December

14, 1995

HOUSE OF ASSEMBLY PROCEEDINGS

Vol. XLII No. 76

The House met at 2:00 p.m.

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

Statements by Ministers

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

MR. ROBERTS: Mr. Speaker, in the absence of my colleague,

the Minister of Finance and Treasury Board who is in Ottawa for meetings with

other finance ministers, may I make a statement on behalf of the government,

Sir.

In May, Mr. Speaker, the Premier announced that the

government would be bringing forward amendments to the Mining and Mineral Rights

Tax Act, which will provide a more equitable sharing of revenues from highly

profitable mining operations while maintaining incentives to explore for

minerals and providing an attractive regime for smaller or lower profitability

mining projects.

The bill to effect these changes will be distributed to the

House and made public today. The following measures are contained in the bill:

The corporate income tax credit offsetting mining tax for the first ten years of

a new or expanded mine, now will be capped at a maximum credit of $2 million

annually and a total of $20 million for any mine. In addition, the minimum

processing allowance of 15 per cent of taxable income is eliminated. In its

place, the processing allowance rate for milling and concentrating will increase

from 8 per cent to 10 per cent.

The uncapped income tax credit and the minimum processing

allowance primarily benefit large, highly profitable mining operations. The

changes will reduce the benefit to them. The $2 million credit increase in the

processing allowance rate contain or enhance incentives for smaller and lower

profitability mines. A new category of processing allowance is added for

refining also at a 10 per cent rate. A refining allowance is a common feature of

mining tax regimes in other jurisdictions; the smelting allowance is being

reduced from 15 per cent to 10 per cent providing a uniform allowance rate of 10

per cent across all processing activity; the processing allowance is as members

are aware, provide a deduction from income for the further processing of

minerals beyond the primary crushing stage.

Government's position is that, where it is economically

feasible to do so, minerals mined in the Province should be processed in the

Province. The amendments clarify that for the allowances to be eligible as

deductions, the processing activity, must take place in the Province. The act is

also being amended to permit the accelerated write-off of preproduction

development expenses. This will bring our policy more in line with other

provinces and can enhance cash flow in the early years when it is important for

new operations to establish a sound, financial position.

Mr. Speaker, it is this government's policy that the wealth

derived from the development of our non-renewable resources must be shared

fairly between the people of the Province and the developers of the resources.

This means that the greater the wealth derived from non-renewable resource

development, the greater must be the return accruing to the people of

Newfoundland and Labrador. They are the owners of the resources and the people

who must benefit from their development.

To ensure that the Province receives its fair share of our

non-renewable resource wealth the Mining And Mineral Rights Tax Act is being

amended to impose a non-renewable resource development tax in addition to the

existing mining tax. The tax is profits based and will apply only after resource

developers recover their full investment and receive rates of return which

reward them in fair measure for their risk and their contribution to

development. Only, if these rates of return are surpassed will the non-renewable

resource development tax apply. The tax will provide the people of the Province

with a higher share of the profits derived from the depletion of non-renewable

mineral resources.

For the purposes of computing the tax, the profits from the

full spectrum of mineral development activity from mining, through concentrating

and smelting, to refining will be aggregated as if it occurs within one company

and one taxable entity. This aggregation will be made regardless of whether or

not the companies involved are operating at arm's length. If these activities

are undertaken by more than one company any aggregate tax liability will be

apportioned among them on a reasonable basis.

Before any liability can arise for the tax, developers must

first recover their entire investment incurred up to the commencement of

commercial production. The recoverable investments include all expenditures from

exploration costs to capital assets and the provision for working capital.

The new non-renewable resource development tax will not be

paid until a developer has recovered its total investment in full. It is a

two-tier tax based on a rate of return. The first tier tax will be levied at a

rate of 10 per cent on the profits beyond a 20 per cent rate of return and the

second tier will apply if the project rate of return exceeds 30 per cent in any

given year. The tax rate on the second tier profits is a further 10 per cent. In

any year that these rates of return are not earned the amount of shortfall can

be carried forward to a subsequent year. The tax will apply only to a project

with gross revenues greater than $100 million a year.

This tax is in addition to the existing corporate income tax

and mining tax regimes which continue to apply independently.

Mr. Speaker, the mining industry has been, and will continue

to be, an important component of the economy of Newfoundland and Labrador. The

mining potential of the Province is receiving international recognition and this

is leading to a dramatic increase in mineral claims and exploration activity. It

is important that government and industry work together to develop this

potential and to bring new mineral projects to fruition. It is the desire of the

people of this Province to have a successful and prosperous mineral industry,

and government is committed to working with industry to bring this about.

We are also committed, Mr. Speaker, to having the mineral

resources developed in a manner that benefits the people of this Province. These

benefits will be derived in two ways. First, by maximizing industrial benefits

through having minerals mined in the Province, processed in the Province where

it is economically feasible to do so -

SOME HON. MEMBERS: Hear, hear!

MR. ROBERTS: - and secondly, by receiving a fair share of

the profits derived from the depletion of non-renewal mineral resources. Mr.

Speaker, I am confident that the amendments to the Mining and Mineral Rights Tax

Act I am announcing today will ensure that we receive a fair share of the

resource revenues to which the people in this Province, as the owners of these

resources, are entitled. Thank you, sir.

SOME HON. MEMBERS: Hear, hear!

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

MR. WINDSOR: Thank you, Mr. Speaker.

My first observation is to wonder why the House Leader was

reading the statement in the absence of the Minister of Finance, why the

minister of mines did not read it? It is a mineral tax act. I am wondering

whether the minister of mines is in agreement with these particular amendments

or not. It certainly causes one to wonder, Mr. Speaker, whether or not Cabinet

is together on this particular one.

Mr. Speaker, the Premier promised these amendments last year

and here we are a week before Christmas now finally getting a major piece of

legislation which the government has indicated that it wants to put through the

House before we recess for Christmas. Well I hope government has ordered up

turkeys for us, Mr. Speaker, because we are going to be here Christmas Day if

this piece of legislation is going to go through without proper consultation.

That is the real problem here, Mr. Speaker, that there is no time being provided

now to consult on this particular matter. It is a very, very important piece of

legislation. It can have very serious far reaching implications for the mining

industry well into the future.

We saw last year, the amendments to the Mineral Tax Act

rushed through this House, late at night if I recall, just a night or two before

we recessed for Christmas. Government has now found that they were hasty in

those measures in their desire to attract more exploration to the Province which

they did because that one was far to generous and we have had record exploration

this year. Now that we are having a measure of success as a result of that, now

government wants to change the rules mid-stream. What we are doing is totally

destroying the confidence of the mining exploration companies in this government

and in this Province, Mr. Speaker. That is what this government is doing,

changing the rules mid-stream, being inconsistent, once again not being

consistent at being straightforward with companies that have come in here in

good faith, invested millions and millions of dollars in exploration and now

they are trying to claw it back.

Now, Mr. Speaker, we agree that the people of this Province

and the provincial government should have a fair rate of return. We agree that

if smelting can be done in this Province or refining in this Province it should

be done if it is reasonable and economical to do so. We don't find fault with

that at all, Mr. Speaker. The big problem we have with it is first of all, it is

time to consult, that this is being rushed through the House once again, a very,

very important piece of legislation that will haunt us for a long period of time

if it is not done correctly. We need time to consult.

I ask the minister, I ask the Premier now, will he refer this

piece of legislation to a committee of the House to hold public hearings, or at

least to have consultation with the mining industry, a Select Committee of the

House? We don't need to rush this through.

SOME HON. MEMBERS: Hear, hear!

MR. WINDSOR: We don't need to rush this through before

Christmas. There is not going to be a smelter built over the next three weeks,

or over the next month, Mr. Speaker. We think that the people of this Province,

and members of the House of Assembly who need time to digest and to analyze this

very serious piece of legislation, should be given that opportunity, and

certainly that the people of the Province and those involved directly in the

mineral industry should have every opportunity to examine this -

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.

MR. WINDSOR: - to debate it, to question the Ministry and

to have input into it.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

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

Does he have leave?

MR. ROBERTS: Yes.

AN HON. MEMBER: (Inaudible) point of order.

MR. HARRIS: Yes. A point of order asking for leave to

speak to the Ministerial Statement.

AN HON. MEMBER: Agreed.

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

MR. HARRIS: Thank you, Mr. Speaker.

I welcome the statement of the minister as giving the

government's consideration to all of these issues. They finally have done it

after a year when it was pointed out to them this time last year they were

potentially giving a free ride to Voisey's Bay. Since then, the government have

given some thought to it.

But I say, along with the Member for Mount Pearl, that what

the government has failed to do to date is to give the people of this Province

time to consider these very complex rules and regulations. It not only affects

the mining industry but it is going to affect the fiscal regime of this Province

for many years to come. There are a number of good ideas here that need further

consideration. I think it is time that government, instead of rushing into

something prior to Christmas, perhaps to meet some personal agenda of members

opposite - perhaps to do that - there should be time for the people of this

Province to consider all of these amendments and to consult with the mining

industry, to consult with those who have a view on this, and to see what the

most appropriate method is, of doing this.

I think it is a good start and we should all have time to

consider it, debate it, and perhaps make amendments to it.

Oral Questions

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

MS VERGE: Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MS VERGE: Mr. Speaker, I have questions for the Premier

about the Hydro bill, Bill No. 35, now before the House. Premier, why are you

rushing Bill No. 35 through the House just before Christmas, refusing public

hearings, allowing members of the House just a few short days to study it? The

indecent haste with which you are proceeding makes it seem to people that you

are trying to hide something from them. Why the haste, Premier?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: We spent the last two days - two full days

of debating time -

SOME HON. MEMBERS: Oh, oh!

PREMIER WELLS: Two days?

MR. ROBERTS: Monday and Tuesday.

PREMIER WELLS: We spent Monday and Tuesday -

AN HON. MEMBER: Three or four speakers.

MR. ROBERTS: They went on and on.

MR. SPEAKER: Order, please!

PREMIER WELLS: They can say what they like. This is my

answer and I give it.

We spent Monday and Tuesday debating a minor bill in this

House, no major principle involved at all. Last year when we attempted to

privatize Hydro because we thought, and we still think, it is in the best

interest of the Province, those who opposed it said, `No, government; that is

the wrong thing to do. The right thing to do is to make Hydro efficient and

effective and profitable and keep it for government.' That is precisely what we

are doing.

SOME HON. MEMBERS: Hear, hear!

PREMIER WELLS: Now, let me say again, Mr. Speaker, this

is not a rush at all. It is a very simple, straightforward, minor amendment in

relative terms. There is no principle of any significance involved here. We are

simply making the Hydro Corporation more effective and efficient, and those who

have said, like the hon. the Member for St. John's East - which I think was a

shocking statement on his part - that this is a sly or subterfuge method of

trying to privatize Hydro, an utterly, utterly unfounded and illogical

statement, and I am quite surprised at the hon. member for making it, quite

surprised. Shocked, as a matter of fact, is a more accurate description of it.

Mr. Speaker, the government's position on the issue of the

privatization of Hydro is exactly as it was a year-and-a-half ago when we stated

clearly in the House, government would take no initiative whatsoever to

privatize Hydro unless it were satisfied that met with the approval of the clear

majority of the people of the Province. That remains the position of government.

MR. SPEAKER: The hon. the Leader of the Opposition, on a

supplementary.

MS VERGE: Thank you, Mr. Speaker.

I say to the Premier, what is shocking is hearing the Premier

of this Province still say that Hydro should be privatized. That is what is

shocking!

SOME HON. MEMBERS: Hear, hear!

MS VERGE: I ask the Premier: Isn't the use of closure by

your government to cut short debate on these critical amendments to the Hydro

legislation a crass abuse of power? Isn't the use of closure to cut short debate

after less than a week of the bill being printed, after only four members of the

Opposition spoke, the mark of a desperate, dictatorial government?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: No, Mr. Speaker.

The only abuse is the abuse of the Opposition in trying to

prevent the majority of this House from exercising their judgement on behalf of

people. That is the abuse.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

The hon. the Premier.

PREMIER WELLS: Thank you, Mr. Speaker.

Mr. Speaker, that is where the abuse lies. Government has put

forward this proposal to ensure the appropriate implementation of the Electrical

Power Control Act which this House passed over a year ago but it was done in the

context of then assuming a privatized Hydro. That has been changed. This bill

will make a couple of minor adjustments in the EPCA in order to provide for the

operation and regulation of a Hydro that will continue to be owned by the people

of this Province.

Now, Mr. Speaker, that is the only thing in that bill, and we

will make Hydro an efficient, effective operation; that is the purpose of it,

Mr. Speaker, and I am quite proud of it.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: The hon. the Leader of the Opposition, on a

supplementary.

MS VERGE: Thank you, Mr. Speaker.

I say to the Premier, who do you think you are fooling?

SOME HON. MEMBERS: Hear, hear!

MS VERGE: If the Hydro bill, Bill 35, is such a simple,

minor, technical, innocuous measure, why did you use closure to cut off debate

after only four members of the Opposition had spoken?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, I am not fooling anybody. I

am totally confident I am not fooling one single person in this Province, but I

am equally confident in something else. They are not fooling anybody either.

SOME HON. MEMBERS: Hear, hear!

PREMIER WELLS: Now, Mr. Speaker, we have been sitting, I

do not know how many government business days since we started, and look at the

amount of legislation. It is clear that the Opposition are trying to prevent the

passage of this bill. Any self-respecting government must put the interest of

the people of the Province ahead of the interest of the Opposition, Mr. Speaker,

and that is precisely what we have done.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

SOME HON. MEMBERS: Oh, oh!

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please! Order, please!

I caution hon. members about their language. If we are to

continue with Question Period, I certainly want some order and decorum in the

House while we are doing it.

The hon. the Leader of the Opposition.

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier, since you opened the House for the Fall

sitting on October 16, why did you wait until last Thursday afternoon, December

7, to release Bill No. 35, the major amendments to the Hydro legislation and

related bills? Why are you allowing less than a week for members to study it?

Why are you denying members of the public a chance to participate in

scrutinizing the bill through public hearings? Why, pray tell, have you used

closure to cut off debate after three-and-a-half hours of discussion and after

only four members of the Opposition had a chance to speak?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, we have had thirty days of

government -

MR. ROBERTS: Forty days, and thirty-two government days.

PREMIER WELLS: Thirty-two days of government business in

this House since we started in the Fall, and we got something like twenty-odd or

thirty-odd pieces -

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please! Order, please!

A question has been asked. I ask hon. members to do the

courteous thing and let the Premier answer the question.

AN HON. MEMBER: He is not answering it.

MR. SPEAKER: Order, please!

PREMIER WELLS: Mr. Speaker, we have had thirty-two days

of government business since this House opened and thirty-six or thirty-seven

pieces of legislation. Now, two of those thirty-two days have been spent on this

one relatively minor bill to effect some amendments to the Hydro act. Now, Mr.

Speaker, the government also has a responsibility to see to the orderly

discharge of the government business in the interests of the people of this

Province, and that is precisely what we are doing and will continue to do.

SOME HON. MEMBERS: Hear, hear!

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

MR. HEWLETT: Thank you, Mr. Speaker.

I saw the Premier on television last night dealing with this

issue. He referred to it as a minor bill. He referred to it as not privatizing

Hydro. I will grant him that. In the short or immediate term it doesn't

privatize Hydro. But one thing the Premier said on that t.v. show had to do

with: `It has nothing to do with power rates.' That is his quote.

Mr. Speaker, when we consider the rate of return change, when

we consider the unfunded liabilities going into Hydro from the pension plans,

those are just two items which will drive Newfoundland and Labrador Hydro to the

Public Utilities Board for rate increases. So when the Premier said it has

nothing to do with power rates, that was a lie! I ask the Premier: Why do you

lie to the people of the Province?

MR. SPEAKER: Order, please!

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

I ask the hon. member to retract that statement. It is

certainly clearly unparliamentary and not acceptable.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

I remind the hon. the Member for Mount Pearl that we cannot

tolerate that kind of statement either.

SOME HON. MEMBERS: Oh, oh!

MR. HEWLETT: Mr. Speaker -

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

I ask the hon. member to retract his statement.

MR. HEWLETT: Mr. Speaker, this is a very important issue.

I realize it puts -

MR. SPEAKER: Order, please! Order, please!

I ask the hon. member to retract his statement. I ask him to

withdraw it, please.

MR. HEWLETT: Mr. Speaker, I realizes this puts Your

Honour in somewhat of an awkward position -

MR. SPEAKER: Order, please! Order, please!

I asked the hon. member to withdraw his statement. I give him

some -

AN HON. MEMBER: Mr. Speaker, he has to be allowed to

speak.

MR. SPEAKER: Order, please!

The member has made an unparliamentary statement. The Chair

is asking him to withdraw.

MR. HEWLETT: Mr. Speaker, I regret, I cannot withdraw. I

spoke the truth and I stand by the truth.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

Again, I ask the hon. member to consider the statement that

he has made. I can give him some time to consider it. I ask him again to

withdraw.

MR. HEWLETT: Mr. Speaker, again, with my apologies to

you, personally, and your role in this House, I cannot withdraw. What the

Premier said was not true, the same as what he said on the education issue in

this House -

MR. SPEAKER: Order, please!

MR. HEWLETT: - with the church leaders in the gallery.

MR. SPEAKER: Order, please!

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Again, the Chair has no alternative but to

name the hon. the Member for Green Bay, and I name him: Alvin Hewlett.

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, in accordance with accepted and

appropriate parliamentary tradition, I move that the gentleman from Green Bay be

suspended for the rest of this day's sitting.

Motion carried.

SOME HON. MEMBERS: Oh, oh!

MR. E. BYRNE: A point of order, Mr. Speaker.

MR. SPEAKER: Order, please!

MR. E. BYRNE: Mr. Speaker, this is unbelievable!

MR. SPEAKER: Order, please!

AN HON. MEMBER: It is a point of order, Mr. Speaker.

MR. SPEAKER: Order, please!

The Chair has not recognized the hon. member.

The hon. the Member for Kilbride.

MR. E. BYRNE: This is unbelievable! We see

an act brought

into this House, Bill 35, last week, that has serious implications for the

people of this Province, serious implications on the Lower Churchill

development, serious implications on what people will pay in higher electricity

bills. The Member for Green Bay stands up and asks the Premier a legitimate

question about a lie that he told in the press yesterday -

MR. SPEAKER: Order, please!

MR. E. BYRNE: - and no one can get up and answer it. It

is a travesty. That is all it is.

MR. SPEAKER: Order, please!

I ask the hon. member to take his seat.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

MR. E. BYRNE: (Inaudible).

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

The hon. member had no point of order. Again, the hon. member

was unparliamentary in his statements, and I ask him to withdraw them.

MR. E. BYRNE: Mr. Speaker, with the greatest respect to

you, Your Honour, and the Chair, and the position that you hold, I have no

intention of withdrawing it. And what is unparliamentary is the Premier's

response to the questions asked in this House today. That is what is

unparliamentary.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

Again, I will ask the hon. member to consider what he has

said, and I ask him to withdraw it.

MR. E. BYRNE: Mr. Speaker, I was elected in this House to

stand and tell the truth and speak it as I see it. I intend to stand by the

comments I made, and I will not withdraw my statement.

MR. SPEAKER: Again, the hon. member leaves the Chair no

option but to have to name the hon. the Member for Kilbride: Ed Byrne.

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, I move that the hon. gentleman

from Kilbride be suspended for the rest of this day's sitting, and I may say,

his father-in-law would be ashamed of him if he were here today.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

Motion carried.

MR. SPEAKER: Order, please!

The Chair is going to recess the House briefly to let hon.

members consider what is happening here, and we will reconvene in ten minutes.

Recess

MR. SPEAKER: Order, please!

The Chair recessed the House because of some serious disorder

here. A motion had been put and carried that the hon. the Member for Kilbride

remove himself for the remainder of the sitting of the day. The Chair recessed

to give the opportunity to the member to consider his actions. Quite, I guess,

extraordinary, his actions are, causing very serious disorder in this House,

putting the House into disrepute so that the House has not been able to carry on

with its business. As I said, the hon. member has time to think about it and I

again ask the hon. member to remove himself.

MR. E. BYRNE: Mr. Speaker, I have given it every

consideration and I feel strongly about this issue. Too many times, the Premier

of the Province has stood in this House and said one thing and done completely

another. I have no intention of leaving this House of Assembly today.

MR. SPEAKER: Order, please!

I just asked the hon. member to reconsider. Obviously, he has

decided not to go, and I have no alternative but to call on the Sergeant-at-Arms

and ask him to remove the hon. member.

I instruct the Sergeant-at-Arms to call on his officers to

assist in removing the hon. member.

The Chair is going to have to suspend the sitting of the

House, because, obviously, there is some serious and grave disorder, and until

that is resolved, the House is suspended.

***************

MR. SPEAKER: Order, please!

The Chair suspended the proceedings in the House after he had

directed the Sergeant-At-Arms and his officers to remove the Member for

Kilbride. The Sergeant-At-Arms and his officers were prevented from doing that

by hon. members to my right, which indeed is, in my opinion, most reprehensible.

It has brought this House down, in my opinion. The dignity and the decorum of

this House has certainly, tremendously been reduced. The Chair has asked that

hon. members respect the House itself and the precedents of this House, and that

we continue to conduct the business of this House in an orderly and proper

fashion. The Chair has very grave concerns about the conduct of members to my

right today and it has brought the House, indeed, as I said, to a very low ebb

in its history.

There being no questions for the Order Paper today or for the

Late Show, I will put the motion to adjourn.

On motion, the House at its rising adjourned until tomorrow,

Friday, at 9:00 a.m.