June 9, 2005 HOUSE OF ASSEMBLY PROCEEDINGS Vol. XLV No.

The House met at 10:00 a.m

MR. SPEAKER (Hodder): Order, please!

Admit strangers.

This morning we would like to welcome to the House of Assembly fifteen Grade

7 students from Greenwood Academy in the District of Lewisporte, with their

teachers Audrey Oake and Sam Mehaney, their chaperone Deborah Noseworthy, and

their bus driver Dan Lewis.

Welcome to our House.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: By agreement, we have agreed that the hon. the Acting

Government House Leader will speak to the House at this time relative to the

adoption of some special rules.

The hon. the Acting Government House Leader.

MR. RIDEOUT: Thank you, Mr. Speaker.

Mr. Speaker, it has been agreed by caucuses on all sides of the Legislature

that we would adopt special rules for the debate on the FPI amendment, or

amendments to the FPI Act, as follows for the sitting today, June 9, and

tomorrow, June 10. I would like to read those into the record so that they are

available and understood. There are rules of procedures for the special sitting

of the House on Thursday and Friday, June 9 and June 10, 2005.

Number one, a bill entitled,

An Act To Amend The Fishery Products

International Limited Act, Bill 41, will be debated for not more than two days,

June 9 and June 10, 2005.

Number two, on those days, the House will sit from 10:00 a.m. to 10:00 p.m.

We have agreed mutually that there will be a lunch break at 12:30 o'clock to

2:00 o'clock and there will be a dinner break in the evening from 5:30 o'clock

until 7:00 o'clock.

Number three, the Premier, the Leader of the Opposition, the Member for

Signal Hill-Quidi Vidi, the Minister of Justice, and the member who is the

Official Opposition critic for either the Department of Fisheries and

Aquaculture or the Department of Justice will have one hour each to speak. The

Premier will have an additional twenty minutes when he speaks before the end of

the debate, and the Minister of Justice will have twenty minutes to speak to

close the debate. All other members will have twenty minutes to speak, with the

exception of those members noted above. No other member may speak more than once

during this special sitting of the House, with an exception that I will mention

in rule six.

Number four, there will be a thirty-minute oral Question Period each day from

10:00 o'clock, or as soon as we are ready to start today, to 10:30 o'clock

or whatever time is necessary thereafter on Thursday and Friday. The only topic

for the oral Question Period will be the bill entitled,

An Act To Amend The

Fishery Products International Limited Act, Bill 41.

Number five, debate on Bill 41 will begin immediately after the adoption of

those rules and, of course, after Question Period and the introduction of the

bill, and, apart from Oral Questions, will be the only business of the House

during the following two days.

Number six, amendments to the bill will be permitted, but only within the

time constraints of those rules and provided that no member may speak more than

once. The amendments will be proposed by either caucus. There is an agreement

that there will be - once an amendment is proposed, the person proposing the

amendment will have an additional twenty minutes to speak to the amendment, and

one representative from each other caucus will have twenty minutes to speak at

their discretion. In other words, if the amendment comes from the Member for

Signal Hill-Quidi Vidi, then he, after he proposes the amendment, will have an

additional twenty minutes to speak to the amendment. A representative from the

Official Opposition will have twenty minutes to speak to the amendment, and a

person from our caucus will have twenty minutes to speak to the amendment. Our

speakers will be at our discretion, but it will done within the time frames that

we have agreed to leading up to 10:00 o'clock tomorrow night. There is a

special agreement that those amendments can be made, obviously, during second

reading, and then they will be voted on when you, Your Honour, calls the vote

during Committee.

The notice requirements for the motion respecting the rules for Bill 41 will

be waived, we have agreed to that. When the debate has concluded - in any event,

not later than 10:00 o'clock on Friday - the Speaker or the Chair of the

Committee of the Whole will put the question on the motion for second reading.

We will put all questions relating to the clauses of the bill in Committee of

the Whole and we will put the question on the motion for third reading on Bill

So, Mr. Speaker, these are the rules that have been agreed to by all caucuses

or all parties here in the Legislature, and I propose that those rules be

adopted.

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

MR. PARSONS: Thank you, Mr. Speaker.

We, indeed, are in agreement with the special rules that are being adopted

for this session. I would point out, just as one matter of clarification - I am

sure the Acting Government House Leader would concur, once I say this - with

regards to the amendment piece, it is my understanding that what will happen is

if a person proposes an amendment, which is okay to do, that person will have to

do so during their speaking time.

For example, if the Member for Bellevue wishes to make an amendment he will

do so during his twenty minutes of speaking. He will not address the amendment

itself during that twenty minute period. He will only be making it during that

twenty minute session. That will automatically allow each caucus twenty minutes,

sometime later in the next two days, to address that amendment that was made by

the Member for Bellevue. When we do put that amendment back on the floor for

discussion at some point later, it does not necessarily require that it be the

Member for Bellevue who addresses the amendment on behalf of his caucus, it can

be whoever this caucus designates to use that twenty minutes to address the

amendment.

Thank you.

MR. SPEAKER: The hon. the Member for Signal Hill-Quidi Vidi.

MR. HARRIS: Thank you, Mr. Speaker.

As it would be obvious, there have been discussions between the three parties

represented in the House as to these rules. I just want to add one little piece

for clarification because I think the debate is notionally taking place at

second reading and everybody is speaking at second reading. This, in my

understanding, would not prevent someone from moving an amendment that might

otherwise be moved in Committee or at third reading, but the amendment would be

moved during the second reading debate and the vote, that the Acting House

Leader referred to, would take place at the end of our session. We would move

into Committee to make those votes, if there have to be votes on particular

clauses. So all the votes would take place at the end, in whatever form it has

to be - whether it be the House or the Committee - but the fact that we are in a

second reading debate will not prevent someone from moving an amendment to a

particular clause of the act. We need to clarify that for the rules.

I understand from our discussions that these are rules that are setting

parameters for the debate. They are not so rigid as so we cannot agree to

clarify what the intention is at any particular time and, on that basis, we are

certainly satisfied to have a special set of rules for this debate because of

its particular importance to the people of Newfoundland and Labrador in general,

and to many specific communities in particular.

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

MR. RIDEOUT: Thank you, Mr. Speaker.

The caveats that have been articulated by representatives for the Official

Opposition and the NDP caucus are certainly our understandings. It is also - I

can say on behalf of the government caucus that we are prepared to be flexible.

We understand and realize that these are special rules. If some little wrinkle

develops then we are prepared to get together with the representatives of the

Official Opposition and the NDP caucus and try to work matters out, but as a

broad parameter, these are the rules that we have all agreed to and I so move

that they be accepted.

MR. SPEAKER: I thank the hon. members for their presentations. Is there

agreement that these rules as outlines by the hon. Leaders of Parliament be

adopted for this sitting?

All those in agreement, aye'.

SOME HON. MEMBERS: Aye.

MR. SPEAKER: All those against, nay'.

The motion is carried and these will be the rules.

I ask the leadership as well, if there is some disagreement, let the Chair

know. If we need to call a recess and meet together, than that would be the

desire of the Chair rather than having some extensive debate on the procedures

occurring on the floor of the House. The required notice was waived in the

agreements that have been reached.

At this time the Chair would ask the hon. Acting Government House Leader if

he would move first reading of the bill before we go to the Oral Question

Period.

MR. RIDEOUT: Thank you, Mr. Speaker.

Mr. Speaker, I move first reading of Bill 41,

An Act To Amend The Fishery

Products International Limited Act.

MR. SPEAKER: It is moved and seconded that the hon. the Minister of

Justice and Attorney General shall have leave to introduce a bill entitled, An

Act To Amend The Fishery Products International Limited Act, Bill 41.

Is it the pleasure of the House that the hon. the Minister of Justice and

Attorney General shall have leave to introduce said bill?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

MR. SPEAKER: All those against, nay'.

Carried.

Motion, the hon. the Minister of Justice and Attorney General to introduce a

bill, "An Act To Amend The Fishery Products International Limited

Act," carried. (Bill 41)

MR. SPEAKER: It is moved and seconded the said bill be now read a first

time. Is it the pleasure of the House that Bill 41,

An Act To Amend The Fishery

Products International Limited Act, be now read a first time?

All those in favour, aye'.

SOME HON. MEMBERS: Aye.

MR. SPEAKER: All those against, nay'.

Carried.

CLERK: A bill,

An Act To Amend The Fishery Products International Limited

Act. (Bill 41)

MR. SPEAKER: This bill has now been read a first time. When shall this

bill be read a second time?

AN HON. MEMBER: Later today.

MR. SPEAKER: Later in this sitting day.

On motion, Bill 41 read a first time, ordered read a second time presently,

by leave.

MR. SPEAKER: Before we call Oral Questions, the Chair would like to

advise the House that this being a special sitting of the House on a particular,

specific matter that the regular rules that might apply to Question Period in

terms of times - I understand members may need extra time to establish their

preambles and this kind of thing, so we will be giving some discretion to that

matter so that all members who are posing questions, and members who are

answering questions, can have the required flexibility as desired.

Oral Questions are now being called.

Oral Questions

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

SOME HON. MEMBERS: Hear, hear!

MR. REID: Thank you, Mr. Speaker.

My questions are for the Premier.

Mr. Speaker, earlier this week we were told that the FPI Income Trust

Proposal was final and binding. Since that time the company has made many new

commitments to communities such as Bonavista. While we, on this side of the

House, are happy to see these new commitments from the company, this proposal

seems far from final and binding. The Premier was very vocal in 2002 when

debating the Voisey's Bay Statement of Principles because he did not consider

it a final and legal document.

I ask the Premier: Is this proposal a final document or will there be other

opportunities for changes to be made by either the government or the company?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: Thank you, Mr. Speaker.

I thank the Leader of the Opposition for his question. I congratulate him on

his new appointment. I wish him well. I do not envy you your position but you

are very capable of living up to the task and I certainly wish you all the best.

On the basis of the first question; when we say it is final and binding - now

it is not final and binding. What we have before the House is a package that has

been negotiated to the best of its ability by the government over the course of

the last fourteen months. This process started in April of last year and over

fourteen months we have kept going back to the company to try and get basically

more concessions for the people. We started from ground zero. We had absolutely

nothing when they first came to us with an Income Trust Proposal and all the

concessions that we have gotten since have all been incremental. The discussion

is still not over.

For example, with regard to Harbour Breton - which I am sure hon. members

opposite, as all government members feel - it is still an issue of great

importance and of grave importance to the members of the government. The Harbour

Breton discussion with FPI is still ongoing. I personally can say, as Premier of

the Province, that I am not satisfied right now with the commitment that has

been made to the people of Harbour Breton and, in fact, we will be looking for

more and needing more before this process is concluded.

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

MR. REID: Thank you, Mr. Speaker.

Mr. Speaker, it certainly appears that the company is making last-minute

commitments to gather support for this proposal. Earlier this week, the company

promised Bonavista a new plant, something that was not spelled out in the

original agreement that we saw on Monday; however, the company is not planning

to build this new plant until late 2007 or 2008, after the next provincial

election.

I ask the Premier: Why is the company waiting so long to fulfill this

commitment when we all know that this plant needs to be replaced now? And, what

guarantee does the government have that this company will not have a change of

heart in the next three years?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: Thank you, Mr. Speaker.

One thing I would like to make very clear to all members, including the

Leader of the Opposition, is that we are not here to defend the company under

any circumstances. This proposal is being tabled before this House for

consideration by all members in a true free vote where all members are free to

vote as they wish, and I am sure you will probably see different opinions on

both sides of the House in the course of this whole dialogue.

The Bonavista situation was one of the options that actually was put forward

and was exercised. I hope that over the course of the next two, three,

twenty-four, hours that new matters come on the table, because every time we get

something incremental here, every time we get something more from the company,

it is something more for the people of Newfoundland and rural Newfoundland and

Labrador, it is more for the communities.

This process alone, this debate in this House, these questions, what we are

doing on an individual basis in order to try and lever more concessions from the

company, is all in the best interests of the people of this Province and I would

certainly welcome it.

SOME HON. MEMBERS: Hear, hear!

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

MR. REID: Thank you, Mr. Speaker.

I say to the Premier, I know that you are not here defending what FPI is

trying to do, but we need to talk about the guarantees that FPI is putting

forward.

Mr. Speaker, FPI has stated that they will guarantee all of their plants will

stay open for the next five years subject to - and that is the key one, subject

to - economic viability and resource availability.

I ask the Premier: Does he feel this commitment is strong enough to protect

these fish plants in the Province, or does he have any concern that other

communities may suffer the same fate that Harbour Breton has, due to economic

viability and resource availability?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: Thank you, Mr. Speaker.

Mr. Speaker, I am always concerned that any communities in this Province

might suffer a fate similar to what is happening to Harbour Breton, and that is

why we are working so hard to try and correct that.

What we have done here is, we have negotiated to the best of the ability of

government, the best possible proposal and covenants and conditions that we can

get before this hon. House. The question of economic viability is defined as,

"economic viability' for a facility will be deemed to occur if FPI

incurs significant losses with no reasonable prospect of curtailing such losses

for that facility."

That is a fairly strong commitment. It is not 100 per cent. It is not

foolproof. None of this transaction is 100 per cent. There are no guarantees

that the Government of Newfoundland and Labrador has been able to close every

possible loophole in this transaction. It would be wrong for me to stand here

and say that, and that is why the matter is before the House; because I think,

as a group of hon. members who represent districts all throughout our great

Province, we have to weigh this, we have to balance it. We have to try and see,

okay, what are the pros, what are the cons? On balance, is this a good decision

for the people of Newfoundland and Labrador? That is what it is all about.

These are strong covenants. They are never foolproof. We cannot control the

actions of a company and what its board of directors can do. There is a certain

amount, of course, that has to be taken in good faith beyond a certain point,

but we do have the legal commitments. We will have them in writing, we will have

them in a term sheet, and the remedy - is the term - for a default or a breach

will be the loss of the quotas. The quotas are of significant value, and they

will revert to the Province. Of course, then there is the ten-year lease

arrangement, but the values of these quotas could be well over $100 million, so

that is a significant penalty and a significant punishment for any breach of any

of these conditions.

SOME HON. MEMBERS: Hear, hear!

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

MR. REID: Thank you, Mr. Speaker.

Mr. Speaker, we have heard commitments from FPI before. As a matter of fact,

in 2001, the company promised a number of things, including: to rebuild their

plants, to rebuild their fleet, and to create more employment rather than less

employment in this Province. You can ask the people of Harbour Breton how solid

FPI's commitments were.

I ask the Premier: What guarantees do you have that the company will actually

follow through on the commitments that they have made to the people of the

affected communities?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: As the hon. Leader of the Opposition knows, we were not

in power in those days. There was a different process going on, and I cannot

speak for what went on with regard to discussions with FPI at that particular

point in time.

The hon. the Leader of the Opposition was Minister of Fisheries at the time

and certainly would be well versed in what transpired. I can only speak for what

we are doing now. As I have said, our Justice Department lawyers have been on

this. We have retained independent counsel to make sure that we have the best

legal advice that we can get available on this. We have tried to cover off every

loophole, and we put in severe punishment, as I said before, severe remedies, in

the event that the company defaults.

There is no guarantee, as I can say, that the company may not do something

untoward down the road. We have to deal with these people in good faith. This is

a reputable company. It is a public company but, you know, they do have a

responsibility to their shareholders and that is the dilemma we are faced with

in this Province. We have a company that was a public creation, which came out

of statute and which was funded by the Province and the federal government and

private investors. Now it is trying to survive as a private company with a

public and a social string attached. It is our obligation here, as Members of

the House of Assembly and the Government of Newfoundland and Labrador, to make

sure that we hold them to those social commitments and to put their feet to the

fire, and that is what we are doing to the best of our ability.

SOME HON. MEMBERS: Hear, hear!

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

MR. REID: Thank you, Mr. Speaker.

I know it is a private company but it is, after all, a creature of this

Legislature.

Derrick Rowe, the CEO of FPI, is on public record saying that FPI will

eventually become a shellfish company. Minister Taylor is on record as saying

that, due to the number of issues facing the groundfish sector, there is

currently very little money to be made in groundfish.

I ask the Premier: By pulling the groundfish quotas from FPI, quotas that are

not - and I stress, they are not - the company's most substantial assets, won't

you only be hurting the employees who work in these plants? Isn't it true that

the government has no real punishment should FPI fail to live up to their

commitments?

MR. SPEAKER: The hon. the Minister of Fisheries and Aquaculture.

SOME HON. MEMBERS: Hear, hear!

MR. TAYLOR: Thank you, Mr. Speaker.

Mr. Speaker, as the Premier said, there are no guarantees associated with the

proposal that we have in front of us today. There are, to the extent that we

could arrive at some safeguards - some substantial safeguards over and above

what we had previously - we have done that; however, we cannot ensure that

absolutely every conceivable negative occurrence that might come towards us in

the future can be protected against.

Mr. Speaker, the groundfish allocations, no, there is little money to be made

in groundfish in Newfoundland and Labrador today - very little money to be made

in groundfish in Newfoundland and Labrador today - however, the value of

groundfish quotas are still substantial to FPI and to people who are in the

groundfish industry. There are people in groundfish throughout this world who,

because of the way that they are handling their fish, or the volumes of the fish

that they have, have the ability to make money. We believe that the groundfish

industry in Newfoundland and Labrador can be a viable industry, and it will be a

viable industry again in the future.

Mr. Speaker, what we have tried to do here - and I suppose only time will

tell - in negotiations over the past fourteen months with FPI is in trying to

get undertakings from the company to have a substantial penalty associated with

the non-compliance of those undertakings. We believe that the loss or the

potential loss of groundfish allocations to FPI represents a substantial penalty

to the company in the short term and the long term. It also could represent

substantial protection for the people of Newfoundland and Labrador.

Whether it is a penalty for the company is one thing, but I think that the

ability to ensure that quotas associated with FPI's operations in Newfoundland

and Labrador remain in Newfoundland and Labrador is a very important, very

fundamental, principle that the people of Newfoundland and Labrador have long

wanted respected.

SOME HON. MEMBERS: Hear, hear!

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

SOME HON. MEMBERS: Hear, hear!

MR. REID: Thank you, Mr. Speaker.

We have only been into this debate for five minutes and I find it rather

disconcerting to hear both the Premier and the Minister of Fisheries say that we

have no guarantees. Mr. Speaker, there is currently a 15 per cent share

restriction in the FPI Act that prevents any one investor from owning more than

15 per cent of FPI. I ask the Premier if he is concerned that if we amend this

act today that a direct competitor of FPI, like the Icelandic Group, could end

up owning 40 per cent of the American assets while also holding 15 per cent of

the entire company?

MR. SPEAKER: The hon. the Minister of Justice and Attorney General.

SOME HON. MEMBERS: Hear, hear!

MR. T. MARSHALL: Mr. Speaker, the current FPI Act places a restriction on

the number of shares that may be held by a shareholder in FPI or FPI

International Limited. Requests were made to FPI for similar restrictions with

respect to the Income Trust, but, unfortunately, because the Income Trust will

trade on the open market down in the U.S., such a restriction could not be

obtained without undermining the ability of the trust to raise sufficient funds.

However, we have requested of the company, and the company has agreed, that they

will obtain undertakings from Sanford and Clearwater not to own trust units

greater than 15 per cent and they will use their best efforts to obtain the same

commitment from the Icelandic company but, indeed, the Icelandic company may

not, in fact, come forward with such a commitment.

SOME HON. MEMBERS: Hear, hear!

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

MR. REID: I say to the minister, that is one thing that concerns us, Mr.

Speaker, the fact that a direct competitor in the U.S. can hold or own so much

of a company that is so near and dear to the hearts of the people of this

Province.

Mr. Speaker, the only thing in this agreement for the Town of Harbour Breton

is the $3 million that the town believes they are entitled to receive because of

the complaint that they have lodged to the Labour Relations Board. In essence,

all the town is getting is what they consider FPI already owes them.

I ask the Premier, knowing that no quota could mean the end of the Connaigre

Peninsula, why didn't government fight harder to secure a quota for Harbour

Breton before bringing this proposal to the House today?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: I can assure the people of Harbour Breton, as I have

assured their committees that I have met with on, at least, three and maybe four

occasions as recently as yesterday. I met with Father Brophy, the pastor of the

community, last Thursday.

With regard to the whole issue of quotas, I have been in touch with the

federal government, as the Minister of Fisheries has, and spoken to Minister

Regan with regard to the issue of a shrimp quota. I have spoken to senior

officials in the Prime Minister's office. I have spoken to the Prime Minister

himself. I have spoken to Minister Stronach, Human Resources and Employment, on

three separate occasions. I have written her a letter indicating just how urgent

and how serious this whole matter was. We have done basically everything we can.

I have spoken to the Member of Parliament, Bill Matthews. I have met with MHA,

Oliver Langdon. Every, single time there was a request from the people of

Harbour Breton, Mayor Don Stewart and the members of their committee, we have

met with them. We have done everything we can. Minister Dunderdale was also

present at those meetings. We have explored every possible alternative and every

possible opportunity.

With regard to where the company is right now, I spoke with the Harbour

Breton Committee and asked them what they wanted us to ask of FPI when we went

into this negotiation. At that particular point in time they indicated that -

they asked for $1.4 million while their action on the labour relations side was

still separate. They asked that the plant and equipment, of course, be provided

to the community if, in fact, they wanted the plant because of possible

environmental concerns, and we have concerns with regard to maintenance. As

well, the quota. The issue of the quota was also put forward.

Those issues were put to FPI; put to FPI again and again and again and again.

What FPI finally said at the end was exactly what we got; is that the $1.4

million, which was the original asked by Harbour Breton, was provided. The plant

and equipment is available subject to part of the redfish line coming out. What

we did do though, we actually increased the ask and asked FPI to put even more

money on the table. They put an extra $1.6 million on the table. So that was an

incremental gain for the Community of Harbour Breton. They see that as a

possible problem because there is a trade-off between the $3 million and what

they might get in a successful claim before the Labour Relations Board. There is

a separate side issue as to whether that claim will be successful or not. That

is something that the committee, the people of Harbour Breton have to weigh,

whether they see that as a gain or whether they see that as just a trade-off.

From our perspective, we took the company as far as we could.

In the last twenty-four hours, officials from government have been in contact

with the company. We have met with the committee from Harbour Breton with a view

to try and increase the amount of money that is made available to get more cash,

some money for the plant for a rehab of the plant, so that if they get a quota

they can get up an operation. We have also asked for additional money which

could be provided in order to go towards the cost of a quota. As a government,

we, as well, have said to them as recently or for the first time yesterday, that

if a quota is available that it could even be bought from an independent source

- because we have reason to believe that there is a redfish quota available -

that the Government of Newfoundland and Labrador, subject to approval by

Cabinet, would be prepared to ascertain an acquisition of that and prepared to

come up with a contribution towards acquiring a quota.

So I can assure the Leader of the Opposition and all hon. members opposite,

that we are doing everything we can to try and get what Harbour Breton wants.

That is a primary goal for us.

SOME HON. MEMBERS: Hear, hear!

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

MR. REID: Thank you, Mr. Speaker.

It is our understanding from the proposal that in order for the people of

Harbour Breton to receive the $3 million from FPI that they are proposing, that

they have to take the case which is before the Labour Relations Board off the

table. That is why we are saying that all they are getting is what they deserve

because we feel they will win that case before the Labour Relations Board.

Mr. Speaker, I am sure the people of Harbour Breton appreciate the short-term

funding that the government is planning to inject into the community; however,

they do not see this as a long-term solution.

I ask the Premier: Are you willing to go back to FPI and ask them to amend

this proposal to leave part of the traditional quota that Harbour Breton had in

that community before the vote takes place tomorrow in this House of Assembly?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: First of all, on the case before the Labour Relations

Board, there is no guarantee that the community of Harbour Breton will be

successful there, so the community of Harbour Breton would have to obtain a

legal opinion of its own to see whether they feel they can be successful. There

is some question as to whether they can, some question to as to whether they

cannot, so I guess, in simple terms, the question is whether they would want to

accept a settlement of some of that amount of money now. That is a separate

issue, and I understand why they would not want to trade it off, but sometimes

getting the money now - the possibility of not getting the money in a court case

- might be the right decision. That is something that the community obviously

has to consider.

With regard to going back to FPI, we were back to FPI. We are back to FPI as

we speak. The committee last night, after their meeting with us, went back and

met with FPI. They asked FPI, and FPI said no. We are back to FPI again this

morning. We are certainly asking them to reconsider, because the company needs

to know that there is some very, very serious concern on this side of the House,

as I am sure there is serious concern on your side of the House and with the

members of the New Democratic Party and the Independent member.

This is a huge priority for us. We are saying to the company that they have

to step up. They have to improve on that offer. That demand is being made to

them privately and it is being made here now publicly in this House.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Fortune Bay-Cape la Hune.

MR. LANGDON: Thank you, Mr. Speaker.

I guess the Premier might have answered some of what I have in my question.

Nevertheless, I will ask it anyhow.

Mr. Speaker, FPI has left Harbour Breton and the whole Connaigre Peninsula

high and dry in the whole process. Representatives of the town, and myself, met

with Derrick Rowe and officials from FPI last night, as the Premier suggested

that we should do, to see if we could secure a percentage of their quota for

Harbour Breton. Mr. Rowe's response was: What I have written, I have written -

signifying there would be nothing new in the term sheet for Harbour Breton plant

in the proposal, frustrating the mayor and the union people who were there.

I ask the Premier: Will you meet one final time with FPI and insist on a

quota for Harbour Breton before the legislation is passed?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: I say to the hon. member, absolutely. If a face-to-face

meeting would help with that, I would only be too delighted to do it, as would

any of our ministers who have already met with FPI.

We are actually in a telephone communication with them as we speak. We have

done it already this morning. They are certainly aware of the situation, as they

are aware from your committee. They understand that the mayor was on Open Line

this morning, again, making a plea to the company.

This issue is very much in their face, but if the member felt that a meeting

with me and FPI would help, I would only be too delighted to do so.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Fortune Bay-Cape la Hune.

MR. LANGDON: Thank you, Mr. Speaker.

Mr. John George, Chair of the Action Committee in Harbour Breton, I think, is

reflecting everyone's opinion on the Connaigre Peninsula when he says there

should be no passing of this legislation unless Harbour Breton is a part of the

agreement in the form of a quota from FPI for the region.

I know some of it seems to be repetitive and so on, but, understanding the

plight of the people who are there, it says: Mr. Premier, are you prepared to

commit that there will be no agreement without a quota secured for Harbour

Breton from FPI?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: As the hon. member understands, what we have before the

House is pretty well a black and white situation. The proposal that we have

before the House right now is what the House has to consider. We are working

behind the scenes and in the scenes, basically, to try and obtain greater

concessions. What will have to happen in this House at the end of the day, all

hon. members are going to decide whether, in fact, this is going to pass or not.

If the company wants this to pass, then I would suggest to the company that it

seriously consider what it has on the table for Harbour Breton.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: That is the issue, because it is black and white, it is

a yes or no, and either the proposal and the amendment to the legislation that

would allow the Income Trust to go will either rise or fall on what they put

forward, particularly on behalf of the people of Harbour Breton.

Just from our own personal perspective, as a government, the MHA knows that

we put the $250,000 on the table originally for a business plan, and that is a

relatively small amount of money in the big scheme of things, but it is

specifically targeted money so that we can come up with long-term economic

diversification. As well, we have said that we put a million dollars on the

table for income support. We had that hitched originally to the federal

government, in order to give the federal government some incentive to step up to

the table here.

We have quite clearly, since that, stated, though, that is completely

separate and apart, that this government will stand behind the people of Harbour

Breton. We understand the hardship. We understand the hardship that has been

expressed by Mr. George and his committee, by the Mayor, Mr. Day, and others,

with the representations that you, yourself, have made to us. So that $1 million

will be made available because we know in the near term that in July and in

August I think there are eighteen people who are coming off employment

insurance. As well, over the course of the next two months there will be

something like sixty, seventy or eighty again, so this problem escalates and

gets more serious. Our money will be there and will be available, as some has

already been provided to the community, so we are doing everything we can.

As you know, as of yesterday, we have also indicated that we are prepared to

make a significant commitment to come up with some matching funds in the event

that we are able to purchase a quota.

The quota seems to be the big issue. Not that it seems to be, it is the big

issue for the people of Harbour Breton. Income support is a short-term measure

for them. Their pride, then, is at stake, and the question of the hope and the

spirit that is going on in that community now. You know, some people feel that

there might be some hope, but there is a feeling of despair in the community. I

want you to know, and I want the people of Harbour Breton to know, that this

government has done everything that it can, and it will do everything that it

can, in order to get some satisfaction for the people of your community.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Signal Hill-Quidi Vidi.

MR. HARRIS: Thank you, Mr. Speaker.

My question is also for the Premier.

The Minister of Justice and Attorney General was - I do not want to put too

many words in his mouth - giving the indication yesterday in the media that two

of the communities, or two of the three problems have been solved, and that

seemed like a pretty good way to go.

We are hearing this morning that the Premier is not satisfied, that the

people over opposite are not satisfied. We are certainly not satisfied. Two out

of three ain't bad might be all right for a pop song, but it is not good

enough for the people of Harbour Breton.

What I want to know, Mr. Speaker, is: Why are we here if the solution for

Harbour Breton has not been found? If we do not have an answer for Harbour

Breton, how can we come here and debate this legislation without some

satisfaction, some hope for the future of Harbour Breton without that piece

being done? Why are we here now doing this when the people of Harbour Breton

have not been treated fairly by this company and they do not really have in

place what is going to be necessary for them to give them a future? Why are we

here?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: Thank you, Mr. Speaker.

We are here because we have to deal with this issue now. I think, as the hon.

member understands, there have been some significant concessions that have been

gained over the course of the last fourteen months. We have come a long way. I

am not going to go down through all of them now, because I am sure he might have

other questions that are important to the people of the Province, but with

regard to rural Newfoundland and Labrador, we do have the five-year safeguard to

all the communities. We know what has happened in Bonavista. We know what has

happened in Fortune, and the Member for Grand Bank and Fortune has indicated

publicly that there are good things in here for rural Newfoundland and Labrador.

We have pushed the Harbour Breton file at every single opportunity. I can

only say to you, time and time again, we have taken it to the point as far as we

can get it right now, but we are also saying here publicly, as I am sure the

Leader of the New Democratic Party is saying, and, of course, as members

opposite and all our members are saying, we want more. We are not satisfied with

this, and the company is going to have to step up.

The matter is now before the House because, you know, this company, whether

we like it or not, has put us in a situation where we have to deal with it. We

are darned if we do and we are darned if we don't. If the Income Trust does

not go through, then this company is saying that it is in a very serious

financial situation. They are unable to raise money.

If they are unable to raise money, then if we do not pass the Income Trust,

then where do we go? What happens with the company? Does the company then

decide, on its own, that it is going to have to start taking action; that, you

know, Fortune will not get the concessions that it needs, Bonavista will not get

the concession that it needs? Other communities, Harbour Breton, of course, will

get nothing, or only what is on the table right now. Other communities will not

have the safeguards.

The weight here, the balancing act that we have to do here, is decide whether

the concessions that we have are good enough to allow this company to go through

with this transaction acknowledging that it is not perfect. I think that is the

reality.

We are here in the House right now because the company is saying that it has

to act right now. It has to decide whether it is going to go ahead with the

Income Trust. Otherwise, it looks like it might have to take other action, and

we have no way of predicting what that action could be.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Signal Hill-Quidi Vidi.

MR. HARRIS: Thank you, Mr. Speaker.

The Premier talked about the possibility of a redfish quota. Yet, FPI wants

to take the redfish line out of Harbour Breton as part of this deal. We do know,

for example, years ago, when Trepassey went down, that there was a $7 million

diversification fund put in place. We know also that there may be options for

Harbour Breton, whether they be in aquaculture, whether they be in another quota

or another species, or whether they be in some other action that might happen in

the future. All of these will cost money.

What I want to know, Mr. Speaker, is, why don't we have in place, before we

are asked to take this action, some kind of diversification fund that is going

to ensure that there is some hope for the future of Harbour Breton, because all

of these options that we are talking about all cost money, whether it be

purchase of a quota, whether it be gearing up a plant, whether it be considering

other options. Why don't we have that in place now, and why aren't we

insisting that be done before we are asked to decide whether or not we are going

to let Fishery Products International go its own way?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Hear, hear!

PREMIER WILLIAMS: As the hon. member can understand, we are trying to

lever whatever money we can out of whatever groups are available. The provincial

government is prepared to step up. It has made the commitment to the community.

The provincial government has reasonably limited resources. We are not cash

flush. We do not have all kinds of money to throw out all over the place;

however, we do recognize the importance of Harbour Breton as the anchor to the

Connaigre Peninsula. If this government allows Harbour Breton to die, then it is

saying to the Connaigre Peninsula that you are on your own and that over time

all the communities down there will die off themselves. That just simply is not

going to happen.

We are there and we are committed to doing whatever we can, but we are at a

point now where we are trying to get as much leverage as we can to get as much

from FPI, because they have an obligation to the people of Harbour Breton. The

people down there have worked very hard to make a profit for that company over

the years. They have run their operations. They have a great workforce and there

is a moral obligation to the people of Harbour Breton by FPI to make sure that

they deliver for them.

On top of that, the federal government has to step up. The hon. member knows

that as well, Mr. Speaker. Forgive me for addressing to the hon. member, but,

Mr. Speaker, the federal government knows that they have to step up here. Even

though there is a lot of lip service being paid, and even though I have talked

to the Prime Minister and I have talked to the ministers and I have talked to

people involved - and I know Member of Parliament Matthews is doing whatever he

can - they still really have not ponied up' here. So, there is a role here

for Belinda Stronach, Minister Stronach, and the Department of Human Resources,

for Joe McGuire, the Minister for ACOA, to step up here; for Minister Regan to

step up here. All of them are involved, but we still have not seen anything yet,

and it is about time that the federal government really started to step up and

do something; whether that comes from money through ACOA for economic

diversification, whether that comes from money from Minister Stronach for income

supplement, whether that comes from Minister Regan to provide either a shrimp

quota, and/or to provide other quotas. I have been in contact with the Prime

Minister and with the Clerk of the Privy Council as well to look at a separate

pelagic quota for Harbour Breton. So that -

MR. SPEAKER: Order, please!

With the flexibility we have, we still have time for one more question. I

will go to the Opposition House Leader.

MR. PARSONS: Thank you, Mr. Speaker.

I appreciate the fact that the Premier has a lot of information to give to

us, but it is Question Period. Again, within the rules of the responses, we are

trying to keep them within the time frames because there are a lot of questions

that we need to ask and I am sure we will get the answers in debate.

Since I have time for one question, Mr. Speaker, my question is for the

Premier. Premier, the term sheet that is being circulated by FPI with regards to

this transaction outlines a number of commitments by FPI to the Province in

return for them being allowed to establish this Income Trust. I will not get

into the numerous commitments that had been made but, suffice it to say, that

the agreement provides that if FPI fails to keep those commitments, they are

promising to turn all of their groundfish quotas over to the Province.

Premier, did the government or its negotiating team, at any time throughout

the negotiations, ask FPI to also commit to turn its shellfish quotas and

dragger fleet over to the Province in the event that they default on their

commitments?

MR. SPEAKER: The hon. the Minister of Fisheries and Aquaculture.

SOME HON. MEMBERS: Hear, hear!

MR. TAYLOR: Thank you, Mr. Speaker.

Mr. Speaker, the only shellfish allocations that FPI have in waters adjacent

to Newfoundland and Labrador are two shrimp licences, two shrimp allocations

that they have, which are now fished on the Newfoundland links. Those

allocations have, since their inception, been harvested, processed and ready for

market at sea on board factory-freezer trawlers. They provide a minimal amount

of employment for people on shore. The real labour and potential value

associated with onshore production has always been, and we believe will continue

to be, associated with the groundfish allocations. Therefore, for that reason,

we pursued the groundfish allocations. That is what we pursued. That was a land

based processing, onshore based processing. The shellfish allocations were at

sea based allocations and had very little impact on the shore based operations,

Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The time assigned for Question Period has expired.

The hon. the Acting Government House Leader.

MR. RIDEOUT: Thank you, Mr. Speaker.

Mr. Speaker, I move second reading of Bill 41,

An Act To Amend The Fishery

Products International Limited Act, pursuant to rules that were, earlier this

morning, adopted by this House.

MR. SPEAKER: It is moved and seconded that Bill 41,

An Act To Amend The

Fishery Products International Limited Act, be now read a second time.

Motion, second reading of a bill, "An Act To Amend The Fishery Products

International Limited Act." (Bill 41)

MR. SPEAKER: The hon. the Minister of Justice and Attorney General.

SOME HON. MEMBERS: Hear, hear!

MR. T. MARSHALL: Thank you, Mr. Speaker.

I am pleased this morning to address hon. colleagues and to introduce Bill

41,

An Act To Amend the FPI Act, which, if supported by the members of this

House of Assembly, will amend the FPI Act to allow Fishery Products to move

forward with, what is know as, the FPI Income Trust Proposal.

It is my duty today to lay out some of the facts and some of the history of

the transaction that would see the company restructure what is known as its U.S.

marketing and valued-added group, such that FPI would have an indirect 60 per

cent economic interest in that group and the remaining indirect 40 per cent

interest in the U.S. operation. When I say U.S. operation, I am referring to

something called Ocean Cuisine International, which includes the Burin secondary

processing facility. They would own 40 per cent but that the company would still

be, in a sense, controlled by FPI because FPI, notwithstanding the fact, can

only hold 60 per cent economic interest would in fact own 90 per cent of the

voting rights in that company.

The process before us during the next couple of days will provide an

opportunity for all members to voice their opinions, to debate openly and to

conclude with a free vote. The Whips are not out on this particular vote.

Members will vote to support the bill or they will vote against its passage. If

the proposal is supported by the members of this House the government will then

enter into further discussions with FPI to finalize the Term Sheet and to put

the final form of agreement into a final agreement form and this legislation

would not be proclaimed until the final form of contract is agreed on and ready

to be signed.

I know that all hon. members in this House, members on this side and that

side of the House, are all committed and determined to protect and revitalize

rural Newfoundland and Labrador. FPI has a significant presence in many of our

rural communities, and the fishing industry is, of course, an important lifeline

for communities right across the Province. It is therefore vital to act in the

best interests of those communities, the plant and the workers, which are

directly or indirectly impacted by FPI and its subsidiary companies. It is

equally vital to allow FPI room for growth and expansion in order to sustain a

viable and competitive business within, of course, the framework of the FPI Act.

We have spent months in discussions with FPI and we have moved to the

Legislature now to provide the opportunity for elected representatives to debate

what is brought before this House and to vote openly and freely on behalf of

their constituents and on behalf of the people of this Province.

Let me be clear, that this proposal is not a government proposal, it is a

proposal from FPI that is being placed before this House for its consideration.

For the benefit of the members, I would like to take this opportunity to provide

some information on the background of FPI and on the current proposal that is

before this House today.

In 1983 the assets of a number of fish companies, eight fish companies I

believe, which were in financial distress at the time, where combined with the

aid of the Bank of Nova Scotia and the federal and provincial governments to

form FPI, and the FPI Act was passed at that time. FPI Limited, the holding

company, and Fishery Products International Limited, the operating company, were

established under the FPI Act, to ensure long term stability in the Province's

fishing sector, by combining a number of companies into a single, large, modern,

competitive and, what was hoped to be, profitable company.

Fishery Products International, FPI, is a publicly traded Newfoundland

company and it owns 100 per cent of its subsidiary operating company, Fishery

Products International Limited, also known as FPIL. Both companies are

incorporated in Newfoundland and both companies have their head office in St.

John's, where a major part of its administrative and financial management is

done.

FPI has, in fact, two distinct business operations, or two business units. It

has what is known as the Primary Group and what was formally known as the

Marketing and Value Added Group, now known as Ocean Cuisine International. The

Primary Group is what most of us in Newfoundland and Labrador are familiar with.

It manages the company's harvesting and primary processing and their

international sales and marketing, and they operate five key businesses,

groundfish, snow crab, sea scallops, cooked and peeled scrimp and offshore

shrimp. As I said, the headquarters is in St. John's. The company operates

fish plants in Fortune, Burin, Triton, Port Union, Marystown, Bonavista, Dildo

and Port au Choix. It operates a fleet of groundfish, shrimp and scallop

vessels, and vessel service centres not only in Newfoundland and Labrador but

also in Nova Scotia. The company purchases raw material from hundreds of

independent harvesters in Newfoundland and Labrador, and markets the products

worldwide. It is also an international marketing and sales agent for, and member

producer of, Atlantic Queen Seafoods Limited, which is a consortium of crab

producers in Eastern Canada. It has a payroll in this Province of $90 million.

That is the primary group.

The other group is known as Ocean Cuisine International. It was formerly

known as the marketing and value-added division. The OCI division manages the

company's value-added processing operations, globing sourcing, product

research and development, and North American sales and marketing. As I said

earlier, it was formerly referred to as the Marketing and Value Added Group. It

has three channels. The OCI unit has three channels of business exclusively in

North America.

First of all, they sell commodity seafood, seafood purchased from FPI and

sold into the North American market. It is also a marketing company and provides

marketing services for other companies to help them sell their product, their

commodity seafood, in the North American market, and this is done on a

commission basis.

I think the most important and the most significant aspect or unit of the OCI

group is what is known as its value-added division, and that is the division

which takes the commodity seafood and adds value to it, and vegetables and

glazing and other products, and it is sold into the at-home and away-from-home

U.S. markets. I think, Mr. Speaker, that is where the company sees its future

growth and that is where the company sees its greatest profit potential.

The everyday group, or the OCI group, the assets of that group represent only

about 37 per cent of the total assets of FPI Limited; yet, it contributes 64 per

cent of the revenues of the total company and 62 per cent of the gross profits

of FPI Limited.

The OCI group is based primarily in Massachusetts. It operates a value-added

manufacturing facility at Danvers, Massachusetts, which is just north of Boston.

It operates a culinary research and development centre in Danvers as well. It

operates a cold storage and distribution centre at Peabody, Massachusetts, which

is about five miles away from Danvers, I understand. They have approximately 400

employees in its production, quality assurance and R&D sectors, its

distribution and traffic divisions, its office and administrative section, and

its sales and marketing section. One hundred of its employees work in Burin.

They have sales offices throughout North America and, most importantly, the

OCI group operates a value-added or secondary processing facility in Burin which

manufactures value-added products. I understand the Burin process is about 26

per cent of FPI's total volume of seafood.

They are the two main divisions of this company, Mr. Speaker. FPI is a

publicly-traded company owned by investors throughout the world. Its business

activities - it conducts business activities just like any other fish company or

seafood company in Newfoundland and Labrador and in other places, but its

activities are also governed by what is known as the FPI Act.

The original objectives of that legislation were to: (

a) protect monies that

had been invested by government in the company. Members may recall that there

were a number of fishing companies or seafood companies that were in financial

distress and the government formed the new company, FPI, and invested. The Bank

of Nova Scotia, the federal government and the provincial government invested

public funds in that company in order to have it survive. One of the objectives

of the act was to protect those public monies.

Also, there was a desire to provide a hedge against unfettered private

ownership of the company. As a result of that, a provision was put in the act

that ownership - no one person would be entitled to own that company. Therefore,

there was a 15 per cent share limitation so that no one person, and no related

parties or associated parties of that person, would be able to own more than15

per cent of the share capital of FPI and FPI International Limited.

Another objective was to avoid corporate raiding or asset breakup. Another

objective was to ensure that the operations of this company in the Province

continue. In general terms, the FPI Act provided a means to ease the transition

for FPI Limited from government ownership back to the private sector. I believe

the act, what we refer to as the FPI Act, is, in fact, entitled,

An Act

Respecting The Return Of The Business Of Fishery Products International Limited

To Private Investors.

The FPI Act contains several provisions for the purposes of accomplishing the

objectives I just outlined. The main ones are: that the majority of the Board of

Directors of FPI and FPI Limited must be residents of this Province. Also, the

head office of both of those companies must remain in the Province of

Newfoundland and Labrador.

As I indicated earlier, the act imposes a restriction on securities ownership

whereby a single shareholder cannot own more than 15 per cent of the share

capital of the company. I understand the Act was amended from what it was

originally to make that restriction to apply to non-voting shares as well as

voting shares.

The Act also contains

section 7, and

section 7 says that neither - I am going

from memory here - but neither FPI or FPI Limited may - I will just get the

correct wording here. Neither FPI Limited or Fishery Products International

shall sell, lease, exchange or otherwise dispose of all or substantially all of

its property or its business which relates to the harvesting and the processing

and the marketing of seafood. That provision was put in the Act, Mr. Speaker, I

understand, to ensure that the companies would not be broken up. That was the

situation before this latest proposal.

In 2004, FPI announced a proposed transaction what would restructure its

North American seafood and marketing business, the Marketing and Value Added

Group. That group would be sold to another company. The sale would involve a

series of transactions to create the new corporate structure, an American

company based in Delaware in the United States, that will own the Ocean Cuisine

assets, it will own the US Marketing and Value Added assets, as well as the

Burin secondary processing facility. The structure is being set up in such a way

that FPI will own an indirect 60 per cent economic interest in that new company.

The other 40 per cent indirect economic interest would be owned through a series

of transactions by something called an income trust which FPI would establish

under Ontario law.

Mr. Speaker, I won't take a long time in dealing with the series of

transactions which set up this new structure, but essentially the US operation

was 100 per cent owned by a subsidiary of Fishery Products International

Limited. The shares in that company are being transferred to the new US company

which will be based in Delaware. These two companies will be amalgamated.

Preference shares will be issued to FPI, along with certain debt. Under those

preference shares - and this is important, Mr. Speaker - FPI will have 90 per

cent of the voting rights. While they will only have 60 per cent economic

interest in the American company, they will have 90 per cent of the voting

rights, as long as they maintain greater than 10 per cent of the economic

interest. The other 40 per cent of the shares in the new US company, OCI US will

be 100 per cent owned by a Canadian company called OCI Canada. The shares of OCI

Canada will be 100 per cent owned by a Limited Partnership known as the OCI

Limited Partnership. That is a partnership that will be established under the

Manitoba law and managed by a General Partnership. Sixty per cent of the units

in the Limited Partnership will be held by Fishery Products or FPI. The other

forty units in the Limited Partners will be owned by the OCI Trust which is

established under Ontario law, in turn owned by the Income Fund, and in turn

owned by the unit holders who will purchase units in the Income Trust.

The bottom line, Mr. Speaker, is that the American operation, the value-added

seafood operation, the marketing operation, which is essentially involved in

North American operations, including the Burin facility, will be 60 per cent

owned by FPI, 40 per cent owned by the Income Trust, with FPI having the right

to elect six out of the seven directors of the American company as long as it

maintains an economic interest in that company greater than 10 per cent.

When the transaction is completed, we will then have FPI owning the Primary

Group here in Canada and owning 60 per cent of the American operation, and the

Income Trust owning the other 40 per cent of the American operation. There will

be a continuing connection between the two companies. The first one, of course,

is that FPI will, in fact, own the 60 per cent economic interest in the American

operation. Secondly, they will exercise some degree of control insofar as FPI

will have the right to elect six out of the seven directors of the board of OCI,

although it is important to point out that while FPI will have the right to

elect these directors, the directors will be independent. The fiduciary duties

that will be owed by the directors, the duty of care that will be owed by the

directors, will not be to FPI. The directors, under Delaware law, will be

independent of FPI. They will be non-residents of Canada. Their fiduciary duties

and their obligations will be to the new company, OCI, and not to FPI.

Another element that will maintain a connection between the two companies is

the marketing agreement between FPI and OCI. This marketing agreement will grant

to OCI, or FPI will grant to OCI, the exclusive right to distribute and market

commodity seafood in North America. FPI will pay OCI a commission and FPI will

sell to OCI all commodity seafood which OCI uses to manufacture its value-added

product. That means that all seafood that the American operation will use in its

value-added business will all come from FPI. That will be a strong connection

between the two companies.

Both companies have agreed not to compete in their traditional markets inside

and outside North America.

FPI will continue to manage the marketing for Atlantic Queen Seafoods Inc and

Ocean Choice, PEI Inc.

The marketing agreement, therefore, ensures a long-term arrangement whereby

FPI has a guaranteed customer for some of its product and OCI US maintains a

source of supply to maintain its value-added business.

Also, as part of the continuing FPI OCI relationship there will be a Services

Agreement which is another contract which will provide a link between the two

companies. My understanding is that under this agreement FPI will provide

administrative, financial, human resource and support services to the American

group. FPI will provide services which include regulatory compliance, investor

relations, tax information and ongoing corporate services. All information

technology work for the American outfit will be done from FPI headquarters in

St. John's and fees will be negotiated and charged, of course, for these

services.

FPI's starting proposal was presented to government for information

purposes. When FPI decided that it was in its economic interest to raise funds

through the Income Proposal, FPI brought the proposal to government for

information purposes on the premise that it was consistent with the FPI Act. FPI

indicated this proposal is beneficial to the company and to the Province. FPI

indicated that it would use some of the proceeds to pay $30 million down on its

long-term debt, but beyond that there were no binding commitments or safeguards

advanced at that stage.

Government's assessment of the proposal was that there was a certain amount

of legal uncertainty as to whether the Income Trust Proposal was, in fact,

permitted under the FPI Act. As indicated earlier, under

section 7 of the Act,

FPI cannot dispose of all or substantially all of its property or its business

that relate to the marketing and the harvesting and the processing of seafood.

Government's assessment was that there was legal uncertainty. Therefore,

government felt that recourse to the House of Assembly was deemed to be

necessary, but only if FPI were prepared to make commitments to safeguard the

interests of communities and workers and to secure the long-term health of the

company on the Province. Government therefore entered into discussions with FPI,

and these discussions went on over the past year. These commitments, these

proposals - FPI, first of all, came to the government with a series of proposals

which were rejected by government. Subsequently, FPI came to the government with

additional proposals which were rejected by the government, but FPI has now come

with a package of proposals that are before this House and government, that it

had spent a lot of time - and FPI had indicated that that was as far as it was

prepared to go - so government felt it was time to come to the House. But, even

with that decision made, changes still took place. Yesterday morning we heard

that there had been changes with respect to decision making in Burin, and also

in Fortune.

I further understand, Mr. Speaker, that while I happened to be speaking with

Mr. Bill Rowe on his radio show yesterday, additional discussions were taking

place by the Premier - as the Premier earlier outlined today - the Minister of

Fisheries and Aquaculture, and also the Minister of Innovation, Trade and Rural

Development to seek further commitments that would be beneficial and would

provide some protection for the people of Harbour Breton.

Mr. Speaker, in the proposals, as I indicated earlier, the proposals indicate

that FPI will have certain controls over its U.S. operation. FPI will not

relinquish its ability to appoint the Board of OCI U.S. without the consent of

the Minister of Fisheries and Aquaculture in this Province or his successor. FPI

will not be able to permit its interest in the Income Trust to fall below 10 per

cent and lose control of their right to elect a Board of Directors of the

American operation without the consent of the minister. If FPI should lose that

control, then FPI would be in default under the agreement.

FPI will obtain a commitment - as I mentioned during Question Period - from

its significant shareholders, Sanford and Clearwater, that they will not acquire

more than 15 per cent of the units of the Income Trust or the limited

partnership or the general partnership that will manage the limited partnership.

As I indicated earlier, FPI will continue to have a marketing relationship

with the American company, which will last for seven years and can be renewed at

the option of FPI for a further seven years. Also, the Chair of FPI in St. John's,

Newfoundland will, in fact, become the chair of the board of the American

company as well.

There are also commitments made with respect to the distribution of the

money. When the deal is completed, Mr. Speaker, FPI will continue to own its

processing operations in Newfoundland and Labrador but will have somewhere

between $75 million and $100 million, depending on how the Income Trust does in

the American capital markets. Commitments were obtained about how the $100

million will be spent. Originally, FPI's proposal was that it will pay down

$30 million of its debt. That commitment will continue and that will make the

company stronger. It will make its balance sheet stronger and that will protect

the primary operations.

Government was concerned that the monies received on the Income Trust not all

be distributed in dividends to the shareholders or by other means but stay in

the company to strengthen its balance sheet and to fund future growth and

expansion. To do this, FPI made a commitment, as I said, to pay down $30 million

on its Newfoundland and Labrador debt. There were a series of commitments to

ensure that the balance of the $70 million cannot be dissipated through

extraordinary dividends.

FPI indicated that, for the next two years, it would not pay dividends of

more than fifty cents a share. I believe that amounts to $7.5 million a year for

the next two years, but thereafter the company has committed to base its

dividend policy on its historic dividend policy which, I believe, was an average

dividend of about twenty cents a year. In addition, the company pledged that

there would be no extraordinary dividend so that the money, apart from a

reasonable dividend, would not be paid out to the shareholders but would remain

in the company for expansion and growth. In addition, not only did FPI agree to

spend $30 million to pay down its debt, it agreed to enter into a debt equity

ratio or to maintain a debt equity ratio, subsequently, to ensure that the debt

would not be increased after it had been paid down.

One major commitment that has been given, which should be mentioned, is the

fact that FPI has committed to operate the current plants for five years,

subject to resource availability and economic viability.

Now, is this perfect? As the Premier indicated today, it is not perfect, Mr.

Speaker, but it is a lot better than what we have now because right now any

company, including FPI, if it wishes to shut down a plant or shut down a

division, has the absolute right to do so, provided it gives the necessary

notice. At least under this proposal, FPI is agreeing that we will continue to

operate the plants unless there is no resource availability or the company is

not economically viable. When we say: well, what difference? That is no

different from the current situation. But it is, because if government

challenges that the matter will go to an arbitrator and the matter can be

arbitrated and then FPI is wrong. If the company is, in fact, or if the plant

is, in fact, economically viable, then FPI will have an obligation to keep that

plant operational. If they fail to do so, they will forfeit their quotas.

FPI has agreed to invest $8 million to expand secondary production in Fortune

on the Burin Peninsula. The original proposal was that the investment will be

made on the Burin Peninsula but now, heard yesterday, that there has been an

agreement with the union, this investment will take place in Fortune. This is an

$8 million secondary production. Four million dollars will be invested over the

next three years to integrate information technology in fish plant operations.

That will help modernize the operations.

With respect to Harbour Breton; as of yesterday, or at least as of yesterday

morning, the commitment of the company with respect to Harbour Breton was to

provide $3 million and to turn the plant over to the community, with the

exception of the redline. As the Premier mentioned today - something that I was

not aware of when I was taking part on an Open Line show yesterday - discussions

were taking place and they continue to take place between the government and the

company and the people of Harbour Breton. I see the Minister of Innovation,

Trade and Rural Development nodding, and those discussions are going on and

continuing new efforts to seek a quota for the people of Harbour Breton.

I must say, Mr. Speaker, that since we started this transaction, since FPI

first came to the government with its proposal some time ago, that the

information has, of course, been changing. The information in the prospectus has

been changing. There were changes as late as yesterday morning and there could

be, of course, further changes. Indeed, the final form of the contract that will

be entered into between the government and the company will be subject to the

government's approval of the final form of the prospectus and the final form

of the material contracts that were linked to this agreement.

There will be a $1 million investment into research and development with

matching funds from government. There will be employment for Fortune workers at

Marystown, providing income support for displaced workers and designation of

Fortune as a new secondary processing operation. In Bonavista, the plant will be

replaced with a new facility.

One major commitment made by the company is that all groundfish will be

landed in the Province and all successors to FPI will be bound by that

commitment. I understand that is a major new initiative, where the company has

agreed that all groundfish will be landed and processed in the Province.

Mr. Speaker, if the commitments are not met, what is the default? What are

the consequences of default by the company? The company has agreed that if they

fail to honour the commitments that they will forfeit to the Newfoundland

government - or the Government of Newfoundland and Labrador, I should say - that

they will forfeit their enterprise allocations or quotas and their vessel

designations. These would be serious consequences for the company. The

enterprise allocations or quotas will revert to the government, subject, of

course, to the approval of the federal Minister of Fisheries and Oceans. I

understand that a briefing of the federal minister has taken place and we will

await the federal minister's decision in due course.

The quotas, of course - if there is default, Mr. Speaker, there will be a

period of mediation and a period of arbitration to see if the default can be

corrected. If not, the quotas will become the property of the Government of

Newfoundland and Labrador, which will agree to lease the quotas back to the

company so that the plants can continue to operate. If there is growth in those

quotas - well, I should say that the original quotas that are in existence at

the time will be leased back to the company, at the cost of maintaining the

quotas without any increase in the growth in the quota, will also be leased back

by the government to the company but at fair market value. That is enough quota

to enable the company to provide full employment. Any quotas beyond that

threshold would be the sole property of the Government of Newfoundland and

Labrador to sell, to lease and do so as it pleases.

Mr. Speaker, the two legislative changes that are contained in this bill,

Bill 41, today to amend the act, if supported the amendments to the act will

permit the Income Trust to proceed. As I indicated, there was some uncertainty

as to whether or not this transaction could not proceed because of

section 7 of

the act. The first part of the amendment is to ensure that if it meets with the

approval of the members of this House, that this transaction can go ahead. That

is why we are here. The real issue is not whether our legal opinions were

telling us that

section 7 prevented the transaction from going ahead, but

whether it is the will of the people of this House, as the elected

representatives of the people of the Province, is whether we feel this

transaction is in the best interest of the Province.

Mr. Speaker, we look forward to an informative debate where all members have

time and opportunity to discuss the transaction, the Income Trust and the

proposed amendments. We look forward to an open and responsible vote that will

help strike a balance between allowing FPI room to grow, on the one hand, and

looking out for the best interests of the fish plants and the workers in the

communities on the other.

If FPI's proposal does, in fact, reach approval in the House, FPI, as I

said earlier, will enter into a contract with the Government of Newfoundland and

Labrador that provides the commitments that I have outlined, and any future

commitments that might come about.

FPI and the government would commence negotiations to transform the term

sheet into a binding contract. This process will take some time and not be

completed until the government is satisfied with the final form of the contract

and with the final form of the Income Trust Transaction, including the final

form of the Prospectus which we, of course, have yet to see, and the final form

of other material contracts including the exchange agreement and the marketing

agreement, the shareholders' agreement, and all other relevant agreements.

At that stage, provided a contract is reached on terms agreeable to the

government and FPI, the bill would then be proclaimed into law. FPI would then

file its Prospectus to start the process it needs to follow.

Mr. Speaker, this is a significant issue for the people of Newfoundland and

Labrador. It is significant to the interests of people in rural Newfoundland and

Labrador. It is significant to a company that this Legislature established to be

a flagship for the fishing industry in this Province, and I am certainly looking

forward to the debate and the comments from all members of this hon. House.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER (Fitzgerald): Order, please!

The hon. the Opposition House Leader.

MR. PARSONS: Thank you, Mr. Speaker.

I appreciate an opportunity to have a few words regarding Bill 41, which has

been put forth here by the government, concerning the FPI transaction. Albeit I

do not have any particular FPI interest in my political or electoral district,

of course, this is a matter of concern to everybody in the Province irregardless

of where you might live.

I appreciate the minister's comments as to the background concerning this

matter. Our purpose here in the next two days, as I understand it, is to ask

questions, if there is something we do not understand, to flesh out some

background as to what the commitments that we are aware of mean. Are they open

to

interpretation? If so, what are the

interpretations? What, if anything, can

we do to improve it, even? That is why the amendment provisions have been

provided here, because the Premier has indicated that this is not a done deal.

This is a proposition put forward by FPI, and if members here have anything to

say in terms of what they feel might be necessary to improve it, we ought to be

able to do that. I would think in the course of the next two days of debate we

are going to be seeing some ideas coming forth from all members of this House

that would improve this deal.

I think the tenor of my conversations will relate to the balance aspect. The

minister said in his press release on this thing - and I quote him - "...a

careful balance must be struck between the ability to sustain a viable and

competitive business, and the long-term interests of Newfoundland and

Labrador."

I agree. I think that is what it is all about. I commend government for what

they have done so far in keeping the feet of FPI to the fire to at least get

some commitments because, from where we started, obviously, a year ago, or over

a year ago, to where we are now - FPI, the closer you put their feet to the

fire, the more they cough up, it seems. In fact, they have coughed up a fair bit

this week, since Monday when the things were announced, vis- B -vis

the announcements on Bonavista which have come forward. We have the

announcements on Fortune, and the fact that there will be no negative effects on

what is happening in Fortune on Burin. That is great stuff, and it has all

happened within the last seventy-two hours, so I think we are dealing with a

moving target here. The deal is not final, so I think anything that we say in

the next two days lets FPI know that you have not finished negotiations and you

may well have to put some more things and commitments on the table in order to

get this deal done by the members of this House.

For example, we have the Harbour Breton situation. I do not think for a

minute that FPI should think that the negotiations and discussions are over on

Harbour Breton, not by a long shot. I think the Premier made that quite clear. I

think that if the behind-the-scenes and out-in-front discussions in the next two

or three days bring FPI to their senses and does something for Harbour Breton,

the likelihood of this Bill 41 getting recognition positively by members of this

House would be much more likely, I would suggest.

I have no problem, by the way; the FPI Act in its current form is there to

protect the interests of the people of this Province. We all know the history on

FPI. It came about when a number of companies in the Province got in trouble.

They put it together as one massive outfit; the flagship, they called it, of the

fishing industry. The provincial and the federal governments threw in a lot of

this Province because we considered it to be a very valuable asset, if not the

most valuable asset, in our fishing industry.

We also have to recognize, as the government has done, I believe, that we

also have private shareholders who have taken their money and put into this

company. They want to make a profit, and so they should make a profit, but where

do they find the balance between what the shareholders want and deserve - for

example, to get some return on their investment - and the fact that we have the

interests of the people to protect?

My first preliminary read of this documentation, three or four days ago, and

I have read it several times since and had briefings and so on, I am still left

with the conclusion that it does not go far enough. I think we have to keep

their feet to the fire. This is not about trust. You hear people saying: Well,

we cannot trust FPI. They tell you one thing two years ago and they are going to

do something else now, or they never delivered on that. We cannot trust them.

I would deal with this in normal negotiations. To use an analogy, I think the

government in this case is the bank, and FPI is the borrower. When you deal with

a bank, it is not about trust. The bank looks at you, sizes you up, sees what

the likelihood is that you are going to pay back your debt, looks at your

previous credit rating, probably, and your payment history, but the bottom line

is, the bank says: Yes, Mr. Parsons, we will lend you the money that you are

looking for, or will allow you to do such-and-such, but we want some security

back.

This is, I think, where this agreement falls short, in the security end of

things. I asked the Premier a question here this morning about: Did we ask FPI

for security vis- B -vis

the offshore quotas? The Minister of Fisheries and Aquaculture responded, and I

took it to mean that you had not asked for it, and the reason he had not asked

for it, he suggested, was because: Well, it was not of much value anyway.

My suggestion would be, it is not relevant what the value is or is not of

their offshore quotas or of their dragger fleet. If FPI wants to do what they

want to do vis- B -vis

the Income Trust, which I have no problem with allowing them to go ahead with

this Income Trust thing; let's deal with it from a proper security perspective

and say: Thank you very much, FPI - but, like the guy who is building a home -

we will let you do what you want to do, and go ahead and build your home, but if

you do not make your payments and if you do not keep your commitments, we are

taking your home back. We are going to seize that home from you, the same as

anybody else who has a mortgage, and we are going to sell it.

Instead of that, we have an agreement here which to me appears to be saying:

Yes, we are going to go let you build that home. Yes, we will give you the money

to go do it, and the authority to go do it, but as security back we are only

going to take a mortgage over your shed - for example, your groundfish quota.

I am suggesting here that we ought to keep their feet to the fire. Never mind

them saying: Well, you do not need the offshore quotas or a dragger fleet

because that may not be relevant or it may not be valuable, or we might get it

offshore and sell it off in Europe and it never creates jobs here in the

Province of Newfoundland and Labrador. That is irrelevant. If they want to do

what they claim they need to do here, why shouldn't we hold their feet to the

fire and say: That is your call, FPI. We are prepared fully to back you in what

you want to do, and look after your shareholders and go for this Income Trust,

but we want full, absolute, security over everything you own. We just do not

want your shed or your outhouse as security if you do not keep your deal. This

is not about trust, this is about security, and fess up and put your securities

on the line, the same as you would ask anybody else who is going to do it.

It is great for FPI to say: We are going to put a new plant in Bonavista. It

is great to say that they are going to put a secondary processing facility in

Fortune. That is great stuff and it is good negotiations that that is put in the

agreement, but what happens if they do not deliver? Those are the same kinds of

questions that came up with Voisey's Bay. What do we do if they do not bring

back the mineral or the concentrate? That is what it was all about, putting in

the protections if somebody does not keep up their end of the bargain.

You look at this documentation, they are giving you groundfish. I do not know

if anybody else here has listened to the media in the last two years, and I am

sure you have and you have heard Derrick Rowe, the CEO of FPI, say publicly,

that the most valuable piece of FPI is the shellfish operations and their

marketing arm. Now, if we are going to give them permission, by doing this here,

to dilute their marketing arm by way of an Income Trust, and if we are not going

to take their shellfish quotas as security, we have only tacked our security to

the least value piece of FPI, the groundfish quota. According to what I heard

Mr. Rowe said: In five, six years or ten years out, FPI may only be an offshore

quota operation in the marketing interest anyway. What is the point in

protecting ourselves with groundfish if even the CEO of FPI today believes that

the groundfish piece is the least value piece that it has.

I think we are missing here on the security, and I would urge this government

to say, yes, you want to do Income Trust, by all means let's take Bill 41 and

do it, but you are going to put on the table for us the security that the people

of this Province deserve. You do not play ball - we have given your investors

and shareholders a chance to go off, and if you make billions of dollars by

doing this Income Trust, and you make this a viable, efficient world-class

company, go for it and we will back you in it. If you do not, you pay the piper,

and you are paying the piper by giving back to this Province what we set up and

created for you in the first place, i.e. the company, not just a piece of the

company, the company. I think that is a very fair and reasonable request to put

to FPI.

I have some concerns here. The minister made a comment, for example, about 40

per cent, and he said it here again today. This Income Trust that they are going

to set up, they are going to sell off 40 per cent. Words are important again. It

is the initial offering of the market value-added wing of FPI, and the people of

the Province have to understand that. We are not just saying here to FPI, by

changing this act now: Go off and we are going to allow you to create an Income

Trust of which you can sell 40 per cent, of which you can then raise about $100

million to go and grow the business. This agreement, as I read it here - and I

would like to be corrected and I hope I can be corrected - this amendment will

permit, once this Income Trust gets rolling, FPI to sell 100 per cent of the

Income Trust. That, in fact, is why the word initial is being used.

We have to realize that we are not dealing here with a 40 per cent sell off

of an Income Trust. Yes we may still retain control in terms of the Board of

Directors, but let's not kid ourselves. Right now, in this box, we have a

company called FPI and a number of subsidiaries; FPI Limited and so on, FPI

Inc., and Ocean Cuisine. The bottom line is, in that box, that big box, of the

100 per cent of it about 65 per cent of it is the marketing and value-added wing

and the primary processing is about 35 per cent based on last year's financial

statements. What we are saying here is: We are allowing you, by this move, to

take that 65 per cent that you have and ultimately it could come under the

control, 100 per cent, of anybody in this world, whether they be Icelanders or

whether they be partially John Risley or some guy down in Africa. The bottom

line is, it is not controlled by us. That has to be made clear to the people,

that it is 100 per cent here.

The question I raise again is - and the Premier used the words today in

Question Period, and this is what I keep coming back to and I think FPI has to

understand this. The Premier said: We have to deal with them in good faith. I

agree with that absolutely, but I would also say to the Premier: Every legal

contract that I have ever been a party too or witnessed, all parties start out

and sign those agreements in good faith but we have a lot of courts in this

country that operate because somebody did not keep the faith. We keep judges

going in this country big time. All I am saying is: Albeit the government is

doing everything in good faith and we take the principles of FPI on their face

and at good faith, we need that security provision there. Never mind we might do

this or we might do that. Thank you, you give it your best efforts, but if you

screw up you have to realize that we get what you have, not a piece of it, we

get the whole lock, stock and barrel. You investors by the way, who now stand a

chance to make some money and return on your investment by us allowing this

Income Trust, you only ever got to invest in this company called FPI because it

was a creation of governments and the interests of the people of this Province

in the first place. You would only be taking back to the people what was

rightfully theirs from the beginning. Good faith can only go so far, and we have

to iron clad the good faith piece, I would suggest, by putting in the security

provisions here. I think there is no better time than the present. They say the

Premier likes to drive a tough bargain and get a good deal, I am a firm believer

that you ought to as well, particularly in this case.

I say - pardon the language, with all due respect to the principles of FPI

and the shareholders of FPI who I want to see make billions of dollars, they

should, and we are prepared to let them do it with this Income Trust - be damned

if you do not give us the security that we need. If that is the choice we have

to make as the people of this Province, we are prepared to recognize market

circumstances, we are prepared to give you the permission to go do what you have

to do, but that is where it ends. You have to show your good faith by putting

your money where your mouth is too. If you cannot cut it with your Income Trust

provision down the road, and you lose control of it or you do not make the money

that you wanted, we have done our part then, but do not come back and tell us

that we are not having what we were a party to, i.e. all of the interests of FPI.

That needs to be done.

The Minister of Fisheries and Aquaculture this morning - these are worrisome

words to the people of this Province. When you start saying we have no

guarantees, we have some commitments, we have some safeguards - those were his

words. We can have more than safeguards and now is the time to do it. There is

no time like the present. I do not say just put your feet to the fire, I say put

your feet in the fire. Deliver or else! They have the ability to do that within

the next two days or no member of this House, in his or her right mind, should

support this agreement because the security is not there.

Let's not confuse what is security with what it is they are trying to do.

Nobody here is saying they should not do this. Do not interpret my comments here

to say that FPI should not be permitted to go and establish an Income Trust.

Absolutely not! They ought to be allowed to do that. I encourage them to do

that, because I accept their words that they need the investment to make it a

world-class company. Absolutely! I accept their commitment that they want to

make investments in infrastructure in Bonavista and Fortune and in this

Province, which is going to create good jobs and particularly in rural

Newfoundland. When I say I support you in all of that, you have to have a level

head and a sensible mind, I think, too, and request the necessary securities. I

am taking a chance on you FPI. Since the 1980's we have covered you. We have

controlled you and now we are prepared to cut that loose. We are going to cut

you some slack, but there has to be a fair deal on both sides, and right now we

are not fair in this deal because the security is missing.

I notice, too, and I am concerned, the Minister of Justice, in his comments

here this morning, says - and this ties into the security piece again, they are

saying - we are going to get the groundfish quotas, and there have been

approaches made to the federal Minister of Fisheries and we await the outcome of

those talks.

I say to the Minister of Fisheries, that isn't good enough for me, again

from a security perspective, because what is the point of having an agreement

between FPI and this Province saying that if we do not deliver on our

commitments we are going to give you even our groundfish quotas, if we do not

have a commitment from the federal minister and the federal government that,

yes, we are going to make that happen? So, that is an absolutely necessary piece

that has to be put into this before it is finally concluded. That has to be

there.

I notice, too, we talk about, I call this the backup plan.

AN HON. MEMBER: (Inaudible).

MR. PARSONS: We only have two minutes left.

I will not get into the full details on it, but the Premier says yes, we have

to do something. I agree, we have to do something, but if they do not give the

commitments that we need, the further commitments on Harbour Breton, if they do

not give the further commitments on pledging their dragger fleet and their

offshore quotas and virtually everything they own, my view is that we do not

have the proper securities; and, we have to have the federal minister clued in.

The other question I would ask is, I feel somewhat in the dark by debating

this in a two-day session, with all of these unknowns, and we have a process

whereby when we leave here and vote on this tomorrow we are all going to go home

and the government officials and the ministers go off and continue these

negotiations to flesh out this proposal, dot the i's and cross the t's and

whatever, but this is never coming back to the members of the House again.

We are being asked to vote on this in principle, based upon what we have seen

- and, as I have said, there are some big, big, loopholes here, particularly

from a security point of view - and we are going to have all of this gone off

and negotiated, and once the government feels that we have now finalized a, b,

c, d, e, f, g commitments, based upon the votes and so on, we are going to sign

the deal and proclaim the act at that time, proclaim the amendments. The members

of this House will never get to see again what the final agreements were.

We had questions raised in Voisey's Bay, very legitimate questions, by the

Opposition: Will we see the final binding agreement? Is this the final binding

agreement? Ladies and gentlemen, in Voisey's it was. We dealt with it by way

of resolution. The deal was put together. The i's were dotted and the t's

were crossed, and we came into the House and said: There it is. There is the

package - for it or against it.

That is not what we have here. We have the parameters of a term sheet which

has to be negotiated in more detail, and my concern is that we, the people of

Newfoundland - for example, through their MHAs - are not going to get an

opportunity to see that final deal anymore. That is why it is even more

incumbent upon government to be very careful about what ends up in those final

agreements. That is why it is very important again that we need the security

provisions in those contracts.

Those are my preliminary comments on this matter. I think it falls short. I

commend government for what they have done in terms of the commitments they have

gotten. It is a great start. It is a good ways down the road, no question; but,

ladies and gentlemen, it is not good enough. Because, if what you have

negotiated is not secure, what is the point of it? We can have all the paper we

want, and all the contracts we want, if we do not hold a hammer to enforce it.

Great for Harbour Breton, great for Grand Bank, great for those places, but

if it is not worth the paper it is written on from a security point of view, why

are we doing it? There is only person, one group, that can give us that

security. That is FPI, and I think we have an obligation to insist, yes, you get

what you want, but you have to give us the protection that we need. If we do not

ever have to use it, that is fine. If you go off and become the best fish

company in the world, and make billions of dollars for your shareholders, go for

it, but we cannot risk the possibility, by allowing you to do this, that we

ultimately could end up losing the whole ball of wax that we have here, which is

so beneficial to our Province.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

The hon. the Minister of Fisheries and Aquaculture.

SOME HON. MEMBERS: Hear, hear!

MR. TAYLOR: Thank you, Mr. Speaker.

I am glad to have an opportunity this afternoon, or this morning, I guess it

is - I am used to saying this afternoon; it is odd being in here in the morning

- to say a few words on Bill 41,

An Act To Amend The Fishery Products

International Limited Act, and the proposal that we have in front of us from

Fishery Products International as it relates to various undertakings and

commitments related to their Newfoundland and Labrador-based operations, and

what they might do with their Income Trust transaction and their Ocean Cuisine

International operations in the U.S.; how they might use proceeds from the sale

of - as the Opposition House Leader said, from the initial offering, the initial

sale of units in the Income Trust, which would see 40 per cent of the value of

Ocean Cuisine International, what was formerly known as the marketing

value-added arm, being offered through an Income Trust transaction, and he is

right. That is potentially only the beginning of what would be a dilution of

ownership by FPI in its marketing value-added arm, Ocean Cuisine International.

Quite clearly, and it has to be acknowledged and it has to be understood by

everybody in this House and everybody in Newfoundland and Labrador, what we are

talking about here now is not about FPI selling 40 per cent of Ocean Cuisine

International. The Income Trust potentially will not own just 40 per cent of

Ocean Cuisine International. It will own 40 per cent of Ocean Cuisine

International initially. Then, as transactions take place, as they decide to

offer more units, as they may decide through mergers and acquisitions of other

bodies in the U.S., potentially, then, of course, the ownership of Ocean Cuisine

International by FPI would become diluted beyond the 40 per cent. They can go

down as low as 10 per cent and still retain the ability to appoint six of the

seven directors on the board of directors of the Income Trust; however, it has

to be understood - and the Opposition House Leader raised a good point, and

certainly I think that was laid out there before but it bears reinforcing and

reminding here today - that is what we are talking about.

Mr. Speaker, I know there is lots of speculation ongoing in the Province

today, especially in media circles, and I would assume over on O'Leary Avenue,

about how this vote is going to end up some time tomorrow, by tomorrow night. I

would not put a lot of money on what way the vote will end up.

I said over the past forty-eight hours, I guess, where my leaning was;

however, there is a lot of debate that will take place here for the remainder of

this day and for tomorrow, a great deal of debate, and there will be a great

deal of legitimate questions asked. There will be a number of answers provided

to the extent that we can; however, it bears again reminding that this is not a

government proposal. This is not a government position. This is not government

advocating on behalf of a bill. This is government laying in front of the people

of the Province what we have been able to negotiate thus far with FPI, on behalf

of the people of Newfoundland and Labrador, certain undertakings as it relates

to certain communities; Harbour Breton being one with a $3 million commitment

thus far. Is that enough to get the support of this House? I do not know. I

suspect it is not enough to get the support of quite a number of people in this

House for this overall proposal. It is not enough to get the support, I do not

think, of the Member for Fortune Bay-Cape la Hune and some of his colleagues. I

am pretty sure it is not enough to get the support of some members on this side

of the House. What is enough? That, only time can tell. Is FPI able to come up

with it all? I do not know. Certainly, an $8 million contribution, an $8 million

investment on the Burin Peninsula, in Fortune, for a new secondary processing

facility, Mr. Speaker, I would think that would be good news for the Burin

Peninsula and good news for Newfoundland and Labrador. Again, Mr. Speaker, is

that enough to get the support that FPI requires in this House to amend the FPI

Act to see this proposal go forward? Again, I do not know. It is very difficult

to say.

Mr. Speaker, I just want to speak about where we have come from. Fourteen

months ago, as the Premier said earlier today and a number of us have said, we

were informed, by way of a briefing, I was informed by way of a briefing, and my

Deputy Minister, of FPI's intention to proceed with an Income Trust offer to

the establishment of an Income Trust. Mr. Speaker, at that time we were informed

that they wanted to pay down some of their long-term debt; some, there was no

figure put on that. I do not recall that there was anyway, at the time. The rest

of the proceeds, as I recall, would be used as FPI determined, as FPI saw fit,

to expand its operation.

As the Minister of Justice and Attorney General said earlier today, we were

informed that this was a good move for the company, that it would be good for

the people, the industry, the company in Newfoundland and Labrador, their

operations and their workers in Newfoundland and Labrador. Mr. Speaker, that may

well have been. However, government, at the time, and for quite some time, felt

that there were a number of commitments that FPI needed to make to the people of

this Province as it related, specifically, Mr. Speaker, to the disbursement of

funds from this Income Trust transaction. They anticipated that they would raise

$100 million, and the question became, really: What does $100 million mean to

the fishing industry in Newfoundland and Labrador? What does $100 million to the

people of Newfoundland and Labrador? We want to see what your commitment is to

your primary operations in Newfoundland and Labrador. We want to see what your

commitment is to ensuring that the $100 million is actually spent on growing the

business, Mr. Speaker. Certainly, I am sure there are a lot of people and we try

to deal in good faith. As the Opposition House Leader said earlier, you can deal

in good faith, but you have to protect yourself against all possibilities also,

or as many of them as you can.

Mr. Speaker, there was a recognition, rightly or wrongly, that we needed to,

to the extent that we could, ensure that the money was spent on operations to

grow the company, to invest in infrastructure and opportunities in Newfoundland

and Labrador, and to ensure that this money did not end up in shareholders'

pockets, for lack of a better way of putting it. It is just as well to be Jack

Blunt about it. This money did not end up in shareholders' pockets, through

dividend payments, extraordinary dividend payments, and what have you. This was

just not a way of raising money to reward current shareholders of FPI.

Mr. Speaker, have we done a satisfactory job of that? Well, only time will

tell. There is a lot more protection there now than there was fourteen months

ago. Again, is it enough, Mr. Speaker? I listened to the Leader of the

Opposition and the Opposition House Leader concerned about my comments and the

Premier's comments earlier today, about there are no guarantees. No, Mr.

Speaker, there are no guarantees. There is no point in us standing here today

and saying this is ironclad, that under no circumstances can we foresee how

there will not be an investment on the Burin Peninsula -

MR. SPEAKER: Order, please!

If the Chair could just interrupt the hon. Minister of Fisheries and

Aquaculture for one moment. The Chair would like to recognize twenty-four Grade

VIII students who are attending and visiting the Legislature today from New

World Island Academy and the Grade VIII students are accompanied by their

teachers, Dean Kinden, Marie Pourier, chaperone, Barbara Burt, and bus driver,

Lew Shea.

Welcome to the House of Assembly.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: I thank the minister for allowing me to make that

introduction. I call on the Minister of Fisheries and Aquaculture to continue

his debate.

MR. TAYLOR: Thank you, Mr. Speaker. You are the Chair.

As I was saying, it would be foolish, on anybody's part, to stand up to try

and say that there are ironclad guarantees. Do we believe that we have made some

gains? Yes, absolutely, we do. Is it enough to ensure that FPI becomes the

prosperous company that we hope it will be? Are we sure that FPI and its

Newfoundland and Labrador operations can grow? No, Mr. Speaker, we are not sure

of that, because there are too many variables out there aside from anything that

anybody might do that would be untoward. There are too many variables in the

international market, there are too many variables in resource bases, there are

too many variables in currency exchange rates, to be able to assure anybody that

FPI is going to be the flagship company of Newfoundland and Labrador in five

year's time or ten year's time or twenty year's time.

Mr. Speaker, what we have tried to do is to put stipulations in place to

protect the people in Newfoundland and Labrador should anything untoward happen,

whether purposely or accidentally. That is what we have tried to do. Only the

people of the Province, through their representatives in this Legislature, can

determine whether or not we have done an adequate job of that, and whether we

are prepared to take the chance with FPI's proposal that we have in front of

us today, whether we are prepared, as the Opposition House Leader said , whether

we are prepared - excuse me. This little cold I have in my head is affecting my

tongue.

MR. REID: Good.

MR. TAYLOR: Good, says the Leader of the Opposition. Yes, I am sure there

are a lot of people who share that sentiment.

Mr. Speaker, we have to ask whether we are prepared to take the chance with

FPI, prepared to take the chance on the Income Trust Transaction, and see if

this company can grow. I think most people in this House recognize that FPI is

hamstrung, FPI is restricted in its ability to be able to raise the kind of

funds that it needs to grow its operations, particularly its marketing based

operations in the U.S., for example, and in Europe. It is burdened with quite a

substantial amount of debt. With the 15 per cent share ownership restriction

that the company has on it, certainly it does not have the same latitude that

other publicly-traded companies have when trying to raise capital. Mr. Speaker,

I think we all recognize that.

The question is: Are we prepared to allow them to go forward with the

proposal that they have in front of us based on the undertakings that they have

provided to government over the course of fourteen months of negotiations? That,

Mr. Speaker, is a question that each individual will have to ask themselves. We

have to recognize that the industry is changing. The industry in Newfoundland

and Labrador is changing. The industry worldwide is changing. We can only try

and look ahead five to ten years, try and look ahead and see how we want our

industry positioned and see what we can do as a government, whether we are in

Opposition or government members, to see how our actions can effect change in

the industry so that our industry is able to be competitive globally. I guess

that, in a nutshell, is what we are trying to do here today.

While it is a little odd to be debating a private company in a House of

Assembly and a House of government, such as we are here today, nevertheless we

are doing it. We do not have this same kind of debate, I suggest to all members,

about Quinlan Brothers. We do not have this same kind of debate about Breakwater

Fisheries or Notre Dame Fisheries or Barry's or any number of fishing

enterprises around Newfoundland and Labrador. When we try to apply restrictions

to those companies, we have to do it in a manner that is consistent with all

other fishing enterprises in the Province. FPI is the only creature in the

fishing industry in Newfoundland and Labrador that has the distinction of being

held accountable in the House of Assembly to the extent that they have been and

are again today. Mr. Speaker, we have to recognize that.

I think, Mr. Speaker, when we - as I said in debate and in Question Period

over the past number of months as it related to FPI on other matters, the

Government of Newfoundland and Labrador, whoever that government might be, has

quite a sledgehammer that it can, on some occasions, hold over - quite a

powerful tool - the FPI Act. But, like a gun, when you have a powerful tool you

have to be responsible in your use of that powerful tool. I believe that we have

to be responsible and we have to be diligent in our use of the FPI Act. We have

to recognize that the company needs to grow but we also have to recognize, and

the company has to recognize, that it has very serious and very strong

obligations to the people in Newfoundland and Labrador. It was a creation of the

fishery was restructured in 1983-1984. When the company was subsequently

privatized in 1987, there was a significant amount of public sector funds that

were left in FPI to enable them to be the company that they are today. There is

a responsibility, whether they like it or not, that is associated with that.

Mr. Speaker, I am not going to speak in any great detail on what has been

proposed. I will say to members opposite and members on this side of the House

and the general public, that we recognize, as the Opposition House Leader said,

that there are a number of issues that have to be dealt with after - assuming,

if I can be so bold, should this pass tomorrow, if it should. If it were to pass

tomorrow there are a number of things that have to be done. One of the big ones

that has to be done is the securing of a commitment from the federal government

as it relates to quotas, enterprise allocations related to Fishery Products

International. Because, as I have said on numerous occasions - and people remind

me of my own words - we have no authority as it relates to allocations of fish.

None whatsoever. For that reason, Mr. Speaker, when we started down this road -

or I should say when we got to a point where negotiations really started to move

forward in earnest, I made contact with the federal Minister of Fisheries and

Oceans, Minister Regan, informed him of the deliberations that were ongoing

between our government and Fishery Products International, and that there was a

possibility of a default clause being negotiated as it related to enterprise

allocations of FPI, that at some point, should we conclude an arrangement, we

would need a commitment from the federal minister and a commitment that would

bind his successors to allocate FPI's enterprise allocations to the Government

of Newfoundland and Labrador should there be a default on FPI's part; should

there be a failure on FPI's part to live up to the commitments that they have

made.

Mr. Speaker, that contact has been made. Minister Regan, at the time - not to

put words in his mouth - informed me, to the extent that he could, he would be

prepared to co-operate with the Government of Newfoundland and Labrador on that

matter. Prior to coming to the House of Assembly this morning, since this thing

started to come together over the last couple of days, prior to coming to the

House of Assembly there has been a letter from me to Minister Regan reminding

him of the conversation that we had and informing him that - depending on how

the vote concludes in the next thirty-six hours, I guess - we would need to have

a further discussion on that, and we would need his commitment and the

commitment of the federal government as it relates to those enterprise

allocations.

Of course, Mr. Speaker, I think it has to be stated here - I think it has to

be stated here anyway - that the federal government has to come across with that

commitment. If the federal government does not come across with that commitment,

if there isn't some binding arrangement on the part of the federal government

and FPI that is satisfactory to the Government of Newfoundland and Labrador as

it relates to their enterprise allocations, then we will not have a hammer to

hold over FPI's head. For that reason, Mr. Speaker, I think that the deal - if

it passes here - would not be concluded on that basis. So, it is very important

for the federal government to remember that, and very important for FPI to

remember that regardless of what happens here in the next thirty-six hours,

there are still a number of hurdles that FPI and the federal government have to

get over.

Mr. Speaker, that, I think, will form the basis of my comments here. I think

there are thirty-six hours, or just about thirty-six hours, thirty-four hours

left before this is finally concluded, one way or the other. FPI have to

understand, I think, that we are a long ways from counting votes at this point.

The votes will not be counted. It is not over until it is over. A lot of people

have to be convinced to the validity of going forward on this course. There are

commitments that have been made and they have been substantial. There are

commitments that have to be lived up to. At the end of the day, the people of

Newfoundland and Labrador and the Government of Newfoundland and Labrador, the

people in this Legislature, will only want to support this transaction and this

proposal if it is for the betterment of the fishing industry and the people who

depend on the fishing industry in Newfoundland and Labrador.

That, Mr. Speaker, is the basis of my comments. I look forward to the

continuing debate. I, for one, and I am sure I speak for everybody on this side

of the House, have an open mind as to this issue. While I have said I have my

leans, at the end of the day the vote is the only thing that counts, not the

leans.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

The hon. the Member for Signal Hill-Quidi Vidi.

MR. HARRIS: Thank you, Mr. Speaker.

I am pleased to have an opportunity to speak on this debate in the House

today, and, in fact, also to follow the Minister of Fisheries whose

responsibility, although he is not responsible for the act, is responsible for

government policy with respect to the fisheries.

Let me first say, Mr. Speaker, that I want to comment on one of his remarks,

in that it is odd that we are here today talking about a private corporation. It

may be that is the case, but this is not the first time that this private

corporation has come before the Legislature of Newfoundland and Labrador. In

fact, this corporation was created by the legislation in Newfoundland and

Labrador in the Fisheries Restructuring Act in 1983. It was created out of a

serious problem of instability in the fishery. There was $254 million of money,

most of which was public, that went into the creation of this company. So this

is a private company now, an investor owned company, but it is a company that

was created by the public for a public purpose.

There were some associations - obviously, there were other people who

participated. The Bank of Nova Scotia was a participant because they had a

significant debt associated with the member companies that formed FPI when it

have a company that had its beginning in a private corporation, and over a

period of time changes were made to allow it to come to the position that it is

in now, as a function of public policy, to be a 100 per cent investor-owned

company; but it is a very particular kind of company, Mr. Speaker, and I have a

name for it. I cannot say I invented the name, but I certainly used it in

relation to this company. I try to use it many times, especially when we were

debating the NEOS propos