May 2,

HOUSE OF ASSEMBLY PROCEEDINGS

Vol. XLII No.

The House met at 2:00 p.m.

MR. SPEAKER (Dicks): Order, please!

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, before we get into Ministerial

Statements, if my colleagues have any, I would ask if the House could pause for

a moment to take note of the death on the weekend of a former member of this

House, Dr. Clifton Joy. Dr. Joy sat as the member for the old dual seat of

Harbour Main between 1962 and 1966. My friend, the Member for Twillingate served

with him in the House, and I guess, is the only person here who did. I came to

know him well over that period, because I worked with the Premier as an

executive assistant at that time.

Dr. Joy was a paediatrician of commanding stature who

performed many public services to the people of this Province, both as a doctor

and as a public official, but I would suggest that the event for which he would

most like to be remembered, an event for which we should honour him today, was

his involvement in the development of the Janeway Hospital here in St. John's. I

think it is fair to say that there would not have been a Janeway Hospital had it

not been for Clift Joy and for the lobbying he did and the powers of persuasion

he exercised on the Premier and the Cabinet of the day.

He died, I understand, quite unexpectedly, and the tragedy is

all the greater because this is the second death to have struck that family this

family this week. His daughter-in-law, Mrs Christiane Joy whose husband is a

lawyer here in town died earlier in the week.

I would ask, Sir, if the House could ask Your Honour to send

a letter in the usual form, to Mrs. Joy on the death of her husband, to say that

for his having served in this House, the people of Newfoundland and Labrador are

the better because of his time with us.

Thank you, Sir.

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

MR. SIMMS: Mr. Speaker, we wish to join with the

Government House Leader, and I am sure the Leader of the New Democratic Party,

who I understand knew Dr. Joy very well, if I am not mistaken. We would like to

be associated with the remarks of the Government House Leader and would endorse

Your Honour writing a message of condolence to the family.

I didn't have the privilege of knowing Dr. Joy, but I have

certainly heard of him. I heard about some members of his family. Debbie, I

believe, was a daughter in Toronto who is an actress, and certainly a lot of

people would be familiar with Robert Joy, who I believe is his son, the

well-known Newfoundland - or international actor now, I guess.

Mr. Speaker, we would like to be associated with those

remarks and ask that Your Honour send a message of condolence.

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

MR. HARRIS: Thank you, Mr. Speaker.

The Leader of the Opposition is correct. I knew Dr. Joy and

his family very well. In fact, I had the honour and sad duty of being a

pallbearer at his funeral today.

Dr. Joy has had a great love for politics mostly as a

spectator; his one foray into politics would be 1962 and 1966. He said it was

for the sole purpose of furthering his dream of having a paediatric hospital

here in the Province, and he pursued that, as the Government House Leader has

said, with persuasiveness on the Premier. He ended up in politics as a result of

that but he was successful at the time, and I have talked to other medical

people and paediatricians who were aware at the time that the struggle was very

difficult.

The medical establishment was against it; the Newfoundland

Medical Association was against it and he struggled on to fulfil this. He

recognized that in this Province in the study that had been done in 1959, the

number of children dying from gastro-intestinal disorders was astoundingly high,

and he saw the need for a special facility here in Newfoundland; and I am

delighted that the Government House Leader has recognized that it is indeed,

that without Dr. Joy, there would not be a Janeway Child Health Centre in the

Province. I was told by one of the senior paediatricians at that institution

that there is almost no city in the world of the size of St. John's or larger,

that has a hospital that can compare in terms of its facilities and its ability

to look after children, and that is a credit to Dr. Joy and is worthy to his

memory.

I know also, of course, his family, his sons and daughter and

wife, all of whom will greatly miss Dr. Joy, who had just started his

retirement. I join with all members in asking that the Speaker send the

condolences of the House of Assembly and of the people of the Province to Dr.

Joy's family.

MR. SPEAKER: The hon. the Member for La Poile.

MR. RAMSAY: Thank you, Mr. Speaker.

Mr. Speaker, the weekend also saw the passing of another

municipal politician which I wanted to have duly noted. Ed Sheaves, a former

mayor of Port aux Basques, passed away on Saturday and services will be held

tomorrow.

Ed was a long-time municipal politician, having served for

some thirty-two years in municipal politics. I think probably one of the longest

serving municipal politicians in the Province's history, Ed was a colourful

gentleman and a very eager and avid politician who supported his town and did so

well over the years. And I would also note that even in his weakest moment, Ed

was always the kind to even be caring for those around him in their grief at his

condition. He was even at that point in time, still caring for those around him

right up to the end.

I would ask, Mr. Speaker, that the appropriate

acknowledgement be sent from the House in consideration of his long-standing

service for his town and indeed for the Province. Thank you.

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

MR. SIMMS: Mr. Speaker, we also would like to be

associated with the remarks of the Member for LaPoile. Many of us on this side

of the House, including myself, in days gone by - particularly in the days when

we were in government - had occasion to interact with Ed Sheaves and members of

his council in those days. He has given long service to the town which he loved,

I think it was something like thirty years - I was speaking with the minister

earlier today - I believe thirty years or something is a long, long time to

serve in municipal politics where you don't get a lot of remuneration and you

get, sometimes, a lot of criticism.

I had occasion, as did many other members over here, of

knowing Ed Sheaves and we would like to be associated with the remarks of the

Member for LaPoile.

Indeed, I believe the funeral is tomorrow and the minister

has kindly offered to take somebody from our side with him to the funeral

tomorrow. I think the Member for Waterford - Kenmount, who no doubt knew Mr.

Sheaves in his capacity as a municipal councillor as well, will be representing

our party at that funeral. We would like to be associated with the remarks and

ask that condolences be sent to the family.

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

MR. HARRIS: Thank you, Mr. Speaker.

I would like to join in with the Leader of the Opposition and

the Member for LaPoile in recognizing the contribution of former Mayor Sheaves

to the municipal politics of the Province. It's a long period of contributing

and working in the hard field of municipal politics where there is a lot of hard

work and a lot of grief from people who need the services of municipal

politicians and who don't often get those with such dedication, considerable

influence and energy has been exercised by Mayor Sheaves in the Town of Port aux

Basques.

Statements by Ministers

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

DR. KITCHEN: Thank you, Mr. Speaker.

Mr. Speaker, today I table for hon. members the discussion

paper for Board Restructuring Northern Newfoundland and Labrador.

Mr. Speaker, hon. members will recall that Ms. Lucy Dobbin

presented to me in early 1993 her Report on the Reduction of Hospital Boards.

Her report was prepared after our 1992 Budget Speech when government indicated

that we would be exploring ways to reduce the number of hospital boards. Her

report indicated that there was considerable interest and discussion regarding

regional board structure in the northern region, which encompasses Labrador and

the northern part of the Northern Peninsula.

Based on her report, and the considerable public interest

being generated by residents of the northern region, government decided to have

a discussion paper prepared outlining several possible options or scenarios for

the governance and delivery of health services there.

This paper which I am tabling today sets forth five such

scenarios. For each scenario, data on population, utilization, services and

costs are provided. The paper then analyses each scenario in detail as well as

mentioning advantages and disadvantages. It makes no recommendations.

In the next several days I plan to distribute the document

widely to interested groups and individuals in the northern health care region,

requesting feedback. I then plan to meet in the northern region with all

interested parties to discuss the options further.

Once these meetings have concluded, I will be making my

recommendations to Cabinet about the appropriate structure to deliver health

care services to residents of northern Newfoundland and Labrador.

Thank you, Mr. Speaker.

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

MR. SULLIVAN: Thank you, Mr. Speaker.

We, on this side, have been saying for some time that what we

needed was a cost analysis, and in northern Newfoundland and Labrador we do have

five options now that range from a high to a low, I think, of $4 million

difference on costs, under the five proposals to restructure the boards in

northern Newfoundland and Labrador. So I applaud the minister on doing this for

northern Labrador and Newfoundland.

I asked him, and we said before, on all the other boards in

this Province there has been no financial basis or improved service basis by

which hospital boards should be restructured, and over the next few days I will

be going through and carefully looking at this report here that seems to be well

documented, and it is very positive. I wish we had something like this over the

past year to deal with all regions of the Province on a cost-efficient basis

here.

Hopefully the right decision will be made in terms of cost

and in terms of delivering service to the people of northern Newfoundland and

Labrador, and having input from the public here is a very positive step that is

severely lacking in all other regions of the Province.

Thank you, Mr. Speaker.

Oral Questions

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

MR. SIMMS: Mr. Speaker, I had hoped the Premier might be

here, but -

AN HON. MEMBER: He will be here, but (inaudible).

MR. SIMMS: Well, I will pursue it. I wanted to ask him

some questions, as leader of the government, related to the educational changes,

so I guess I will go to the Minister of Education.

Mr. Speaker, may I say at the outset that we, on this side of

the House, want to first of all compliment the government on what appears to be

a significant step towards getting both sides back to the table, and hopefully

to work on an agreement with the churches on organizational changes to the

denominational education system.

We hope that the government will be successful. Personally I

believe it is an important step that the government has taken and the details of

this, the modifications at least, were tabled here in the House.

I have to say to the minister that there are elements still

within that modification package that could easily cause negotiations to break

down - I'm sure he is aware of that - unless the government somehow indicates

publicly that it is in fact prepared to continue to be flexible in its position,

in addition to the modifications that he put forward. I would like to ask him

today: In resuming negotiations with the churches is the government prepared to

be more flexible - continue to be flexible - and is it prepared to make other

concessions if necessary in order to reach a reasonable agreement on educational

reforms with the churches?

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

MR. DECKER: Mr. Speaker, I don't know how the hon. member

expects us to be any more flexible than we've been. I mean, the royal commission

report came in almost two years ago. Next month will be two years. We have been

talking back and forth to every single stakeholder in the system. All I can say

to the churches through the hon. member is that we will continue to be just as

flexible as we've always been. I should also point out though that we are

getting a considerable amount of criticism from people in this Province who are

suggesting that we are being too flexible and that we should go ahead with these

reforms.

Mr. Speaker, flexibility is our second name over here. We are

known for our flexibility.

SOME HON. MEMBERS: Hear, hear!

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Supplementary, the hon. the Leader of the

Opposition.

MR. SIMMS: I apologize to the House, Mr. Speaker, for

bursting out in laughter but I think the reason is obvious. Even members

opposite had to laugh at that line.

I'm glad the minister asked: In what other way can we be

flexible? Because I happen to have a couple of suggestions and questions for

him. I think he is astute enough to understand and recognize that there are

still several issues on which, you know, in the modification that he tabled the

other day, on agreements that he is looking for - could easily flounder. He is

astute enough to recognize that. Never mind the funny answers. Try to give us

straight answers, because I think it will be helpful in the process.

For example, on the issue of the viability criteria, which

was item number three, I believe it is, which would determine which schools will

remain one denominational, or uni-denominational, as the government calls it.

Now, in last week's proposal you said: Viability criteria will be established by

government after further consultation.

Mr. Speaker, I'm sure the minister would know there is a

world of difference between being established by government after consultation

and being established by agreement between the two sides. I want to ask him: Is

the government prepared to negotiate specific viability criteria, and is he then

prepared to include that criteria as part of any formal document of agreement

that you might reach with the churches?

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

MR. DECKER: Mr. Speaker, the hon. member will know that

it is possible to make any school in the world or any school on the moon viable.

If we are prepared to put the extra resources in, the distance education and all

the modern technology, we can put a classroom on the moon for three children and

make it viable. That is possible. It costs an enormous amount of money.

When we deal with viability we will be looking at the ability

of a school to deliver X number of courses, to deliver the program. We will be

looking at the impact of one school on another. For example, you can take all

the children from school A and bus them to school B, and you have school B which

is viable but you've made school A unviable. If you are prepared to bus

thirty-five and forty miles you can make a school on Signal Hill viable. It is

no trouble to make a school viable.

In our letter to the churches we've said after further

discussions; we will discuss this with the churches. We will discuss this with

the Newfoundland and Labrador Teachers Association. We will arrive at an

absolute standard that constitutes viability in a school. Then we look at the

Province, okay? We have absolute viability regulations in place. If two schools

are side by side, both of which are unviable, before putting extra teachers into

each of these schools, or before putting distance education in these schools, we

will encourage these two schools to come together, because sometimes coming

together you could have one viable school where we have two unviable schools.

We recognize that a place like Harbour Deep and Red Bay and

parts of Coastal Labrador, parts of the South Coast, they cannot be viable

because the communities are isolated, so you need something extra. We will only

put the extras into a school to make it viable when we have used up all the

options about consolidation. We do not consider that the denominational

component of a school contributes to its viability. That is where one of our

problems will indeed be with the churches. Some of the churches - not all of

them - are suggesting that when you have all the viability criteria in place you

also have to put a denominational aspect. We don't accept that.

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

MR. SIMMS: Mr. Speaker, I appreciate the information the

minister is providing to the House. It had nothing to do with the question I

asked him.

MR. DECKER: I thought it was good.

MR. SIMMS: Yes, you thought it was good, but the question

was: Will you include that viability then, or that criteria that you reach

agreement on, if you do reach agreement on it, as part of the official document?

MR. DECKER: Oh, oh!

MR. SIMMS: Okay, well, that was the question. You could

have said that in two seconds. Let me ask him a further supplementary, Mr.

Speaker. Since he has raised the other issues, this other issue, specific issues

about schools, denominational schools, and what is viable and all the rest of

it, let me ask him a couple of other ones.

Specifically - because in addition to meeting the viability

criteria, he would know in his document that `uni-' or one denominational

schools must also be approved by parents. That is what he says in here. Now, in

large communities where there are several schools, which he talked about a

moment ago, the requirement in his document is that sufficient parents from the

community must indicate a desire to have such a school.

I want to ask him two questions I guess on this point, if I

might. What percentage of parents in this case would be deemed to be sufficient?

Secondly, would this place unfair restrictions on certain students? For example,

would a Roman Catholic school in Grand Falls - Windsor - the area I know best -

still be able to accept a student or students from Badger, for example, if the

community of Badger decided it was going to have an interdenominational school,

but these RC students in Badger still wished to attend the school of their

choice in Grand Falls - Windsor? Would that school in Grand Falls - Windsor be

able to accept them under these rules?

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

MR. DECKER: I will explain this for the hon. member. It

is an excellent line of questioning, I'm glad he is putting it forward.

Let me use an example of two Catholic schools in St. John's,

Brother Rice and Gonzaga. If we went to both of these schools and asked the

parents of the students attending that school: Do you want this to be `uni-' or

do you want it to be `inter,' most likely we would not reach the 90 per cent

clause. So you would end up with these two Catholic schools today ending up

being two interdenominational schools.

Rather than do that, where you have sufficient numbers of

people in St. John's to have separate viable uni-denominational schools, the

logical thing to do would be to take one of these schools, and all of the people

who want to attend a uni-denominational school could attend, say, Brother Rice -

Gonzaga then, or Brother Rice, whichever the parents chose - would become a

uni-denominational school, a Roman Catholic School.

Now, students attending that school would know full well that

it is a Roman Catholic School. If a Protestant child attended that school, he or

she would know that he or she is attending a Catholic school, and it would stay

a Catholic school.

The other problem we have is in rural areas. Take a place

like Trepassey, where the population is predominately Roman Catholic, then the

parents would have the option of asking to make it uni-denominational.

The reason we bring the parents in is this: The churches

could say: We believe Trepassey should be a Roman Catholic school. The

government might say: Maybe you're right; maybe you're not, but we would go to

the people of Trepassey and say: Look, the churches have said you should be

uni-denominational; what do you say? If the parents say, `yes', then it would

become a uni-denominational school.

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

MR. SIMMS: Mr. Speaker, on the same line of questioning,

since he has raised the Trepassey example, in a situation where there is only

one school in a community, for example, his document says, it requires the

consent of at least 90 per cent of the parents for that school to remain as a

one-denominational school.

Now, on the Southern Shore, for example, all the schools on

the Southern Shore, pretty well, are Roman Catholic - in fact I think they all

are - and by far the majority of the population is Roman Catholic. Now

consequently there hasn't been and never will be, I guess, any duplication of

services and costs; yet the Roman Catholic schools in that area, as I read it,

could be eliminated if as few as 11 per cent of the parents voted for an

inter-denominational school.

Now there doesn't seem to be any rationale for that, so I

would like to ask the minister if he could explain: Why should 11 per cent of

the parents override the wishes, say, of 89 per cent or 90 per cent, especially

when there is no duplication of services or costs?

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

MR. DECKER: Mr. Speaker, I must say, these are the most

sensible questions I have heard about education since I have been Minister of

Education.

Here is the situation. The concept of the neighbourhood

school is the way government is going. Take the school, for example, in

Trepassey. Every person who lives in Trepassey has the right to attend that

school. If it were possible to bus the Protestants out, we would not do it

because we are not going to bus children from a viable school.

So here is the government on one hand saying, all the

children who live within a reasonable distance of that school are eligible to

attend that school. Now how does it shake out? When the school shakes out, all

the people in the neighbourhood, all the people in the community, have the right

to attend. What do you have?

If you have half Protestant and half Catholic, then I don't

think the decision is too difficult to make; it becomes inter-denominational.

Seventy/thirty - should you let it be all Catholic? Ninety/ten? I don't know,

and I will confess, I am not sure that 90 per cent have the right, but you have

to recognize that the minorities do have some rights, and the whole basis of

denominational education recognizes the rights of the minority.

So if the government is saying, on the one hand, to 10 per

cent of the Protestants in Trepassey: You must attend that school, then I am not

sure we have the right to say: You must attend a Catholic school, whether you

have or not, so that is why, you see.

I am not tore up on the 10 per cent, but that is what is

behind it.

MR. SPEAKER: The hon. the Member for St. Mary's - The

Capes.

MR. MANNING: Mr. Speaker, my question is for the Deputy

Premier.

The Institute of Social and Economic Research at Memorial

University has received a $1.4 million grant to study the effects of the

groundfish moratorium on rural Newfoundland. Why does the provincial government

support this study, and has the Province provided any funding for the study, in

addition to the federal grant?

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

MR. BAKER: Mr. Speaker, I understand that this particular

group, or the particular professor, has applied to the federal government,

received a grant under ACOA. As far as I know, there are no applications in to

the provincial government and we have not provided any money.

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

Mary's - The Capes.

MR. MANNING: The Executive Director for the study,

Professor Rosemary Ommer was interviewed by the Globe and Mail about the

future of outport communities. She talked about the need to train people to run

bed and breakfast establishments for tourists.

I quote: To understand, it is really necessary to have towels

and hot running water, and I repeat: To understand, it is really necessary to

have towels and hot running water in rural communities. Well, I am from rural

Newfoundland and we have had both for a very long time.

How can any person with such ignorance and prejudice do a

legitimate study of rural Newfoundland, supported by $1.4 million of taxpayers'

money? Are we spending the $1.4 million to educated Professor Ommer?

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

MR. BAKER: Mr. Speaker, the hon. member has expressed his

opinion. I don't know the details of the study; I don't know the background that

obviously the hon. member has, so I feel unable at this point in time to make a

definitive statement on it. We have not supported that particular study as far

as I know and -

AN HON. MEMBER: Doug House (Inaudible).

MR. BAKER: Well, they may have, I don't know, but we have

not, we have had no such request that I know of, Mr. Speaker, and that's all I

can say about it.

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

St. Mary's - The Capes.

MR. MANNING: Mr. Speaker, Doug House of the Economic

Recovery Commission has supported this study, and Professor Ommer's comments to

the Globe and Mail perpetuates a stereotype about Newfoundlanders. If she

isn't showing her own prejudice, then she is playing to the prejudice of the

mainland media.

I ask the Deputy Premier, will he demand that Ottawa withdraw

funding to this project and the insult it is to rural Newfoundland?

SOME HON. MEMBERS: Hear, hear!

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

MR. BAKER: I must say, Mr. Speaker, that I was as

appalled as the hon. member with that particular story in the Globe and Mail

and some of the comments attributed to individuals. I don't really know if the

individuals actually made the comments, I have never bothered to check that out,

therefore, again I hesitate to do a condemnation unless I have all the facts. It

is just not my way of doing things but, Mr. Speaker, let me hasten to add that

the kind of attitude displayed in that Globe and Mail editorial is

something that we can well do without.

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

MS. VERGE: Thank you, Mr. Speaker.

I have questions about Tourism and Culture. Since there is no

Minister of Tourism and Culture and the acting minister is away and the Premier

hasn't arrived in the House yet this afternoon, I will direct my questions to

the Deputy Premier.

The 1994 Rand McNally Road Atlas for North America, lists

major tourist attractions in the United States and Canada. Eighty-seven US and

ten Canadian attractions are highlighted, one in Newfoundland and Labrador and

that one is the Stephenville Festival. Why has the provincial government, by

cutting $35,000 a year in provincial funding last year, by ignoring responsible

proposals for better administration of the Stephenville Arts and Culture Centre,

and by silly, needless hassles, caused the Stephenville Festival Board to decide

last week to cancel the 1994 program?

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

Labour Relations.

MR. GRIMES: Thank you, Mr. Speaker.

Again, I appreciate the question but I think it seems fairly

obvious from the tone of the question and the kind of language that was used

that the hon. member opposite made it all up herself because none of that

language or tone has come from anyone involved with the Stephenville Festival in

dealing with the provincial government.

They have been quite pleased with the efforts between the

festival organizers and ourselves; they did operate last year with the tourism

marketing grant decreased from $35,000 to $17,000; they found other ways to

continue to function, they were working with officials in the department, in

several departments actually, of the government and everything was in

expectation that there would be a festival again this summer.

The board, for its own very good reasons, felt that on the

basis of all the information they had and all the prospects that they had for

this year, that despite the fact that they would like to have the festival, they

felt it is in everybody's best interest to use a year to regroup, to reorganize

themselves to deal with some of their significant accumulated debt over the

years, and they think it is in everyone's best interest to just take a year off

to reorganize so that they can put the Stephenville Festival back on the road,

so it will again be like it was as the hon. member indicated, one of the

attractions that is listed in many publications in North America and one of the

things that draws people regularly to the West Coast of Newfoundland.

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

MS. VERGE: Thank you, Mr. Speaker.

I say to the Minister of Employment and Labour Relations, it

is in nobody's best interest for the sixteenth annual Stephenville Festival to

be cancelled.

Mr. Speaker, the government's much bragged about Strategic

Economic Plan identifies tourism and culture as among the very few economic

growth potentials for this Province, and the report specifically cites the

Stephenville Festival as a major tourist attraction on which to build. Will the

government act immediately, and I mean today, to give the Stephenville Festival

Board the support they require to salvage the 1994 season so this Province can

have the economic benefit anticipated by the Strategic Economic Plan, and so

that Newfoundland and Labrador can deliver the one and only tourist attraction

listed in the 1994 Rand McNally Road Atlas billed as America's number one

seller?

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

Labour Relations.

MR. GRIMES: Thank you, Mr. Speaker.

It is unfortunate that the hon. member again persists, as she

does, when this is really not the issue she is trying to make it out to be, in

the context she is trying to make it out to be. There is a problem that the

board of the festival itself has recognized and they came to the decision that

it was in the best interest of everybody involved with the Stephenville Festival

to regroup and reorganize so that even though the unfortunate initial outcome is

that the 16th annual Stephenville Festival does not run, they do not want to

jeopardize the 17th up to the 170th. They would like to put it on a firm

foundation so that it can in fact contribute, like it does, artistically and

culturally, and to the tourism potential value in that part of the Province,

because a lot of Newfoundlanders and Labradorians have taken a real interest in

the Stephenville Festival, and were looking forward to the release of their

program for this year, and not to an announcement that it was cancelled.

The kinds of reasons that the hon. member is trying to put

forward, that there has been haggling between the festival organizers and the

government, and that it is because of the cutback of $17,000 in a $400,000

budget, that is not the kind of arrangement that caused the festival to be

cancelled. There are other initiatives that the government and the festival

organizers were working at in terms of trying to make sure that the festival was

on a firm foundation. They felt, with no pressure from government, whatsoever,

that they would make the best decision at this point in time, which was to

cancel for this year and to put it on a firm foundation so that next year, and

every other year, there could indeed be a Stephenville Festival running again.

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

Humber East.

MS. VERGE: Mr. Speaker, what a bluff.

SOME HON. MEMBERS: Hear, hear!

MS. VERGE: Mr. Speaker, each season the Stephenville

Festival has employed between forty-five and fifty-five people. If the 1994

Stephenville Festival is cancelled about fifty seasonal jobs will be gone, as

well as the spin-off benefits for the service businesses of the Bay St. George

region. Will the government make the relatively small effort - small effort,

required to salvage this season for the sake of the economy and jobs? Jobs, I

say to the minister responsible for employment.

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

Labour Relations.

MR. GRIMES: Thank you, Mr. Speaker.

I can hardly answer the question I am that hurt. My feelings

have been hurt that much with that first comment that I can hardly answer the

question.

Again, so that everybody would know, this a very serious

matter and we deal with it seriously and not in the manner that the hon. member

opposite does in asking the questions, with a lot of rhetoric and a lot of hot

air, and so on. That does not impress anybody. It might impress herself but it

certainly does not impress anybody involved with the government, and I do not

think it impresses anybody involved with the Stephenville Festival.

In fact, Mr. Speaker, there have been opportunities

investigated for a couple of years now whereby the organizers of the

Stephenville Festival in concert with the government could access additional

money, but for their own reasons they have not done that. There are other

proposals that have been looked at to try to make it possible for them to

operate on a better basis than they have so they can improve their financial

situation and so that in fact the festival could continue to provide the

economic spin-off that it does, provide the tourist attraction that it does, and

continue to be listed as a tourist attraction in Newfoundland and Labrador.

Mr. Speaker, unfortunately at this point in time, with their

own information, and because of their own decision, made on a very firm basis

from their own point of view, they have decided that they should not operate

this year so that they can regroup, put it back on a firm foundation, make sure

that the Stephenville Festival operates for at least another fifteen or twenty

years, and we will see where it goes from there.

Thank you, Mr. Speaker.

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

MR. SULLIVAN: Thank you, Mr. Speaker.

I would like to direct a question to the Minister of Health.

Advertisements have been appearing in newspapers across Canada for a chief

executive officer for the new regional hospital boards and community health

boards. I ask the minister, what would be the salary range for those positions?

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

DR. KITCHEN: Thank you, Mr. Speaker.

MR. SPEAKER: Order, please!

I can't hear the hon. minister.

DR. KITCHEN: Mr. Speaker, offhand, I don't have those

figures but let me say that each of these positions, I think, has been

tentatively evaluated by the people in government who do these evaluations on

the HAY Plan. The salary - it has been advertised that it fits into this HAY

system, but offhand, I can't give you the range for each of the positions

because the positions vary, some are larger than others.

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

Ferryland.

MR. SULLIVAN: Thank you, Mr. Speaker.

Some of the advertisements indicate it is according to the

HAY Plan but the one in the Globe and Mail for chief executive officer

did not indicate it is according to the HAY Plan at all. In fact, remuneration

will reflect the single nature and responsibilities associated with the position

and it hasn't specified.

Now, there will be seven hospital boards and five community

boards if we follow the current plan of government - there are some combinations

of both. How many executive, administrative and support staff will be hired by

those boards? Will there continue to be executive and management staff for each

institution that now comes under the jurisdiction of the regional boards? In

other words, will there be more or fewer administrators in this new system?

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

DR. KITCHEN: Thank you, Mr. Speaker.

Mr. Speaker, one of the main reasons for combining the boards

and making fewer boards is to eliminate administrative positions. By combining

boards, the person who becomes the chief executive officer of the larger board

has a bigger individual responsibility than either of the people that he or she

would replace and consequently, it is normal to pay them a little more but it is

hoped that there will be a reduction in the number of management positions

throughout the whole system as a result of this combination, and not only

management positions but other combinations where there is overlap. We are

trying, as best we can, to preserve the front line health care workers in

hospitals and nursing homes and in order to do it, within the given financial

situation we find ourselves in, we have to combine boards and eliminate

positions that are overlapping.

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

for Ferryland.

MR. SULLIVAN: Thank you, Mr. Speaker.

I have seen an increase in the budget for health but I've

seen a decrease in hospital beds and front line workers. The minister is

implying that hospitals now each have an administrator and when we get a chief

executive officer we are going to eliminate some of the administrators at the

institutional levels, that's what the minister is stating. Surely, by now,

government has done a cost benefit analysis for the new system. We have most of

the boards in place. Can the minister tell the House whether administrative

costs will be lower or higher under the new regional boards? Will he table an

analysis which compares estimated costs under the new board with costs that are

currently being incurred now under present boards?

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

DR. KITCHEN: I can assure the hon. member, Mr. Speaker,

that the administrative costs under the new arrangement will be less than the

old costs. We have not and will not carry out detailed studies at this point

because a lot depends upon when the boards are in place and their chief

executive officer is in place. They have then to decide which positions they

will eliminate, which ones they can combine, which ones they'll eventually

atrophy and so on, these are things which will be there. We know, it's obvious

to anyone with a grain of sense that there will be savings. You don't have to

say that there will $1,000,017.23 which is what the hon. member wants but we do

know that there will be savings and I challenge anyone to say that there won't

be. Thank you.

MR. SPEAKER: Order, please!

The hon. the Member for Baie Verte - White Bay.

MR. SHELLEY: Thank you, Mr. Speaker.

I have some questions for the Minister of Forestry and

Agriculture. I started on Friday asking some questions of the acting minister,

the Minister of Health. I'm sure that the minister now can expound on some of

those questions.

Some time ago the government announced it was actively

pursuing the privatization of Newfoundland Farm Products. I'd like to ask the

minister, how far along are you with those preparations to sell that particular

Crown corporation?

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

Agriculture.

MR. FLIGHT: Mr. Speaker, I suspect that the answer coming

from the hon. the Minister of Health on Friday, since the member indicated, is

probably adequate and probably provided the information that the member needs.

I would simply say to him that we are in the process. We've

called for expressions of interest probably a month ago. There has been

considerable interest up to this point in time. A number of corporations or

individuals representing corporations have indicated a desire to make a proposal

to the Newfoundland government with regards to privatization. That is the

process we are into.

I would presume that the proposals we are receiving, or have

received, are being processed and looked at.

AN HON. MEMBER: Oh, oh!

MR. FLIGHT: Shortly, yes, we will get it pretty soon. The

whole thing is being done under the auspices of Treasury Board, Mr. Speaker,

with regard to the financial aspect. It is an ongoing process and sooner or

later we will expect to be able to privatize Newfoundland Farm Products.

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

Baie Verte - White Bay.

MR. SHELLEY: Thank you, Mr. Speaker. Maybe I will ask my

next question of the President of Treasury Board. I believe that there is a

general support for the privatization of Newfoundland Farm Products. The

principle concern is that the company may be sold to out-of-Province interests

who may then shut it down and supply the consumer market here with

out-of-Province produce. What steps will the government take to ensure the

company will continue to operate in this Province?

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

Agriculture.

MR. FLIGHT: Mr. Speaker, obviously the member can

fantasize all he wishes. In one breath he says he supports the concept, and then

he gets up on a flight of fantasy as to what might happen. Maybe we will get an

iceberg and move Newfoundland Farm Products and operate it from an iceberg.

We are going on the basis that it is right to privatize

Newfoundland Farm Products. It will be privatized in a way that protects the

interest of the established producers in the Province, and there is no basis for

the silly concern just expressed by the hon. member.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

Question period has elapsed.

Answers to Questions

For which Notice has been Given

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

Labour Relations.

MR. GRIMES: Mr. Speaker, I would just like to table brief

answers to questions asked on Thursday past, April 28, by the hon. the Member

for Ferryland, with respect to tour boat operators and whether or not there

would be a licensing system put in place and some safety standards, and also

comprehensive liability insurance.

Just to point out, in tabling the answers, there had been a

meeting scheduled for yesterday, Sunday, May 1, between tour boat operators,

Hospitality Newfoundland and Labrador, and officials from the Department of

Tourism and Culture prior to this issue, because it had been raised in the

department by the existing tour boat operators a week or so ago.

The issues were addressed. It has been agreed that the tour

boat operators, the industry association and the department will work together

to try to make sure that the issues of licensing - which are currently covered

under the Coast Guard regulations - anything to do with onshore loading and

off-loading and those types of issues will be dealt with, along with the

industry, the department and the operators trying to put in place a standard and

rating system. Also, the operators working with Hospitality Newfoundland and

Labrador will determine the most appropriate way to ensure that all tour boat

operators carry appropriate levels of liability insurance.

Those are issues that had been under discussion. The

discussions are continuing, Mr. Speaker, and I table these answers to those

questions.

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

MR. LUSH: Mr. Speaker, on Friday, the hon. the Leader of

the Opposition posed questions related to the changes in the U.I. regulations

and with respect to the fisheries package and what impact they may have on

social services, and whether or not there might be a revised budget.

In answering the question of the Leader of the Opposition, I

said at the time that in projecting these figures the officials consider the

economic situation at the time and all of the trends, in particular with social

services looking at the growth in the caseload. I say to the Leader of the

Opposition that the situation re the U.I. was known to the officials, and with

respect to the fisheries that it was considered in the global consideration,

although the specifics weren't available. In that sense both were considered in

the global consideration, with respect to the economic situation, but

specifically the U.I. situation was addressed.

No, Mr. Speaker, at this point in time we are not

anticipating any revision in the budget figures.

Petitions

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

MR. A. SNOW: Thank you, Mr. Speaker.

I am pleased to have the opportunity to rise and present a

petition on behalf of several residents of Western Labrador who have signed the

petition and asked that it be presented to the House of Assembly.

The prayer of the petition says: `Wherefore your petitioners

urge the Government of Newfoundland and Labrador to stop immediately the

privatization of Newfoundland and Labrador Hydro and hold a referendum to ask

the people of Province their views.'

Mr. Speaker, the people of Western Labrador who have signed

this petition are very concerned about the privatization of Newfoundland and

Labrador Hydro and how it is proceeding down the rails on the sale of their

Crown corporation. These petitions were collected by a committee that was struck

from a public meeting that I organized in Western Labrador. The petitions

continue arriving at my office because they had presented them throughout the

community and then people were mailing them in.

The people of Western Labrador have a right to be even more

concerned than the general public of the rest of the Province of Newfoundland

and Labrador in a sense that they are the highest per capita users of

electricity in a municipality. By the nature of their geography, by the nature

of the demographics of the community and how they've changed from oil-fired to

electric furnaces and electric baseboard heating in the houses, and also by the

fact of climatic conditions, these things ensure that they must even today have

to plug in their cars in order to start them to be able to go to work in the

mornings. We still have temperatures down to -20 C in the month of May.

In light of the irrational statements made by people such as

the Minister of Health - suggesting that the people of Western Labrador should

face huge electrical increases of up to 500 per cent, he says they should be

charged - these irrational statements don't do anything to help ease their minds

about a government that should have concern for them, and direct the Crown

corporation not be sold and that the Crown corporation would charge a reasonable

rate, and a reasonable rate increase would only be given to people who consume

this amount of electricity, any electricity in this Province, Mr. Speaker, but a

500 per cent increase, as proposed the Minister of Health, is completely

unreasonable and so would be the 300 per cent as suggested by the Premier.

Now, Mr. Speaker, we've even had some of the people outside

Cabinet, such as - some of the want-to-be's, Mr. Speaker, that want to be in

Cabinet, such as the Member for St. John's South who has suggested that the

electricity rates in Western Labrador have been subsidized. Mr. Speaker, there

is nothing further from the truth then the fact that they have been subsidized

in their electrical rates. They have not been subsidized. The rates in Western

Labrador haven't been subsidized. The private utility -

MR. MURPHY: (Inaudible).

MR. A. SNOW: Well, one of the want-to-be's in Cabinet -

the Member for St. John's South suggested that the electricity rates in Western

Labrador were subsidized.

MR. ROBERTS: They are not bearing their share of the

subsidy that (inaudible).

MR. A. SNOW: But they have never been subsidized and the

Minister of Health - I noticed that the Minister of Justice, the Government

House Leader, conveniently wouldn't respond to what the Minister of Health

suggested, that the people of Western Labrador should be paying 500 per cent

more, should have to endure -

MR. ROBERTS: (Inaudible).

MR. A. SNOW: But do you agree that they should be?

MR. ROBERTS: The Public Utilities Board will decide what

is fair.

MR. A. SNOW: But does the Government House Leader suggest

that the people of Western Labrador have to pay 500 per cent more for

electricity?

MR. ROBERTS: What I'm saying is they should pay what the

Public Utilities Board proposes. (Inaudible).

MR. A. SNOW: Mr. Speaker, the people of Western Labrador

fear that the Public Utilities Board may indeed allow a 500 per cent increase -

forced down their throats, Mr. Speaker.

AN HON. MEMBER: (Inaudible).

MR. A. SNOW: I don't know, maybe they were given

direction by the Cabinet. I don't know why they would do it. I don't know why

and I don't know the rationale why the Minister of Health and the Government

House Leader want to charge the people of Western Labrador 500 per cent more for

electricity, Mr. Speaker, I don't know why he wants to do it. I honestly don't

know - and neither do the people of Western Labrador understand why this

government wants to first of all come in and take over the utility company. They

asked the Hydro Corporation to come in and take it over and now, Mr. Speaker,

they decided to sell it out again to the private sector. So, I mean, they don't

know which way they're going. That's exactly what's occurring and that's what

scares the people of Western Labrador. They're afraid that they may indeed have

to endure a 500 per cent increase which would be exorbitant in anybody's books,

denoting the high amount of consumption of electricity that the people of

Western Labrador have to use because of where they're living, because of the

climate, Mr. Speaker, and because of -

MR. SPEAKER: The hon. member's time has elapsed.

MR. A. SNOW: I would ask that government reconsider their

position -

MR. SPEAKER: No leave.

MR. A. SNOW: - and not continue with the privatization of

Newfoundland and Labrador Hydro. Thank you, Mr. Speaker.

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

MR. SULLIVAN: Thank you, Mr. Speaker.

I rise to support my colleague's petition from constituents

of his district against the privatization of Newfoundland and Labrador Hydro.

Now, the Premier, from day one, for many years, has had as

his pet project, the privatization of Newfoundland Hydro. He has tried to do it

in a way that would sort of hoodwink the people of this Province. The whole

scheme has been exposed now and the chances of getting public support are

dwindling by the day. He has now resorted to going outside the Province, to

bring in people from outside the Province, to speak here to convince people in

this Province what's best for them.

Now, he wasn't very successful in getting Wade Locke, who the

Minister of Mines and Energy described as not knowing anything. I'm not sure the

word he used to describe him, it wasn't very complimentary - and he doesn't have

his facts right, his numbers aren't correct. Well, the government hasn't

provided any numbers otherwise to show the positive effects of privatization.

The only thing the government has been prepared to show is that we will have to

borrow less money and therefore we'll have less costs on retiring that debt over

the lifetime of that debt, whether it's forever or whatever the case may be.

What they failed to realize is that there is a negative side on that balance

sheet and the negative side is very, very substantial, far more significant then

the amount that we're going to save by not financing the debt. Now we know that

Hydro makes a profit of anywhere from $14-$16 million a year. This past year, I

think, almost $14 million, $16 million the year before, when you exclude the

Upper Churchill. So let's look at the portion that's now up for sale. On top of

that $14 million - $16 million that we are turning over in profit to the people

of this Province or to keep down other borrowing costs or to keep down the rate

of electricity, we're going to put on another $10 million in guarantee fee we're

going to give up by putting it in privatization, and when you look at the rates

that electricity is going to increase, when you take all the associated costs

with privatization, depending on the figures provided by Wade Locke, and if you

take the conservative end of those figures, it is going to be in the tens of

millions of dollars - possibly $40 million, maybe as high as $70 million are

some of the costs. So the bottom line, when you weigh the positive side against

the negative side, we are going to be down $40 million, or $50 million, maybe

higher.

Why would anybody want to sell a company that is paying its

debts, turning a profit, and keeping the cost of electricity down for the people

in this Province? It just doesn't make sense.

Peter Boswell now has changed his view. Anybody who has

access to all the figures and costs is starting to change his mind. I am sure

John Manuel, who is Chairperson of the Advisory Council on the Economy, who

works very closely with Premier Wells, has come out trying to get Boards of

Trade, Chambers of Commerce, to support it. The largest in the Province has

voted against it, so we are finding that it's just not working. We might as well

give up the fight. You are either going to force it through, because you are

never going to change people's minds - they are becoming entrenched; they

haven't been told the whole truth at all - people are being insulted by not

being told the truth, along with having no positive reason, from a financial

perspective, why they should privatize. So they are two very valid reasons, the

cost, of course, being most important, and an insult, really, to the integrity

of the people of this Province is another one.

And they are trying to throw out now, in the public forum,

that if we don't privatize now, our credit rating might go down. Our credit

rating may very well go down, or remain the same if we never privatize. The

economic outlook is negative, even with or without privatization, so don't use

that scaremongering tactic that the accused Opposition are using in the

privatization of Hydro. That is one the government is using. They had a member

stand up and ask a question in the House, the first time I have seen it since I

came into the House, that a member on the government side - they have every

right - to try to throw out into the public view, and to scaremonger, and try to

show that this could have an adverse effect on our credit rating, when the

economic outlook is negative without that. Those are some of the things that

people don't take too kindly to.

They have indicated it's going to open up the doors to great

economic opportunities for this Province. Yes, we can see a privatized Hydro.

They are going to come knocking on our doors, and we are going to have hustle

and bustle all over this Province. Well, that is a myth. That is not going to

happen. We have to set up and establish a proper climate for business in this

Province.

This government went through a period of increasing taxes

after taxes, upped the corporation tax 17 per cent, dropped it back again.

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, I would like to say a word or

two, if I might, in respect to this petition. I won't attempt to answer the

peculiarly paranoid delusions of my friend, the Member for Ferryland, because he

has long since departed this realm into flights of fantasy, but I would like to

say a word about the comments of my friend, the Member for Menihek. I want to

make a couple of things clear.

In this Province it has been the case, and as long as this

administration is in office it will continue to be the case, and I venture to

say no administration will ever change this, the price of electrical power is

set by the Public Utilities Board - that is point one. Point two, the board does

not take direction from the government, as he said here in the House. The board

neither seeks nor accepts direction. The government neither wants to give

direction, nor would be party to a response if a request for such help came.

AN HON. MEMBER: (Inaudible).

MR. ROBERTS: Look, my friend, the Member for Ferryland is

irrelevant to this. We are talking about serious stuff. I am talking about my

friend, the Member for Menihek now.

The Member for Menihek said that perhaps the government had

given direction to the Public Utilities Board, or would give direction. He used

the word `direction'. The government do not give direction. We have not been

asked for it. If asked, we would not respond. We have no right to give

direction. The price of electricity will be set in the future as in the past, by

the Public Utilities Board, which is an independent board with tenure that holds

office under legislation, that functions in a quasi-judicial sense, a

quasi-judicial role subject to an appeal to the court of appeal in the

appropriate circumstances, and sets prices in accordance with the rules laid

down in the Public Utilities Act and that act has stood for many years, and the

new Electrical Power Control Act which in this respect is essentially the same

legislation as is now on the books and has been on the books, again, for a

number of years. So I would say to my friend, if any of his constituents has any

illusions or delusions or fears about a 500 per cent increase because of some

direction of the government, they are completely unfounded.

Now, will there be a 500 per cent increase? I don't see how

that could come to pass, because what will have to be done when it comes to set

the rates for power in Western Labrador, or for that matter in my district, in

the Upper Lake Melville area, will be to look at the cost of the power which

comes from the Upper Churchill Development, to look at the cost of delivering

that power which is the same throughout the Province on a per unit or per capita

cost in my understanding and then, this is where the increase will come, to add

in what has not been there hither to, which is the rural subsidy.

The people of the Island are paying a share, each in our

proportion to the cost of the subsidy in the diesel areas. The people of

Labrador are not paying anything towards that, and in my judgement, and I

believe the people of Labrador being fair-minded people will concur, they should

pay their fair, proportionate share. That won't be a 500 per cent increase; it

won't be a 100 per cent increase. Now my friend wanted to ask a question -

AN HON. MEMBER: (Inaudible).

MR. ROBERTS: I beg your pardon?

AN HON. MEMBER: How do you compute the cost of the

electricity?

MR. ROBERTS: The cost of electricity is computed by the

cost of generating it and delivering it to the point of return and - I don't

know what the board would do - the most they would do is look at the cost in

Labrador where we have an interconnected grid running from Western Labrador

through to Happy Valley-Goose Bay, and in each case power coming from Churchill.

If my friend is suggesting that there would be a common Province-wide base, I

could only say that would be the first time ever and it would be a most, most,

amazing result in my judgement. I don't know what the board would do of course,

but I find it difficult to conceive the board would.

The cost of power in Labrador is the cost of generating it in

Churchill and in moving it across Western Labrador to his constituency and

across Central Labrador to the east to my constituency. The other people in

Labrador use power generated by diesel-electric generation so, I would simply

say to my friend that while he has every right to say what he wants, and I don't

fault that, he is really barking up the wrong tree if he believes that there

will be a 500 per cent increase because of privatization or anything; there will

not be that kind of increase in my judgement for the reasons I have given and

more to the point, the increase will come, whatever it is, and we have offered

the view that it may be as much as five or ten mils in our estimate, but it is

only an estimate, will come whether Hydro is privatized or not. The only reason

it hasn't come hitherto is, Hydro, as a corporation held off making an approach

to the board to ask them to set the rate in Labrador until these issues are

resolved. Well the issues will be resolved sooner or later, Hydro will make its

approach, the raise will go through no matter who owns the share interest in

Hydro.

Now I make that, Mr. Speaker, not in relation to the thrust

of the petition, which of course I do not accept, I do not agree with, but in

relation to the incendiary remarks of my friend, I have no quarrel with his

right to object to what we do, but equally, I think he will acknowledge that we

must be sure we don't mislead people and I am sure he was doing it unknowingly,

but in my view, his remarks left an incorrect and a wrong impression.

Thank you.

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

MR. FITZGERALD: Thank you, Mr. Speaker.

I rise today to present a petition on behalf of some

residents from Baie Verte - White Bay, St. John's North, residents of Kilbride

and other areas of St. John's. The petition reads:

WHEREFORE the undersigned, your petitioners, humbly pray and

call upon Parliament to demand the Government of Newfoundland and Labrador not

privatize and sell Newfoundland and Labrador Hydro, and ensure that Newfoundland

and Labrador Hydro remains a Crown corporation.

Mr. Speaker, time and time again, we have seen people come

forward here to this House and demonstrate on the steps of the building, in the

foyer of the building here, people coming in and speaking out, opposed to the

sale of Newfoundland and Labrador Hydro. People are continuing to voice their

frustrations, voice their concerns about what might happen if this Crown

corporation is privatized.

In the beginning we were told that the legal opinions of the

day were that privatization was a good thing, it was a positive thing, it was

something with which we should go ahead, but as time progresses, Mr. Speaker, we

continually see people with a great knowledge of privatization and a great

knowledge of the legal opinions of businesses come forward and saying it is not

such a wonderful idea, that the privatization of Newfoundland and Labrador Hydro

is not the great and wonderful thing that government members put forward as

something that should happen.

Mr. Speaker, as we have waited over this past number of

months we have been looking forward to the facts and figures coming forward to

show us, and convince us, that a privatized Newfoundland and Labrador Hydro

would be of great economic benefit to this Province of Newfoundland and

Labrador, but those figures have not been forthcoming. Figures that are put

forward by this side and by other people who are not in favour of the sale, Mr

Speaker, are continually shot down as being false, we are fearmongering, it is

not the right figures, but people are asking, and, I guess, pretty soon will be

demanding that the real figures that government is basing their opinions are be

brought forward so that people can see for themselves why it is that this

government is so anxious in privatizing a Crown corporation.

Most of the polls that have been conducted in the past, Mr.

Speaker, have shown as well that approximately 80 per cent of the people in

Newfoundland and Labrador are opposed to this sale, opposed because they do not

have enough information, they do not have enough information about the wonderful

things that might happen if it is privatized by what government is putting

forward and saying.

Mr. Speaker, we have always been told that our credit rating

would improve and we would be able to get much more money for much lower costs.

I think if you read the reports put out by several of the credit rating agencies

you will find that those reports are unfounded as well. People are questioning

why we want to privatize this Crown corporation, something that is ours,

something that is continuing to turn in revenue to the government. They ask

government to lay this piece of legislation aside and get on with the business

of the day, to get on dealing with the problems that are out there in rural

Newfoundland and Labrador, and deal with the common issues, the every day

issues, that affect our people.

Mr. Speaker, in conclusion I plead with the government to lay

this piece of legislation aside, put it aside, and get on with the business of

running government, and let this Crown corporation continue to exist and operate

in the efficient manner as it has done in the past.

Thank you, very much.

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

MR. WOODFORD: Thank you, Mr. Speaker.

I would like to support the petition presented by my

colleague on the privatization of Hydro. There is no question in my mind, and it

is obvious from some of the petitions that have been presented here in the last

number of weeks, that the majority of the people of the Province, and looking at

some of the polls that were done in the last month or so, the majority of the

people of the Province are against the privatization of Newfoundland and

Labrador Hydro.

Mr. Speaker, whether the people of the Province are familiar

with the exact repercussions, the consequences, or what have you, of the

privatization of Newfoundland Hydro, whether or not they are, or whether or not

they are cognizant of what will happen after, or what has been happening with

Newfoundland Hydro, or what effect it will have on the debt of the Province, and

so on, the credit rating or whatever, the fact is, in this instance, that the

majority of the people of the Province are against it. It is obvious that if the

majority of the people of the Province are against it, it is for a reason, and

one of the big reasons I am finding around the Province today is the lack of

information, the lack of information available.

Now, most legislation passes through this House with the

people of the Province knowing very little about it. It is one thing for it to

pass through the Legislature without a public hearing, or without it going to

committee, but it is another thing for a substantial piece of legislation such

as this going through without any hearings at all.

Will the privatization of Hydro cost Newfoundlanders and

Labradorians more? Yes, Mr. Speaker. That is even admitted by the Premier and

members opposite, it will cost more. The figures and facts put forward by

members opposite in their analysis of the rate increases over the next five

years, as far as I am concerned, just do not wash with me. Based on the facts

and figures of just a few short years ago it is going to cost the people of this

Province a substantial increase, far more than what is recommended and what is

documented by members opposite in their piece of correspondence that has gone

around to the people of the Province. That it is going to cost them far more.

The big thing, Mr. Speaker, is that they are going to lose

one of the biggest and best assets that this Province has ever had, ever will

have. They will lose complete control over the generation of electricity in this

Province forever and a day. Newfoundland Hydro generates - doesn't distribute -

90 per cent of the electricity in this Province. Wouldn't that be a wonderful

thing to be able to hold in your hand, regardless of what company wanted to come

in, what business wanted to come into this Province today, to say that you own

and can generate and guarantee people that you own it and not a private outfit?

Seventy-eight per cent of the shareholders of the new hydro

company in Nova Scotia today are from outside the Province of Nova Scotia. If we

haven't learned a lesson of mistakes in bygone years in this Province we should

just look over our shoulders at our neighbouring province that did what we are

doing now a just a few short months ago. Just look across there and see what is

happening. They've got coal generation. Most of their fuel is coal generated in

Nova Scotia. It has nothing to do with water that can run forever and a day like

we have in this Province. We've got one of the cleanest, most environmentally

sound generation of electricity in the world today.

We own it, regardless of what they say about the - the

government is still going to guarantee the debt. If this passes on tomorrow

government still guarantees the debt for this particular new Hydro. One of the

biggest reasons for selling it is because it is a liability. How can one of the

best assets you have be your biggest liability? If someone could explain that to

me then I would probably go along with it.

I can just name five or six logical reasons why it should not

be touched. We can charge Newfoundland Hydro more. This government can say

tomorrow: Give me 2 per cent to float your bonds. They can charge 3 per cent to

float their bonds, they can charge 4 per cent to float their binds. That is one

instance alone. There is going to be a price increase anyway -

MR. SPEAKER: Order, please!

The hon. member's time is up.

MR. WOODFORD: Thank you, Mr. Speaker.

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

MR. ROBERTS: Mr. Speaker, we've had our two petitions, I

gather, so with the acquiescence -

AN HON. MEMBER: Oh, oh!

MR. ROBERTS: I'm sorry?

AN HON. MEMBER: Is there a quota?

MR. ROBERTS: No, there is no quota, it is just we've had

two. Accordingly I propose to move -

MR. SIMMS: Oh, oh!

MR. ROBERTS: Yes, that is fine. The Opposition Leader can

schedule the petitions over there. We've had two on the electrical power.

Members are obviously anxious to get on to it. I will move, pursuant to Standing

Order 21, that the Orders of the Day now be read. No more than that.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

It is moved that the House now move to the Orders of the Day.

All those in favour?

SOME HON. MEMBERS: Aye!

MR. SPEAKER: Against?

SOME HON. MEMBERS: Nay!

MR. SPEAKER: Carried.

Orders of the Day

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

MR. ROBERTS: Mr. Speaker, thank you. Would you be good

enough to go to Order No. 4? Hon. members opposite can then make their speeches

on the important issue of the Electrical Power Control Act.

MR. SPEAKER: Order No. 4.

The hon. the Member for Humber East.

MS. VERGE: Thank you, Mr. Speaker. I adjourned the debate

on the principle of this bill on Friday after speaking for just two minutes.

The Electrical Power Control Act is intertwined with the

Hydro privatization act. The two bills were introduced in this House of Assembly

simultaneously by the government. The Premier in introducing each of them

explained that the two are intertwined and that the Electrical Power Control Act

contains many provisions which anticipate and facilitate the sale of

Newfoundland and Labrador Hydro. After that, public opposition mounted and by

the middle of March the Premier backed down to the point of going on

Province-wide television and saying to the citizens of the Province that he

would withdraw the Hydro privatization bill if a majority of citizens were

opposed to it.

It is obvious that an overwhelming majority of the people of

Newfoundland and Labrador are adamantly opposed to the government divesting

itself of Hydro. That was measured by two independent, reputable polling firms

within a week of the Premier's television address.

Mr. Speaker, if the Premier is going to keep the promise he

made to the citizens of the Province, we shouldn't be proceeding with this

second reading debate about Bill 2. The only acceptable course of action for the

Premier and the government would be to withdraw both bills, and then, in the

case of the Electrical Power Control Act, make appropriate amendments,

modifications, changes, to the bill, and then come back with another piece of

draft legislation, refer that revised bill to the appropriate Legislation Review

Committee for public hearings.

Mr. Speaker, unfortunately, that is not happening and we are

being forced to participate in a debate about the Electrical Power Control Act.

We don't know what the Premier, in the end, is going to do with the companion

legislation, the Hydro Privatization Bill. We don't know if the Premier is going

to keep his promise.

Mr. Speaker, the Premier has held himself out to the public

as a man of principle, as an honourable person, as somebody who keeps a promise

when he makes one. That is how he presents himself to the population.

Mr. Speaker, having watched the Premier's performance over

the last five years, many of us have observed a string of broken promises, but

this was an exceptional promise. This was a commitment made on Province-wide

live television, stated not once but three or four times, said clearly and

unequivocally. The Premier of this Province said to all the citizens that if a

majority of the population are opposed to the government's Hydro privatization

proposal, he would withdraw the legislation. So it is quite wrong for the

government to persist with this companion bill, the Electrical Power Control

Act.

Mr. Speaker, there are several provisions of this bill which

have to do with Hydro privatization, some of which are designed to ameliorate

the sharp electricity rate increase that would surely result from the

privatization of Hydro, yet this bill purports to set out as a major part of

provincial policy for electricity, the provision of electricity at the lowest

possible cost to consumers. So that part of the stated policy of this bill is

completely at odds with Hydro privatization. Hydro privatization would add

significantly to the cost of electricity. Inevitably, privatization would drive

up electricity rates way beyond where they would be if the government retains

Hydro as a Crown corporation.

Mr. Speaker, members opposite don't have to take my word for

that, but I refer them to Memorial University Economics Professor, Wade Locke.

Dr. Locke, a respected academic, has done a careful, detailed analysis of the

likely cost and benefits resulting from Hydro privatization.

Now, Dr. Locke, the same as members on this side of the

House, and private citizens of the Province, have not been privy to the

government's assumptions and calculations about Hydro privatization, but Dr.

Locke has studied many relevant documents, financial statements of Hydro and

Newfoundland Light and Power, rulings and records of the Public Utilities Board,

relevant information about utilities in other parts of Canada, the provincial

Budget, the two bills before the House of Assembly. Dr. Locke has questioned

government officials and the minister, the nominal minister responsible, the

Minister of Mines and Energy, so Dr. Locke is able to make a very good, educated

estimate of the costs and the benefits that would flow from Hydro privatization.

Dr. Locke acknowledges that there are several factors that

would have a bearing and there may be a number of variables. Dr. Locke

constructed an economic model and then plugged in several possibilities. Dr.

Locke's conclusion is that the most likely variables indicate a whopping net

cost to the Newfoundland and Labrador economy, a staggering increase in

electricity rates for consumers; householders and small businesses.

Mr. Speaker, Dr. Locke has published his analysis. He

conducted a public presentation of his analysis a couple of weeks ago which I

was glad to attend. Over the course of an hour-and-a-half he outlined his

approach, he showed his model and he answered questions. He subjected his

analysis to scrutiny by his colleagues at the university, faculty and students,

as well as people from outside the university community. The consensus at the

presentation is that Dr. Locke had been extremely generous to the government in

making his assumptions. Most of his assumptions favoured the government. Still,

though, his conclusion is that Hydro privatization is likely to cost the economy

of Newfoundland and Labrador a staggering amount each year, in excess of $50

million each year. Dr. Locke found that the benefits associated with Hydro

privatization would be far, far outweighed by the costs - costs to consumers and

costs to the economy of this Province.

Mr. Speaker, it doesn't take sophisticated analysis to see

why there would have to be staggering costs associated with Hydro privatization.

The current Crown-owned Hydro has a high debt equity ratio. A debt equity ratio

of 82-18 - high debt, low equity, and that's quite sensible since debt is

cheaper than equity. The current spread is over 3.5 percentage points. The

average annual interest rate, paid by Hydro on its debt, is 10 per cent. The

rate of return on equity ordered by the Public Utilities Board for the

privately-owned electricity company in the Province, Newfoundland Light and

Power, is over 13.5 per cent. Debt is always cheaper then equity. Debt involves

less risk, less risk for investors, albeit more risk for the borrower but in the

case of a utility producing and selling a necessary commodity, with the price

publicly regulated, there's very little risk.

Now, Mr. Speaker, the plan, according to the minister and the

Premier, is for a privatized Hydro to have a debt-equity ratio in line with the

industry average, something approaching 50-50. I believe the Premier in his

private locked door news conference indicated that the debt-equity ratio may end

up being 58-42. So it will go from 82-18 to something approaching 50-50. Mr.

Speaker, that will have to add close to $50 million a year to electricity rates.

It will have to, because we'll have several hundreds of millions of dollars of

10 per cent a year interest bearing debt converted to 13.5 per cent a year

interest bearing equity. And we'll have whatever the government chooses to

settle for a price for its ownership equity, our equity, at $300 million on

which it now gets an annual return of about 7 per cent. That will grow to 13.5

per cent or more. So by virtue of the change in the financial structure of a

publicly-owned Hydro to a privately-owned Hydro, we are looking at close to $50

million a year extra cost for Newfoundland and Labrador consumers, and where

will that additional $50 million or so a year, go? Most of it will go out of the

Province to non-resident shareholders. Realistically, Mr. Speaker, the same as

the shareholder profile of Newfoundland Light and Power and Nova Scotia Power,

most of the investors will reside out of the Province.

We have a small provincial population, we don't have a lot of

wealth in our Province, so when Nova Scotia Power privatized and 80 per cent of

the shareholders ended up living outside the province, is it realistic to think

that a higher percentage of a private Hydro's share purchasers would reside

within our own Province? So the approximately $50 million a year additional cost

that Newfoundland and Labrador consumers will be saddled with, will, for the

most part, be paid outside of the Province to the non-resident shareholders.

Mr. Speaker, there are other reasons why the cost of

electricity will go up, but the change in the financial structure of the

corporation will be the largest single contributor to the staggering cost

increase. Now, Bill 2 contains measures to try to moderate the whopping price

increase that will result; there will still be a staggeringly high price

increase associated with the government divesting itself of Hydro, not quite as

high as there would be otherwise.

Mr. Speaker, one of the provisions of this bill, calculated

to keep down the extent of the electricity price increase is found in, I think

it is clause 3 of the bill, and that's the provision dealing with federal

legislation called the Public Utilities Income Tax Transfer Act. It is in clause

3 (e). That clause provides that the revenue which under the federal

legislation, the Federal Government now shares with the Provincial Government,

which is derived from private utilities, will in future, be refunded to the

private utility.

Now, private utilities have to pay federal corporate income

tax. We have now one private electrical utility in the Province, Newfoundland

Light and Power, and that corporation pays to the Federal Government, federal

corporate income tax. Under the federal act now, 85 per cent of that is shared

with the Provincial Government and that contributes close to $10 million a year

to the provincial coffers, revenue which the Province uses for education,

health, social services and all the other provincial responsibilities.

Under this provision of Bill 2, the Province would forfeit

that revenue by refunding it to Newfoundland Light and Power, and from what the

Premier and the minister have said, the purpose is to have the extent of the

electricity rate increase ameliorated because it's assumed that Light and Power

would factor that rebate into its rates, or that the Public Utilities Board

would ensure that the rebate is factored into rates, and rates would thereby be

lowered.

Now, Mr. Speaker, a privatized Hydro, the same as Light and

Power, would be subject to the requirement of paying federal corporate income

tax. Now, because Hydro is a significantly larger corporation than Light and

Power, the amount of money at stake is much greater, and if the Federal

Government were to keep the federal corporate income tax that would be levied on

a private Hydro, then that amount, an estimated $30 million or $40 million a

year would have to be factored into rates charged customers.

Under the current federal legislation, the same as the share

for Newfoundland Light and Power tax, 85 per cent of a private Hydro's federal

corporate income tax would be shared with the Province. Under the provision in

Bill No. 2 that share would be passed back to Hydro, thereby keeping down the

electricity rate increase - keeping it down to a mere $50 million a year.

Dr. Locke at the University pointed out that the federal

legislation is exclusively within the legislative competence of the Federal

Parliament. In other words, there is nothing that this Provincial Government or

any other provincial government can do to ensure that that legislation

continues. Mr. Speaker, that legislation, involving the sharing of private

utilities' federal income tax with provinces has been under attack. A couple of

years ago PUITTA provided for a 95 per cent share of private utilities'

corporate income tax with the provinces. Two years ago the Federal Government

decreased the share from 95 per cent down to 85.5 per cent.

Professor Locke pointed out that electrical competitors, such

as the oil industry, might likely lobby to have the PUITTA sharing arrangement

decreased or eliminated altogether. If the federal legislation is repealed and

Ottawa keeps all the federal corporate income tax paid by private utilities to

the Federal Government, then there is nothing a Provincial Government or a House

of Assembly in St. John's would be able to do to prevent a further electricity

rate increase of the magnitude of $50 million a year.

So, Mr. Speaker, because of the intended change in the

financing structure of Hydro from going public to private there would be

approximately $50 million a year loaded onto consumers, most of which would end

up being paid outside the Province to non-resident shareholders. If the federal

legislation dealing with a sharing of private utilities' federal corporate

income tax with provinces is repealed there would be another $50 million a year

loaded onto Newfoundland and Labrador electrical consumers, making a whopping

total increase of $100 million a year.

Mr. Speaker, as I said at the beginning, it is quite improper

for the government to be requiring, forcing, coercing the House of Assembly to

proceed with a debate of the Electrical Power Control Act when the Premier has

promised to withdraw the Hydro privatization bill, and yet this bill contains

many provisions, including the ones that I've mentioned, that have to do with

Hydro privatization and facilitate it. If the government were not contemplating

privatizing Hydro, surely, the government wouldn't be contemplating giving up

close to $10 million in revenue which it now gets under PUITTA from the Federal

Government, which originates with Newfoundland Light and Power. That wouldn't

make any sense for a cash-starved Provincial Government, for a Provincial

Government that is projecting a big current account deficit again this year.

Mr. Speaker, it is not right for us to be proceeding to pass

legislation that would proclaim as Provincial Government policy providing

electricity to consumers at the lowest possible cost when the same piece of

legislation contains measures that would have to do with privatizing Hydro and

obviously drive up the cost of electricity way beyond the level we could have if

the government simply continues to own Hydro.

There are other provisions of this bill intertwined with the

evil proposal to sell Hydro - evil, I say to the Member for Fogo. Those

provisions, for the most part, are found in clause 3. Then, in clause 23 we see

a provision which purports to limit share ownership in an electrical utility to

20 per cent of the voting shares, but allows the Public Utilities Board to

approve ownership of more than 20 per cent of the shares if it is in the public

interest.

Mr. Speaker, why conceivably would that be there? Is it

because the Premier still has, in the back of the mind, the possibility of a

merger between the company of which he was board chair immediately before

re-entering provincial politics, and Hydro? Is it because the Premier has a

grand design to have Newfoundland Light and Power merge with Hydro? How would

that be in the best interest of the people of the Province? But why else would

this provision be in the bill? How would that 20 per cent ownership limitation

affect the paper companies' electrical generating facilities?

Corner Brook Pulp and Paper, owned by Kruger, and

Abitibi-Price each have power-generating capabilities. Corner Brook Pulp and

Paper, through its Deer Lake power plant, generates most of the power, something

like 80 per cent or more, of the electricity it needs for the operation of a

newsprint mill in Corner Brook. How would that affect the paper companies?

Mr. Speaker, the Premier confessed in his first Province-wide

television address, the one on NTV, that his real reason for proceeding with

this legislation, and with divestiture of Hydro, is to try to recapture power

from the Upper Churchill which now flows to Quebec under the contract between

CF(L)Co and Hydro Quebec.

The Premier provided a legal opinion about such a strategy

back in 1986 when he was in private law practice, and when he was serving as a

director of Newfoundland Light and Power. The theory involves having provincial

legislation empowering the Public Utilities Board to reallocate any power

produced in the Province - in other words, setting up the PUB to expropriate

power.

Mr. Speaker, the Premier's theory hinges, in part, on this

Public Utilities Board power being of general application and not being targeted

at the Upper Churchill, because the Supreme Court of Canada, in striking down

the Water Rights Reversion Act as being unconstitutional, issued a warning, and

I quote: `The Supreme Court of Canada, in a unanimous decision, said - I am just

trying to find the quote, Mr. Speaker. The Supreme Court of Canada issued a

warning about provincial legislation violating the division of powers in the

constitution by masquerading as a provision regulating affairs within a province

when, in reality, the impact is to infringe on arrangements between provinces

which are within the exclusive jurisdiction of the Federal Parliament.

I have found the applicable statement, and I quote: `Where,

however, the pith and substance of the provincial legislation is the derogation

from or elimination of extra provincial rights, then even if it is close in the

proper constitutional form it will be ultra vires.

Mr. Speaker, the Premier is suggesting that

part 2 of this

bill is convincingly cloaked - I see the Minister of Social Services is

fascinated by my speech. I'm glad to have his rapt concentration.

MR. SPEAKER: Order, please!

The hon. member's time is up.

AN HON. MEMBER: By leave.

MS. VERGE: Oh, thank you.

MR. SPEAKER: Order, please!

Does the hon. member have leave?

SOME HON. MEMBERS: By leave.

MR. SPEAKER: By leave.

MS. VERGE: The Premier is on the one-hand, out of one

side of his mouth, trying to say that

part 2 of this bill is of general

application but then when the Leader of the Opposition asked him specifically if

it would apply to the paper companies - to Corner Brook Pulp and Paper and

Abitibi Price - he said, no. Now, Mr. Speaker, if

part 2 does not apply to the

paper companies who's left? Who else is there in the Province producing power?

At any rate, Mr. Speaker, this approach, if continued with by

the government and if there was a realistic chance of success, I would

wholeheartedly support it, this approach is guaranteed to land us back before

the Supreme Court of Canada. Surely Quebec will challenge any move by the

Newfoundland and Labrador Public Utilities Board under this or similar

legislation as exceeding the constitutional power of the provincial legislature.

So we would be in for a long drawn-out expensive third case before the Supreme

Court of Canada. Mr. Speaker, we wouldn't be able to get all the way to the

Supreme Court of Canada instantly. This is a matter that would drag through the

lower courts, through the Newfoundland Supreme Court trial division and then the

Court of Appeal. So it's similar to the 800 megawatts recall case which dragged

through the courts for eight or ten years. We would be in for a long drawn-out

expensive court battle.

In the meantime, Mr. Speaker, what about our chance to

negotiate a good deal with Hydro Quebec for both the Upper Churchill and the

Lower Churchill? Our interest in the Upper Churchill is in jeopardy, Mr.

Speaker, since by 1998, four short years from now, CF(

L) Co will go into a

deficit position and the annual shortfall will become worse as the years go by.

We now own two-thirds of the shares in CF(

L) Co., Hydro Quebec owns the other

one-third. If Hydro Quebec puts money into the company to keep it solvent, Hydro

Quebec would be entitled, under existing contractual arrangements, to gain more

shares and more control of the corporation.

Mr. Speaker, as I revealed last month, two short years ago

this government had a golden opportunity to get redress on the Upper Churchill

and to develop the Lower Churchill but it was an opportunity squandered and

hidden from the people of the Province. Now, Mr. Speaker, as I exposed, by

making public a Cabinet briefing document, what the Premier walked away from two

years ago involved a Hydro Quebec offer to have side agreements on the Upper

Churchill involving Hydro Quebec injecting billions of dollars additional into

the Upper Churchill to keep the company solvent, to replace worn infrastructure

and in addition to net the Newfoundland and Labrador Government over $4 billion

in additional royalties and revenues over the remaining life of the Upper

Churchill contract which stretches to 2041, that was number one. Number two,

Hydro Quebec offered a cooperative approach to developing the Lower Churchill,

both Gull Island and Muskrat Falls, by purchasing power surplus to the

requirements of Newfoundland and Labrador over 2000 megawatts initially - about

2500 megawatts initially, over a thirty year term at an escalating price.

MR. SPEAKER: Order, please!

On a point of order, the hon. the Member for St. John's

South.

MR. MURPHY: Leave withdrawn, Mr. Speaker.

MR. SPEAKER: Leave withdrawn.

MS. VERGE: I guess the truth hurts.

The hon. the Member for Menihek.

MR. A. SNOW: Thank you very much, Mr. Speaker. I'm

pleased to have the opportunity to speak on this bill.

Bill No. 2 is inextricably tied to Bill No. 1 and thus I have

quite a bit of difficulty with portions of Bill No. 2, because of my opposition

to Bill No. 1 and how they are both tied together. Because we know that the bill

is broken down into basically three parts.

Part I deals mainly with the

privatization issue and how Bill No. 2 will have an effect on Bill No. 1, and

conversely Bill No. 1 on Bill No. 2. I have quite a bit of difficulty with

Part

I of Bill No. 2 because of, as I said, my opposition to the privatization of

Newfoundland and Labrador Hydro and the effects the privatization of

Newfoundland and Labrador Hydro will have on the people of this Province.

We heard the Premier when he addressed the Province on March

22 speak of why the people of the Province should support Bills Nos. 1 and 2. If

I may first of all just have a few very brief comments concerning that

presentation the Premier made to the people of this Province when he suggested

to them that he had this super scheme to right the wrongs of the Upper Churchill

deal and that this is one of the reasons why he asked the Cabinet and his caucus

to be quiet and not to mention, not to discuss, not to - I forget the exact

words that he chose, but it was that we wouldn't cause this to be struck down by

the Supreme Court of Canada because of some inflammatory remarks by members of

the provincial Legislature.

That in itself is a misstatement because he suggested that

the water rights reversion act had been struck down by the Supreme Court of

Canada on the fact that a member of the House of Assembly, a member of the

provincial Legislature at the time, had made some inflammatory remarks and were

attempting - this was going to cure all. Where in point of fact, the statements

by members of the Legislature weren't admitted as evidence, is my understanding.

What exactly did happen was that it was statements in a written brochure that

had been published by the government had been admitted as evidence and that is

what was ruled upon. The government couldn't propose to do through the back door

what they can't do through the front door. That is why the Supreme Court ruled

against the provincial Government of Newfoundland and Labrador with regard to

the water rights reversion act.

Of course, by the very fact that when the Premier mentioned

that, by the very fact that he went on t.v. and referred to the fact that this

was his super scheme, he was going to right these wrongs, he fell into the same

boat that the previous administration did when they attempted to do this, to

right this wrong on the Upper Churchill deal.

I am digressing a little. I just want to get back to my

statement that these two bills are inextricably entwined together and that is

one of the reasons why I have a problem with it. Because

Part I of Bill No. 2 is

tied to the privatization of Newfoundland and Labrador Hydro. In his infamous

television appearance the Premier suggested that one of the first reasons that

he apologized to the people of the Province and his colleagues in government

that by asking them to keep quiet he undoubtedly did some damage to the public

of this Province in the fact that they weren't willing to accept the sale or the

privatization of Hydro because of misstatements made by people who have a

contrary opinion to his.

One of the first things he suggested is that what this

government will get from the privatization of Hydro is that it is going to have

some money coming to it because of the sale. We are going to be selling this

tremendous asset and some people have suggested we may get $500 million, $600

million or $700 million for it. Any way, we are producing an asset of this

Province I believe that is going to be very undervalued in a sale. Thus we are

not doing the Province any favour by selling this.

Yes, we will get a quick fix of dollars but that doesn't

solve your problem, Mr. Speaker. We have to have other things done in this

Province other than just selling off assets and attempting to correct the

economic situation that we are in by selling off assets. You will not cure the

problem with a quick fix and that is what this government is attempting to do.

When he accuses the Opposition, or the naysayers, the people who are opposed to

the sale of Newfoundland and Labrador Hydro of misstatements he should first of

all look at himself because what he is suggesting is that this sale is going to

solve the economic problems to a large degree. It will not, Mr. Speaker. It will

only be a quick fix for a very short period of time and we will not have to

borrow for the next one or two years. Then we will have this asset that is

forever and forever gone. Not only will we have to worry about this asset being

gone but so will our children and their children. They, too, will have to worry

about higher costs of electricity because the Premier by his own admission has

stated that we will all have to pay more for electricity as ordinary consumers

due to privatization.

The quick fix is not going to work, and the Premier is

misleading the people of this Province when he suggests that just because we do

not borrow for two or three years we solve the economic problems. Far from it,

we create larger problems because we have larger financial problems for

everybody to bear down the road because we are going to pay more for electricity

as consumers.

Number two, the Premier suggests that he will improve the

credit rating of this Province by the fact of lowering the debt because we will

remove the debt of Newfoundland Hydro. Experts in the field, Mr. Speaker, have

suggested this is not true and will not occur because in point of fact we have

Crown corporations in this country such as Hydro Quebec which is a similar Crown

corporation and they actually lead the Province of Quebec in their credit

rating. They drive the provincial economy of Quebec. I feel there is no reason

that we could not have a similar type of approach in this Province in the fact

that we should be able to drive our provincial economy with a Crown corporation.

They do it in Quebec and if it works there it can work here.

The Crown corporation debt removal, Mr. Speaker, yes, we are

going to take $1 billion off but we are going to be giving away, selling, or

privatizing an asset that is worth a lot more than the $1 billion that we are

going to be removing from the debt. In point of fact we are not going to be

making the Province more credit worthy, we are going to be putting it in a more

liable position because our assets have been tremendously reduced. That is what

is going to happen, Mr. Speaker. That is exactly what is going to happen, our

assets are worth more than what they are going to be sold for so we are putting

ourselves in a greater liability position. That is the second misstatement, if

you will, that the Premier has made.

Third, the talks about the privatization of Newfoundland and

Labrador Hydro is going to solve the economic woes because he links it with the

private sector being the engine of economic recovery of this Province. I believe

in the private sector. I come from the private sector. I worked in the private

sector and I have earned a living for the last twenty years in a small family

operated business. I have earned a good living from it.

MR. TOBIN: What kind of business?

MR. A. SNOW: I have worked in it, Mr. Speaker. I have

earned a good living and so has my family. Prior to that I also worked for a

large private sector company, one of the largest mining companies operating in

the world today, the Iron Ore Company of Canada, and they today are probably the

best mining company in the world. I believe in the private sector but I do not

necessarily believe what the Premier suggests, that just because we sell off a

Crown corporation, the Hydro corporation, that it is good for the economy. Let

us take a look at it for a second. Will a small business operator have to pay

less for electricity after Newfoundland Hydro is privatized? Will they have to

pay less or will they have to pay more?

Mr. Speaker, the Premier himself has admitted, and even the

unknowing Minister of Energy says that consumers will have to pay more for

electricity after privatization, because we have to give a return to the

investors. Apart from paying the debt we also have to give a return to the

investors, so will that help small business? No, you will drive up the operating

cost of small business.

Will people invest in this Province? Sure they will invest.

They will invest in the new Hydro. They will buy shares, but what will that do

to this Province? I will tell you what it will do. It will remove capital from

being invested in other sectors, other parts of industry, whether that's

tourism, mining exploration, or the fishing industry, or whatever it is, that

capital is now going to be invested in new Hydro, and they are going to expect a

return, and they will get a return, so the capital is going to be removed, and

capital is very, very scarce in this Province, so we are going to be removing

capital out of the marketplace, because we are going to sell this Crown

corporation to the private sector. So that's a misstatement.

He attempts to suggest, just because the private sector is

going to be the engine of recovery, basically, in our economy, that by

privatizing Newfoundland and Labrador Hydro it will accelerate the economy.

That's not true. It's a misstatement. It won't work. It will shrink the private

sector. It will increase their costs, it will remove capital, and that will hurt

the private sector.

Fourth, he is saying that this is going to increase the

viability of certain industries in this Province, mainly the paper companies.

The Premier suggested, in his address, that that was the fourth reason, that the

paper companies would be more competitive. So they may, but who is going to pay

the extra burden? In the initial three or four years, until 1999, you know who

is going to pay it? The taxpayers are going to pay it, because they are going to

give a one-time grant of, I think it is $15 million, to new Hydro to help defray

the cost that now is borne by the industry, because the two paper mills produce

their own power, and they subsidize the rural distribution of electricity. There

is going to be a one-time subsidy of $15 million. What happens in 1999? You know

what is going to happen. The subsidy is a one-time subsidy. It will be removed

and then the rural subsidy will be gone. The rural subsidy will be removed, and

people will have to pay more for electricity.

So again the suggestion that this will help the industry -

yes, it will help the industry, but who is going to pay? The consumers, the

ordinary consumers of this Province will pay after 1999, and they are paying in

the initial stages anyway, because they pay it through their tax dollars,

because a taxpayer and a rate payer are one and the same person, and they are

going to have to pay it up front, in taxes, because the government is going to

give a subsidy, and then what is going to happen is that new Hydro will be

allowed to charge whatever rates they wish as part of the investment, and this

will be part of their investment, so they will have to bear that cost.

The Premier suggested that one of the things that will occur

is that the municipalities will receive an extra million dollars in 1998. Now

again we are talking about getting an extra few dollars - $1 million to

municipalities. Now this is not a lot of money, split up amongst all the

municipalities of this Province, but again we tout that as being an advantage.

If you want a Crown corporation to pay municipal taxes, and I

actually believe, being a former member of municipal government, that Crown

corporations should pay municipal taxes anyway, and so should provincial

governments, or grants in lieu, and so should government buildings. They should

also pay, similar to how the federal government pays their grants in lieu to

municipalities, but we must remember that the taxpayer and the rate payer again

are one and the same person, so to think that municipalities are going to be

swayed by this, I think, is infantile for the Premier to suggest this as an

advantage of the sale and why it should be privatized.

Those are just a few of the reasons, if you will, why I can't

support

Part I of this particular bill in Bill 2, because it is inextricably

tied to Bill 1, and because of my opposition to Bill 1, I cannot support

Part I

of Bill 2.

Mr. Speaker, in Bill 2,

Part II is the Planning, Allocation

and Reallocation of Power and Facilities.

Generally speaking, the Premier talked about one of the

things that could occur was part of his secret scheme that he had that could

right the wrong of Upper Churchill, how he suggested that if this were to occur,

if Bill 2 could be passed then we may be able to right that wrong that had been

done years ago by a Liberal government -

AN HON. MEMBER: (Inaudible).

MR. A. SNOW: Well, the Premier has also suggested that it

was a wrong.

AN HON. MEMBER: No, that's in your judgement.

MR. A. SNOW: No. The Premier suggested that it was wrong.

The Premier himself has suggested, in his television address, that there were

two reasons. One was redressing the grossly unfair situation of the Upper

Churchill contract with Hydro Quebec, which sees Hydro Quebec get a greater

benefit from the generation of 5,250 megawatts of power from Upper Churchill and

they get it for basically about 3 mils and sell it at a tremendous profit,

somewhere around the vicinity of $700 million economic grant accrues to the

Province of Quebec, and he says that what they may be able to do, and he has in

his limited experience he suggested, that they would be able to, because of

Section (inaudible) they would be able to use that

section in the Constitution

and if we pass this part of the bill,

Part 2, that we would be able to right

this wrong that had been done back in the 60s by a previous Liberal

Administration, and the Premier himself was in the Cabinet at that particular

time.

But I am not so sure that this can be done. I would like to

be able to see the analysis that had been done, and I would suggest that what

the Premier should do, what the government should do is, strike a panel of

well-learned lawyers and to research this thoroughly because I don't know what

advice he sought, he hasn't told us, he hasn't told the people of this Province

whom he sought advice from; most lawyers with whom I have spoken and whom we

have had briefing us, have suggested that there won't be any more grounds for

this such as what Patrick O'Flaherty has suggested in his

article in an

editorial written, that there is no difference in doing this way than what a

previous administration had attempted to do with the Water Rights Reversion Act.

So I would suggest that what they do would be to strike a

committee of well-educated and experienced lawyers and have them give a public -

make some public discussion, create some public discussion and more awareness

about whether or not we would be able to correct the infamous Upper Churchill

deal because if indeed we could, I would readily support this part of the bill,

but, I still don't see why we would have to privatize Hydro; I don't think you

have to necessarily link the two.

The Premier himself suggested in 1986 that it didn't have to

be linked in a subsequent debate to the infamous NTV appearance, the Premier

admitted that it wasn't necessary to privatize Newfoundland and Labrador Hydro,

and when he was confronted by the Leader of the Opposition, he admitted that it

wasn't necessary to do it so what we should do as the Leader of the NDP Party

suggested, we should tear up Bill 1 and proceed in a timely fashion if you will,

with a discussion and more research on -

AN HON. MEMBER: (Inaudible).

MR. TOBIN: What? He spoke twice?

MR. A. SNOW: No, he didn't.

MR. SULLIVAN: No, he was an honourable person, he didn't

speak twice.

MR. A. SNOW: Mr. Speaker, the Premier should in my

opinion strike a special committee and have that committee research all the

implications of what would occur if we were to pass - because I would readily

support

Part II of this bill. I think that most people in this House would

readily support it if they thought that we could by doing this accrue a

tremendous benefit to the people of this Province. A wrong that was done to us

back in the 1960s.

I don't know of any studies that have been done. I don't know

what has been done. The only one that I know of is the Premier says that he

feels - he is the only one who has touted it. There is an expression that goes

about that a lawyer who acts on his own behalf has a fool for a client. Maybe

the Premier should take heed to that statement.

MR. TOBIN: What is that? Say that again. A lawyer who

acts on his own behalf....

MR. A. SNOW: His own behalf has a fool for a client. Mr.

Speaker, the Premier should take that advice and seek more legal advice as to

what exactly the implications are, and not attempt, like a lot of people are

suggesting, to hoodwink the people in this Province by tying this particular

part of the bill to the privatization. Because that is fundamentally wrong. You

are falsely raising the hopes and aspirations of the people of this Province

because they've felt a tremendous burden and shame over the last numbers of

years because of this tremendous wrong that was done to us as a province and as

a people back in the 1960s with regard to the development of the Upper

Churchill.

The other thing, one of the problems I have with it - and

again this is from legal advice. I am not a lawyer. In some briefing notes that

we've had presented to us, people suggest that in

Part II the paper companies

themselves could be put in some jeopardy because of this particular part of the

bill. That because of their lack of secure energy this could place their assets

in a certain liability. Of course, because their assets are restricted - their

assets being electrical energy producing plants - and they would then have a

very fixed cost, so their assets are going to be restricted, so that would limit

their asset and thus it could possibly restrict the amount of borrowing that may

be necessary for them to operate in a prudent and competitive fashion.

Because we all know that in today's market the pulp and paper

industry is very competitive. If indeed that is one of the reasons why we had to

pay an extra $15 million to one of the paper companies recently - because some

people have suggested this is what exactly occurred. That we gave them this

subsidy on the short-term and maybe we can let this go for another while. If it

affects all producers - it will affect all producers. You can't have it both

ways. You can't say it won't affect Kruger but it will affect CF(L)Co., in my

opinion. I believe that it will affect both.

With those few restrictions I don't see where I could not

support

Part II of Bill No. 2, albeit I'm still adamantly opposed, because I see

no benefit whatsoever, no permanent, long-term benefit for the privatization of

Newfoundland and Labrador Hydro. Thus I cannot support

Part I of Bill No. 2.

Also, because I believe that if this were to work - let's

assume that it could work. What would happen to any further hydro development?

Hydro development as we all know has just about totally developed now on the

Island portion of the Province. The only area of the Province where we have any

sense of large projects in hydro development able to proceed, or potential for

development if you will, is in Labrador.

If this could work, Mr. Speaker, how would we then proceed

with any development? How could it work on the Lower Churchill? I don't see how

it could. Would Hydro Quebec enter into a contract that cannot absolutely

guarantee the supply of power? I don't think they could. I don't know of anybody

who would finance it.

Mr. Speaker, can Hydro Quebec resell power to the United

States if it cannot absolutely guarantee that power? It couldn't.

AN HON. MEMBER: (Inaudible).

MR. A. SNOW: Gorbachev is over there somewhere. That is

Breshnev, isn't it?

Mr. Speaker, I can see where this could have a negative

impact upon further development of hydro in Labrador, and thus, that is another

reason why I would have to have second thoughts about any support I could give

for Bill 2.

Now, Mr. Speaker, Bill 2,

Part III, with regard to emergency

power - while I believe that no province in this country has any similar type of

legislation which provides for the permanent expropriation of power and

facilities, most provinces do have legislation to provide for emergency recall

of power, and we do not. It is long overdue and I can support that thrust in the

legislation.

With those few remarks, I just want to conclude, if I may.

MR. TOBIN: You still have three minutes.

MR. A. SNOW: One of the things that does bother me to no

end, is the unwillingness of this government to listen to people. I reiterate

and repeat that I am dismayed at the unwillingness of this government to listen

to people, to allow people to express their concerns about the effects of

dramatic moves this government is going to make with the privatization, and I

believe, in a wrongful fashion, with regard to rushing this bill through the

House without proper consultation with the people it is going to affect, mainly

the paper companies and ordinary individuals.

I think this government, while on one hand espousing one

theory about consultation and the willingness to listen to people, they don't do

it, Mr. Speaker. They are long on style and short on substance. There is

absolutely no reason, that I can see, where I can support this particular bill

because of how it is being tied to privatization and is not necessary. If this

bill were only attempting to address the problem and create another method or a

better method of giving us as Newfoundlanders and Labradorians the opportunity

to further develop hydro in this Province, I could support it. If this bill

could and would give us a greater access, in the case of an emergency, to hydro

facilities, distribution, and production, I could support it, but the fact that

this bill is totally tied to the privatization of Newfoundland and Labrador

Hydro - and I believe that is all it is about. It is only about the

privatization of Newfoundland and Labrador Hydro.

MR. SPEAKER: The hon. member's time has elapsed.

MR. TOBIN: By leave, Mr. Speaker.

MR. A. SNOW: Now, Mr. Speaker, I will not support this

particular bill because the bill is only being tied as a smoke screen for the

sale of Newfoundland and Labrador Hydro and that's fundamentally wrong. This

government is attempting to deceive the people by falsely raising their hopes,

by going after the Upper Churchill.

MR. SPEAKER: Order, please!

On a point of order, the hon. the Member for St. John's

South.

MR. A. SNOW: It didn't work the last time and the Supreme

Court won't allow it to work this time.

SOME HON. MEMBERS: Hear, hear!

MR. MURPHY: The member can't be getting on with that

stuff. No leave, Mr. Speaker, no leave.

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

Extern.

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

I'm pleased, Mr. Speaker, to rise today and speak on Bill No.

2,

an Act to Regulate the Electrical Power Resources of Newfoundland and

Labrador. As I stated before, Mr. Speaker, I believe that this act was

fraudulently introduced into the House of Assembly when the Premier first

introduced it. We found out the reasons why it was introduced in an address on

province-wide TV, long after the bill was introduced into the House. The real

reason was given, at that point in time, as being to try to access the Upper

Churchill power. Again, in the leader's debate a few nights afterwards, the

Premier agreed that there was no need to privatize Hydro to access the Upper

Churchill power.

AN HON. MEMBER: (Inaudible).

MR. J. BYRNE: Another twenty-nine minutes and thirty

seconds.

I realize that Bill No. 2 and Bill No. 1 are closely

associated, one with the other and it's hard to speak on one and not the other,

as many members in this House have done, Mr. Speaker. I believe that this bill

is a very important bill and it could be supported by all members of the House

if certain sections of the bill were taken out which refers to, of course, the

privatization of Newfoundland and Labrador Hydro. Subsection 3(a), paragraphs

1-3 and subsection 3(

a) paragraph 4, which deals with the rural subsidy ending

in 1999 is a very important issue and will have drastic effects on the rural

areas of Newfoundland and Labrador in the future.

The power emergency section, Mr. Speaker, which is

part 3 of

this act - I'm going to certainly agree with the intent of that

section and it's

probably long overdue. I realize or understand that there are other provinces

which have similar legislation.

With respect to the privatization of Hydro, Mr. Speaker, I

don't believe that there will be any benefits accrue to the people of

Newfoundland and Labrador, although the Premier says, over the next ten years we

will save approximately $250 million, which actually works out to be

approximately $25 million a year. Figures have shown that it will actually cost

the Province over $1 billion in the same period because of increased rates,

subsidies, and tax concessions to certain companies - Newfoundland Power and New

Hydro, of course. The Premier has also stated in the past that the selling of

Newfoundland Hydro will boost our credit rating in the Province but the rating

companies, themselves, disagree with that statement and have said so. They have

said that Newfoundland Hydro is self-sustaining and it is excluded from the

public debt when they are doing their calculations.

I believe now that the government is grasping at straws and

trying to get people to support the bill - such people as RBC Dominion

Securities who are about to make $20-$30 million on this deal, people like

Merrill Lynch and Mr. Kellogg who was here speaking to, I believe it was the

Board of Trade.

I noticed, Mr. Speaker, that there were very few members

opposite who spoke in the debate over the past months on this issue, either on

the privatization of Hydro or actually the six-month hoist. There were a couple

of members opposite who spoke on the six-month hoist but very few spoke in

favour of the privatization of Hydro. I realize that it's probably because the

Premier has those hon. members muzzled and he basically told us that on

province-wide TV a month or so ago.

Mr. Speaker, I would like to look at the number of people who

are opposed to the privatization of Hydro. We have had a number of polls now

done by different groups who say that possibly 70 per cent or 80 per cent of the

decided vote is against the