government, the Minister of

Education, the Minister of Finance, should sit down with the Newfoundland and

Labrador Teachers' Association, not use this as an excuse to put everything off

until September or maybe the end of September, but to try and solve the problem

now, and keep the students in mind when they are doing it.

Thank you, Mr. Speaker.

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

West.

MR. TOBIN: Mr. Speaker, I have a petition to present

similar to the one that was presented by my colleague from Humber Valley. This

petition basically has been addressed by the announcement the minister made

earlier today. I did speak with the minister prior to the House beginning, in

explaining to him that this petition was given to me to present in the House by

a group of students from my district, and that's the intention even though the

minister has basically addressed it. But when the minister stands to speak, as I

understand he probably will, as it relates to both petitions, I would like for

mainland; because on the Burin Placentia, the South Coast and, I guess, other

parts of the Province, traditionally, a number of students, after graduating

from high school, attend universities whether it be St. Mary's or St. Francis

Xavier, Dalhousie or Acadia, there are a significant number who do travel to the

mainland. I'm wondering if the minister has already worked out plans with these

universities so that the students can be accepted? Now, there are also some

concerns that were raised by the Member for St. John's East regarding students

who probably found themselves in a situation after the mid-term exams where they

weren't doing so well and they would like to have that looked at as well.

I will table the petition, Mr. Speaker, I have signed it,

adding my support to it and I ask the minister if he would be so kind as to

address the concerns that were raised by the three speakers so far on this

petition. Thank you.

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

MR. DECKER: Mr. Speaker, I was aware that there was a

second petition coming so I thought my remarks could apply to both petitions.

When the hon. members presented their petitions they did call

to attention some problems that they want answers to. One of the problems is

that some students actually want to write the exams and that's quite correct.

After I had presented my ministerial statement, I was going through my mail, as

I do most days when the House is in session, while I'm listening to what's going

on in the House - and I had some letters, at least one letter from a parent who

had anticipated we were going to announce that there would be no exams and that

parent gave me all the reasons in the world why we should have exams, Mr.

Speaker. So it's one of these cases where you're damned if you do and you're

damned if you don't. It's not always easy to be all things to all people. That

has been tried over the years. However, we've made the decision, Mr. Speaker,

not based on whether a student wanted them or didn't want them, whether a parent

wanted them or not, or whether a school wanted them or not. We made the decision

based on educational grounds. We went right through all the pros and cons, we

pictured exams where there might have been some disruptions. Students would not

have been able to perform at their best, so at the end of the day, as much as I

personally would like to have seen the exams go ahead, we came to the conclusion

that it would be difficult, if not impossible, to do so. So we cancelled the

exams, Mr. Speaker, in the interest of education.

In the interest of the universities outside the Province - as

I said in a statement, Memorial University has assured us they will be accepting

students for the fall semester - we have had contact with some universities in

the Maritimes and we're confident, Mr. Speaker, that they, too, will accept

students this year.

The Member for Humber Valley said there will be a price to

pay. The hon. member is quite correct, there will be a price to pay, not so much

because the students will not have written the exams but there will be a price

to pay in that many students have not covered the year's work. So what we will

see this fall is students being accepted into university who will not be able to

perform as well as they should have, had they gotten the full year's work. I

would venture to suggest that come Christmas, where there's normally a drop-out

rate of about 5 per cent of the first year class, there will probably, this

year, be a drop-out rate in excess of the normal 5 per cent. That's the price

some students are going to have to pay. Maybe they would not have been accepted

into the university if we had gone through the process and the exams had been

written, and they might not have performed as well, but that is one of the

downsides of having to do this.

The hon. member talks about a certificate. The problem in

preparing a diploma isn't of great concern for those students who intend to go

on to a post-secondary institution - all of the post-secondary institutions will

accept students this coming year; but the problem is with students who don't

intend to go on to post-secondary institutions, who plan to join the workforce,

or who, for whatever reason, want to have proof that they did complete Grade 12.

Maybe that is all they intend to do, that is all the formal education they

intend to have. They, too, are entitled to a certificate.

The Department of Education is watching very closely the

negotiations which are still ongoing with the teachers, and hopefully, I have no

reason to suggest one way or the other, but hopefully, this matter will be

resolved in time so that teachers can get back into the classrooms, if to do

nothing else, at least be able to evaluate the year's work, so they can put

together a certificate or an evaluation that the department can use to issue

diplomas to people who deserve them.

What I am saying, Mr. Speaker, is that this year, and this

year only, the certificates that will be awarded will be based on the

evaluations and the marks that are provided by the schools. I am hoping that

this strike will some day come to an end, sooner rather than later, and that

teachers will be able to get back into the classrooms to do these evaluations.

Failing that, we will have to find some way, it will become imperative, that we

get access to the mid-term marks, the quizzes, and the evaluations.

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.

SOME HON. MEMBERS: By leave.

MR. SPEAKER: By leave.

MR. DECKER: The future of the students is so important

that we all have to wrack our brains to find some way, if this dispute is not

resolved, to get access to the mid-term marks and the evaluations, so that we

can give the students a diploma which means something, not just a slip of paper

with my signature on it, or whoever the minister happens to be. It has to be a

piece of paper that has some validity, and that will be accepted. I believe, if

we can get access to the year's work, get access to the mid-terms and

evaluations, that a process can be put in place to deliver and present to the

students a valid diploma for what they have done.

Thank you, Mr. Speaker.

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

MR. SULLIVAN: I rise to support my colleague, the Member

for Burin - Placentia West in his petition to have public examinations

cancelled. We are aware, from the minister's statement this morning, that has

happened. I think it was a little late, because I think, last week everybody

realized that public exams are based upon the full year's content, and because

of the teachers strike we know that a certain amount of the year's material that

was built into those public exams was not covered, and it would have been very

unfair - even last week if they had gone back, it would have been very unfaIr to

go ahead with public exams, because students would be writing exams in which

there would be material they had not yet covered.

Now, the department has records on hand of all students right

up to Level II and they could compare the performance of students in Level I and

Level II, and there is a great degree of consistency. In fact, I happened to

teach the first year they brought in this 50/50 evaluation. I have taught for

over twenty years in a Level III homeroom, actually, and have been involved in

the trends that have been established over these years. Students are very

predictable from year to year with only very few exceptions.

The department can, and I am sure they have, in some boards,

have access to mid-term marks. Some schools have them on computers and school

boards have access to these, and by projecting ahead and giving the benefit to

students, I am quite sure you can get a mark that is very, very valid, in fact

every bit as valid as based upon a one-shot exam in June of this year, because I

think the past and the consistency would be very much brought forward.

I do not think it was any major surprise today in that

announcement. It was no major surprise to me. I have been saying since last week

that public exams should not go ahead. It would be unfair to students to do

that. They probably should have allayed the fears and anxieties of parents and

students from the time over a week ago when they started gathering, and told

them earlier that there would not be public exams. The students would have been

at rest then, and they would not have to compete, I guess, with other students

who are not subject to strike.

Overall, the petition, I think, was well-intended here and

action has been taken. There is just one other point to the minister that is of

concern, and that is scholarship exams. While the minister may not realize it, I

hope he does, scholarship exams also are based upon academic content in each

specific subject area.

There is an area in language, and an area in mathematics and

science, that is based upon what was studied this year. They are not just

general exams of knowledge, they are based upon factual information that is

taught during the course of high school.

I think it is very important, as well, on the scholarship

exams, to use some type of tolerance factor in marking and scoring these to make

sure that they have valid results, too, and they really project the proper

marks, and the students who are most deserving would end up, in the result,

getting the particular accolades they deserve.

Thank you, Mr. Speaker.

Orders of the Day

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

MR. ROBERTS: We are on Orders of the Day, I take it, Mr.

Speaker.

MR. SPEAKER: Orders of the Day, yes.

MR. ROBERTS: As I advised the House on Friday, we will be

asking the House to deal first today with the two loan bills. They stand as

Motions 1 and 2. Perhaps we could begin with Motion 1, which is the Local

Authority Guarantee Act, Bill 14. Then, assuming we finish that, at some point,

we will go on to Bill 22. We do not plan to ask the House to sit beyond 5:00

p.m. this afternoon, Sir.

On motion, that the House resolve itself into Committee of

the Whole, Mr. Speaker left the Chair.

Committee of the Whole

MR. CHAIRMAN (L. Snow): Order, please!

Bill 14.

The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Chairman.

This is a fairly routine piece of business that happens once

a year, where we add municipal loans and guarantees issued since the last loan

bill was put before the House. In this case, it is for the period October 21,

1993 to February 25, 1994. These are the municipal loans and guarantees that

were issued during that period to town councils and community councils around

the Province. Generally it was for a variety of municipal works.

The first one is the Town of Appleton. This had to do with, I

think, water and sewer. It was a two-year thing, $31,000 spread over two years.

I think the rest of them are very similar to that, relatively small amounts of

money by-and-large. It is a requirement that we add those to the Local Authority

Guarantee Act once a year. So this is a fairly routine occurrence.

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

MR. WOODFORD: Just a few short comments on this bill, the

Local Authority Guarantee Act, Mr. Chairman. It totals some $5,826,000 in this

particular - what I find a bit odd is that it comes between October of 1993 and

February of 1994. Usually, all municipal programs are released in the spring of

the year or in the summer, and so on. Very few, I suppose some, come out in late

fall, depending on what it is for, if it is drilling of wells or - but there is

not much road work or municipal work announced at that time of the year. There

are a few there in the $800,000 category, but the rest are usually $10,000,

$30,000, $50,000 and so on.

I was wondering why it is so late that the guarantees are

issued. Are they loans? How many are loans and how many are guarantees? Loans

have to be listed with a financial corporation. The others sometimes are loans

guaranteed by the Province to the banks on behalf of municipalities. I'm just

wondering what percentage of that and what the breakdown was. Maybe the minister

can get the - the minister responsible can probably later on address those few

questions. What are loans guaranteed to the financial institutions, like

chartered banks, and how many are guarantees to the municipal financing

corporation on behalf of municipalities in the Province? And the lateness of

some of the guarantees - that is quite late in the year for municipal work. Some

are fairly substantial. There are a couple of $800,000 ones there and so on; so,

just a few short comments as it pertains - I know it is an annual thing, in any

case, Mr. Chairman, and maybe the minister can address those two or three

concerns that I have.

MR. CHAIRMAN: Shall the resolution carry?

The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Chairman, there is not a great deal one

can say about these bills, except in generalities. Once again, as is normal, we

are asked to approve this retroactively because these funds have already been

spent; the loans have been approved some time ago and municipalities, no doubt,

have undertaken the public works.

My colleague brings up the amount that is here; there is only

$5.-something million, I believe the hon. member said, I didn't bother to add it

up. I think it is worth noting that this is an incredibly small amount; I assume

this part of the year - this is not a whole year? Did we not do some in the fall

session? Did we not do part of last year's in the fall? These little ones that

now have been put on long-term financing, the others were already on before; so

the overall package was how much? Maybe the minister could tell us how much was

actually spent last year and compare that with previous years. As we have been

led to believe, we are probably spending less and less each year, making less

and less funds available to municipalities in spite of the fact that costs are

increasing each year. But I suspect this is probably the lowest amount we have

spent on municipal capital works for years, probably twenty years - the amount

has gone down tremendously.

Now, we could get into a whole debate on the federal

infrastructure program which the government is piggy-backing on and try to take

credit from.

AN HON. MEMBER: You are not right there.

MR. WINDSOR: Well, if I'm not, then the minister will

correct me, and I hope he can, I will be delighted, if there is more money being

spent than previously, but I think the minister -

AN HON. MEMBER: Unfortunately, there is.

MR. WINDSOR: I don't think there is; if the minister has

the facts he will tell us, I'm sure; but it is curious that there are some very,

very small amounts here. All or most of them are very small amounts and I

suspect there is not more of them there is less of them and they are smaller

amounts, that's why I said I think we are going to do a lot less work this year

than in previous years, Mr. Chairman.

There is not much else we can say, it is already done, it is

a fait accompli, the money is spent, loans are gone, the municipalities are not

responsible for it, they have to pay it back and we have no choice, of course,

but to put the amendment to the legislation to give effect to these loans.

MR. CHAIRMAN: The hon. the Minister of Finance.

MR. BAKER: Just a few comments, Mr. Chairman. First of

all, most of these are guarantees; I don't know how many of them are actually

loans, not very many, they are all guarantees. There might be one or two loans

snuck in there, I'm not sure, but I could find out.

The hon. gentleman, the Member for Mount Pearl is absolutely

correct. Last fall we did one of these bills and this is essentially what we did

over the winter, which is a small segment of the year and that is why it amounts

to only $5 million.

MR. WINDSOR: Or what was (inaudible) by the fall to carry

over.

MR. BAKER: Yes. Now, the question I really want to deal

with is comments about the amounts and so on that are being financed in terms of

the municipalities in the Province.

In the last four years, there has been a tremendous increase,

and I say, as Minister of Finance, unfortunately, we still have a tendency to

perhaps overextend ourselves, and have exhibited that tendency over the last

four years, to overextend ourselves in this field. I know there is great

pressure in terms of municipal works and there is great pressure to, every year

increase the amount further and further and further, and it is an urge, Mr.

Chairman, that we have to control, because we have to get our total debt and

that would include the guarantees, work we do under the municipal financing

corporation, to get that under control as well, because even though it seems as

if it is not a real expenditure in every given year, it is a real expenditure

and it adds to our debt and adds to our guarantee debt each year.

Back in the late 1980s, I think the amounts probably averaged

$25 million to $30 million a year that were done this way. In the early 1990s,

the average has been over $50 million a year; there has been a tremendous

increase in the amount of this type of work done, and again, I am not saying

this - I am not bragging about it, because I really think we went too far. There

has been a tremendous increase.

I tell you what I will do for the hon. gentleman - I will get

him an exact breakdown now of the last eight or ten years. It is not something

I'm overly proud of, but there has been a tremendous increase. One year it went

over $60 million, I think; and it has fluctuated, it has gone from, I think, a

low of about $40 million up to about $62 million - $63 million, averaging out

somewhere above $50 million a year in the last four years. This year, of course,

because of the infrastructure program, it is going to be ballooned a lot more,

and that is unavoidable.

I would like to point out that as hon. members go through

this, they have to realize that in many cases here, that amount is not really

something that the Province ends up paying. In the case of the smaller

communities, in the communities with less fiscal ability, the Province ends up

paying a large share of it. In the communities that are financially sound and

can afford it, have a good tax base and so on, especially if it is water and

sewer work, the whole cost is picked up by the municipality. So, in terms of

exactly what the Province has to pay, you would have to do an analysis and you

would have to leave out the larger centres here, because most of this is paid

for entirely by themselves. In terms of what the Province will eventually have

to pay, you have to simply look at the other municipalities that don't have a

tax base, where we pick up 100 per cent of the cost.

So I will make the promise to the Member for Mount Pearl that

I will go back and get the total amounts of the financing over the last few

years, from my perspective, as well as his. I think it would be interesting for

both of us to have a look at and comment on one way or the other. As I said, we

are at the point where we have to be very careful as to how much we spend in

this regard even though the needs are great. Because whether it is this

particular government that is in power or a few years down the road some other

government is in power, we have to realize that these are real debts on the

Province and that we must, at some point in time, reach the stage where we are

paying our own way for a while, until our debt-service ratio gets down, and our

debt-to-GDP ratio gets down. Then we can start on the track to perhaps a little

more deficit financing, but we have to be very careful of this type of

expenditure.

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

MR. HARRIS: Thank you, Mr. Chairman.

I don't have a lot to say on this bill except to ask the

minister a couple of questions concerning the approach taken by government on

this.

Looking through the list, obviously there is hardly a

particular community you can object to a loan being guaranteed by the Province.

But in light of the minister's comments and occasional government comments about

the size of the provincial debt, I wonder if the minister could explain what the

procedure is and what the criteria are. I know, of course, that banks, like most

lenders, will take whatever security they can get, and usually will ask for far

more than they need. Usually, they will lend you money if you have money. If you

have money and are prepared to lay it down in one pot, they will lend it to you

out of another pot.

Obviously, the banks are going to try to get whatever they

can. Are we giving security where it is not necessary? I see, for example, the

City of St. John's has $53,000 there being guaranteed by the Province, on page 8

of the bill. Would the bank lend them money without a guarantee from the

Province? I don't know. I don't know what it is for, or what it relates to. Does

the government ever say no when a town council says that the Royal Bank or the

Bank of Nova Scotia or whatever would like to have a government guarantee on

this? Has the government ever said: No, the bank should loan you that money on

your own merits, on your own tax base, or whatever?

In other words, are we getting into a situation here where

really all the government is doing is providing comfort for the banks, which

they don't need, and at the same time, jacking up our own numbers in terms of

the contingent liabilities of the Province for government guarantees for the

municipal corporation or whatever?

I'm not questioning any individual or specific allocation

here, as to whether it should or should not have been granted, but I ask the

overall question: Are we just providing an extra measure of comfort for the

banks, adding numbers to our provincial debt? Are there criteria that government

applies in making decisions about this? Do we ever say no? and basically what

procedure the government follows here, because I wouldn't want the banks, as a

matter of course, to be insisting on this type of guarantee in order to

facilitate their loan operations, or to save the reputation or the angst of the

local bank manager. If that's all that is going on, then we shouldn't be doing

it.

It may be that they will give a loan at a 2 per cent less

interest rate if there is a government guarantee, and that amounts to some sort

of saving for the municipality. If that's the case, then I can see some

advantage in the government providing a guarantee. There may also be some

argument for the government charging a fee for that. Who know? I'm not proposing

that as a solution. I know, obviously, the government decided in the case of

Newfoundland and Labrador Hydro a few years ago that if they were guaranteeing

all of this debt, then they were going to charge a fee for it. I don't know what

the circumstances are with municipalities. If they are getting a special

interest rate from the bank because of the Provincial Government guarantee,

maybe somewhere between the rate that the banks would ordinarily charge and what

they get from the government guarantee, something could be done there to ease

the burden on the Province.

These are just speculative questions, but I hope the Minister

of Finance will be able to address them in his remarks.

MR. CHAIRMAN: The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Chairman.

In one sense, I suppose, the issue is really a non-issue.

Obviously, if government guarantees a loan, then there is more security for the

bank than if government didn't guarantee the loan. All that means is that the

bank is more sure it is getting paid; therefore, it presumably can offer a lower

rate.

AN HON. MEMBER: In theory.

MR. BAKER: In theory, yes.

Also, of course, whether government issues a guarantee or not

to most of the communities in this Province, the municipalities are creatures of

the Province, and even if a community, I suppose, were to go out and borrow

money, the Province ultimately would be on the hook, because the municipality is

a creature of the Province, or the tendency would be that the Provincial

Government would not see a municipality sort of go bankrupt and not straighten

out their debts and all this kind of thing. Consequently, in terms of the

municipalities that don't have the power to pay, banks then wouldn't give them

money anyway, or if they did, they would charge high interest rates.

In terms of the municipalities that can pay, it doesn't

really matter, because these municipalities end up paying, in terms of water and

sewer, the full cost anyway. This was the big problem with the City of St.

John's in terms of the infrastructure projects, where we made the decision to

use the infrastructure money along the lines of our current programs, so we had

an 80-20 recreation facility program; we had a 60-40 roads program, and we had a

water and sewer program where the municipalities pay according to need, and

according to ability to pay, so that places like Gander, St. John's, Grand Falls

and Corner Brook, perhaps, would end up paying, in terms of water and sewer, the

full amount of the loan,

whereas other communities having lesser ability to pay

might end up paying back half of it, and a large number of communities having no

ability to pay would end up paying 0 per cent and the Province paying 100 per

cent.

These are the types of programs that we have, and I am not so

sure it makes a difference in terms of the Province and the Province's

obligations, whether they guarantee these loans or not. I know that some of the

municipalities, the "richer municipalities", the municipalities with the tax

base, quite often go and get loans on their own. I think they still have to have

the permission of the Department of Municipal Affairs, but sometimes they do go

and get loans totally on their own, with no government guarantee.

The only instances I know where that happens is in some of

the larger municipalities, that they do in fact get loans without any government

guarantee at all because of the absolute certainty that they can pay them back.

I don't think that happens a lot, though, but I know of some instances where it

has happened. Municipalities have gone ahead, simply to do a project, gone out

and borrowed the money themselves, and paid it back themselves, but obviously,

their budgets at the end of the year have to be vetted through the Department of

Municipal and Provincial Affairs and we would be very careful to see that these

municipalities are not over-extending themselves. It's only when they

over-extend themselves that government would then have a moral obligation, if

not a legal one; but it would have a moral obligation in case they ran into

difficulty.

So, the whole issue of whether government is doing too much

of it, I suspect we are. Should we be saying `no' more often? You're probably

right, and judgements have to be made, but there are all kinds of forces at play

here, political forces, environmental forces, health forces and so on, that have

dictated recently that we say `no' less often, even though we do say `no' an

awful lot - but we say `no' less often than we have in the past.

The issue of whether we should guarantee loans or not is an

interesting issue, but as I said, I'm not so sure because of our moral

obligation anyway, that it makes much difference. The only thing I would have to

check into is whether the government guarantee does give them the lower rate,

and it should. It's something I wouldn't mind checking into.

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

MR. HEWLETT: Thank you, Mr. Chairman.

I'd like a few words on this Act To Amend The Local Guarantee

Act. As the Minister of Finance pointed out a moment ago, there are certain

municipalities in the Province which have the ability and, in reality, do pay

their own way. I represent one such community named Springdale, Mr. Chairman.

There was a degree of concern in Springdale over the last few

days that it was not approved for project under the new federal infrastructure

program - a program, which, in the case of a town like Springdale, would have

seen the Town still having to come up with two-thirds of the cost of the project

they applied for, insofar as Springdale, in terms of the municipal and

provincial end of any water and sewer project, would be picking up the total

cost which, under the new federal program, would have been two-thirds of the

cost.

Springdale had an application in for several hundred thousand

dollars to install a new water supply line from the existing reservoir serving

Springdale to the west end of the town. Springdale is substantially serviced,

Mr. Chairman, and these services were installed, a lot of them, by pick and

shovel back in the 1950s, in the years of the Smallwood Administration. So

needless to say, it's a town that is not overly burdened with debt compared to

other communities in my district and the Province. However, not being funded

under the infrastructure program means that Springdale is still faced with a

real problem in terms of its water system. Fire flows are very low in the west

end of town and the new service line from the reservoir would correct that

problem but instead of having to pay two-thirds of the cost of such a project,

if the town gets it under the regular municipal financing provided by

government, it would have to pay 100 per cent which, of course, is a larger

burden on the town. Failing to get on the annual water and sewer program, either

through the infrastructure program or a direct provincial program, the town will

be forced to do as the Minister of Finance indicated, get permission to borrow,

an approval to borrow, from the Minister of Municipal and Provincial Affairs

which is, in the case of Springdale, somewhat of a formality, and go to the

local bank and raise a loan, as you or I would, based on our financial

reputation, our creditworthiness, etc. That, I don't think, would be a problem

for Springdale. Obviously, it would be easier, and perhaps better, as regards an

interest rate, if it had a government guarantee. It would have been much better

had it gotten approval under the infrastructure program, in that it would have

had to pay only two-thirds of the cost of its water line, versus 100 per cent.

So therefore, Mr. Chairman, I would like to put on record

that I ask the Minister of Municipal and Provincial Affairs, in further funding

under the infrastructure program, to consider Springdale for an addition to its

water system, badly needed for fire flows. Failing that, I do believe the Town

will have to come to the government for approval to borrow on its own strength.

Thank you, Mr. Chairman.

MR. BAKER: I would like to thank the Member for Green Bay

for making the case for some water and sewer money for the Town of Springdale.

In a lot of ways, I look upon Springdale as my hometown. I started school there

in Kindergarten and went as far as Grade 6, I believe it was, and have very fond

memories of Springdale. I went back and taught there for three years, as the

hon. member knows. He was in school at the time, and I still remember him. He

wasn't very old, but I still remember him in school. He was a very interesting

person at that stage in his life as well.

I say to him that there is still money left under the

infrastructure program to be allocated. It won't be allocated right now, but

there is more left, and I would suggest to him that he make sure that if in fact

what is happening there now is resulting in a real safety problem in terms of

water pressure, availability of proper water pressure for fire trucks and so on,

if this is that type of situation, that he go and talk to Municipal Affairs

again to make the case, to make sure that all these safety things are included.

Because they do their analysis and we pick them according to rankings, and the

secret is to get all of the points across, about the particular project you are

talking about, and it seems to me, there is extra stress given to safety

features like that.

I would suggest to the hon. gentleman that he make sure those

points have been taken into consideration. I, myself, would like to see, if that

is the problem in Springdale, that it is corrected. I would suggest that the

hon. member just do another check. I know he has checked before, but do another

check to make sure all those factors are included with Springdale's application,

and that the officials involved understand the seriousness of it.

Motion, that the Committee report having passed the

resolution and a bill consequent thereto, carried.

MR. CHAIRMAN: The hon. the Minister of Finance.

MR. BAKER: Motion 2, Mr. Chairman.

MR. CHAIRMAN: I understand the minister is calling Bill

22 now.

The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Speaker.

This again, is a normal occurrence each year, but members may

recognize that this year there are some complicating factors they may want to

debate.

First of all, this gives authority to raise $300 million on

the markets if and when the need arises. What happens is, we try to have enough

borrowing authority to cover our needs with a fair amount of leeway left over

for the next year. In actual fact, there is probably about $150 million

authority left over from last year that we could use. That's the way it is year

after year. We ask for authority up to a certain point to give us enough leeway

to carry over into the next year, so that we never get caught short. If, at a

certain point in time, the markets are so good that we can quickly access the

markets with the expectation that things will turn worse a couple of months down

the road, or a couple of weeks down the road, then we do so and we pre-borrow

for several months ahead, even though the need may not be there at the time. It

allows us an awful lot of flexibility to get the commitment, or to set the limit

high enough to be able to do that.

In this instance, we are asking for authority of the

Legislature to raise $300 million by way of loan for the purpose of the

Consolidated Revenue Fund. That would be enough of borrowing authority to carry

us through this year and part of the year after. We would hopefully have quite a

significant amount of this authority left over at the end of the next fiscal

year so that that could carry us into next summer - as we do this year; we have,

as I said, about $150 million authority still left over.

So, again, it is a normal piece of business that allows us to

function in a manner that is to the benefit of the Province and doesn't put any

restrictions on us. We must do that before we actually run out of borrowing

authority that we now have.

MR. CHAIRMAN (Barrett): The hon. the Member for Mount

Pearl.

MR. WINDSOR: Thank you, Mr. Chairman.

I guess, the interesting thing about this bill is that it is

here at all. I would have thought this year, that with the proposal to sell

Hydro, the minister would be standing up today saying: I don't need to introduce

a bill to raise $300 million. We are going to sell Hydro and not borrow any

money. Now they've changed their tune. Why are we borrowing $300 million if we

are going to privatize Newfoundland and Labrador Hydro and not have to borrow

any this year and perhaps none for next year? The minister just told us that he

has $150 million left over from last year. So surely, that is enough, together

with the revenue to be realized from the sale of Hydro, to carry us for at least

two years. I don't understand why the minister has this bill here at all.

On the other hand, then, I haven't heard anything about the

Hydro bill recently. Where is the Hydro bill all of a sudden? That doesn't seem

to be on the agenda for this week. Perhaps what the minister is telling us is

that we are not going to proceed, at least not now, with the Hydro bill.

SOME HON. MEMBERS: Oh, oh!

MR. WINDSOR: We are not going to proceed with the Hydro

bill. That is good news, Mr. Chairman. I say that is good news. That makes good

sense. I would sooner have the minister come here and ask to borrow $300 million

this year, which is not an unreasonable sum; in fact, it is a much smaller sum

than we've been borrowing annually for many years for various reasons. I'm much

happier debating the borrowing of $300 million than if we were here debating the

giveaway of our hydroelectric resources in this Province.

I think this makes eminently more sense than privatizing

Hydro. This is a small percentage of the benefit of retaining that Crown

corporation. I am not going to get into that debate any more than that at this

point in time because hopefully we will never have to debate it. If we do, then

we will debate the pros and cons in full measure. Let me simply say again that

this is far more preferable. So $300 million, as the minister said, this is -

AN HON. MEMBER: If we do.

MR. W. MATTHEWS: We need a statement first to clear the

air.

MR. WINDSOR: This is a normal piece of legislation that

comes in every year, that is the borrowing. I was just about to look to the

Estimates and see exactly what the - I had forgotten for the moment what the

overall budgetary requirement is; four hundred and seventeen million dollars.

MR. BAKER: That includes the rollover which we don't need

authority for.

MR. WINDSOR: That includes the rollover from last year.

We didn't then need to borrow as much last year as the minister had authority

for. The minister said that each year we always have some at the end, but that's

not the case. There is very little, normally, left over. We normally borrow all

that by October, November - we've borrowed all that the authority was asked for.

It's not normal to have money left over, to have authority left over at the end

of the year. It may have been this year and last year but -

MR. BAKER: That has been for the last three years.

MR. WINDSOR: The last two or three years - most unusual,

Mr. Chairman. Normally, we don't ask the House for authority to borrow any more

than we have to. And the reason for that, obviously, is because once the

minister asks the House for authority to borrow and receives authority to

borrow, that then, is a liability on the Province's books. The credit rating

agencies will then look at that far more seriously than they would look at the

Hydro debt, which is simply a guarantee of a debt that can never be called on,

that guarantee would never be called on. That borrowing doesn't bother me, or

the guaranteeing of borrowing by Hydro, totally self-sufficient debt, has very

little impact on the Province's credit rating.

Borrowing $300 million or $400 million does have an impact.

If the minister is borrowing $100 million or $150 million more than he needs,

then I say that is not wise. The minister could always come back in the fall if

he finds that by the end of the year he is going to be short and ask for $100

million if, in fact, that is the case. The indications we've had - and the

minister says he will let us know in due course - but the indications are that

the Province's financial position is a little bit ahead of expectations.

Obviously, the teachers strike is going to give them a great boost as well. We

don't know what will be the resolution of any savings there. The minister is

talking about putting it into the teachers' pension plan or something, which is

fine in some ways and not so fine in others. We will debate that at another

time.

MR. BAKER: (Inaudible).

MR. WINDSOR: I am not totally in favour of that, I say to

the minister. It all sounds well and good, and it is great for government. It is

a liability we have anyway, and certainly it is a benefit to have that in there,

but it is the children of this Province, I say, who have suffered by this strike

more than anyone else. I would sooner see those savings go into education, into

equipping schools, and upgrading schools, and providing better facilities in the

educational system, not taking it out of that and putting it into the pension

plan.

MR. BAKER: We could argue that.

MR. WINDSOR: We can argue that, sure. It is a matter of

opinion, and there are benefits to both sides. No doubt, there is a benefit in

making a significant contribution to the teachers' pension plan. It is a

liability the Province has anyway; it has to go in there sometime, so it is

certainly not an unwise use of those funds, but I am not sure that it is top

priority for those funds at this point in time, when we are closing down

hospital beds and reducing the number of teachers and everything else. I am not

sure that is the best use of those funds at this point in time.

This bill is routine, as the minister has said, something

that we do every year by resolution that gives effect to the borrowing program

announced by the minister, and it is less than was announced by the minister in

his Budget, so obviously the government will need these funds to provide

services in the Province for the coming year.

Mr. Chairman, with those few words, I will pass on to some of

my colleagues.

MR. CHAIRMAN: The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Chairman. I would like to

briefly comment on some of the things the Member for Mount Pearl mentioned.

First of all, for the last at least three years that I know

about, we have always ensured that there was enough borrowing authority left

over at the end of the year so that if conditions were such that the market was

absolutely perfect to borrow, and we knew we needed money during the summer, but

maybe in May sometime, the market conditions were absolutely perfect and we were

getting a really good deal, that we could go in May, even though we may not need

to go until July or August, and it provides that kind of flexibility, because by

the time the Budget gets to the House, and by the time the loan bill gets

through, there may be a window that is missed, so the extra borrowing authority

is simply for the flexibility of the system, and I think that flexibility is

kind of important.

We don't actually go out and borrow. We only borrow what we

need, and we like to keep, as the hon. member knows, so much money on short-term

deposit anyway, and on the average throughout the year there is perhaps $100

million on short-term deposit, and that varies. Sometimes we might go in the

hole a little bit, and we have borrowing arrangements with the bank, but

generally we like to keep a float of maybe $100 million, or around there, in

short-term deposits in case of emergencies and this kind of thing, and in case

we come to a point where we need to go to the market but the market is not

right; we can then postpone it a little bit longer. So keeping that float there

also provides us with added flexibility.

In terms of the rating agencies, I think they believe that we

should create that type of flexibility for ourselves so that we can try to get

the best deals at all times, and not be forced into going to the market when the

market is simply not there and we would have to pay high rates for our money, so

I think flexibility is important.

In terms of his comments about the pension plan and the use

for that money, he is right; that is an argument that we could have, and I guess

there is an argument to be made on both sides. I can see both sides of it, and

probably that is a great fault that I have, that I can generally see both sides.

One could argue that there are other needs in the Province,

immediate needs that need to be met, and the monies put to better use, but I

also can see where - you know, previous to 1980, the government simply used the

money that was collected from people for pensions, didn't put in any of its own

money, and used the money that was collected in current account, and maybe that

was understandable in those days, but it simply did not work out to be the

proper way to do it. Consequently, that is one of the causes of the tremendous

unfunded liability, and particularly the teachers pension plan. Government has

an obligation to pay that back and that obligation, the money that was taken and

used for road work and things like that, plus accumulated interest from the

'50s, '60s, 70s and up, would probably amount to well over $300 million that

this Province actually owes to that plan, and should put in the plan because we

were rapidly approaching the point a few years ago when the plan would, in

essence, be bankrupt and we would have to fund the payments as a current

account, and that is not a proper way to go. So we made some changes in the

plans. We increased the contributions of both the employee and the employer and

put it on a current, service-cost basis which pushed the date out when it would

go bankrupt. The teachers plan now is about 2006, 2007 which gives us some

breathing space.

I really think that it is kind of important that we start

paying back some of that $300-and-some-odd million that we took out and used. I

think it is kind of important that we start replacing that. It is kind of

important that our public employees get the impression that we are taking that

obligation seriously, and not just having a written obligation on paper without

ever doing anything about it.

As I say, I can understand both sides. There are the needs

that we have now and there is that horrendous problem that we have, having to

replace money that previous governments used. I guess it is a balancing act.

We have decided that the pension plan is really important. As

to what we will ultimately do with the so called strike savings - don't forget

that if, for instance, you want to talk about strike savings, if you assume that

we pay the employees $2 million a day, then the savings to us is not $2 million

a day. Because of that $2 million that was going out in pay, maybe 30 per cent

of that was our own money that will come back in income tax, and maybe only 70

per cent of it was usable money for the employees. So the savings are not as

much as it might seem on the surface because of the loss of income tax and RST

and everything else that goes along with that money being spent.

Certainly there are some savings and the decision has to be

made as to where it goes. It should certainly go one of two places. I mean, it

should go into the pension plan or it should go into much needed services,

particularly in the education system. So it should go in one of the two places.

Those are the only comments I want to make right now, Mr.

Chairman.

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

MR. HARRIS: Thank you.

Mr. Chairman, I would like to make a few remarks about the

bill. It is obviously an important bill authorizing the borrowing of up to $300

million for public purposes. I would say, first of all, that I support the

legislation. Obviously the government program requires a borrowing program to go

with it, and in the absence of authority to borrow, government may feel

constrained to have another excuse to say that we have to sell Newfoundland and

Labrador Hydro, and say: We had to do it, the House wouldn't let us borrow any

more money. We asked them and they said no, so we cannot borrow any more money.

So we have to sell Hydro.

I mean, I can hear the minister saying it now on the radio,

that we wanted to borrow more money but the House wouldn't let us. So we now

have another whole series of ads going all summer to tell us how we now have to

sell Hydro because the House wouldn't let us borrow any more money.

I want to put it on the record that I support the

legislation, I will vote for it. I am not asking the minister to withdraw it. I

support the legislation and I want to see it passed.

In doing so, Mr. Chairman, I want to make a few comments

about the public debt in general. You know, the government and governments

across the country, particularly those who want an excuse to say no or to cut

back or to do further damage to our social welfare system and to the social

needs of people that are being met by government programs, quite often talk

about the great burden of the debt and all of this sort of thing. I don't wish

to minimize it, but I want to say, and I think we should all understand, that in

this Province, as compared to other provinces, we are not really doing all that

badly. Our per capita debt in Newfoundland is a lower per capita debt than six

of the ten provinces.

SOME HON. MEMBERS: Oh, oh!

MR. HARRIS: I hear the members talking back and forth,

ignoring the per capita debt, because now somebody else could come along with

another measure that can put us on the bottom of the heap.

The reality of the matter is that the ability to service the

debt is based on the percentages of your revenues that are used to meet the

interest costs. The ability to service the debt is based on your revenues, and

in Newfoundland about 13 per cent of our revenues are used to service our public

debt. So the ability to pay: Obviously you get a better credit rating if you

don't need the money, but the reality of life for Newfoundland is that we do

need the money to be able to maintain the level of public services that is

consistent with other provinces. In fact, that is constitutionally recognized,

that we ought to be able to have sufficient revenues and a proper fiscal

relatively equal, burden of taxation, and provide the same level of services.

When we look at other provinces, on a per capita basis our

debt is not high compared to other provinces. There are only three provinces

that are lower, in fact. Prince Edward Island is one of them, British Columbia

is another, and Ontario is the third. So on a per capita basis we are not really

doing that badly, and that is a consideration that has to be recognized. In

terms of what percentage of our resources we are using to support that debt, it

is relatively modest, 13 per cent per year. It hasn't gone up in the last two or

three years; in fact, if anything, it is going down very slightly. That compares

to the federal government's debt burden whereby thirty-four, maybe up to

thirty-six cents now, of every dollar in revenue collected by the Government of

Canada goes to service the Canadian government's debt.

I support a sensible borrowing program. We recognize that

government does have to borrow money on the markets in order to finance its

activities, and I think we will expect - all of us expect - that that borrowing

will be limited to what is absolutely necessary to meet the objectives of the

Budget as passed by the House.

With those remarks, Mr. Chairman, I will conclude my speech

and indicate my support for the legislation.

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

MR. SULLIVAN: Thank you, Mr. Chairman.

I have just a few brief comments here. Certainly the bill is

authorizing government to borrow the $300 million. Of course, we know that it is

needed to be able to meet, I guess, future debts and the refinancing of our

debts that are there. I think a point to keep in mind, too, is that we can't be

so naive as to think that just because we pay a low percent in the financing

that we are in tremendous shape among provinces in Canada - quite the contrary.

Newfoundland is at the bottom, actually, of the heap in terms of its ability to

be able to repay its debt in terms of our gross domestic product.

AN HON. MEMBER: (Inaudible).

MR. SULLIVAN: Yes, and a lot of our costs are pretty

fixed costs where we don't get the flexibility. We are depending on, I believe,

$1.4 billion of transfer payments that are filtering into specific areas that

are needed, and with the other federal assistance programs that are on a

cost-shared basis, with our social assistance and so on, we don't have

flexibility in those areas. We don't have very much flexibility. We have

mushrooming costs, and each year we are taking up a bigger percentage of the

disposable, flexible income which we have, to be able to meet our needs. We have

growing needs in health care - we know that - and education and other areas, and

our flexibility is limited. While it might be a low percentage it is far, far

from a very enviable position. In fact, with our total debt factored in, I think

we are 125 per cent over, based upon our debt to gross domestic product. When

you factor it in, it is 125 per cent for this Province. We are the highest of

any province in Canada.

We have problems with taxation alone dealing with these. In

fact, we have some of the most, I guess regressive, if you want to look at it

that way, negative aspects in taxation that the government seem to think

necessary.

The Workers' Compensation report tabled here today: We have

some of the highest worker compensation costs in this country. In fact the

highest, I believe. Ontario might be a little bit close to us, I think. We are

the highest. We have a payroll tax that is the second-highest I believe in the

country. Quebec is substantially higher. The rest is just a margin, 2.2 per cent

I think in another province. Just a very little different than ours in another

province or two.

We have a lot of negatives still, from a business aspect,

that are going to be able to generate revenues to be able to increase our gross

domestic product. If we want to be able to increase our gross domestic product

we can't be frustrating and limiting the ability of businesses to be able to

grow. With inter-provincial barriers coming down, we all see a need to be more

competitive. I'm sure if government is not addressing, maybe it is discussing

some of these areas. It hasn't addressed some of these areas.

I know they dropped corporate income tax, or proposing to,

down to 14 per cent. We all know that is positive, but it is really going to do

very little in terms of real dollars. Because we are only taking in, proposed, I

think $52 million this year in corporate income, $48 million, $49 million last

year. We are not going to take a big percentage in anyway, because of that

measure. It does have bit of a cosmetic effect, no doubt.

The big area that we are finding: Over the past five years we

were taking in $70 million in corporate income tax. Now we are only taking in

$49 million, $50 million, proposed $52 million this year. The real killer is the

big payroll tax. We are paying businesses 60 per cent more in those two taxes

than we paid five years ago. Here we have inter-provincial barriers coming down,

trying to be competitive. If we don't get businesses in here, we don't increase

our GDP. We have a higher percentage of our GDP. In fact, if it doesn't increase

and our debt is going up it is causing a grave problem.

We were recently ranked - I think the Fraser forum here

ranked us down with some of the Third World countries. You can take that

opinion, I guess, for what it is worth. They have some interesting statistics

here on provinces across this country. Newfoundland - I will just give you an

indication when I find it here exactly where we fit into the picture. Actually

out of severely indebted categories, we are twenty-fifth. Nicaragua, Guyana,

Mozambique: they are the ones that are below us in that rating; Honduras, Egypt,

Angola, Panama. We are the twenty-fifth most severely indebted country. Nova

Scotia, thirtieth; Prince Edward Island thirty-fifth; Manitoba, forty-first, and

right up the line.

We are not considering in some of these debts - we are

failing to consider other debts: Unfunded liabilities, other related debts, and

so on that are not factored in. So, we do have major problem here.

One big area of concern that hasn't been addressed

sufficiently is creative ways to be able to entice businesses to speed up the

growth in the economic sector in the Province here, business-wise, and to be

able to increase our GDP, and to be able to put us in a better position

financially to be able to cope with these debts and hopefully to be able to

borrow less in the future. There are some areas that need to be addressed by

this government.

Thank you, Mr. Chairman.

MR. CHAIRMAN: The hon. the Minister of Finance.

MR. BAKER: I just want to make one comment, Mr. Chairman,

about the hon. gentleman for Kilbride. Where is it? Kilbride, is it? No.

AN HON. MEMBER: Ferryland.

MR. BAKER: Ferryland. Sorry! Yes, the hon. gentleman for

Ferryland.

While he was up speaking I detected that he was sounding very

much like a Minister of Finance. I would like to remind him that he has to be

very careful, because Minister of Finance has been the death-knell for many a

politician. I would like to suggest to him that perhaps he should start sounding

a little less like a finance minister if he wants to survive in politics. That

is the only comment I would like to make, Mr. Chairman.

Resolution

"That it is expedient to bring in a measure to authorize the

raising from time to time by way of loan on the credit of the province the sum

of $300,000,000 and the additional sum or sums of money that may be required to

retire, repay, renew or refund securities issued under

an Act of the province or

that may be paid into the Newfoundland Government Sinking Fund."

Motion, that the Committee report having passed the

resolution and a bill consequent thereto, carried.

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

MR. ROBERTS: Mr. Chairman, since we're in committee I

wonder if the House would agree to deal with Orders 3 and 4 which are the

committee stages on two bills to which we gave second reading a few days ago? I

don't think they're matters that would delay the committee for long although one

can never be certain. If I get my friend from Grand Bank inflamed we could be

here all day on the amendment to The Internal Economy Commission Act.

When that's done, the House will go on to deal with the

Income Tax Act which I gather is the less controversial of the two taxation

bills.

Perhaps if we could call the committee stage on Bill 23 and

then committee stage on Bill 25, Mr. Chairman?

MR. CHAIRMAN: Bill no. 23.

A bill, "An Act To Incorporate The Grand Concourse

Authority." (Bill No. 23)

Motion, that the Committee report having passed the bill

without amendment, carried.

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

MR. ROBERTS: Would you be good enough to call Bill No.

25, Sir, The Internal Economy Commission Act?

MR. CHAIRMAN:

An Act to amend The Internal Economy

Commission Act, Bill No. 25.

A bill, "An Act to Amend The Internal Economy Commission

Act." (Bill No. 25)

Motion, that the Committee report having passed the bill

without amendment, carried.

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

MR. ROBERTS: Your Honour would you be good enough please

to rise the committee and then we'll deal with the two loan bills at third

reading, maybe give third reading to those two bills and then go into the Income

Tax Bill?

On motion, that the Committee rise, report progress and ask

leave to sit again, Mr. Speaker returned to the Chair.

MR. SPEAKER (L. Snow): Order, please!

The hon. the Member for Bellevue.

MR. BARRETT: Mr. Speaker, the Committee of the Whole on

Supply have considered the matters to them referred, have passed a certain

resolution and recommends that bills be enacted to give effect to the same, Bill

No. 14 and Bill No. 22.

In addition a second report, the Committee of the Whole have

considered the matters to them referred, and have passed Bill No. 23 and Bill

No. 25, without amendment and ask leave to sit again.

On motion, report received and adopted.

Resolution

"That it is expedient to bring in a measure further to amend

The Local Authority Guarantee Act, 1957, to provide for the guarantee of the

repayment of loans made to, and the advance of loans to certain local

authorities."

"That it is expedient to bring in a measure to authorize the

raising from time to time by way of loan on the credit of the province the sum

of $300,000,000 and the additional sum or sums of money that may be required to

retire, repay, renew or refund securities issued under

an Act of the province or

that may be paid into the Newfoundland Government Sinking Fund."

On motion, resolutions read a first and second time.

On motion, the following bills read a second and third time,

ordered passed and their titles be as on the Order Paper.

A bill, "An Act To Amend The Local Authority Guarantee Act,

1957." (Bill No. 14).

A bill, "An Act To Authorize The Raising of Money By Way of

Loan by the Province." (Bill No. 22).

MR. ROBERTS: Your Honour, could we give third reading to

Bill No. 23 and to Bill No. 25, please?

On motion, the following bills read a third time, ordered

passed and their title be as on the Order Paper.

A bill, "An Act To Incorporate The Grand Concourse

Authority." (Bill No. 23)

A bill, "An Act To Amend The Internal Economy Commission

Act." (Bill No. 25)

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

MR. ROBERTS: Your Honour, would you be good enough to

call Order No. 9.

Motion, second reading of a bill, "An Act To Amend The Income

Tax Act." (Bill No. 10)

The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Speaker.

It will only take a couple of minutes. It gives me tremendous

pleasure to introduce this bill in the House. This measure was announced in the

Budget and is part of our overall plan to make this Province the best place in

North America for businesses to come and invest their money. Mr. Speaker, this

is one small step, I suppose, in that process.

Over the past couple of years we have made changes to the

general tax rate on corporations, the tax on manufacturing and processing, and

things like that, and this is just another step in that direction. This bill

reduces the general tax rate on corporations from 16 per cent. I remember a

couple of years ago it was 17 per cent and we reduced to 16, and now we are

reducing it to 14, and on manufacturing processing income from 7.5 per cent to 5

per cent.

This, Mr. Speaker, will be an encouragement for people to

come here to make a profit, and in doing so they cannot do it without also

creating jobs in the Province.

Mr. Speaker, I recommend this piece of legislation to all

members of this hon. House. It is a tremendous move forward and part of our plan

to rebuild this Province.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Thank you, Mr. Speaker.

My hon. colleagues are correct, the minister makes it sound

like peaches and cream": What a wonderful government we are, we have lowered tax

rates! That is the kind of bill that any minister, particularly the Minister of

Finance, likes to bring into the House of Assembly, a bill to reduce tax rates,

Mr. Speaker, but he has to tell the other half of the story.

The minister says, we are pleased to do this because it is

going to be such a great boost to businesses in stimulating the economy of this

Province, and he is right. The problem is we need stimulation because this

government has decimated the economy of this Province in the five years they

have been in power. In 1989, if I am not mistaken, the first Budget of this

government raised the corporate tax rate from 16 per cent to 17 per cent; and I

sure if I went back to Hansard, I guess I told them twenty times, you are making

a mistake. It is hard enough to do business in this Province now. We have enough

natural disadvantages of doing business in this Province: The cost of

transportation; the geographic location of this Province; the weakness in our

technological base; and in skills in many areas compared to other parts of

Canada. It is tough to do business in this Province, particularly if you are

competing with businesses from outside of the Province, and particularly if you

are competing with other Maritime Provinces of Canada. Those are our closest

neighbours and those are generally our biggest competition, except for the big

corporate giants that come in from Ontario, Quebec, and the United States, or

wherever, and they are competing everywhere. It is very difficult for small

local companies to deal with them, or compete with them.

Sixteen per cent is now down to 14 per cent. We cannot argue

against that. It is just too bad that it doesn't go down further, but 14 per

cent compares very favourably with the rest of Canada, Mr. Speaker. I have the

table here provided by the minister's staff during the Budget debate, the Budget

lockup, and 14 per cent is the lowest one except for Quebec which has a totally

different system anyway. It is very difficult to compare tax rates in any part

of Canada with tax rates in Quebec.

In terms of other Maritime Provinces, we are now 1 point

below PEI, 2 below Nova Scotia, and 3 below New Brunswick. In manufacturing and

processing we are now down to 5 per cent, which is great. PEI has 7.5 per cent

and Nova Scotia and New Brunswick which are our biggest competitors do not have

any rate. They do not charge a tax on manufacturing and processing.

MR. BAKER: (Inaudible)

MR. WINDSOR: So, they charge 16 and 17?

AN HON. MEMBER: Big difference.

MR. SULLIVAN: Which provinces?

MR. WINDSOR: Nova Scotia and New Brunswick.

MR. SULLIVAN: Nova Scotia and New Brunswick have sixteen?

MR. WINDSOR: That is on (inaudible). I'm talking about

manufacturing and processing.

What is even more significant, Mr. Speaker, is that none of

the other Maritime provinces have a payroll tax. There is one of the big

differences here when you talk about a direct disincentive. The minister has

already admitted that the payroll tax - as we told him when it was introduced,

we told the previous minister when it was introduced, that it was a direct

disincentive for doing business in this Province. It is a penalty for creating

employment. It is the most ridiculous tax anyone could ever imagine.

MR. BAKER: But they have higher education taxes,

municipal taxes (inaudible).

MR. WINDSOR: Oh, you have to look at the whole gamut, Mr.

Speaker. Sure! As we, as parliamentarians, would have to do. But the businessman

coming in, deciding where to establish a business, he looks at what affects his

bottom line. Sure, indirectly education tax and all the rest of it, and salary

levels, and everything that is expected of an employer, is a factor that he or

she would have to consider, but nothing as much as the direct taxes on the

corporations themselves. These are the ones that we have here. You have the

regular corporate tax rate, manufacturing and processing taxes, and on small

business.

Would the minister tell me: Has the minister extended the tax

holiday for new small businesses? There was a three-year tax holiday, and if I'm

not mistaken, that has now expired. It was something that the previous

government introduced and we extended it every year for one year, so we always

knew that for the next three years there was going to be a tax holiday, a

three-year tax holiday for everyone. That has not been done the last number of

years. According to this chart, in fact, there is no record on this chart that I

have that that tax holiday is now in place, but there is a tax holiday for Nova

Scotia, Quebec and Saskatchewan; two years in Saskatchewan, three years in Nova

Scotia and Quebec.

Maybe the minister could tell me if that tax holiday now for

new small businesses is in effect, is now available. You always had to apply for

it. Is it still available or has that now expired? I believe it might have

expired.

MR. BAKER: We are bringing in a new bill dealing with

that.

MR. WINDSOR: You are bringing in a new bill.

MR. BAKER: In the fall.

MR. WINDSOR: In the fall. So it has expired. Somebody

establishing a new business today will not get a tax break.

MR. BAKER: (Inaudible) believe so, I will check.

MR. WINDSOR: I would appreciate that from the minister.

MR. BAKER: I'm sure it did but I just have to double

check. We are bringing in a new bill in the fall.

MR. WINDSOR: Certainly, Mr. Speaker, the $60-odd million

that is collected by way of payroll tax - and the minister has already admitted

in the House, and I think outside the House, that it is a regressive tax, that

it has been a disincentive to business and industry, and that he is hoping to

find a way to start decreasing that, or phasing it out.

Would the minister, when he speaks again in closing this

debate, tell us what has he done in that regard? Is he proposing to phase out

the payroll tax, or is he going to eliminate it altogether, which he should do?

How does he propose to collect the $61 million? Obviously government can't

eliminate $61 million of taxation and not replace it somewhere else, except with

spending cuts. There are not a lot of those available to the minister.

MR. BAKER: Or growth.

MR. WINDSOR: Pardon?

MR. BAKER: Or growth.

MR. WINDSOR: Or growth. That is right. Or growth. Maybe

the minister could tell us, Mr. Speaker, how he proposes to deal with the

payroll tax. What is in store for b