December

11, 1995

HOUSE OF ASSEMBLY PROCEEDINGS

Vol. XLII No. 73

The House met at 2:00 p.m.

MR. SPEAKER (Snow): Order, please!

Oral Questions

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

MS VERGE: Thank you, Mr. Speaker.

I have questions that I would like to address to the Premier.

I expected he would be in the House of Assembly today since he was due back from

England on the weekend. Since the Premier is expected momentarily I will yield

to one of my colleagues and rise when the Premier takes his place.

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

MR. WINDSOR: Mr. Speaker, actually my question I should

have put to the Premier as well but I can put them to the Government House

Leader or the Minister of Finance, since we are dealing today with the Auditor

General's Report that was tabled here on Friday. The report expressed concern,

in fact last year's report expressed concern that the House of Assembly has not

been receiving sufficient, appropriate, and timely information necessary to

ensue accountability of all government departments, agencies, and Memorial

University. She also says this year that during periods of fiscal restraint it

is even more critical that legislators and tax payers received this information

but unfortunately there has been little progress in this regard.

Mr. question, Mr. Speaker, is in view of this continued

annual reporting by the Auditor General of concern of accountability in the

accountability process that the House of Assembly, which is really the final

step in the accountability process - we often say the Public Accounts Committee

is, but in fact the Pubic Accounts Committee is just a branch of the House

itself, but the House of Assembly must have adequate information and good

reporting in order to properly control the public purse, and government appears

not to have taken any action in this regard whatsoever. Is the government now

prepared to take some action and put in place an accountability process, more

specifically legislation dealing with the reporting by all government

departments and agencies?

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

Treasury Board.

MR. DICKS: I share the Auditor General's concern with the

necessity of getting information to the public of the Province. This is a

perennial issue that comes up. I believe Memorial University is one that she has

continually tried to audit and the question, I guess, is whether or not audits

should be for value? There are people who may not know there is a distinction as

to whether or not most audits, for example, whether or not the money is spent

for the purpose it was given. A value for audit is whether or not that purpose

is a proper one. I share the Auditor General's concern as to getting appropriate

information before the people of the Province, however, the decision as to how

that should be done is one for government to consider, and if necessary to take

whatever steps to amend the legislation. It is a matter for Cabinet to consider

as a whole, and beyond that I am not sure there is too much I can add.

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

supplementary.

MR. WINDSOR: Thank you, Mr. Speaker.

Let me say to the minister that in reading the Auditor

General's Report I have not seen anything about value for money. What she is

talking about here is accountability process, government departments being

required to produce annual reports. There are only three or four departments

that have been doing that over the past number of years, actually tabling annual

reports in this Legislature. Most government departments, most Crown agencies,

Memorial University, do not produce annual reports that will allow this House,

the members of this House who are responsible to the taxpayers of this Province,

to properly assess the role of the departments, whether or not that role has

been met, whether it has been done efficiently and effectively, whether or not

we are receiving good value - without getting into the value for money concept -

good value for the taxpayers' dollars that are being spent.

MR. SPEAKER: Order, please!

I ask the hon. member to get to his question; he is on a

supplementary.

MR. WINDSOR: If we do not have any reporting information,

how does the House of Assembly assess that?

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

Treasury Board.

MR. DICKS: Mr. Speaker, we are talking in part about the

role of the Auditor General, and we may be getting a little confused. There is a

whole process of accountability in government. Treasury Board itself is a group

of ministers that regulate what happens in government departments to a large

extent. We, as much as any other group in the Province, rely on the individual

managers in each government department to do that. I would be the first to admit

that we ourselves find fault with that process and from time to time demand

further accountability. Given the size of government, I can tell hon. members,

some of whom have sat on this side of the House, that it is a considerable

challenge and one that is difficult to meet, and I have yet to find a process

that will result in perfection.

When I see the Auditor General's Report I often concur with

most of the comments that she, in this case, makes. As to whether or not and

what types of processes one needs beyond that, government is responsible for

delivering services in an efficient manner to the public. We, each day in this

House that it is open, account to the public through the questions of the

Opposition. In turn, we are accountable when we go to the electorate for our

management and stewardship of the taxpayers' dollars. Beyond that, the Auditor

General acts as a secondary process of review of the whole of government's

finances, puts before the Legislature of the Province each year, as I tabled, I

believe, on Thursday or Friday of last week, the consolidated financial

statements for the Province, and tells the taxpayers if the money has been spent

in accordance with the budget approved by the Province.

Beyond that, Mr. Speaker, I don't think there is a lot I can

say. We take the Auditor General's comments into account each year. The House

will hear in due course whether or not Cabinet decides that further legislative

changes are necessary.

MR. SPEAKER: The hon. the Member for Mount Pearl, on a

supplementary.

MR. WINDSOR: Mr. Speaker, I find it incredible that the

minister is not prepared to accept the fact that legislation is required to

ensure reporting to this House of Assembly, very simple and straightforward, Mr.

Speaker.

Let me ask the minister this: The Auditor General also

reports many variances from the Public Tender Act, and the question, I guess, to

the minister is: Is the Public Tender Act of any value at all if government is

going to continuously ignore it, Mr. Speaker? And we have seen it in every

Auditor General's Report, in many departments of government, and certainly, in

the Crown Agencies and government-funded bodies that we have looked at over the

past couple of years, in particular, this report, Mr. Speaker. It relates a

whole series of breaches of the Public Tender Act, or breaches of the guidelines

associated with it. Also, Mr. Speaker, on, I think, thirteen occasions, the

final decision on the hiring of consultants was passed on to a Committee of

Cabinet.

Mr. Speaker, my knowledge of the Public Tender Act does not

tell me that there is any Committee of Cabinet established under the Public

Tender Act which allows us to do that. Consulting, and so forth, is supposed to

be done according to the Public Tender Act. Will the minister tell us what this

Committee of Cabinet is all about, and on what basis does this Committee of

Cabinet select the consultants, or is it on the same basis as most of the ones

reported here, done without public tender call, without proposal call, just done

on the basis of preference?

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

Treasury Board.

MR. DICKS: Thank you, Mr. Speaker.

My recollection of the history of the Public Tender Act, is

that it was set up in the late 1970s in response to perceived abuses by the

government of the day. In fairness, this government, which has been a part, has

followed the Public Tender Act with a great deal of precision, but what I would

say to the hon. member is that, certain services are excluded from that and

those are consulting services. Those are not subject to the Public Tender Act.

What is often done is, there is a call for proposals which

have to be evaluated and it is a little bit different when you are asking to

have a specific type of thing built; if, for example, you need a car that meets

certain specifications, it is very clearly a matter of value. The hon. member,

being an engineer, knows, that type of work is, by-and-large, rotated among a

group of qualified engineering firms, for example, and consulting services are a

little bit harder to monitor.

If the hon. member has any specific questions regarding

specific tenders, my friend, the Minister of Works, Services and Transportation

can speak to any particular tender. The only other ongoing thing that I know

from time to time, are a matter of leases for space that are already contracted

for, which have renewal terms, and sometimes those are extended in accordance

with the Public Tender Act, subject to the decisions of routine Cabinet so, Mr.

Speaker, I don't think there has been any substantial variation or failure to

follow the Public Tender Act in any major respect, to my knowledge.

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

MS VERGE: Thank you, Mr. Speaker.

I have questions for the Premier about last weeks financial

statement made by the Minister of Finance while the Premier was over in Europe.

My questions have to do with the government's lack of planning, incompetent

management and bad choices. The Premier commented from London that he and the

government had no choice but to make the decisions announced last Tuesday.

I ask the Premier, doesn't even a low-income mother running a

household have choices? Doesn't the mother not have the choice of planning

realistically, managing carefully and choosing to spend the money needed to feed

the children on groceries and choosing to do without the sofa advertised on

sale, no matter how good a bargain it is, if money to buy the sofa on sale has

to come from groceries? I ask the Premier, why did he and his colleagues, last

summer, spend $7.2 million on water bombers when that expenditure was not

authorized in the March budget? Why instead, did they choose to take the $7.2

million from students, children in Kindergarten to Grade 12, students in

colleges, students at the University, just before Christmas?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: I can't figure out if there is an

intelligent question there or not. There was a lot of blather about relating

unrelated subjects. With that kind of a convolution of totally unrelated and

non-substantiated statements, it is difficult to discern a sensible question.

The one question that - the one thing that did stand out has been answered, I

think, about eight times before in the House, but if that is what the Leader of

the Opposition wants to do, I will repeat the answers that I believe were given

before by the Minister of Finance, the Minister of Natural Resources and perhaps

others. Why did the government choose to spend $7.2 million on water bombers?

The department and the minister and all officials concerned came to the

government with a compelling case. We sent it back because we did not want to do

it. It was outside of the Budget, it had not been provided for in the Budget. We

felt it should not be done. It went back and it came back to us again with the

suggestion that look, our water bomber fleet, some of it, is fifty years old.

Some of it is fifty years old. If we don't do something to replace it now we

could well lose it and that means putting in jeopardy the jobs and economic

benefit derived from the three newsprint mills that operate within the Province.

With great reluctance, the government agreed to do it. On

second thought, in knowing what we know today, I don't think the government

would do the same thing if we had the decision to make today. We would run the

risk, probably. But that is why it was done, and those are the circumstances in

which it was done, and it has nothing to do with the convoluted gobbledegook

that the Leader of the Opposition put forward.

MR. W. MATTHEWS: Totally incompetent, boy - it's time for

you to go. Make no wonder you've decided to go.

MR. SPEAKER: Order, please!

The hon. the Leader of the Opposition, on a supplementary.

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier: Why didn't you and your Cabinet colleagues

know about the state of the water bomber fleet in March when you prepared the

Budget for the year? If so, why didn't you make provision for two water bombers

then? Why are you now placing in jeopardy schools by taking more than $9 million

from education institutions late in the year, leaving those institutions only

three-and-a-half months to make up the savings when the institutions planned in

the summer for the academic year?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: The only question that I can sort of

discern from it is why didn't we know at the time of the Budget that the water

bombers were fifty years old and planned then to buy water bombers. It is fairly

simple. We knew that they were fifty years old, but the price of new water

bombers was $22 million each, of the CL-415, is it?

AN HON. MEMBER: The 415, yes.

PREMIER WELLS: The CL-415 cost $22 million each. So we

couldn't afford to do it and we didn't plan for it. These two came on the

market, used, but in quite good condition I'm told - I didn't see them; I rely

on the advice I got in that regard - for $7.2 million for two. Now, the

alternative if you buy them new is to spend $44 million to get two. The terms

and conditions, we were persuaded, made it a good buy and a good deal for the

Province to protect the long-term interests. That was the sole basis for the

decision, and that is the explanation as to why it wasn't in the Budget to spend

$44 million to buy two.

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

Opposition.

MS VERGE: Thank you, Mr. Speaker.

Yet the Premier said in answer to my first question that with

the benefit of hindsight the government made a mistake, that the government

shouldn't have spent the $7.2 million on water bombers this summer.

I ask the Premier: Why did you and your Cabinet colleagues

spend $6.6 million on Marble Mountain this summer when that expenditure was not

authorized in the March Budget? Why did you spend $5 million over budget for the

Economic Recovery Commission this year, since the Economic Recovery Commission

has yet to contribute to the economic well-being of the Province? Why, instead,

did you choose to take major amounts of money back from education institutions,

the health sector and social services, very late in the year?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: The answer is fairly simple. None of what

the hon. member said is accurate.

To begin with, the expenditure on Marble Mountain, as the

hon. member knows, a project started originally by the former government, was

cost-shared with the Federal Government 70/30, so what she is looking at is the

gross expenditure, not the net. It was cost-shared by the Federal Government on

a 70/30 basis. The ERC did not overspend by $5 million. That is the SRDA

agreement entered into with the Federal Government.

Now, we could turn it down and say -

AN HON. MEMBER: Cost-shared in what way?

AN HON. MEMBER: Seventy/thirty.

PREMIER WELLS: Again, 70/30 money. We could turn it down

and say, `We don't want your money,' and the Federal Government would have been

quite happy to take it and add it to their budgetary measures; but we need it in

the Province, so we took the money because it is good for the Province. It is in

the best interest of the Province to do it.

MR. W. MATTHEWS: What advice did the Queen give you, by

the way?

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

supplementary.

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier: Why didn't you plan for those expenditures

in your March Budget? Why did you have to come to the House of Assembly in

October with Special Warrants for $6.6 million for Marble Mountain and $5

million extra for the Economic Recovery Commission? Why, instead, are you taking

that money from the disabled and the sick, and from public servants who lost

their jobs?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, it wasn't in the Budget

because the funding for it wasn't agreed by the Federal Government at the time

and we couldn't put it in there, and without Federal Government participation we

would not have spent it. Now, there is the explanation. It is quite simple,

quite straightforward, quite rational and quite reasonable. Nothing whatsoever

was taken from anybody, students, unwed mothers or otherwise. Nothing was taken

from anybody.

AN HON. MEMBER: (Inaudible).

MR. SPEAKER: Order, please!

The hon. the Leader of the Opposition, on a supplementary.

MS VERGE: Thank you, Mr. Speaker.

I suggest to the Premier that he talk to the people affected

by the budget cuts announced last week. If he had not been over in Europe he

perhaps would realize that there has been considerable hardship resulting from

last week's budget cuts.

I ask the Premier: Why did the government, this summer, spend

$3 million in excess of what was budgeted for roads - $3 million over budget on

roads? Why did the government spend $2.7 million that was not budgeted for Cabot

celebrations? Why, instead, is the government taking that money, money that was

spent without Budget provision from students, from the disabled, from the sick,

and from public servants who were all penalized in the decision last week?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Again, Mr. Speaker, the Leader of the

Opposition has no idea what she is talking about. The $3 million additional

money spent on roads was 100 per cent paid for by the federal government out of

the compensation for the elimination of the transportation subsidies, totally

100 per cent paid for by the federal government. We could have turned it down

and it would have gone to New Brunswick or Nova Scotia.

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

supplementary.

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier, why did you lose count of your temporary

hiring? Why did you not set in place a mechanism to monitor employment, since in

repeated Budgets in the previous six and a half years the government has

announced an intention to freeze hiring and to be frugal in spending on public

servants? Why instead did you lose count, and will you give the House an

accurate number of the growth in public service positions through permanent

hiring, as well as temporary hiring since you took office, and explain why you

did not have proper controls in place to execute your stated policy, and why

instead you made panic decisions late in this Budget year to abruptly terminate

390 public servants just before Christmas?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, again most, not all, of the

premises of the Leader of the Opposition's question is totally without

foundation and has no merit. We did not just hire increased numbers of temporary

people. We made the mistake of following the management system, the personnel

management system and approach that was in office when we took office. We should

have made major changes before and regrettably we didn't. Now, Mr. Speaker, that

is not to say that I am without any responsibility whatsoever. I should have

been on it before. I acknowledge and I accept that responsibility.

Now, Mr. Speaker, I still say better late than never. We

will, as a result of the exercise that government is going through now, we will

do a complete assessment of what is genuinely needed to run the government of

this Province on a proper and efficient basis, and that is the structure we will

have in place. We are not going to rush at it and do it overnight. We are going

to do it over a reasonable period of time, do a full assessment, and we believe

at the end of the day, when we are finished with it, the government and people

of this Province will be infinitely better off and have a much better system

than they ever had before.

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

supplementary.

MS VERGE: When the Premier took office almost seven years

ago he inherited a system involving Cabinet Committee approval for all hiring,

temporary, part-time, student, as well as permanent. Did the Premier change that

system, and if not were the Cabinet Ministers who approved the out of control

hiring asleep at the switch?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the same system essentially

is still functioning and the same approval levels were necessary. As the result

of assessment done I have since discovered some of the increases. For example,

in social services there were fifty-five in one sudden increase, in order to

meet the increased demand, in order to meet the recommended levels of services

in social services there were fifty-five people added. I think that was the

number. I can get it checked, and there were a number of other areas where in

fact those approvals were given by the committees of Cabinet and by Cabinet as a

whole. Mr. Speaker, we should have been paying closer attention to it. I have

already admitted that. That is not new. I said that three weeks ago, or two

weeks ago at least, so that is not new.

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

MR. W. MATTHEWS: Thank you, very much, Mr. Speaker.

I have a question for the Minister of Education flowing out

of the Auditor General's Report. The Auditor General noted that colleges in the

Province received block funding which is not based on student enrolment or

programs. I would like to ask the Minister of Education on what he bases the

amount of block funding that each college receives? What is it based on? If it

is not student enrolment or programming why do they get the dollars they get and

what is the criteria used to determine the amount of funding?

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

Training.

MR. DECKER: Yes, Mr. Speaker, every year each college

board, represented by their president, meets with people in the Department of

Education and they go over their expenses, the cost of their operation and they

give them a block fund.

MR. SPEAKER: A supplementary, the hon. the Opposition

House Leader.

MR. W. MATTHEWS: Mr. Speaker, it is quite obvious that

the minister in charge does not know on what basis the government and his

department gives funding to our colleges. That is obvious from the lack of an

answer from the minister, which I guess really the minister has answered the

problem or has given the answer for the problem. Obviously, there is not

adequate accounting by the colleges.

Let me ask him this then, why doesn't his department have a

procedure for monitoring the financial reports, the information that comes into

his department from the colleges? Can the minister explain why he has not seen

fit to put in place a procedure to monitor the financial data that comes in from

those colleges so then he would be better informed for the next fiscal year to

determine what block funding they get, can he answer that?

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

Training.

MR. DECKER: Mr. Speaker, I think it was in 1988 the then

minister, Mr. Charlie Power, read the ministerial statement when he talked about

the five regional colleges. The intent Mr. Power had was to put more control

into the regions. Actually it was probably a good intent, Mr. Speaker,

unfortunately it got out of control to the extent that the Auditor General is

quite right, we don't have the reporting process in place. It is not quite as

bad as the report would have you believe. We do receive their budget proposals

every year, we do have to go over them. There is a division in the department

which does that but there are some weaknesses within the department when it

comes to colleges. I have said publicly that I agree with many of the

observations that the Auditor General has made and that I am in the process,

which has started a year and a half ago, to try to correct some of the problems

which are there. The over-administration, the lack of accountability in some

areas are concerns which the department is quite concerned with and we are

trying our best to put a process in place to deal with it, Mr. Speaker.

MR. SPEAKER: A supplementary, the hon. the Opposition

House Leader.

MR. W. MATTHEWS: Thank you very much. A final

supplementary for the minister, Mr. Speaker.

Can the minister inform me and the House what happened to the

document by Dr. Warren, former minister, post-secondary educational agenda for

the future, the Triple E agenda he called it; equality, excellence and

efficiency whereby he was about setting up a five year strategic plan for the

college system in the Province? Can the minister inform the House what has

happened to that? I watched the minister a few days ago reacting to the Auditor

General's report. It was almost like he was trying to blame everyone else, going

back to the days of Smallwood, Moores, Peckford and Rideout, that he had no part

of it. I was just wondering what happened to the Triple E agenda that Dr. Warren

brought forward and the five year strategic plan, can he answer that?

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

Training.

MR. DECKER: Mr. Speaker, there is still a lot of sense in

the report which my predecessor dealt with, the White Paper which he floated.

Remember the incorporation of the Marine Institute into Memorial which was part

of that process and like everything else, it made a lot of sense but there were

certain factors which we did not fully expect. The decline in the enrollment has

certainly impacted on it. The total backing out of the federal government from

post-secondary education was not anticipated at the time, Mr. Speaker. So what

the Auditor General is telling us is it is time for us, once again, to take a

look at the college system and see if we can streamline it just a little bit

more.

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

MR. HEWLETT: Thank you, Mr. Speaker, a question for the

Minister of Natural Resources.

Since I last questioned the minister in the House, Mr.

Speaker, I have continued to have concerns expressed to me from the mining and

mineral exploration industries about the dampening effect of the upcoming tax

changes. One of the things they have suggested to me is that the taxation scheme

be left as is but with a proviso attached that for large projects we have

project agreements like we do for Hibernia, Terra Nova, et cetera with

industrial benefits packages like a smelter or whatever and a revenue package. I

ask the minister, has that been put to him by the industry and what is his

reaction to it?

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, I have received copies of the

same correspondence I am sure that he has been receiving. It has been copied to

every member of the House of Assembly and probably to all the media and he will

see what we are going to do when we table our legislation.

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

Green Bay.

MR. HEWLETT: Mr. Speaker, as I indicated in my remarks

the other day, one of the problems we are having here is considerable

uncertainty and close to panic, as a matter of fact, out there in certain

sectors of the industry. Would the minister care to indicate whether or not,

once this bill is tabled, that he appears to be going to table without further

consultation, that a time frame be put in place for some consultation with the

industry and members of the public generally who might want a say before it is

finalized?

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, my door is always open and the

industry knows that my door is always open. If it wants to express its views to

me about anything it can express its views to me at any time. I am going to be

meeting with industry representatives tomorrow. Later on I'm sure there will be

others who will want to come in and talk to me and express their views. I

welcome that at any time. With regard to specifics of what we may do, that can

only be available when the bill is tabled.

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

MR. CAREEN: Thank you, Mr. Speaker. My question today is

to the Premier. During the past fiscal year, and this fiscal year, the Province

received in excess of $50 million to take over the South Coast ferry system.

Originally the Minister of Works, Services and Transportation said the monies

would be put into a separate account that would pay for the ferry system into

perpetuity. That never happened. The monies were taken to help force a balance

on current account. The federal government was let off the hook.

I am now asking the Premier if his government is accepting

monies in excess of $10 million to take over the federal wharves and freight

sheds on the South Coast, wharves and freight sheds in other isolated ports,

thereby letting the feds off the hook again and closing the $11 million gap that

the finance minister said he was looking for last Tuesday?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the first part of the hon.

member's comment is not correct. The minister confirmed for me that he never

said any such thing.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

PREMIER WELLS: Mr. Speaker, in terms of assessing whether

or not it was the right decision for the Province to take, it was assessed on

that basis: The value of the money, what it would earn if it were deposited in a

trust account, and so on. That was the basis on which the assessment was done.

Government never made any such decision, and would not make a decision to handle

its funds in that way. It would not be in the public interest to have done so.

As to the further question that the hon. member asked, we

have been conducting discussions with the federal government with respect to the

wharf facilities that are used by the Province in connection with the ferry

services only.

AN HON. MEMBER: (Inaudible).

MR. SPEAKER: Order, please!

PREMIER WELLS: I repeat again, we have been having

discussions with the federal government with respect to harbour facilities or

dock facilities only in the ports where the provincial government is operating

the ferries. That is a sensible thing to do. We believe it is in the best

interest of the Province to do it, and those discussions are continuing at the

moment.

MR. SPEAKER: Question period has expired.

Orders of the Day

MR. ROBERTS: Oh, I am sorry, Mr. Speaker. It is seldom

that we get so quickly through the routine. The arrangement for the day is that

we will start with Committee stage on Orders 24 through 28. These are bills we

dealt with on Friday morning if recollection serves me well, and then, once we

deal with those which I understand is likely to be fairly quickly, we will go on

to Order 31 which is second reading of a bill, To Amend The Hydro Corporation

Act, The Electrical Power Control Act; that's Order 31.

On motion, that the House resolve itself into Committee of

the Whole, Mr. Speaker left the Chair.

Committee of the Whole

MR. CHAIRMAN (Barrett): Order, please!

The hon. the Government House Leader.

MR. ROBERTS: We are going to ask the Committee, Sir, to

deal with Orders 24 through 28 in that order. These are all Committee stage on

today's Order Paper. Would you be good enough, Sir, to start with Order 24 and

then we will take them, serially, as they come?

"An Act To Amend The Animal Protection Act", (Bill No. 3).

Motion, that the Committee report having passed the bill

without amendment, carried.

"An Act To Amend The Workers' Compensation Act", (Bill No.

4).

Motion, that the Committee report having passed the bill

without amendment, carried.

"An Act To Amend The Highway Traffic Act", (Bill No. 26).

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

Extern.

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

When this bill was discussed on Friday morning in the House,

Mr. Chairman, the Minister of Works, Services and Transportation was confused,

and as usual, Mr. Chairman, he got up you know, and made statements about how he

is going to have to read it slowly so that the people on this side could

understand and what have you, but people's words come back to haunt them

sometimes, Mr. Chairman, and basically, I am going to refer to Hansard, page

2543 of Friday morning, and the Minister of Works, Services and Transportation

said: " Clause 7 would amend

section 178(3), to remove an exemption allowing

drivers to not wear shoulder belts. When the legislation was brought in, as well

as the belt across the waist, you had to wear the shoulder belt, but now, it is

separate. Some of the newer vehicles have the belt in two sections, and what we

are changing in the act now is that you can drive your vehicle with the waist

belt only and not have to wear the shoulder belt." Mr. Chairman, this is not

right.

Again, he goes on to say, on page 2544, the last sentence

there: "They changed the design of the belt and now you don't have to wear - to

not wear the shoulder belt" and, Mr. Chairman, I responded, after some

elaboration: "To me, that clearly says now, that you are required to wear both

the lap belt and the shoulder belt. There was permission allowed before, that if

they were separate, it was not required to wear both, but now, you are required

to wear both", and he clearly said: "No"!

Now, Mr. Chairman, under

section 7 in the bill itself, if you

read it properly, if the minister could read it properly, okay,

section 7.(1)

Subsection 178 (3) of the Act is amended by striking out the words and commas

"but, where a seat belt assembly comprises a pelvic restraint and a torso

restraint which are not joined, the driver shall be required to wear the pelvic

restraint only". That is what is being struck out, I would say to the Minister

of Works, Services and Transportation, so now, he does understand that you are

required to wear both the pelvic restraint and the shoulder restraint. I would

ask the minister to confirm that, that is what this bill is saying.

Also,

section 7 (2) subsection 178(4) of the Act is amended

by striking out the words and commas "but where a seat belt assembly comprises a

pelvic restraint and a torso restraint which are not joined, the passenger shall

be required to wear the pelvic restraint only".

That is what is being stricken out of this, so in actual fact

the minister was confused on Friday morning and now he is straightened up. The

Member for LaPoile tried to straighten the minister out. I think he added a bit

more to the confusion. I would like the minister to confirm that, please.

MR. CHAIRMAN: The hon. the Minister of Works, Services

and Transportation.

MR. EFFORD: Thank you, Mr. Chairman.

I must admit that I was confused on clause 7 on Friday

morning. Far be it for me that I could not make a mistake occasionally; I do

admit that. As the hon. member just pointed out, clause 7 reads exactly as is,

because when I left the House of Assembly I talked to the constable outside and

we discussed it. I went immediately to my department and rechecked it, and the

hon. member is quite correct. It now remains that you must wear the waist, the

pelvic and the shoulder strap in all instances.

MR. CHAIRMAN: The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Chairman, I was not here on Thursday

or Friday, so if this has been discussed and brought to the minister's

attention, maybe he can let me know and I will just sit down.

Paragraph 2(j): "commercial motor vehicle" means a vehicle

designed to carry goods, and includes a bus, a school bus...

From what I understand in talking to some of the officials in

the minister's department, that word in the old act was `designated'. When this

bill was brought to committee we had a problem with the word `designed', and we

thought that maybe insurance companies might use it in order to bring forward

commercial insurance rates and attach them to vehicles which are designed to

carry goods but not necessarily designated to carry goods. There is a big

difference in both words.

At that particular time the minister's officials were going

to go back, and felt that maybe the word `designated' should be reapplied there

again. I think it was their idea to take it out because they thought `designed'

was a better word, but after quite a discussion followed they felt that the word

`designated' should go back there, and not `designed'.

AN HON. MEMBER: (Inaudible).

MR. FITZGERALD: Paragraph 2 on page 4, Minister, (j), top

of the page: "commercial motor vehicle" means a vehicle designed to carry

goods...

What I am saying, and what the committee suggested was that

we change that word `designed' back to `designated' to carry goods, because

there is a vast difference. It could be another way of an insurance company

looking at applying commercial rates to vehicles used for domestic purposes,

like a pick-up truck for instance, which is designed to carry goods but not

necessarily designated for that purpose.

I would like to know what the minister's thoughts are on

that, and if he has any problem with changing that word from `designed' back to

`designated'.

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

Extern.

MR. J. BYRNE: I want to address that also.

At our Government Services Committee meeting on October 26

there was a motion put forth by the member and myself, and the motion was

carried, and it was exactly that, that the word `designed' be replaced with the

word `designated' included. I just wanted to let the minister know that, that it

was carried at that meeting.

MR. CHAIRMAN: The hon. the Minister of Works, Services

and Transportation.

MR. EFFORD: Thank you, Mr. Chairman.

No, I have talked to the people in my department, and I have

had full consultation with them, and the commercial motor vehicle means a

vehicle `designed' to carry goods. There is nothing wrong with that. "...a

vehicle designed to carry goods, and includes a bus, a school bus, a truck, a

truck tractor and other motor vehicles designed for commercial use but does not

include camper type vehicles designed or adapted exclusively for recreational

purposes;".

I don't see anything wrong with that. Any vehicle designed

for carrying goods - designed to be a commercial vehicle - should require a

commercial inspection, for safety purposes only. The regulation of the trucking

industry caused us to bring in safety inspections only, and required the

operator of that vehicle for that use only. It is designed for commercial use,

and is exactly what the

interpretation of the bill says.

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

Extern.

MR. J. BYRNE: I hope the minister is not getting confused

again. At the committee meeting the discussion was on and the people from Works,

Services and Transportation who were at that meeting also, representatives, they

agreed with what was being discussed. In that a vehicle could be designed for

commercial purposes but not be used for commercial purposes. Some of the

insurance companies may take advantage of the situation and require people to

pay rates on insurance for a vehicle that is designed for commercial purposes

but not being utilized for that purpose. I would like the minister to make sure

he understands what is happening here.

MR. CHAIRMAN: The hon. the Minister of Works, Services

and Transportation.

MR. EFFORD: I understand the point that the hon. member

is making. I wasn't part of the committee. I had taken the advice from the

officials of my department. The officials have told me that they didn't have a

problem with this. I've just nodded to one of my people who is in the gallery

and said go check it, because I want to be absolutely sure. The bill is written.

I assume there is nothing wrong with it, and I understand the reasons why it was

put in there. A commercial vehicle designed to carry goods or people or

whatever.

You can designate a trolley to carry goods. You can designate

whatever type of vehicle you wish to carry goods. The explanation that they give

me that they were satisfied with under the Highway Traffic Act, the fact that a

particular vehicle is designed to carry commercial goods. I can designate my

machine which is a Jimmy to carry commercial goods, but this one is designed

specifically for that. That is all, these vehicles are designed to carry

commercial goods. If I carry commercial goods this afternoon in my vehicle,

which is a light-weight vehicle, because it is designated to carry it that

doesn't say I have to go through a safety inspection twice a year or once a

year.

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

Extern.

MR. FITZGERALD: Mr. Chairman, I don't think the minister

fully grasps what is being said.

MR. CHAIRMAN: Order, please!

I recognized the Member for St. John's East Extern.

MR. J. BYRNE: I will give leave.

MR. CHAIRMAN: Okay.

The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Speaker, I'm not so sure that the

minister fully realizes what is being done here. Because in a great many cases

an insurance company will charge a rate, or designate a commercial vehicle, by

the type of licence plate that it carries. A C plate for commercial - it may not

be C, but there is a different designation for a licence plate for a commercial

vehicle.

The minister's Jimmy, or the minister's car I suppose, can be

designed to carry something, but that doesn't automatically make it a commercial

vehicle. But if it is designated, if he has a pick-up truck and he uses it in

the construction business, and he designates that truck as a commercial vehicle

for hire and compensation, well then it is a commercial vehicle. But because it

is designed, because it has a pad on it and it is capable of doing something,

that doesn't necessarily make it a commercial vehicle. I can see this as an

entrapment where many people may be forced to pay a commercial rate on a vehicle

that is being used for domestic purposes.

MR. CHAIRMAN: The hon. the Minister of Works, Services

and Transportation.

MR. EFFORD: Mr. Chairman, that is the hon. member's

interpretation of what it may or may not do. Any individual who goes to an

insurance company to get a vehicle insured - I can have my vehicle designated to

be commercial, and I go get a licence. I also can go to the insurance company. I

may not do it. In fact, my vehicle is designated - I pay a higher insurance

because I am using it for work, for business. But that is up to you to go to the

insurance company and get that corrected.

AN HON. MEMBER: (Inaudible).

MR. EFFORD: Yes.

MR. CHAIRMAN: The hon. the Member for Bonavista South.

MR. FITZGERALD: This is exactly what I'm saying to the

minister. Because he is designating his vehicle to be what he wants it to be.

That is exactly what the argument is. Minister, what you are saying is you are

agreeing with the argument but you are not agreeing with changing the term. The

committee - I think it was pretty well unanimous - agreed that this go back and

be changed. The two officials from your department were there and fully agreed

that: Yes, maybe we should revert, and there is a very good reason for that word

being put there in the first place.

But the minister comes back and defies the committee and

says: No, it is not going to be changed because it is already written. If the

committees are going to function and go through the procedure of meeting and

looking over legislation, and bringing back unanimous consent, then I think the

minister should take it probably a little bit more seriously, and respond to the

suggestions that are being brought forward.

MR. CHAIRMAN: The hon. the Minister of Works, Services

and Transportation.

MR. EFFORD: As I pointed out, Mr. Chairman, the word

`designed' here says exactly what it is, what a vehicle is designed for, and as

I said in the remarks I made a couple of minutes ago, also what a vehicle could

be used for. It is a clear

interpretation on the part of the owner or the

insurer to what they say, and that vehicle may be a private vehicle of

commercial size but if it is not used for commercial use then it does not have

to be insured for that. That

interpretation is up to the individual at the

particular time, so what we are saying is what it is designed to do but also

what the user uses that particular vehicle for. In the meantime, where you are

saying that the committee was unanimous and that the officials of my department

- I mean, the bill is written and I am just double-checking and making sure that

when the bill goes through it is to the satisfaction - I will have an answer

back now in a minute.

MR. CHAIRMAN: The hon. the Member for St. Johns's East

Extern.

MR. J. BYRNE: Just to try to clarify this situation, Mr.

Chairman. If I own a pick-up truck and I have that truck insured, under the

definition here now, if it is `designed', it would be classified a commercial

motor vehicle, so the insurance company can charge me the rate for a commercial

vehicle.

MR. EFFORD: Unless you go and -

MR. J. BYRNE: No, no. You are putting in legislation now

that it is a commercial motor vehicle. That is what it is being described as

now, a commercial vehicle. If you put in the word `designated' - designed `and

designated', we are taking care of that problem because then the vehicle will

not be designated as a commercial vehicle. That is what the minister has to

understand. When are we going to have the answer back from your department? If

we are going to pass this here today it is going to be too late then, so we need

to know now.

AN HON. MEMBER: You will know in just two or three

minutes.

MR. J. BYRNE: But this is going to be passed through as

soon as we sit down. Either the minister agrees or disagrees.

MR. EFFORD: I disagree with you.

MR. J. BYRNE: Well, he disagrees.

AN HON. MEMBER: I can't see how Cabinet could approve

that.

MR. J. BYRNE: No, I don't either. So, the minister is

saying that he is going against the recommendations from the representatives of

his department at the committee meeting held on October 26, 1995. He is going

against the recommendations of the committee which were passed unanimously and

nobody objected to them. The minister is over there now basically saying the

same thing we are saying. He is confirming our argument but he is not agreeing

to make the change that will solve the problem. Is that what the minister is

saying to us now? Why can we not just amend it and put in the words -

AN HON. MEMBER: (Inaudible).

MR. J. BYRNE: Look, if you have a problem with the word

`designed' and you want the word `designed' to remain there, instead of taking

out the word `design' and putting in the word `designated', leave `designed'

there and put in, `and designated' as a commercial vehicle. That takes care of

your problem and it will take care of the problem of the people in the Province

who have vehicles that are designed as commercial vehicles but will not be

designated as commercial vehicles, and you will not have to pay increased

insurance rates. Because, if you have a pick-up truck which is designed as a

commercial vehicle you can mark it down that the insurance companies will end up

charging me the rate for a commercial vehicle. You are going to get up now and

say, if it is designated, but if it is not in there that's what is going to

happen. So, put it in there and we have our problem solved.

MR. SPEAKER: The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Chairman, the hon. member is right,

you can add both words here, because when the minister gets up to explain it all

he is doing is justifying the very reason why we want it changed. The minister

is saying he is going to go to the insurance company, or he is going to go to

Motor Registration, and he is going to tell those people the way he wants the

vehicle to be used, so in doing that he is designating the use of that vehicle

for either commercial or for domestic purposes. Right now, you can have a person

going with a pick-up truck with a C plate on it and the next thing you know you

are going to be charged a commercial rate for automobile insurance.

MR. EFFORD: (Inaudible).

MR. FITZGERALD: Yes, you can, Minister, yes you can, but

if you have it designated as a recreation or domestic vehicle, then you would go

and be charged for the exact use of that particular vehicle. So not only must it

be `designed', it also must be `designated', because there is a vast difference

in those two words.

MR. CHAIRMAN: The hon. the Minister of Works, Services

and Transportation.

MR. EFFORD: Mr. Chairman, you are arguing over your

interpretation of a word in a clause and what an insurance company may or may

not do. The insurance company will simply - if the vehicle you have is for

private use, you tell the insurance company so. If ten million people in the

world have a pick-up or other vehicle and if they have it for commercial use,

they tell the insurance companies it is for commercial use, if it is not, it is

for private use.

AN HON. MEMBER: Boy, oh, boy!

MR. CHAIRMAN: The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Chairman, here again, the minister is

wrong. The minister can go out and he can buy one of those pick-up trucks with

the double wheels, I don't know if you've seen them; there are not a lot of them

around - I think they are a one-ton truck. Well, if the minister has one of

those, I can tell him that he has it insured as a commercial vehicle because

they will not insure it as a domestic vehicle. It is automatic, commercial. It

is automatically a commercial vehicle because it is a one ton-truck even though

it only has a one - it has a pan on it or a box on it, the same as a half-ton

pick-up. So that is the difference right there in a `designated' and a

`designed' truck. So unless the truck is `designated' then the insurance

companies can play around with it. You can have a lot of people out there, after

this piece of legislation is passed, driving half ton, three-quarter ton pickups

for a Sunday afternoon drive and be paying a commercial vehicle rate on it as it

relates to automobile insurance but if you had the word there `designated' then

when you go to insure the vehicle or when you go to license the vehicle it would

be clearly interpreted exactly what it is being used for.

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

MR. ROBERTS: Mr. Chairman, I appreciate my friend, the

Member for Bonavista South, yielding the floor. He can come back again if he

wishes, of course.

The argument seems to be, if I follow it, we are talking now

- it is clause 1 of the bill, it would substitute for the present 2(

j) a new

2(

j) which appears -

AN HON. MEMBER: `Ed', are you saying (inaudible).

MR. ROBERTS: Yes, hold on now. Just let me -

AN HON. MEMBER: (Inaudible).

MR. ROBERTS: Yes, let me just say what I have to say. The

proposal is that 2(

j) of the main act would now read: commercial motor vehicle

means a vehicle designed to carry goods, etcetera, etcetera. Now, the present

statute, the present 2(

j) says, "commercial motor vehicle" means a vehicle

designated to carry goods..." My understanding is that the concern is with the

use of the word, `designed' instead of the word, `designated.' Now, Mr.

Chairman, there are other changes in the definition, but I gather they are not

of concern, the committee are prepared to accept the other changes in the

definition.

So on that basis I have asked my friend the minister, and he

just asked the law Clerk to have a word with the officials who deal with this

directly for us. So I am going to suggest that the Committee are amenable, and

we simply let this bill stand for a little bit. I should have an answer quite

quickly and then I will take instructions from my friend, the minister on

whether he is prepared to change `designed' to `designated'. It may be as simple

as in the drafting, the drafter chose the word, `designed' instead of the word,

`designated' with no more then that behind it. So we will find out. Now, I am

not sure anything of substance hinges on it but if it will ease the Committee's

concern, then we will try to address it. So if it is agreeable, Sir, I would

simply suggest to you, let this stand and we will go on to the next bill for a

bit.

MR. CHAIRMAN: Okay, so the next order is Order 27, "An

Act To Amend The St. John's Assessment Act." Bill No. 45.

The hon. the Member for Kilbride.

MR. E. BYRNE: Thank you, Mr. Chairman.

I will direct my comments maybe to the Minister of Municipal

and Provincial Affairs or the Government House Leader, dealing with, "An Act To

Amend The St. John's Assessment Act."

I have some questions for the minister dealing with the rate

of assessment. In Clause 2, 49(1), "Real property shall be assessed at its

market value, that value being the amount which in the opinion of the assessor

would be paid if the property were sold as of the base date established by the

chief assessor by a willing buyer to a willing seller both of whom are

knowledgeable in the market." I ask the minister, does such an assessment - will

that be now included in terms of farmland that probably was taken out of the

agricultural freeze, say, in my district, or would it be included in large

tracts of land that there is no development on, that are not for sale? If you,

as minister, owned five to seven acres of land - how will these changes to the

St. John's Assessment Act be impacted upon somebody in that situation?

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

Provincial Affairs.

MR. REID: What has been happening is that because this

particular

section was not included in the act, today somebody could go out and

buy a piece of property, ask for the property to be assessed, and the assessment

for that piece of property today could be either up or down from what it was

assessed in the last assessment year, so you had a mishmash. Every time somebody

was buying or selling a piece of property they were asking for an assessment,

and the assessment was going up and the assessment was going down, so there was

no base rate; there was no base set year. The City of St. John's was the only

one in that situation, so what they have asked us to do is, like the rest of the

Province is doing, you do an assessment in a base year.

Let's say 1996 would be a base year for the City of St.

John's. Then, two years or three years down the road, somebody wants to sell

that property, to get it reassessed, the assessment then has to reflect what the

assessment was in the base year rather than the year they are buying. What was

happening was that there were a number of court cases and people were losing

money, and in a market today in particular where property values are decreasing,

the city council from one year to the next could not make plans in regard to how

much taxes it was going to collect from a particular piece of property. Do you

follow what I am saying? Because any time during the year, that assessment could

be challenged, another assessment would be done, and then the assessment could

be up or down. So what the City of St. John's has basically asked us to do is to

set the base year that you are going to do the assessment for all properties -

every property, regardless - every property in the city would be assessed at a

given time. That assessment would stand until the next base year, or the next

time when a complete assessment would be done, and that way that is being fair

to everybody. Because if it is not done that way, then one person could possibly

be paying more taxes than the fellow across the street. I will just give you an

example.

Two convenience stores, or two service stations on the corner

of an intersection, both of them, when they are assessed to begin with, are

assessed equally in the amount. Two years after, one gentleman decides to sell

his service station. He asks for an assessment to be done on his property, and

because property rates fluctuate up or down, his property is assessed lower than

the guy across the street. Now, is that fair to the person across the street who

is paying on the base year, and he is getting a reassessment done in the middle

of a term, say in the second or third year, and he is paying lower taxes. That,

then, causes problems for the City, because at the end of the day almost anybody

can ask for a reassessment at any time, and that puts the City of St. John's

into a situation where any given year they don't know what amount of taxes they

are going to actually collect. Because if you are going into large buildings,

for example, you could be looking at large amounts of taxes, and if they are

going to be assessed almost on a yearly basis, then it is going to cause all

kinds of problems.

I cannot answer the gentleman. I don't know what the act says

as it relates to vacant agricultural land, but I would think that yes, it stands

for that, too. I would think that if there is a base year for property, then it

would relate to a base year as well for agricultural land. I think you would

stay there, at that base. Now, I am not sure about that but I can check it out

for you.

MR. CHAIRMAN: The hon. the Member for Kilbride.

MR. E. BYRNE: I appreciate the minister taking some time

to explain the situation, and I understand generally what the City of St. John's

has faced compared to what other municipalities have been doing in the Province,

but while that may be true and the problem that we are about to correct there,

generally speaking, for 90 per cent to 95 per cent of the cases, in certain

areas of the city, especially in newly incorporated areas like ones that I

represent, where there are individuals in there who have large tracts of land,

for example, the assessment rate, I mean, it is based more upon what the market

can bear at the time than it is actually - the city's assessment rate may be

unrealistic compared to what the market can bear in terms of what they can sell

it for. While they may be able to sell it, on the one hand, for whatever they

can get, which is fine, but the assessment could be abnormally high to a point

where they would be paying abnormally high taxes on the land and therefore be

put into a situation where they would have to be forced to sell it for whatever

they can get just to take care of taxes.

Now, while that may not seem a significant problem, it is a

problem to some constituents in my district who own large acreage of land that

has just come out of the agricultural freeze, say, on the major arteries where

you are talking 400 to 600 feet long, 300 backward in depth. It could create a

real problem for those people.

If the minister is going to check on it - I don't know if he

has any other feelings based on what I've just put forward, but if he can check

on it and elaborate probably a bit more.

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

Provincial Affairs.

MR. REID: Just let me say this to you. If a person finds

himself in a situation where his property - be it real property or land or

whatever - and he thinks it is overly assessed, well, then, he uses the appeals

process. I can't really get into that question I say to the hon. member, because

there is a process whereby when the assessment roll goes out from the City of

St. John's to your friend in the Goulds or your friend in Kilbride, then he has

the right to appeal up to a certain number of days - I'm not sure in the City of

St. John's, I think it is ninety days - to appeal that assessment.

Then he or she, whoever it might be, takes that assessment to

a court of revision, and the court of revision then decides whether the City has

over-assessed the property or under-assessed it. He takes his chance. At the end

of the day, he has to accept the verdict of the court of assessment, or take it

to the Supreme Court of Newfoundland. Now, not very many cases go to the Supreme

Court of Newfoundland. But then it stops, at that point.

MR. E. BYRNE: (Inaudible).

MR. REID: No.

MR. E. BYRNE: (Inaudible).

MR. REID: Yes. We are not talking about in the appeals.

No, that is a different process altogether. That is outside the appeals process.

That should answer you.

MR. E. BYRNE: (Inaudible).

MR. REID: The appeals process is a general appeals

process that anybody can go to. If you have a property that you - right? That

process has to continue to work anyway. After the appeals process - the appeals

process is part of the base year process. So then the base is set after the

appeal. Okay?

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

MR. E. BYRNE: No, I appreciate now the -

MR. CHAIRMAN: No, no (inaudible).

MR. E. BYRNE: Oh, I'm sorry.

MR. CHAIRMAN: I recognized the hon. the Member for St.

John's East.

MR. HARRIS: Thank you, Mr. Chairman.

I want to say a few words on this legislation.

First of all, I think the point needs to be made that there

is a difference between the appraised value and the assessment. Quite often the

two get confused when in fact an appraisal that was done will tell you the

market value of the property as of today's date, what you could get for it now.

As I understand this legislation, what this legislation is going to tell you is

the market value or assessed value as of the base year. For example, the

agricultural land that may just come on the market as available commercial land,

if that needs to be assessed now, or if somebody were to build a new house and

there has to be an assessment, the assessment won't necessarily be based on the

market value of the house the day it was built, but in fact on the base year

which may be two or three years previously.

The assessor is doing a very different job from that of an

appraiser. The assessor has to determine the market value, but then also has to

relate it to the base year; so that if you, as a minister, build a house on a

particular street and my house is on the same street, and mine was assessed in

1990, yours is being assessed in 1994, well, we are supposed to be paying

comparable taxes based on the comparable homes. So your house, even though it is

built in 1994, has to be assessed as if it had a value in 1990.

That seems to be fair. Because even though your house may be

a brand new house and the market may have risen by 15 per cent in the four

years, you ought not to be paying a higher rate because yours is being assessed

in 1994 when mine was assessed at a fairer market value in 1990 of 15 per cent

less than yours. The only way to really be fair is to go back to my house and

jack my assessment up by 15 per cent, which you can't do because you would get

the whole thing all jigged up.

Now, as I understand it, this amendment tries to sort out

that problem so that there is a base year on which all properties are assessed.

So that even if you make an improvement to your house this year, and there is a

reassessment done, which can be done, that, that reassessment reassesses that

increased value again going back to the 1990 tax year or whatever the base year

that's established.

Now, as I understand it, that's what is happening here and I

do understand there are lots of problems at City Hall at the assessment and at

the appeals level, whereby people have varying assessment dates and assessment

years. In fact, I have seen just today, from the City of St. John's, two

assessment notices coming out with two different base years on it; one for 1995

and one for 1990.

Now, I am assuming that this is going to be cleared up once

this bill passes, that would be my understanding, because it would be very

difficult for someone to be able to know whether or not they have a valid point

in challenging an assessment if they go down to City Hall and see all kinds of

different assessments for different tax years. According to this legislation,

similar to the assessment acts that apply elsewhere, the only real ground of

appeal is that the assessment of my property is unfair in relation to the

assessment of another property which is of equal value.

People look at the assessment, the assessed value of property

is often very different from the appraised value of a property and quite often

the assessed value is significantly lower than the appraised value of the

property, so it is no good to say that I have an appraisal here that shows my

property is worth less than the assessment, what you really need is a

comparability between my property and other properties of similar nature and

what they have been assessed at. The only way to fairly compare those is to have

the same base year applied to all properties, and if my understanding is

correct, and I think it is - I see the minister nodding there - then, I think

that this legislation is in order and very desirable, because as it stands right

now, there is a tremendous amount of confusion as to what grounds of appeal may

be valid and you will have a lot of unnecessary appeals because the rules are so

difficult to follow and understand, that people will put in an appeal just to

cover themselves and then a court of revision has to deal with it and try to

sort it out.

Perhaps the minister will comment. If my understanding is

correct, then I have no difficulty with the bill. If I am wrong in that, perhaps

the minister can say so. And, would he indicate, whether or not the City of St.

John's plan to bring these assessments in order or are they waiting for the new

assessment year, which I think is coming up?

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

Provincial Affairs.

MR. REID: Let me say, Chairperson, that I appreciate the

comments that my hon. friend, the Member for St. John's East made because I

think he explained it quite adequately.

Yes, the City is waiting for a new assessment to be done.

They are hoping to be able to set the base for the whole of the city within the

next twelve months or so and they are doing it. So then that will, as soon as

legislation - legislation is retroactive to January 1, last year, too, because

there is a number of court cases - a number of cases have been challenged now

already, and once we set the base date, it is going to be a lot easier for the

City of St. John's, then, to actually, without having the problem of being

challenged so often as they have been, over assessed values, be able to actually

tell their planners and assessors, here is the base rate, what we are doing is

equal or fair to everybody, and by the way, they are only coming on line,

believe it or not, with the rest of the Province. That's the way the rest of the

Province operates. So, unless there are any other questions, the hon. member is

correct, I thank him. I would like to thank my hon. colleague, the Member for

Kilbride and of course, the Member for Waterford - Kenmount, who supported this

piece of legislation.

The City, by the way, I will say to the hon. member, have

been after me almost on a daily basis for this. They need it as quickly as

possible.

MR. HARRIS: The new base year will be 1995.

MR. REID: The new base year will be January 1, 1995.

Motion, that the Committee report having passed the bill

without amendment, carried.

MR. ROBERTS: Order 28, Sir, Bill No. 39.

"An Act To Amend The Hospitals Act", (Bill No. 39).

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

MR. L. MATTHEWS: Thank you, Mr. Chair.

There is not much I can add to the eloquent presentation that

I made on Friday on that particular bill. I would simply say ditto to all that I

said on Friday morning, and would recommend that you follow and get this thing

through as quickly as you can.

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

MR. SULLIVAN: Thank you, Mr. Chairman.

I don't have too much to add either. The minister did such a

thorough job the last day, he covered everything in great detail. He even talked

about tobacco taxes and revenues, and how we are going to deal with those

issues. I am sure the minister has done a very, very thorough job, and I think

we will leave it at that; I had my comments the last day.

A bill, "An Act To Amend The Hospitals Act." (Bill No. 39)

Motion, that the Committee report having passed the bill

without amendment, carried.

MR. ROBERTS: Your Honour, may we go back to Order 26,

that is Bill No. 26.

MR. CHAIRMAN: "An Act To Amend The Highway Traffic Act,"

(Bill No. 26).

The hon. the Minister of Works, Services and Transportation.

MR. EFFORD: Mr. Chairman, seeing it is so close to

Christmas, I find it necessary, after talking to the people in my department, to

say to the Opposition, we will change the word from `designed' to `designated'.

I think that will, according to members on this side and members on that side,

make everybody happy.

AN HON. MEMBER: Designated drivers.

MR. EFFORD: Designated drivers.

MR. J. BYRNE: May I speak to that?

MR. CHAIRMAN: Is there an amendment to the bill? Because

the minister -

AN HON. MEMBER: I moved the amendment.

MR. CHAIRMAN: Okay, because the minister cannot -

MR. ROBERTS: (Inaudible).

MR. CHAIRMAN: Okay, so the amendment has been proposed by

the House Leader.

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

MR. J. BYRNE: I will second it.

Seeing that it is close to Christmas, I am going to pay the

Minister of Works, Services and Transportation a compliment now, and I am going

to say it is good to see the Minister of Works, Services and Transportation

being man enough in one day twice admitting that he was wrong.

On motion, amendment carried.

On motion, clause 1 as amended carried.

A bill, "An Act To Amend The Highway Traffic Act." (Bill No.

26)

Motion, that the Committee report having passed the bill with

amendment, carried.

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

MR. ROBERTS: Mr. Chairman, would you be good enough,

please, to rise the Committee, and perhaps we could deal with the amendments to

Bill No. 26 in the Whole House and then we will carry on with debate on the

Hydro Amendment Act bill.

On motion, that the Committee rise, report progress and ask

leave to sit again, Mr. Speaker returned to the Chair.

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

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

MR. BARRETT: Mr. Speaker, the Committee of the Whole has

considered the matters to it referred and has directed me to report having

passed Bill Nos. 3, 4, 45 and 39, without amendments and Bill No. 26 with

amendment, and ask leave to sit again.

On motion, report received and adopted. Committee ordered to

sit again presently by leave.

On motion, amendment to Bill No. 26 read a first and second

time, ordered read a third time on tomorrow.

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

MR. ROBERTS: Mr. Speaker, in accordance with the order of

business we outlined earlier would you be good enough to call Order 31, Bill No.

35, please?

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

Corporation Act, The Electrical Power Control Act, 1994 and other Acts." (Bill

No. 35)

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Thank you, Mr. Speaker.

This bill deals with amendments to a number of pieces of

legislation, particularly the Hydro Corporation Act, The Electrical Power

Control Act, and a number of others that are consequential. This bill clearly

indicates our intention that in the future Hydro will operate with more

independence of government than in the past on a day to day basis, and with less

political interaction on a day to day basis.

I would like to first take a look at the explanatory notes.

Number one: the amendments to the Hydro Corporation Act would affect changes to

the internal operations of the corporation, a number of the clauses that are in

this bill, and among those changes would be the possible establishment of a

private pension plan for the employees of the corporation, and also the

application of the Labour Relations Act to the corporation instead of the Public

Service Collective Bargaining Act as at present. The amendments to the Hydro Act

would also subject the corporation to full regulatory review by the Public

Utilities Board. In that regard in the future the Public Utilities Board would

set the rates for both retail customers and industrial customers, rather than as

at present where the PUB only makes recommendations to the Cabinet, so Hydro in

the future would be subject to regulations just as Newfoundland Power is today.

The second clause in the explanatory notes regarding the

Electrical Power Control Act, and this is the new Electrical Power Control Act

that was passed last year, the amendments contained in Clause 15 of this bill,

this amendment has been made necessary by changes in the Public Utilities Income

have been cancelled, so we no longer need this clause and we will be deleting

it.

The amendment contained in Clause 16 of this bill, regarding

the Electrical Power Control Act, would provide that the Lieutenant-Governor in

Council may give direction to the Public Utilities Board with respect to the

policies and procedures to be implemented by the board with respect to the

determination of rates of public utilities.

The final clause in the explanatory notes, the amendments to

the Crown Lands Act, the Freedom Of Information Act, The Provincial Preference

Act, and the Public Tender Act, are consequential to the other amendments as

Hydro would be subject to the Crown Lands Act but not to the other three.

Now, I would like to take hon. members through the bill

because there are a lot of clauses and subclauses in this bill so I want to

ensure that people understand where we are going here. On Page 4 starting with

the amendments to the Hydro Corporation Act, Clause 1, where now the

Lieutenant-Governor in Council determines, we will now say that the shareholders

will determine by special resolution. The shareholders are us, of course, we are

the only shareholder, the government is the only shareholder, but it would not

require reference to Cabinet, it would be the shareholder. Right now the

Minister of Energy reports to me.

MS VERGE: And the Minister of Finance.

DR. GIBBONS: And the Minister of Finance, of course,

holds the shares, but reports to me in terms of responsibility, so it would not

have to go through the Lieutenant-Governor in Council to the Cabinet. The

shareholders would sit - in this particular case, we are dealing with directors

fees - so Clause 1, deals with directors fees, the shareholders will determine.

Clause 2, deals with the appointment of the chief executive

officer and there shall be a chief executive officer appointed. Now the

shareholders, by special resolution, will approve the appointment of the chief

executive officer.

AN HON. MEMBER: Who are the shareholders?

DR. GIBBONS: The shareholders are ourselves.

Clause 3, is regarding the contract for the chief executive

officer and again Clause 3 has the contract being approved by, "the shareholders

by special resolution."

In Clause 4, presently

Section 10 of the Hydro Act requires

that Cabinet approve by-laws and we are saying that is not really necessary. The

Board of Directors can approve its own by-laws relative to holding meetings in

such internal matters in Hydro. So that is the way we are changing this. "The

board may make by-laws" in the future and that is dealt with in Clause 4.

Clause 5,

Section 14 of the Hydro Act is repealed.

Section 14

of the Hydro Act gives Hydro an exclusive franchise to water rights on the

Island of Newfoundland. We are repealing this so that in future, if Hydro wants

Hydro rights it must come to government and apply just like anyone else would

apply.

Clause 6 of the act, "Paragraph 16(1)(

h) of the Act is

repealed and the following substituted: (

h) deposit money or securities with a

bank, trustee, trust company, or other depository in Canada or outside of

Canada;". This is an internal matter and no Cabinet approval is required and the

Hydro board will deal with it.

Clause 7, Sections 17, 18, 19, 20 and 21 of the Hydro Act are

repealed and the following substituted: starting with 17(1). Now 17, 18, 19 and

20 are primarily dealing with water rights. As I said, relative to Clause 5,

Hydro will have no special provision and will be treated like any other

corporation that would apply for water.

Section 21 though of the Hydro Act is

the

section where Hydro was exempted from Public Utility Board regulation. By

repealing this now, Hydro will be subject to full regulation by the Public

Utility Board.

As we go down now to the new sections, seventeen onwards,

Section 17(1) of the Hydro Act. 17(1)(

a) and (

b) basically preserve existing

policy relative to the accounting methods and the rate stabilization plan that

exists today. 17(1)(

a) deals with the rate setting mechanism for accounting

methods, depreciation and amortization and 17(1)(

b) deals with the rate

stabilization plans. So there is a carry over of these matters until the Public

Utilities Board has a rate hearing and makes any changes. So otherwise, until

the next rate hearing the existing situation will be maintained.

Section 17(2), again, is maintaining the status quo relative

to the rate base of a property and assets of the corporation will be maintained

at their net book value, as they are today and stay that way for rate setting

purposes.

Section 17(3) "For all purposes of the Public Utilities Act,

the expenses chargeable to operating account by the corporation shall

include..." a number of items. On page 6 of the bill we have sub-item (a),

related to a pension plan. Sub-item (b), related to foreign exchange losses,

dealing specifically with a Swiss-Frank loan and a Japanese Yen loan. Subsection

(

c) deals with four contracts that are in existence for non-utility generators

that are due to start in a year or so.

In the case of pension liabilities and the pension clause,

subsection (

d) assigns fifteen years for the amortization event any liabilities

that are outstanding to be taken care of and charged to the operating account.

Subsection (

e) deals with the foreign exchange losses and is specifying that the

foreign exchange losses be taken care of over a forty-year period so that there

would not be a major impact on the rate payer as we take care of these losses.

Section 17(4) is more for technical and legal clarity to put

the matters beyond doubt that the items I've just talked about, relative to the

pension plan and the foreign exchange losses and the existing contracts, should

be provided for and should be considered to be reasonable and prudent for the

purpose of the Public Utilities Act.

Section 17(5) is a transition clause related to rates and

tolls and charges and mainly is saying it provides for the status quo until the

next rate hearing. Likewise,

Section 17(6) is a timing matter related to the

capital budget. Presently we approve the capital budget annually. I have this

year approved the capital budget for 1996. In the future the capital budget will

have to be approved by the Public Utilities Board, and that will start with the

budget for 1997.

Section 17(7) is also a transition clause regarding contracts

for the supply of electricity and liabilities according thereto.

Section 17(8)

is stating that where there is a conflict between

Section 16 of this act as now

provided and the Public Utilities Act, the provision of this act shall prevail.

The new

section 18.

Section 18(1) deals primarily with

definitions of the Government Money Purchase Pension Plan which is for part-time

employees, the Hydro Money Purchase Plan, the Hydro Pension Plan, and onwards.

Section 18(1) deals with

definitions.

Section 18(2) is more significant. It is under

section 18(2)

that the corporation may, with the approval of the Minister of Finance and

Treasury Board, establish a Hydro Pension Plan in part (

a) or a Hydro Money

Purchase Plan in part (b). That is

section 18(2) allowing the setting up, with

permission, of a Hydro pension plan system.

Section 18(3) specifies that the Minister of Finance and

Treasury Board may enter into an agreement with Hydro or with the corporation

regarding the transfer and assumption of assets and liabilities of the pension

plan. Likewise

section 18(3)(

b) deals with transfer relative to the Money

Purchase Plan. Sections 18(4) to 18(8) are more related to the mechanics of how

to set up the pension plan for Hydro.

On page 10 of the bill the new

section 19(1) specifies that

the Labour Relations Act will apply to the corporation. As I said earlier,

presently the public service collective bargaining act applies. In future it

will be the Labour Relations Act.

Sections 19(2) and 19(3) are again transitional clauses.

Section 19(2) confirms that the present collective bargaining agreements are

assumed as if made under the Labour Relations Act, and

section 19(3) assumes

that the present unions are certified for the purpose of the Labour Relations

Act. So it preserves the status quo in both cases.

Section 19(4) mentions that

section 11.1 of the Public Sector

Restraint Act, 1992 applies to the corporation and its employees. This is to

ensure that there could be no retroactive cancellation of restraint measures as

they applied back at that time to all public servants. This is a go forward

bill.

Section 19(5) is recognizing that today Hydro has an agreement with its

union relative to some essential employees. In the future this will be

continued, but the status quo will be maintained until changed by the Public

Utilities Board. In the future the Public Utilities Board will have governance

over Hydro relative to essential employees.

Clause 8 repeals two unnecessary matters.

Section 22 deals

with the public service collective bargaining act, and that will no longer apply

to Hydro.

Section 23 applies to a requirement relative to the Golden Eagle

Refinery. Of course, the Golden Eagle Refinery no longer exists; it has been

closed for many years, so we are repealing that particular section.

clause 19 states that subsection 25.(1) of the act is

repealed and the following substituted relative to share capital, so that again

the shareholder will approved share capital,

whereas in the past it was the

Cabinet and the Lieutenant-Governor in Council.

Clause 10 states that

section 26 of the act is repealed, and

section 26 of the Hydro Act refers to a contingent water franchise in Labrador,

so even Labrador Hydro has to come to the government and apply through the

normal process for water rights in Labrador.

Clause 11 deals with the borrowing program, and we are

repealing subsection 40(2) relative to the borrowing program and approval

thereof.

Clause 12.41(3) of the act is repealed, and the following

substituted relative to the appointment of auditors. In the future, the Board of

Directors of the corporation shall appoint its auditors.

In clause 13 we are again dealing with matters that are

primarily technical and legal relative to the mechanics of the operation of a

utility. Subsections 44(3), 44(4), 44(6), and sections 45, 46, 47, 48, 49 and 50

of the act are repealed. In the future, all of this will be covered by the

Public Utilities Board. The normal principles of the Public Utilities Act apply,

and Hydro will be treated in the future the same as Newfoundland Power is

treated today in the normal operation of a utility. For example, subsection

44(3) deals with frequency of electricity; 44(4) deals with inspection of

wiring, and 44(6) deals with the terminating of service for reasons, so in the

future the PUB will regulate that, and Hydro will not have any special need for

these particular sections.

Clause 14 is transitional. "Section 47 and subsection 48(2)

of the act shall continue to apply, notwithstanding their repeal, to and for the

benefit of the corporation in respect of a cause of action, claim or liability

against the corporation existing on the date of proclamation of this section."

To our knowledge, today there are no such claims, but we have to leave this as

transitional until the act is proclaimed.

Now we go on to some amendments to the Electrical Power

Control Act, 1994. As I said earlier, Clause 15 deals with the

section of the

Electrical Power Control Act related to PUITTA, and since PUITTA has now been

cancelled there are no rebates to consider so we no longer need this particular

section, paragraph 3(

e) of the Electrical Power Control Act.

Clause 16, I mentioned earlier in the Explanatory Notes,

deals with giving direction to the Public Utilities Board, so we have included a

clause there, "5.1. Notwithstanding

section 3 and

section 4 of the Act and the

provisions of the Public Utilities Act, the Lieutenant-Governor in Council may

direct the Public Utilities Board with respect to the policies and procedures to

be implemented by the board with respect to the determination of rates of public

utilities..." and some specific examples are given in the bill.

Clause 17 is repealed. Clause 17 deals with

section 23(7) of

the act which is repealed and the following substituted. Now this deals with the

governance, the corporate ownership part and governance part, of the Electrical

Power Control Act. I would want you to note that in subsection (7) everything

after the word `act' - "Notwithstanding sections 99 to 102 of the Public

Utilities Act..." everything after that is already present in the Electrical

Power Control Act. What we are doing is adding that clause "Notwithstanding

sections 99 to 102 of the Public Utilities Act...", but we are not proclaiming,

or have no plans to proclaim, the corporate ownership

section because that is

not required at this time.

Clause 18 and clause 19 refer to sections that are being

repealed, and these relate to the ability to make regulations for the public

utilities income tax transfer program. As I said earlier, that program has been

Clause 20 deals with the Crown Lands Act. Subsection 50(4) of

the Crown Lands Act is repealed. That is because previously the Crown Lands Act

was subject to the Hydro Act and in the future there is no need of that. Hydro

is now going to be subject to Crown Lands matters just as any other corporation.

Clause 21, deals with the Freedom Of Information Act; Hydro

operating in this way fully regulated by the Public Utilities Board, will be

exempt from the Freedom Of Information Act. Clause 22, deals with the Provincial

Preference Act and Clause 23, deals with the Public Tender Act, likewise, Hydro

operating, regulated fully by the Public Utilities Board will be exempt from

both the Provincial Preference Act and the Public Tender Act. CF(L)Co today is

exempt from both those acts, and clause 4, just states that this act or a

section or subsection of it comes into force on a date to be proclaimed by the

Lieutenant-Governor in Council in the future.

Mr. Speaker, that concludes my comments in introducing Bill

35, and I am pleased to move second reading.

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

MS VERGE: Thank you, Mr. Speaker.

I say, shame on the government. Shame on the government for

trying to sneak through the House of Assembly just before Christmas hoping

nobody is watching a major piece of legislation which will have significant

ramifications.

Mr. Speaker, this bill indeed will have the effect of

distancing Hydro from the government. It will have the effect essentially, of

commercializing Hydro, of making what is now a Crown Corporation, like a

privately-owned utility. Mr. Speaker, we have to ask: Is this a measure designed

to set the stage for yet another attempt at privatizing Hydro, because that's

what it looks like, Mr. Speaker.

No. 2, Mr. Speaker, this bill contains several measures which

will ensure higher rates for consumers, higher light bills for households and

businesses in this Province. Mr. Speaker, as long as the government continues to

own Hydro, the cumulative effect of the measures will be to have camouflaged

increased taxation, to higher electricity rates and ongoing dividend grabs from

Hydro by the government. The government started that practice in March of this

year by taking $20 million in dividends from Hydro and then continued the

practice in a mini-Budget last week by taking another $2.9 million from Hydro in

dividends.

Mr. Speaker, this measure contains provisions which will have

the effect of allowing more BRINCOs by repealing a provision of the Hydro Act

giving Hydro a monopoly over the larger hydro sites on the Island of

Newfoundland. The door will be open to private developers to get rights to the

larger undeveloped sites remaining on the Island, and then, Mr. Speaker, the

repeal of

section 26 of the Hydro Act, relating to franchises and rights over

Labrador waterpower is extremely worrisome. The minister glossed over that

provision.

Now, Mr. Speaker, the Smallwood government gave away the

rights to the Churchill River to BRINCO. Newfoundlanders and Labradorians are

haunted by the knowledge that the Smallwood government entered into a disastrous

arrangement for the development of the Upper Churchill giving away all the

Churchill River water rights in the process. In the mid-1970s, the Moores

Administration bought BRINCO's shares in the Upper Churchill paying some $120 or

$130 million for them and remember, those were mid-1970s dollars and then,

paying another $30 million for the water rights to the Lower Churchill. Mr.

Speaker, the Smallwood government gave away the water rights to the Lower

Churchill. Twenty years ago a PC administration paid $30 million to get them

back. Now is this Liberal administration, through a legislative change that they

are trying to sneak through in late 1995, preparing to give away water rights in

Labrador once again to allow more BRINCO's?

Mr. Speaker, these provisions will have major consequences.

The extent of the ramifications will remain to be seen but, Mr. Speaker, these

provisions cannot be allowed to proceed through this House of Assembly before

Christmas. These changes deserve a full and public hearing. Now the minister and

his colleagues learned that Newfoundlanders and Labradorians are extremely

protective of Hydro. People in this Province want our water rights to be

retained by the government and developed for the benefit of the residents of

this Province. That is why thousands of citizens participated in the outcry over

the Wells Governments attempt to privatize Hydro a year and a half ago. Mr.

Speaker, those people deserve to know about these changes. Those people are

entitled to an opportunity to have their say about these proposed amendments.

Mr. Speaker, the minister kept his head down as he read from notes, presumably

hoping people would not notice what he was saying. Mr. Speaker, this is an

extremely unfair and insidious effort to make major legal change without the

people of the Province knowing about it. Remember it is the people's water

rights that are up for grabs and it is the people who are going to have to pay

electricity bills in this Province for ever more.

Mr. Speaker, I have outlined the four major provisions of

this bill that I have seen. I only got this bill on Thursday afternoon. It was

only Thursday afternoon that the government printed and distributed the bill. We

have not had nearly enough time to study and analyze the bill. The citizens of

the Province, outside this Chamber, have not had any opportunity to find out

what is contained in these provisions. Mr. Speaker, on the surface a move to

make Newfoundland and Labrador Hydro like a private utility - question, is the

real agenda to privatize Newfoundland and Labrador Hydro to achieve what the

government could not get through in 1994? That is the big question.

Second, is it designed to increase electricity rates to make

electricity consumers in this Province pay substantially more for a necessary

commodity? Is it a move, Mr. Speaker, for the government, as long as the

government retains ownership of Hydro, to get more money from the citizens of

the Province through a disguised tax, through allowing Hydro to make higher

profits and then taking large amounts of dividends into government coffers to

meet current account demands, as the government started doing this year?

Finally, Mr. Speaker, what is the motivation for the provision that will open up

water rights on the island, as well as in Labrador, the vast undeveloped

territory of Labrador, to private development, to subject our Province to more

disastrous deals like BRINCO, to allow the few to profit at the expense of the

many?

Mr. Speaker, I would like to go through the bill from the

beginning and make a number of comments. The first

section of the bill, amending

Hydro Corporation Act, has a provision which the minister failed to explain even

though some of us asked him questions across the Chamber as he was on his feet.

The sections substitute the Cabinet for shareholders. Now what is the rationale

for that? Right now, as I understand it, the Hydro shares are held on behalf of

the people of the Province and the government of the Province by one Cabinet

minister, namely the minister of finance. That is the reason for the government

moving to change the legislation to use the word shareholders - plural - and

provide that the shareholders - plural - have certain final decision making

power instead of the Cabinet? Does that have to do with the government's

commercialization-privatization scheme? What possibly is the explanation for

that change? It is a technical legal change; there must be a technical legal

explanation for it.

Mr. Speaker, one of the next provisions has to do with

deleting

section 14 of the Hydro act.

Section 14 of the Hydro act gives Hydro

the sole right to develop hydro sites on the Island of Newfoundland. The only

exception, as I understand it, has to do with small sites, sites capable of

generating only up to 15 megawatts. This government has chosen to allow private

developers, such as Genergy and Bell Island Power, to embark upon development of

smaller sites such as Northwest River. That is going to involve higher cost to

rate payers in the long term.

What is the public policy purpose of opening up the larger

sites on the Island to private development? Isn't it clearly in the public

interest to restrict development of the larger sites - in fact, I would argue

all sites - to the publicly owned utility? What is going on here? How can the

government think that it can make this major change without involving the

citizens of the Province in a public discussion?

The purpose of having a publicly owned utility develop hydro

sites and have a monopoly over their development is to see to it that the

benefit is spread among all the citizens of the Province, as rate payers and as

tax payers. Through this change a few private developers will benefit greatly

and handsomely, while the majority of us will be paying higher electricity

rates.

Then we proceed to some accounting changes where

section 17

is amended. These changes on the surface may not make sense to the lay person.

But I ask the minister: Don't they open the door to higher electricity rates?

Aren't they a further contributor to higher electricity rates? There are changes

relating to the method of depreciation of Hydro assets. I ask the minister:

Don't these changes have the affect of depreciating more on the front end, and

therefore loading more cost onto rate payers in the short term rather than the

medium or longer term? What is the purpose of doing that? Does it have to do

with the hidden agenda of privatizing Hydro, of making Hydro's books more

attractive to private developers, of eliminating the distinction between rates

that a publicly owned Hydro would be charging versus what a privately owned

Hydro would have to charge?

Then we have the provisions that transfer the Hydro pension

plan from the public service pension plan to a new Hydro pension plan. The

minister should tell us about the assets in that plan now, accumulated through

contributions paid by Hydro employees, versus the liabilities. What is the

difference between the assets and the liabilities, and don't the provisions

authorizing the differential to be amortized inevitably leads once again to

higher electricity rates. Overall, is not the Province simply transferring part

of its unfunded pension liability to Hydro and allowing Hydro to cover the

shortfall by jacking up rates? And what are the amounts, I ask the minister?

What is the differential and how much would that work out to according to the

amortization scheme set out in the bill? How much would that come to in annual

rate increases over the next several years?

Mr. Speaker, next we come to the repeal of

Section 26 of the

Hydro Act. That is a provision that I have grave concerns about and I would like

to dwell on it.

Section 26 of the Hydro Act says that the Cabinet may, for the

considered desirable subject to the rights of a person then existing - the

Cabinet may vest in the corporation, in other words Hydro, a subsidiary of Hydro

or another person absolutely or for a prescribed term, all or part of an

exclusive right or franchise to develop and generate power in Labrador, and sell

the power in the first instance for consumption by way of domestic, industrial,

or other use, or for resale. Then it goes on in Subsection 2 to say: a right or

franchise conferred on a person under Subsection 1 shall be vested in him or her

by the deed, lease, license, permit, or other instrument that the Minister of

Justice determines to be appropriate for the purpose, and every instrument shall

be issued under the Great Seal of the Province.

Finally, Subsection 3 says: a person in whom a right or

franchise is vested under Subsection 1, has, may exercise, and shall enjoy that

right or franchise for the period prescribed and to the extent provided in the

instrument issued in accordance with Subsection 2.

Mr. Speaker, the effect of the bill now before us is to

repeal

section 26, everything I just read out. What does that mean, I ask the

minister? What effect will that have on the Lower Churchill? What will that mean

for the Lower Churchill Development Corporation's franchise over the Lower

Churchill? Will that open the door to another BRINCO, after twenty years ago the

Moores Administration paid $30 million, in mid-1970s dollars, to buy back the

water rights the Smallwood Government gave away back in the 1960s? Is this a

measure that is going to open the door for another BRINCO disaster, I ask the

Minister of Works, Services and Transportation, and what about all the other

undeveloped hydroelectric sites in Labrador? How is this provision going to

affect them? What is the meaning of this section? Where did the idea for it come

from? Has the minister subjected it to legal

interpretations?

Now, we all remember the disastrous Upper Churchill contract

with Hydro-Quebec.

DR. GIBBONS: If I may, Mr. Speaker?

MS VERGE: Yes, I will yield for the Minister to comment.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Thank you, Mr. Speaker.

Just for clarification, Mr. Speaker.

Section 26, as the hon.

member read, says that Cabinet `may', not shall. The Labrador

section is only a

contingent franchise. It is not a shell, it is not like the Newfoundland one.

Presently, relative to the Lower Churchill Development Corporation there is an

annual assignment of that lease. Every year on November 24th, I sign the lease

for the Lower Churchill to the Hydro group of companies, so the Labrador one

really has very little meaning or significance. It was only a contingent

franchise as said, and it is only something that Cabinet may do, so nothing has

changed, really.

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

MS VERGE: Mr. Speaker, the minister really isn't making

sense. The bill that he introduced has the effect of repealing

section 26. Why?

I ask the minister.

DR. GIBBONS: They can still come to us and apply for a

certain river and and we can do the same as we have done with the Lower

Churchill. (Inaudible).

MS VERGE: What protection do the people of the Province

have, I ask the minister, of our interest in undeveloped power sites in

Labrador? What safeguard is there against an incompetent or a corrupt government

giving away or giving a sweetheart deal over rights to develop the Lower

Churchill or other undeveloped water rights in Labrador to BRINCOs or their ilk?

I will yield for the minister to make his comments.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, what the hon. member is saying

frankly exists today, because a government of the day may do what a government

wishes relative to water rights in Labrador under the present situation.

Section

26 is only giving Hydro a contingent franchise. It is not like the franchise

that they have for the Island - water rights on the Island of Newfoundland -

where they have first priority above all others. They have it in that and we are

withdrawing it all to the government so it will be under normal regulations of

government, under the Crown Lands Act and the Water Resources Act, that we would

assign the rights to anybody.

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

MS VERGE: Mr. Speaker, I am afraid I cannot accept the

minister's explanation.

I come back to water rights on the Island. He did not explain

the agenda associated with opening up all remaining hydro sites on the Island to

private development, of cancelling Hydro's monopoly over the more substantial

remaining undeveloped hydro sites on the Island. What is the excuse for that?

Has the government entered into negotiations with private developers for the

remaining undeveloped sites on the Island? Why would the government want to do

away with Hydro's monopoly on undeveloped sites on the Island? Why wouldn't the

government want to maintain the advantage Hydro has, and to allow Hydro to use

the expertise it has acquired to develop any remaining Hydro sites, whether on

the Island or in Labrador, for the benefit of all citizens of the Province, and

the Government of the Province, instead of opening the door for a few developers

to cream off the substantial amount of profits that can be generated through

developing remaining hydro sites in our Province? If the minister wants to

comment on that, I will yield again.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, in the future when there is a

need for power to be added to the grid on the Island, when there is a need for

power, Hydro, completely, totally regulated by the Public Utilities Board, will

have to determine how to best get the lowest cost possible for the future

sources of supply, and that is specified in the Electrical Power Control Act;

you have to get the lowest cost possible. One of the options in that regard,

because it will be overseen by the Public Utilities Board, is that anyone will

have an opportunity to put forward proposals to give the lowest cost supply -

absolutely the lowest cost supply - for the ratepayer, and the Public Utilities

Board will then rule on that as to who can put forward the lowest cost supply.

If that is Hydro bidding and saying, `We can provide it from a certain source,'

or if it is Newfoundland Power saying, `We can provide it from a certain

source', if it is a private company that already has existing rights, and we

have companies in this Province that have existing water rights, if they come

forward and say, `We can provide the lowest cost power that is going to be the

next addition to the grid,' that is the one that we should be selecting, the

lowest cost option, and if it is Hydro we will sign the lease for water rights

for Hydro. If it is somebody else that does not have water rights, then we can

sign a lease for them, but we have to make sure that the supply of electricity

that goes into the grid on this Island has to be the lowest cost supply to keep

the rates as low as possible. It need not be Hydro; it may be somebody else.

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

MS VERGE: Mr. Speaker, that is nonsense. If the minister

and his Administration were seriously interested in keeping down Hydro rates

they would not have put this piece of legislation before us. This legislation is

riddled with provisions that are going to force up electricity rates. It is an

insidious change that is going to remove Hydro's advantage and make Hydro like a

private utility.

That brings me to the next

section of the bill which is the

new provision of the infamous Bill No. 2, the Electrical Power Control Act,

1994. Those provisions authorized the Cabinet to direct the Public Utilities

Board about the way it sets rates for Hydro and also privately-owned utilities.

That opens the door for the Cabinet ordering the Public Utilities Board to

impose a rate of return basis for setting Hydro's rates, and thereby doing away

with the main cost differential between a publicly-owned utility and a

privately-owned utility.

During the debate of 1993 and 1994 when the government got

hammered for trying to sell the people's Hydro, it was clearly shown that

privatization would significantly add to electricity rates in this Province,

that privatization would enrich the few at the expense of all the electricity

consumers in the Province. This change in clause 16 which inserts a new

section

5.1 into the Electrical Power Control Act is one of the most dangerous

provisions in this whole bill.

It says: "`Notwithstanding

section 3 and

section 4 of the Act

and the provisions of the Public Utilities Act, the Lieutenant-Governor in

Council'" - in other words, the Cabinet - "`may' direct the public utilities

board with respect to the policies and procedures to be implemented by the board

with respect to the determination of rates of public utilities" - plural -

"under the Public Utilities Act and, without limiting the generality of the

foregoing, including direction on the setting and subsidization of rural rates,

the fixing of a debt-equity ratio for Hydro and the phase-in, over a period of

years from the date of coming into force of this section, of a rate of return

determination for Hydro and the board `shall' implement those policies and

procedures."

Now, Mr. Speaker, the minister glossed over those changes.

The minister, if he is honest, will look up and admit that these changes are

going to cancel the cost advantage Hydro has always had as a publicly-owned

corporation. It is going to set up Hydro as a cash cow for the government, as

long as the government continues to own Hydro, and then it is going to do away

with the price differential that was one of the main arguments against

privatizing Hydro.

AN HON. MEMBER: You are totally misreading that.

MS VERGE: I am not totally misreading it. Maybe the

minister himself doesn't understand it. Will the minister care to explain the

difference between a rate of return basis for setting Hydro rates and the basis

that is used now? Will the minister not admit that a rate of return basis, which

is now used for private utilities such as Light and Power, involves a rate of

return about twice as high as what Hydro has been getting from the Public

Utilities Board? Will the minister explain why he and his colleagues want to

make this change?

MR. SPEAKER: The hon. the Minister of Natural Resources.

MR. HARRIS: A point of order, Mr. Speaker.

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

a point of order.

MR. HARRIS: Mr. Speaker, I understand this is second

reading debate. I don't think the minister should be speaking four or five times

without unanimous consent, which I do not offer.

MR. SPEAKER: To that point of order, it is my

understanding that the Leader of the Opposition has sixty minutes in which to

engage in this debate, and she has relinquished her portion of the time for the

minister to reply to her questions. So there is no point of order.

The hon. the Leader of the Opposition.

MS VERGE: Thank you, Mr. Speaker, that is correct. I

yielded to the minister to try to force out more information about the true

meaning of this bill. The minister, in his short remarks, glossed over some of

the most dangerous and insidious provisions of the bill. I will now yield while

I hope he will begin to get into an explanation of the ramifications of the new

section 5.1 for the Electrical Power Control Act.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, it is not this

section but a

different

section that is going to make Hydro subject to the Public Utilities

Board regulations and subject to rate of return regulations. That's elsewhere in

this bill, and this particular clause, clause 16, with the subsection 5.1 is

basically just giving the government authority to give direction on any matter

it concerns. It is not in this

section that we are saying you will go to a rate

of return regulation, that is elsewhere in this bill, but if we, as a

government, or any future government might wish to give direction on a

particular issue, then this clause allows it to do it.

For example, you mentioned, the phase-in over a period of

years of going to rate of return regulation. We are saying: if, instead of going

instantly to rate of return regulation, you want a phase-in over a five-year

period or whatever number of years it would be, then you are going to have a

modifying effect, flattening effect on any rate increase that would be effected.

If the government would want to give some direction on fixing

the debt-equity ratio, that, too, has an effect of how far you can go in terms

of the rate of return regulation and how high your rates can be. So, we are

specifying that you can fix the debt-equity ratio in terms of giving direction

on that.

If you want to do something as a government relative to what

the rates should be in the rural diesel areas, presently, there is a policy that

the first 700 kilowatt hours per month will be at the interconnected rate.

Recently, we saw a public report from the Public Utilities Board which said:

Throw that out, throw out that long-standing policy and charge them more. What

we are saying in this clause, is that, if government wishes to give direction on

that, we could give direction saying: you shall maintain a lifeline rate of 700

kilowatt hours or some particular number, so that's all that this clause is

doing, allowing the government, any government, to give direction on any aspect

relative to the regulation of Hydro. Give direction on any aspect - but the rate

of return regulation is what it is going to be because of other aspects of this

act.

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

MS VERGE: Thank you, Mr. Speaker.

It is the rate of return basis for setting Hydro's rates that

this amendment has the effect of establishing that is going to significantly add

to electricity prices.

Now, the minister, through his convoluted explanation, did

indicate that the rate of return basis for setting rates will lead to higher

rates; what he did not acknowledge is the extent of the necessary rate increase

from what it would be if we leave the status quo, if we leave the interest

margin basis for calculating rates.

Now, I would suggest to the minister, that the rate of return

basis for setting rates, which is what is used for private utilities, will lead

to a substantial increase, perhaps in the order of $20 million a year. If the

minister has other figures, then he should make them public. He needs to lay all

this out on paper for the public to examine carefully and not just try to sneak

it through the House of Assembly without a clear or adequate explanation, in the

last few days before Christmas, hoping that the news media and the public are

not watching.

Mr. Speaker, I maintain that the switch to the rate of return

basis for setting rates is going to have the effect of substantially increasing

rates, and of doing away with most of the price differential between a

publicly-owned Hydro and a privately-owned Hydro. In the short term, while

government continues to own Hydro, it will set up Hydro to earn more profit that

the government can raid through taking more and more dividends as the government

started doing this year, $20 million in March, $2.9 million last week. In the

longer term, perhaps it will be used to cancel one of the most powerful reasons

for wide-spread public objection to privatizing Hydro namely, higher rates, Mr.

Speaker.

DR. GIBBONS: (Inaudible).

MS VERGE: And the debt equity ratio under this new rgime

can be essentially dictated to the Public Utilities Board by the Cabinet and

then the Public Utilities Board will have no choice but to implement the

Cabinet's directive.

DR. GIBBONS: (Inaudible).

MS VERGE: But at any Cabinet meeting, any Thursday

morning behind closed doors, the Cabinet can make a different decision and

impose it on the Public Utilities Board.

DR. GIBBONS: That would become public, it would not be

behind closed doors.

MS VERGE: Mr. Speaker, I come back to one of my first

points: This is far too important a piece of legislation, with far-reaching

consequences, to have go through the House of Assembly without putting it out to

the public through hearings. I emphatically call upon the minister to refer this

bill to a House committee for public deliberations over the winter. What

possible reason could the minister and his colleagues have for rushing this

through the House of Assembly in the few days leading up to Christmas? This was

made available to members of the House of Assembly only last Thursday afternoon.

None of us, on this side of the House, have had an ample time or opportunity

yet, to analyze it and to understand clearly all of the consequences of passing

it. We have seen some negative provisions, which I have outlined, and on that

basis, I would express strenuous objection to the principle of the bill. There

may be more negative contents that we have not yet had an opportunity to

decipher.

Now, Mr. Speaker, regardless of that, it is not fair to the

citizens of Newfoundland and Labrador to have this measure proceed before

Christmas. People showed clearly in late 1993 and 1994 how fervently they care

about Newfoundland and Labrador Hydro. Hydro is their corporation. It is a

corporation owned by all the people, with the Minister of Finance holding the

shares in trust for the citizens of the Province, and it has to be maintained

and used for the ongoing benefit of the citizens of this Province, the people

now in the Province and generations to come.

Mr. Speaker, Hydro gets most of its power from water. Hydro

now owns and controls water rights on the Island and in the vast territory of

Labrador. Mr. Speaker, we have to oppose, in the most strenuous way, any legal

change that is going to give up our ownership and control of those water rights

and allow for a more disadvantageous deal like the infamous BRINCO deal. Mr.

Speaker, we cannot allow a Liberal Administration in the mid-1990s to repeat the

colossal blunders in developing the Upper Churchill made by the Smallwood

Liberal Administration in the mid-1960s.

Mr. Speaker, if this bill sees the light of day, if it is put

out to the public and allowed to be carefully and thoughtfully analyzed, I

believe the minister and his colleagues will hear a barrage of opposition and

criticism, the same as they got in late 1993 and 1994 when they made an overt

attempt to sell Hydro. Mr. Speaker, I believe once again, Newfoundlanders and

Labradorians will plead with this government to hold on to one of our most

valuable and productive assets, an asset that will continue to generate profits

and benefits for the people of this Province in perpetuity as long as the water

flows, and the water will flow forevermore.

Mr. Speaker, if the government had gotten their way and sold

off Hydro back in 1994, what would they have done to balance their current

account this year? They were looking at selling it off in 1994 for something

like $300 million. Well, by now they would have had that $300 million frittered

away. This year alone, they got $10 million approximately from Hydro on a loan

guarantee fee. They took $20 million in March in the way of dividends and last

week they took another $2.9 million. Mr. Speaker, we still own Hydro, and

through Hydro, we own and control all the water rights in the Province.

Mr. Speaker, the minister is smugly saying that in future

under this measure it would be done through government. Well, this measure

distances the government from Hydro. This measure overall makes Hydro more

independent. It commercializes Hydro. It sets up Hydro for sale in the future.

It dresses up Hydro to have the same kind of rate of return as a privately-owned

utility. It sets up Hydro to pass on higher rates to the eventual consumers to

generate higher profits which government will take in the short-term, and which

would be available to a private developer in the event of a sale.

Mr. Speaker, the people of the Province spoke loud and clear

in late 1993 and early 1994 when government was trying to privatize Hydro. The

people of the Province want to keep Hydro, want Hydro protected and developed

for the overall public good, and the people of the Province do not want any

changes in the law that are inconsistent with that fundamental aim. The people

of the Province do not want the water rights on the Island or Labrador opened up

to private development. The people want the water rights held by a

publicly-owned corporation, controlled by the government on their behalf for

their benefit. The people of the Province do not want to pay higher taxes under

the guise of higher electricity rates, higher taxes dictated just as surely by

the Cabinet as if the Cabinet put sales tax on electricity once again.

Mr. Speaker, if government wanted to get more revenue from

electricity they could do it through the front door by imposing a sales tax on

electricity. If they had wanted to get $20 million from electricity consumers

this year they could have put a 5 per cent retail sales tax rate on electricity

and they would have gotten approximately $2