!, l Volume 'l PROVINCE OF NEWFOUNDLAND THIRTY-SEVENTH GENERAL ASSEMBLY OF NEWFOUNDLAND 1st. Session VERBATIM REPORT FRIDAY, NOVEMBER 28, 1975 SPEAKER; THE HONOURABLE GERALD RYAN DTTENHEIMER Number 6

November 28, 1971. The House met at 3:1)f1 p.m. Mr. Speaker in the Chair. STATEHENTS BY HINISTFRS! BON. J. CROSBIF ('1inister of Mines and Fnergy): R!l - 1 Mr. Speaker, I hnve ;; statement that 1 would like to make on the Lower Churchill project, Hr. Speaker, and 1 would ask the indulRence of the House. It will he len~thier than the usual ministerial statement, But since it is an extremely important topic T. trust the House will not mind the length.

A copy of this will be r,iven to all the members nn~ tn a few minutes and the press in case you want to follow along and Twill try and summarize so it does not take as long as it would otherwise. On Monday, ~r. Speaker, my colleague, the Hinistcr of Finance commented briefly on the Gull lsland hydro-electric project and gnve an indic:ntion of the course of action proposed hy government with re)!ard to this important issue. The decision which has to be taken regarding C:uJ 1 Island is one of the most important that has ever come hefnre the honourable members of this House.

It 1411.1 have far renrhfnr; implications for the future of our Province and it is \;~cause ft is such an important m.-1tter that t intend today to pn"'vldP hon. members with 11 detailed report on the project and to fullv cxpla:in and iurttify the decision which has heen taken. The first part of the statement, Mr. Speaker, deals with NPwfoundland 1 s electrical Iond growth and describes the early stages of the develnpme.nt of the electric: utility industry in Newfoundland in thE> 1940's and 19)0 1 s when rural electrificntion started in the Province.

The average use of energv hy ~1ewfoundland householders in 1960 wa~ still 40 ner cent lower than the Canadian average and in the 1960's emnhr~sfs was pl11ced an the provision of essential horne service. During this neriod load r,rowth on the lsltmd ;tpproximated 5 per cent per annum (which was helow the national lon~ term avern~e of 7 per cent load rrrowth ner annum) nnd industrial groNth wan curtailed by the lack 359

November 28, 1Q75. Tape 144 RH - 2 of power for exp~nslon purposes. In 1964 the Bnv d 1 Enpoir hydro electric project was initiated and with it the decision to construct an Island-wide transmission grid. The first commercial delivery of energy from Bay D'Espoir was achieve~'! in Hay, Fl07. The availability of that additional energy resulted :in no annual load growth immediately increasing to an average of 12.S per cent per annum, with a maximum of 19 per cent heing reached in 1969. As a result, the second phase of Bay d'rspoir hnd to be undertaken ahead of

schedule and it was also necessary to add a 300 me~awatt oil-fired generating station at Holyrood in 1971, to prevent energy shortages occurring during the 1970 1 s. Wherens the average annual rate of growth on the Island had been 5 per cent per annum prior to 1967 when Bay d'Espoir first relieved our enerv,y shortage, the average rate of growth in electrical load from 1967 to 1q74 has been 11 per cent per annum.

However, despite this rapid growth, per capita, electrical energy consumption tn Newfoundlnnd remains today still 10 per cent below the national average, Durinr, the past three years extensive load growth studies and forecasts have bN'!O unclertaken in order to compute our future electrical t>nerp:v n:quiremt>nts. In undertaking these studies tvo different approaches to loarl forecasting have heen employed and the results of each assessed and c:ornonred to the other, in order to derive the most accurate pro;ection possible.

The first ttpprnach • basecl on "micro-nnalysis 1 ; involves surveying all existing rnstomers ( that is Newfoundland I.ight and Power Limited plus thC'. ma1or industrial users) to determine directly from them their expected energy needs. And then the estimates are hased on the information they provide and the Department of Industrial Development is consulted on past experl~nce. The second approach, based on nmncro-analysis'; involves examining the various social and economic indicators relating to the Province. 360

November 28, 1975 Tape no. 145 Page 1 ~ mv In this connection. vnriou!'l rotatlstical indicators arc used. For example~ statistics rel~tin~ to the electrical appliance market and household furnishings and facilities are used to determine the extent of market naturation which has occurred in Neufoundla:nd and past and present per capita electrical consumption in viewed in relation to per capita consumption in ather areas of Canada. Trends in per capita income are analyzed nnd projected, with industrial expansion separately examined in relation to past trends and known future developments. Now. Hr.

Speaker, while those two analytical techniques have proven to be of value during the past ten years, for short-term forecasting, the uncertain economic c1 !.mn:te vhich is expected to prevail during the next five to ten years justif:f.es a critical review of the methodologies being employed. A major ne~ factort Mr. Sneaker, h the effect of rapidly rising energy prices on consumption. This Is 3n unkno~~ factor when considering whnt may happen in load growth in tht> next few v<;aro;. OiscusRions with other utilities, and load forecasting consultant!':, do not suggel'lt <1 totally new approach.

But a critical review waR undertaken of the accuracy of past load forecasting ezerd.sest in relation to the: Actual load exnerience:d. to determine tf P<iSt forecasts have shown any particular bins. The results of that ase;~r:~-;rnent showed,first, thrtt the domestic, commercial and light industrial l0tui ~Jct·b:ity in thlr: Province has been consistently underestimated.

It shm,ed furtht!r th2t the main factor causing the growth in domestic load in thin Prnv{ncu fs the installation of electric heat, And~third~that industrial encrgv rcqrdrements hnve been extremely irregular, reflecting the t>ffect of cbatF""i' '!n world market conditions and other factors. Surprisingly ther~~ app<'!lts to he virtually no correlation between domcntic electricAl consumption and the direction or level of industrial consumption.

On the b.qsis of the inf0rmntinn p:ained from assessing the 'lc-curacy of p;lst forecasting exercises :1ione we would he justified fn increasing the current projt~ctions if vc vent on the past experience. !!ow-ever, current forecaRts have not explfcftly taken into occount the likelv reaction of consumers to substantially h:i.gher energy prices during 361

November 28, 1975 Tape no. 145 Page 2 - mw the 1980's. White ~;ome research has been attempted, no definite conclusions can be reached. One would think that as prices rise most consumers will attemnt to limit electrical demand and particularly energy wastage~ Some may want to reconsider purchasing additional electrical apvliances.and so on.

However, as the price of alternative energy sources is also rtr.ing rapidly and as operating costs for electric appliances are a relatively insignificant proportion of the orir,inal costtand of a monthly budget, it is not clear that there will in fact be a significant reduction in load growth. On balance, therefore. it is considered prudent not to inflate our current estimates to compensate for the traditional conservative bias found in the present methodology. The general conclusion to be drawn from all these studies is: thnt - here is an important point, Mr.

Speaker - assuming no steps are taken to limit the demand for electricity. the Province will experience significant load growth during the period to 1990 and beyond. That is, if no steps were taken. That one alternative, Mr. Speaker, would be to take steps to limit the demand for electricity, which :ts not an alternative we want to consider unless forced.

While numerous forecasts have been prepared, the most realistic forecast availnblc,in the opinion of Newfoundland Hydro, projects the Island's industrial ioad growth at an annual compound rate of 5.6 per cent and the utility load growth of 9.6 per cent, giving an overall average system load growth of 8.1 per cent per :mnu.-n from 1976 to 1990. On the assumotion that thin rate of growth occurs, a major new energy source is required hy the end of 1980. So that the forecast is a conservative one vith a small "c." and it is as realistic as it can be made. Thrw, Mr.

Speaker, iuat briefly, the origin of the Gull Island concept. In September. 1972. Brinco formally approached the Government of Newfoundland and Labrador with a proposal to develop the hydro potential at Gull Island on the Lower Church:tll River. 362

"<ovember 28. 1975 Tnpc 146 IF-1 The orfginn!

Rrfnrn rnm:ept WtH; to t1r> the C:ull T~lttnd rlevelnpment fntn th11t of the roper f:hurthfll. rmd ro sell the output to Hydro Quebec: under n lonr t,..nr> c:ontrnc:t. />'!'t n matter of fact they !'mr:n:esteci the ~:tme kinrl of lenAe nnd terms ns on the Hpper Churchill. nfsrussionm continued - !Jr>. rPOSB!E: Ven. niscussions continued hrtween RrJnco and the g-ov1~rnmcnt relatfnp to tnx nnd roynltv arranJ!ements nntH the Sprin of 1973, hut mutually satisfactory terms n.nd conditions were not nchleverl. 1-le wish~>rl n better arranp;ement than there hac' been on the IIpper r'hnrchilJ. nnd we were nbJc r.o come to no aJ!reement with Rrinco who t.rf're rropnsinp. to develop the Lower rhttrehf.Jl hut sell the power to !lydro-Ouebec.

At the same the that ne~otint1ons were proceeding with Brfnco, the PJ ;mnf.nr, Task Force Stucly Croup on Energy was at wnrk anrl in H:ty 1973, that Tnsk Force recommended thnt government serjouslv crmsirler rep:dninp; control of the Province's LAbrador hydro­ t>lectric enerp:v sources, Tt was not nnJv our mm view, Hr. Speaker, but thiG TAsk ForcP. recnl'!ttrlenrlerl this nlso. The mnjor fnctors underlying this rP.cnmrt'IA'-ndntinn were the er.tremelv rnp!d rate nf energy load rrm:th forf:'cast for the TsJnnd into the 1990's nni! the 1lmited on­ ldnnrl prnnpects for economicnJ enerp;:y source rlevelopment.

Tn Aug_ust of 1~73, the r:ovemment's enerr:v ngent, the Power f:omnd.asfon :-::n it t><Hl then known, nuthorize~- Teshrnont r:onsultnnts nnd H. linder and ftr;:~nd,'ltes to conduct a Joint studv of the technical <1n<l f'conorntr- ft'rH:ihll.itv of develorinr, the hydro-electric power resources ,,t full TnJnnd nnd pf rlelivr>rinp the pow-er to load centres on the Jslnnd. At the smnt> time :::hnwf.'r>if Net.:fnunrlland Limite.d was cmnmissionerl to studv .1ltC'rn:!t:IVP5 to the run island development. The results of tho<te tMo studies, one receiveti in F't'hrunrv :mrl the nthc-r in November JllJ4.

C'Onf1rmed thnt the iiu11 T~lnnc! hvdro-£>}ectrif' ptoteet W:1R hoth rPrhnirn11v nnd fin:mr:i<'!llv fl"n~iblc :m0 the be.<':t <:;ource of mhHtion.1l enerp,y available, nl'r'nnr nlJ thP pof>sihle :1lternntives. With thn.o;e stmlies !'_f'J'fl11]ete-ri, :md th<' resnJtA confirmirtl! tht! pnvernr.("nt's Vif'V thnt the rlf'Vf'lopment of rul1 hvrlro vi1S the best source nf energy for the Ts1!l"ntl 11nrl for Lnhrndor, it vns decided 363

November 28, 1975 IB-2 thnt the future dt'veloprnent of nll hyrlro ~enernt:fon resources in rhe Province r,hnuld be <Cntro11ed by the government. In Jtme:, 1974. nl thour:h T he 11 eve it wa~ in March or April when we started, but in June, 1974, the Province purrhma~d from Rrinco Limited its 57% sh:;:reholdinr: in rrtcn nnd it» 1007, :i.nterest in Gull Island Power alnnr, vith all of Hrinco's Lnbrndor wnter rights. All of the water ri,~thts of Lnbrador w£"re vested in Brinco.

Fhortly thereafter the Power rorporation enterecl lnto n project management agreement with Teshmont Consultants Limited and they were the firm, Nr. Speaker, who were f 1oing the line from the Nelson River in !'~:mitoba down through Hani toba to the South part of }-l.anitoha. A project management agreement was entered in '~<•ith them for the rlesi.jm and construction managel'!'lent of n high voltage_ rHrect current trnnl'lmission Une, extending from Gull to t~~ terminal stations on the Island of Newfoundland.

Also covered wa5 the rlesign and construction mannp;ement of an intertie between Gull Island anrl Chnrchi11 Fnlla and the design and construction management of a transmission line tunnel for the Strait of Belle Isle crossing.

A similar pro1ect management agreement was agreed in principle with a consortium romprising AcreR Consultlng Services, who had been involved Jn the Ppper Churchill, Montreal Engineering Company Limited, and Sh:tdnir:nn Engineer-Jnp: rompnny Limited 1 known collectively as !,ower r'hurr:hill ransultantR, for project desip;n and construction management of the hydro fad J ities proposed for the Gull Island site. The nrip.innl Teshmont-Zinder FeMi.bility Study estimated the totnl cost of the prr>);'ct At between $1 billion nnd $1.1 billion. Of rourse thnt vns :;. prc1 !minarv estimate, Mr. Speaker.

On the ba!d.s of ~-!!>cnssiom; hP.ltl vith repri'\APntatives of financial institutions in f':mad11 and the Fnitcrl Stater:, Tf'Rhll'ont-Zinder stated that the r£>nnirecl rrtpfrn1 rot~ld be ohttdnecl for the project provided an assured mnrkPt e:xfste(l for the enerrw and the pro-ject had suitable. financially ~tr('lnp._. supporter!'>. nne nf the issues thnt they had to address vas the nhilftv of rhis Province> to net ns the !'<ole finnnc:inl backer of the pro·ject. It was conc1m1eP, hovever, thnt the investment was too lnrr,r in rPJntinn to the income, resources nnd credit of the Province. 364

November 28, 1975 Tape 147 PK- l Indeed. only the Government of Canada was visualized as having the capnhilitv of financin~ the entire project alone. The feasibility report therefore concentrated its analysis on a more likely case, involving the Government of Canada providing a major part of the financing required. It was also pointed out that if we wanted the power brought to the Island by January 1 1 1979 a decision would have to be taken by April 1 1974 to authorize field investigations and engineering work, and you would have to give full project release October~1974.

The government authorized the financing of the preliminary work in order to protect the energy delivery schedule. Recause of the magnitude of the investment comtemplatedt and the urgency for a final decision the ~overnment approached the Government of Canada to request financial aid for financing of the project. In May 1974, the Premier met with Prime Minister Trudeau to personally present and explain our application for federal a~sistance in fundinp. the development of the Gull Island project.

The request for financial assistance was based 1 1n part, on the precedent of the assistance given to the Government of Manitoba by the federal government in financing the Nelson River HVDC transmission facilities and.in part, on their previous policy of making r,rants to the Atlantic Provinces for the construction of transmission lines and generating facilities.

At the meeting with the Prime Minister, the Premier noted that the federal government had not provided the total financing required by the Government of Manitoba for the Nelson River HVDC tnnsmission facilities and had funded one-third of the total capital cost of the Bay d'Espoir hydro development by way of a grant. We therefore asked the Government of Canada first 50 per cent- I do not mean now a. grant. loan funds - first 50 per cent of the capital cost of the Gull Island HVDC transmission facilities, plus the intertie.

At that time the estimate was about $240 million, excluding interest during construction; that the funds be repaid on a ''line-use basis", similar to that agreed to for Manitoba. where they had to start repaying thP funds once the 365

November 28, 1975 tape 147 PK - 2 line was in use; third, a grant of $150 million, through DREE (which represented approximately one-third of the estimated capital coat of the Gull Island hydro facilities). Well~as a result of those discussions a Federal-Provincial Task Force on the Gull Island project was established. That Force had to review the past work, it commissioned additional studies by consultants and other groups of experts in the public service in order to evaluate the proposal from the Federal Government's financial, economic and social perspective.

A series of study committees were organized which focused~first~on our load growth; second, an alternative sources of energy; third, on financial and economic matters; and fourth. a review of the technical feasibility of the project. Although we had an undertaking that there would be a quick response, the Task Force took almost nine mnnths to complete their studies and to come up with the recommendations. It is under­ standable in view of the size of the project. This delay caused the Province to withhold project release which had originally been scheduled for October 1974.

In the meantime, engineering and design work proceeded and as additional field information became available the estimated total cost was revised upwards to $1.47 billion, representing in part scope and design changes and also the e~tect of hi~her interest rates. On February 10, 1975. the Government of Canada acknowledged their willingness to provide support for the Gull Island project:. They ap,reed to loan 50 per cent of the cost of the transmission facilities, up to $343 million, at Government of Canada Crown Corporation interest rates.

We were also told that upon request, and the presentation of an acceptable case, interest and principal repayments on the Federal loan could be deferred for five years after completion of the project. This would make the term of the loan forty years from commencement of construction. The proposed federal loan of $343 million, together with the interest capitalized during construction. provided approximately $425 million of the estimated then total capital cost of $1.47 billion. No other aid 366

November 28, 1975 PK- 3 was offered but the communique, the letter from Ottawa 1made clear the Federal Government's willingness to discuss further financial assistance. should the initial response to our request prove inadequate. 1-!r. Speaker. while this was going on of course, the national nnd international financial and economic climate was going through :;: period of stress particularly because of the "energy crisis" which was stimulatin~ inflation. 367

November 28. 1975 Tape No. 148 NM- 1 HR. CROSBIE: Although we do not cause these effects the effect on the Gull Island project was significant. It became clear that the prices uses for materials and labour in preparing the estimated cost of Gull were rapidly becoming obsolete, and on the other hand that rapidly rising oil prices, and threatened interruptions to orderly supply of oil increased the interest in the Gull Ialnnd hydro-electric energy resource. Because, of course, Mr.

Speaker, one of the great benefits of Gull would be that it would free uo from dependence on imported oil and save Canadian foreign exchange of many. many tens of millions of dollars~ In January,1975, therefore, the r~vernment took steps to commission a new series of studies on the Gull Island project.

The first study vas given to Shavinigan again to do, Shawinigan Engineering, and that was a review of anticipated price trends over the period 1975 to 1981, for all major material and labour components which would be inputs into the construction of Gull~ the transmission facilities. the tunnel crossing and the intertie. Immediately upon completeion of the escalation review, which predicted significantly higher future costs for construction than had been previously anticipated, a new capital cost estimate was requested of the project managers fncorporatinR the new escalation assumptions.

The results, which were available in ~arch 1975, indicated that the capital cost of the Gull had risen to over 51.8 billion. An analysis of the reasons for the increases which had occurred revealed that the direct cost increases on the power plant, the lines, the straight cro~sing, the intertie, that is the nctual construction part of it. accounted in totnl for 29 per cent of the overall increase. while increases in 1rtercst during construction and escalation provisions accounted for most o( the balance. Interest rates of course arc all important in a project like this~ Mr. Speaker.

The government decided that these much higher costs made it necessary to totally reappraise Gull and to reassess whether Gull was still the preferred source of energy for the Province, Accordingly arrangements were made for Teshmont and Zindcr to conduct an entirely new feasibility atudy 368

November 27, 1975 Tape No~ 148 NM - 2 and to collaborate in tha= with Shawinigan Engineering, who had been also commissioned to again prepare an assessment of alternative ~ources of generation. In order to obtain confirmation that the capital costs, risks and construction

schedule were correctly reflected in the Mareh up-date, the President of Hydro met chief officers of Shawinigan, Montreal Engineering. Acres and Teshmont and asked them to establish a review committee of their senior executives who are not directly involved in Gull, to report to him on these matters. In a letter of April 17, Mr. Groom asked them to review the following matters, first, the proposed timetable for the provisional project release in June and final release in October: Secondly. the accuracy of the March 1975 estimates indicating $1.8 billion. Third, whether the construction

schedule is realistic and whether Gull energy would be available for use on the island by the end of 1980; and four, whether all the major risks associated with the project had been identified. The report of the review committee and the results of the new Teshmont-Zinder study became available in Hay. The Teshmont-Zinder study concluded:- " .•• the Project is financially stronger than ever desrite rising capital costs. The dramatic increase in the cost of fossil fuels in the recent past can not be ignored nor will the upward pressures be relieved in the foreseeable future.

Stability of cost after construction is the most outstanding economic feature of hydro power and the moat desirable in view of continued inflation of even modest proportions." Then to summarize, Gull Island remains the most satisfactory when evaluated against all known alternatives. The technology exists to develop the hydro of the Lower Churchill and to transmit it to the Island and costs could be fully recovered from anticipated revenue that is based on competitive rates which would encourage continued economic growth in the ProvincC<. And they concluded in their view the project could be financed.

The review committee reported on May 22, 1975. They commented on the design. the schedule, the costs, the escalation and major risks. With rE"gnrd to risks they stated, ''it is our opinion that the definitive project estimates will not exceed the $1.842 billion plus 12.5 per cent and thus a financing figure of $2.1 billion is reconD:ttended to cover the overall project 369

~1ovcmber 27, 1975 Tape No. 148 NM- 3 ns defined in the Teshmont Zinder Report". In commenting on escalation tlwy said. "We arranged for an independent review of the escalation indices used to determine the probable cost of inflation to the project. This re .. ·iew confirms the ::tndices used 11 • By the way, that was 370

November 28. 1975, Tape 149, Page 1 ~~ apb reponed to the House of Assembly last June, in a debate last .Tune in the House. OurinP. the early part of 1975 1 while Teshmont-Zinder and Shavinigan nro('ceded wHh this re-evaluation, we asked the Svstem Planning Department of Hydro to undertake a number of supplementary investigations to see whether it was economically desirea:hle to delay undertaking the Gull Island nro1ect or to phase its implementation.

These studies included consirleration of bringinp, Churchill Falls energy from Labrador - that is Hnper Churchill - either, by purchasing it or obtainin~ it in some form of l:'ner~v swap, whereby energy borrowed for delivery to the Island would he repaid at some future time when the Gull rlnnt came on stream. These studies indicated that if the entire Gull project is delayed, even for one year, a new encrp,v source will have to he installed on the Island. And this is interesting, Mr. Speaker.

This conclusion is based on the assumption that all existing industrial customers of Newfoundland and Labrador Hydro will continue to operate and that no new major industrial load will arise until after 1980. So that statement is not based on any :mntheosis that there would he major ne,w industry, it .iust assumes that the Pxistinr, industry will continue to operate. If that is the case we will need a nPw ener~y source at the end of 1980.

The studies concluded that the option of phasing the development of the Gull project by constructing a transmission 1 !tHo :md delaying the building of the power plant, while it would help the spremling of the horrowfnp, programme over a longer neriod. was not as attrnctive from a financial analysis net present v;llue point of view as proceedinr: with the full pro1ect.

Their anaJys !~' clenrly :tndicatcd that in the long run it is to the economic ndvantar,e nf the Province to proceed immediately with the full Gull deveinnment, selling: to ;Ivdro"Ouebce energy in capacity from the Gull site which might temporarilY be surplus to tlH~ Province 1 n needs. Those studies were reviewed by Hydro 1 s fiscal agents and financial advisors, Mor~an Stan]ev nnd Company -who have confirmed the conclusions reached~ Horgan Stanlcv. of course, were involved in the tipper Churchill pro.1ect and are onP of the best known financial firms in the world.

While these studles were being undertaken- or while all the studies 371

November 28, 1975.

Tape 149, PaP,e 2 -- apb undertab>n confirmed the desirability of proceeding immediately with the full Gull oroject. thr: government recognized that the major problem is ;;nd always has been the ahUity of Newfoundland and Labrador Hydro to raise the sums of money required to finance the total pro1cct. !t was nlso acknowledged that other sip;nificant difficulties have to be overcome tf the full pro_1ect is to proceed, Early in 1975 therefore 'W'e reviewed the various options abailable to the Province for meeting our energy needs ;md concluded we should not be diverted from our original intention of proceedinp, with the full Gull pro.1ect and that only if insurmountable obstacles arose would ;my alternatives be considered.

Hydro l>1ere thus instructed to take all necessary steps to ensure that the momentum on Gull was maintained, with a view to provisional project release to be Riven in Junl! 1975 and final pro_ject release in October 1975. llp to this point the management had concentrated on evaluating technical and economic feasibility to try to reach the

schedule target date of January 1, 1981. One of the first tasks that they then proceeded with was to organize a team in the Hydro and recruit strong experienced people, project people to staff Gull Island Power Compnay who would devote themselves full-time to the pro1ect, and give policy direction to the project managers. 1t is necessary to have a strong owner's presence to ensure that our interests are protected. The next i.moortant step was the decision to appoint Morgan Stanley as fiscal agents and principal financial advisors to Newfoundland and Lnbrador Hydro.

When they were appointed they were asked to review and verify all nrevious financial and economic analyses undertaken on the Gull Project (inc.ludinr, the most recent Teshmont-Zinder Report); (

b) to determine the economic and financial viability of Gull; (

c) to develop a financing plnn for the pro1ect: (

d) to assess the horrowin~ capacity of Hydro and of the Province, and (

e) examine the- capacity of the financial markets to provide the funds required. Horgan Stanley's review of our borrowing capacitv and the capacity of various financial markets to provide the funds required led to the indisputable conclusion that neither Hydro nor the Province have the financial resources or the credit stnndinp, to enable the proiect to be undertaken on the basis of the offr>r of assistance- from the Government of Canada of February 10, 1975. Thus 372

llnvemher 2R. Jl}JS. Tape 150 Rl! - 1 nn Auj.;:ust zq. 197"~ T, ns the Minister of lnterr,overnmcntal Affairs tJuhmitted a further requeRt for finrmcinl :1id to the hon. Donald Macdonald, Minister of Energy, ~Unes and Resources and we are refiucstinf{ assistance in th£' following forn:

(1) A grant towards the capital cost of the project totnlling $250 million (or alternatively a similar amount Invested as ef!uity in null Island rower Company Limited); a grant. i_f they are not prepared to make , grant. inver;t in e:r]uity in the pro_;ect.

(2) He have anked for ;; loan for one-half the: capital costs of the transmission system (Pxclud:lng the tunnel under the Straits). {3) That interest and cnpitnl rep:tyments on the federnl lo:m for the transmission lines he delayed (vlthout compounrling) for a period of five years from the initial in-servict> datr>, and wf.th the r(':payment period extended by five years; and (4) rhat they f:tnnnce the construction of the tunnel under the Strait of Belle Ts.le by way of a p.rnnt. That is what we are now asking, Mr. ::;peaker.

We believe thnt the tunnel could bP 1ustifiPd to be supported by a grant since it wi 11 join us to the mainland of Labrador. We Btr"s~;pd the lmportArt,'t, of an early resi}oOJ;(' zts we hoped to r-hrP ftnal project relt:asc in October. As I st<'lted, Mr. Speaker. it vn~ recogni:o;:f>ri nt the outset that a numher of malor issues had to be rchr:dvcd hefore final project release could be given, if we are to proc:eerl without acceptinr; undue r-tsks. 1Wo major issues involved Hydro-Quebec.

The first~ a requirement that :m operating agreement be enterf'd into bet¥Jeen t;u11 Island Power and CFLCo to enable the two plants to be opernted tn a manner that 'Will optimize the energy output of the water that flows through the two facilities. And the second major issue with Hydro-Quebec 1!1 a need to obtain a commitment from them to purchase surplus cnergv and capacity from the Gull facility. The oper.1ting agreement i!;: critical because Gull Island is a •run of river"plant and has no storage facilities of it.s ovn.

The volume of generation that occurs at Gull ifi largely dependP.nt on the volume of water released through the plant at Churchill Falls. Energy 373

November 28 • 1975. Tape 15f) RH - 2 avnJlahle nt Gull durin~ certn:i.n months of the year is about 25 per Cf'nt helow, ;md during other month!> ahout 30 per cent above, the PXpN·ted load demand pattern on the Gull Island plant resulting frnm the needs of Newfoundland and Labrador. The proposed intertie hctween Gull and Churchill t.>ill permit exchanges of energy between the two plants durin~ periods of deficiency or excess of water at Gull nnd thus enable optimum utilization of the full potential of the Churchill River through the "integrated operation 11 of the two plnnts.

As the power contract between CFLCo and Hydro-Quebec gives Hydro-(Jut>bec virtual control over the pattern of operation of the pl~nt nt Churchill Falls, it was necessary to establish principles relnting to the integrated operation of the two plants, acceptance of which would remove some of the operating flexib:i.lity which Hydro-Quebec presently enjoys. Now discussions have been held. The idea was first ncrepted in princJple.

There have been detailed discussions and now "Pri.ndple" of Agn~ement" have been reached which set forth the objectives to he :tchieveti hy the joint operation of the two facilities and the rcsp~ctive privileges and responsihilies of each. Present indications are that there will be no difficulty in concluding a satisfactory ;;.~recrnent covering the Joint operation of the two facilities.

Some progress has also been made in discussions ~ith Hydro­ Quebec relating to a surplus energy sales ag:reement. tf the Gull Island plant carne on stream in early 1981, our estimates are that approximately one-h:'df of the total enerRy and capacity would be temporarily surplus to the needs of the Province. Surplus capacity of that ma~nitude would seriously jeopardize the feasi.bility of the proiect if it could not he dispos~d of at a reasonable price and on acceptabl~ terms and conditions. In the event that no customer could hP fottnO for the enerp,v in the Province that is one alternative.

You might offer them a lower rate to ~et them here Then the only other 374

November 28, 1Q7'1. Tape J5fl RH - 3 ::Ilternat:ivt>c avail11hle is an arrangement 1.dterchy Hydro-f}uehet vou1d buy thr: surplun: f'ncrgv :md capacity. So discussions were start~d with Ouebec-Hvdro several months ag:o about their willingness or ability to enter into an :1cceptable purchase contract. One of the first issues which had to he resolved before th.1t could be seriously negotiated was the ability of the transmif';sion 1 ines between Churchi 11 Falls nnd the llydro-Ouebec system to carry the additional power and energv which would be available from Gull. Those lines werP 375

November 28, 1975 Tape no, 151 Page 1 - mw originally designed to carry only the output from Churchill Falls. However, it has now been established that the tran);missian network between Churchill Falls and Hydro-Quebec system is adequate to carry the energy and capacity available for sale from Gull. There will have to he some rearran~ements in the pattern within Quebec but the lines can ~nke this additional power. By earlv June that technical issue was satisfactorily resolved and discussions were held with Hydro-Quebec to see would they he interested in purchasing energy and capacity from Gull Island.

It became clear, from the outset, that there were a number of difficulties. First, energy and capacity from Gull Island is scheduled to come on ~trenm at precisely the same time period th~t the first major block of energy and capacity becomes available from the James Bay development, Hydro-Quebec therefore indicated that it has all the energy uhich it requires for its oun use and thus is not urgenly in need of purchasing more. Secondlv.

Pydro-Quehec has pointed out that the existing interconnections ben:een its system and its neighbours (New Brunswick, Ontario and the Northeast U.S.) are tnadequate to permit the resale nf Gull energy, along with its own surplus energy and capacity. You might note. Mr. Speaker, thnt the James Bay project is now going to lw phrtsed over a longer period according to an announcement in Quebec made last week, and the pace of the work is to be slowed down because of financial reAsons.

The most recent development of major importance to the Gull project is the meeting of Eastern Premiers which took place in Quebec City September 25. 1975.

At that meeting strong support was given to the concept vf '' strengthened eastern Canadian grid, with Gull. and other Labrador and Quebec hydro facilities being developed for use in the eastern re~ion~ of Canada, In the event that it is decided to take the neces~nry steps to strengthen the grid there will obviously he an ur~ent need for Gull energy, However, a decision on this matter is not likely before the middle of 1976, thus any firm commitment from Hydro-Quebec to buy Gull energy on mutually acceptable terms for nurposes of export hy themselves for the rest nf eastern Canada or to the U.S.- mav well be delayed until after the 376

November 28~ 197) Tape no-. 151 Page 2 grid question i~ resolved. The other provinces. particularly the three Maritime Provinces and the northeastern tl. s., arc: anxious to ~et the energy but there has to be a regional grid. }!r. Speaker, considerable amounts of work have been done in environmental matters, a labour agreement, manpower recruitment, finalization of r:-ost and design and financial planning, T will ~kip this section. It can be read. Environmental studies have been done. They were commissioned by Provincial Affa:Lrs nnd Environment.

They have been given to the authorities in Ottawa, and they have been given the reports, full proJect description. The Gull Hydro proi ec.t should he one that has minimal envir-onmental connequences for a hydro project. The main points seem to be whether or not we should clear all the timber from the Gull Island reservoir nren, which the environmental people have indicated they feel should be done, and that cost is now included, and the cost figures. The oLher major question is the study of the fish life in the Churchill River and whether that would seriously damage fish resources.

Work wns done on the labour relations plan for the project and that will continue. Manpower recruitment, the principles that p:overn the htrfnp, of manpower described here, on page 24 which are aimed to maximize the utilization of ~ualified NeYfoundland workmen and ~o on, We nim to ensure that Newfoundland residents have first prtoritv for :1ll. posHionB. nnd it descrtht~s how this is being done, tht• R tatement doc;. As of October Jl this year there were seventeen contractors worki.ng on the prnject 'dt:h a total workforce, including management .:tnd supervi~inn, nf 470 persons.

Of that number 454,or approximately 97 per cent 1 wcre ~ewfoundl:m~ers. In addition • another 343 people were working with the engineerin;; nnd mnnagement groun<> assigned to the proiect. Of these 232 were located in the Province and 140 or 60 per cent were Nc1..:foundlanderc;. 377

!-1ovemh£>r 2~, 1975 Tape 152 lA-1 Trte totnl prnit>n stnff an of October 3Ist 1 numbered 702 rt'nlrl!nr in the l'rovlnre vdth n Newfoundland content of 85!. Slnce thP stnrt of work over 3,000 man-months of employment have been providerl, ROi: nf w-hich WMl performed hv our o;,..m people. FoJJowin~ submission of the request for additional aid on the C:ul.l Tf>1:md prniert on Au~ust 29, nnd j_n nccordance with the progrnrmne of ,,•ork thnt T havt> dPr;cr:iheP leading up to October 1975, revi~Prl construction rnr;t Pf;t:iTMteR were recetved from the eonsultants nn S:Pptember 19.

A netnilecl' brenkrlo'Wll is given on page 27. These nhnvPtl n further sip;nificant increase in costs over the March figures. A r,eneratin~ st~tion, direct cost, that is the cost of constructing it.W'ould now- be $56R million; the n.v.n.c. lines, $516 million; the tunnel, $142 tnillion:nnd the costs on those projects to the end nf 1974 were $5,070,000. So the direct cost will be $1.232,000,000. nrhPr costs that had to be added ~~re insurance, $15.5 million; additional m-mers cost making a total of $33 millton or $1,2fU,OOO,OOO.

The e!lcnlntion figures nre now $51R million to provide for the escalation that mir,ht occur in the next five to six yenrs .nnd interest during construction, $518 million makjnv, a total of $2,:ns,ooo,ooo. The nssumptions relating to escalation and interest during conPrurtinn have nnt altered as between Parch and September estimates. The inrHres used are those developed by Shawinigan.whjc:h I mentioned t>arl i.er. tnterest riuring construction is included at 10% per annum on fedcrn1 fint1ndnv, :'nfi::<mmed to be one-half of the cost of the transmission linef> and tunnel) And at 117 on the balance.

Provjncinl sn]r>s tmd gasoline taxes are excluded from both sen~ of estimates. If He inclurle them* they would add approximately $100 million to the total proiect cost. The next several par,es, ~r. Speaker, ~ive some examples of the reasons for the change in the r>stiml'ltes • For example, nrh-Hng clear cut.tin~ cf the reservoir, net of snlvage costs vould add $15 million, design development chan gee • .'>33 mi 11 ion and so on. I will not read all of that. Purchase of mirro-vave nystem nnd so on, nnd the tunnel insurance and the owner's rnst. 378

Tnpe l'J2 On ptlr" 17 thPn, ur, Spt'ttker, m1 Psttmnte of the cn;;h rPfini rcrN'ntr. for rlw pro jPct bnRed nn the Septemh!:r 1975 estimates l::: ~iven. 'rhi" shovs thnt if the fuU pro.1ect ~·ent ahead what the cnr-h rcquirementt; vnu1d he t:nrh vear. At the entl of 1974 H was TR-2 S'iJl70,000: tn the t•nci of 1075, if the: full project cont:inue:rl, $53 million; 'he:t durinr 197f, you need another $204 mf1 H.on; 1977. $368 mill:ion; l97R. $)94 Tl'1illion; 1979.

S5JI m:!lHnn: 19RO, $406 million; 1981.,. $64 m'fl lion: nnd $45 million :in l9R2; $30 miLlion in 1983; $23 million in 19R4: .1ntl $9,900,000 in 19R5 when the proieet :it; nll completed, totnllinR $2,318,000.000. Thes£> cnfit' csttmntel' are ln the process of he:ln~<: examjned bv nur Rtnff ,md uhU" d1P p:r.nmlnnt inn Is nn_ Vt.'t romp!eted, thi' results should be knm .. "l1 shortly. There is a chnnce th:a these estimates may be too hiRh, hut of course nnly thne would telL LnwPr rhurchill lnnsl utants and T('Shmont Consultants in lc ttcrs !!a ted October 7th :tnci 8th h;1ve ccrt l fied thcf;e estimate-s. ·~r.

Spenkrr, we h:we nlso looked r;t thP trnnsportntfon possfhil.itfes of thr tunnel. Tn our letter to the F('dernJ Covernment nf Aurnsr 29 wr rPfPrred tr> the tunnel's potent{nl for Um:iter-' r-r;msportntion purposes. PreJ::Iminnrv r.tmlie~> h:wc amti~d thnt fnrt nnd hnvP inr:H en ted thnt the tunnel could be nPapted for limited tr:msportnt:ion mws at relntivE"lv 1Ht1e cost.

Tf the tunnel werP usecl for freight trnnspon;;tlon onlv thr rlfr~e:t c-nst -would be $1!.7 million. lf for frefp,hr :mrl pnsr<CnRcrs, $li.7 million. hlfa:n you add cscn1ation :u1rl lntPT!'f;:t vou wmdt: h:wr to incren:.e thm:;e fip.urefi hy :.bout 100:%. Thesr nre t!w prC'1 ftnfn:>rv estfrnntes. A more :!et:dlerl studv is beinr de-me now. 379

November 28, 1975 Tape 153 PK - 1 Given the fact that nir transportation is the sole means of nccesn to that particular area of the mainland coastline for several months each year, and given also the relatively small costs involved in establishing a transportation link, we feel there is strong justification for adapting the tunnel for that purpose. A final decision will have to await the outcome of more detailed engineering and coat studies and also the willingness of th~ Government of Canada to provide the necessary financial assistance.

The financin~ considerations - before we wrote the Government of Canada on August 29, requesting further aid on Gull, and since receiving the September construction cost estimates, Morgan Stanley have undertaken a considerable amount of work assessing the ability to finance the project. They have considered a variety of methods for financing the large sums required.

From the outset they have stated their view that the project should be divided into two parts for financing purposes, with the tunnel and transmission lines drawing mainly on Federal financing and the hydro site being financed on a project b~sis from private sources. For purposes of financial planning. they have also assumed that some financial support might be received from the Province of Alberta and that any such support ~ill be utilized to assist the funding of the transmission lines.

While some info~~l discussions have taken place between the government and the Province of Alberta. no commitment has yet been received nor has any specific amount or interest rate yet been considered. We have a commitment that the Province of Alberta is interested in assisting but not vet on the amount or the terms. They are studying that no~. fn the course of the work which has been undertaken other important factors have emerged in relation to private financing involving questions of completion of guarantees and other undertakings which might be required by the lenders.

Resolution of these important issues and consideration of the availability of the funds raises the question of the credit standing and borrowing needs of both the Province and Hydro and whether they have the necessary resources or ve have or credit standing to provide the various undertakings in a 380

November 28, 1975 Tape 153 PK - 2 manner acceptable to the lenders. This is being discussed with all of our fiscal agents. As the key to undertaking the Gull project is the Federal C~vernment, a number of meetings have taken place between ministers of the government and their Federal counterparts and between officials of the tY"O governments.

In the course of those discussions at the officials level, the concept of a Federal equity participation vas revie~ed and while from our point of view assistance in the form of equity is not as attractive as receiving aid in the form of grants, it is clear that Federal officials were not enthusiastic about grants for the project. The single exception to this is the tunnel and officials have indicated that a request for a grant to cover the cost of the tunnel, particularly if it has come transportation potential, mi~ht be favourably received.

That is Yhy in mY letter of AuguRt 29, Ye offer the suggeRtion of equity participation if a grant is nqt available nnd a grant to cover the cost of the tunnel. Costs to dat~ then: Hr. Speaker, in order to ensure the availability of Gull energy by January 1, 1981, we authorized Hydro to enter into certain commitments,which were detailed in this House last June bY my predecessor, and to incur certain expenditures. Expenditures incurred to October 31 total approximately $25 million and t\d,; fir;ure is expected to rise to $39 million by the end of 1975.

Sixty per cent of the expenditures incurred to date have heen in respect to engineering, design and field investigations. The remainder is being spent on transmission line route surveys, road upgrading in Labrador, site preparation, and the establishment of camp and support facilities at Gull Island and at the Strait of Belle Isle. Up to this time th~ project has been enRineered and managed from tvo locations. St. John's and Hontral,and has three sub-projects: one the transmission system', two, the Strait of Belle Isle tunnel crossinR; and three, the Gull Island hydro site.

Since mid-1974, engineering design and field investigations have proceeded in accordance with the original

schedule to meet an on- 381

November 38, 1975 Tape 153 PK - 3 power date of January 1, 1981. Engineering costs to October 31, 1975 ~4tlnted to $5.7 million. with a further $1 million to be incurred by vear-end. Most of the basic design criteria has been established and specifications for major components in the syr.tem are in various stages of development. Approximately $1.3 million in survey contracts were tendered during 1975~ using for the most part Newfoundland based survey companies. Almost all this work will be completed by year end.

Five local contractors were working along the transmission line route on October 31, with a work force of 88 employees, all but four of whom were NPYfoundlanders. The tunnel crossing: 382

Novembe-r 28, 1975 Tape No. 154 NI-l- 1 MR. CROSBIE~ Detailed seismic and geotechnical studies, field work and cable desir,n cost!'< have brought engineering expenses to $3.4 million by October 31, with a further expenditure of $600,000 by the end of the yenr. rn the meantime preparation was done on both sides of the Straits to install camp and support facilities to enable the shaft contractors to mobilize for an early 1976 stnrt.

Approximately $1,4 million will be incurred by December 31, and Sll,8 million of contracts related to power supply. c_amp, entering, transportation and auxiliary st~rvices for the shaft contractors. The two major shaft contract~. amounting to some $15.4 million, have been let alonp, with the head frame, hoist equipment, foundations and collar contracts and asRociated works for an additional $12.7 million.

Approximately $4,9 million will have been expended on these contracts by year end, At the end of October four local contractors were active at the Strait of Belle tsle emploving 63 people, nll of whom were Newfoundlanders. The Gull Hydro Site~ The next

section discuss the work done there, which I will skip in the interest of time. So at the end of October eight contractors employing 319 people were active at the Gull site and along the access roads between Goose and Churchill Falls, 307 of whom were Newfoundlanders. In establishing a timetable that called for final project release on October 1, 1975. it was recognized that it would be necessary to make RiRnificant progress in n number of areas if this date were to be met. It was also noted that any failure to meet the October deadline would place the project

schedule in jeopardy and thus place at risk our ability to meet our electrical energy needs during the winter of 1980 - 1981. It was also recognized that there was little likelihood that all components of the project would be firmly in place by October and any decision to release the project at that time vould have to be taken tn the absence of complete assurances regarding all critical aspects, 383

November 28, 1975 Tape No. 154 NM- 2 HR. CROSBIE: During the pnst few weeks, in order to decide whether we could give final release for- the full project~we have critically examined the progress mode in respect of all major aspects of the project. In addition to the all-important matter of Federal support; the other critical factors we have examined were:- first: the cost of the project; second, its technical feasibility; third, the resultant energy rates; four. environtt~ental concerns; five, surplus energy sales; six, the labour agreement; and seven, the ability to finance.

The current position with respect to each of those items is that, first-the cost of the project have increased very sharply and While the enegineering consultants have indicated their view that the most recent e_stimates include full provision for contingencies and an 80 per cent probahility that they will be lower rather than higher. it is apparent that there are a large number of factors totally outside our control which could have a significant impact on the eventual coat of the project, Ho,~ever. on the basis of current information, the most recent estimates appear to be reasonably computed and it seems unlikely t.hat "the definitive cost estimates" scheduled for early 1976 will differ materially from the September estimates.

Any large project that we look at of the last several years will show the same kind of escalation, Mr. Speaker, including the Tar Sands plants, James Bay and the like, Second, technical feasibility - there is no doubt that the project is technically feasible. The necessary engineers' certificates confirming this will be received in due course.

Energy r,\tes - on the basis of the latest cost estimates. assuming federal aid in the f0rtr. requested and with satisfactory terms for surplus energy sales. th~ cost of power in Newfoundland devlivered from Gull Island during the 1980•s will be reasonably comparable with rates likely to be prevailing in Eastern Canada at that time. It would not be cheap energy,as people have considered in the past. Mr. Speaker, but reasonably comparable with rates elsewhere in Eastern Canada. 384

November 28. 1975 Tape No, 154 NM - 3 MR. CROSBIE: Environmental concerns do not nppear to be insurmountable. Surplus energy sales- it is unrealistic to assume that Hydro­ Quebec will be prepared to enter into any commitment for the purchase of surplus energy on acceptable terms in advance of a decision on the question of a regional grid, becauRe of the inter-connections necessary between their province. the Maritime Provinces and Northeastern U.S. This suggests that it may well be t~ards tre end of 1976 before any firm commitment is received. 385

tlovemher 28, 1Q7S. Tape 155 R!! - I ~20SBTF: Labour <'1p,reement: He are hopeful th:tt an early agreement can be reachc>d. Ability to finance! This, Mr. Speaker, is the most critical factor. An added problem is that no assurances regarding financing ("_an be. obtained until all other outstanding matters have been satisfactorily resolved.

AssuminJ); that a contract for the purchase of surplus energy is not received until towards the end of the third f!llttrter of 19711 and that a commitmf!nt of federal support is not obtained until towards the middle of 1976, Morgan Stanley will be unable to provide any opinion as to the likely availability of the necessarv finnncing until towards the end of 1976. Such nn opinion t of course, is not a RU:trantee as to the availability of funds.

Asnurances regarding the availability of the necessary finance will probably only he received by the end of the first quarter of 1977, following an offering of bonds to potential investors. By the way, Mr. Speaker, the Federal Government has not responded yet to our request for additional fund!'l. They are studying the latest figures and when we will receive a response from them, we rlo not know. TheY certainly have not said that there will be no further assistance nor have they given us any reason to believe that there would not he a favourable response.

An important input to the question of the ability of the f'rovinct> to flnnnce the tot'nl project is an assessment of our credit rating. our capitnl needs and our financial strength.

Such an assess­ ment h<ts been m::1de and it has been concluded that when you project the capitn1 needs of the Province over the next several years and aggrep;ate those of Newfoundland and Labrador Hydro. the total deT!k;.nds contemplated are likely to exceed the funds availahle, It waR ther<>fore clear that if the Province provided a full project release at this time we would do so knowing that·, (1) the total funds re(juired by the Province and Hydro during the next several years mir,ht not be nvailt!hle: (2) by the time necessary assurances regardinp; 386

November :!R, 1975. T<1pe 155 RH - 2 finance. federi'll support and surplu!'> Pne-rgy sales are received, total commitments on Gull might well exceed $400 million. In other words, if we continued tJith the hydro s:ite nnd the transmission lines at ful 1 speed by the end of J97fl ~,;;e would have $400 million at risk; (3) even if the Province was prepared to accept the: risk that everything would ultimately- be resolved in a sati.sfnctory manner, it might well experience difficulties in obtaining the finance re(Juired to enahle the proJect to continue.

The p;overnment therefore conc:1udPtl that notwithstanding the ohvinus advantages of proceerling wlth the full Gull project, we cannot give final project relc>ase at this time nor until the question of the amount and type of federal airl and the terms for surplus energy snles are settled. Hhn.t are the alternatives. Hr. Speaker. to a full project release? MR. NEJ\HY: Resign! HR. CROSBIE: Yes. Pell,. that is one_ alternative, Hr. Speaker. To he a fluitter. we cnn do that, hut that is not in our nature. Now, Mr.

Speak('r, given the need for a nev energy source to be in service hy the end of 1980, any decision not to proceed with the full Gull project had to he coup]ed with a decision on an alternative en~·rr;y source. The major options open to the Province which we have hnd to consider. which memhers of this House will have to consider nrC'- ( 1) To adopt .:1 conventional oil~Hred thermal/nuclear route. That is one altPrnn.tivf'. L'e cnn go on with oil-fired steam plants and then eventun11 v to nucle.1.r and we will never have hydro power on the Island of !'1ewfoundland from Labrador. That is one alternative. rm.

NEARY: ---- We can a] l r,o to the moon, too. HR. CROSBIE: Exactly. Or Hf' can aU commit suicide and jump over Signal Hill. That is an alternative for Newfoundland. Or (2) construct the transmission lines nnd pending the availability of Gull energy, ohtain the energy required from (;hurchill Fnlls. That is an .1.lternat:hle. Going ahead with the full pro.iect is not an alternative at this time for the reasons I have mentioned. 387

Nnvemhcr 28, 1975. Tape 155 RH - 3 The ofl-fired thermal, followed by nuclear alternative, iR a distinct option for the Province but it means:

(1) That we accept the posr;ihility that the Island of Newfoundland would be permanently isolated electrically from Labrador and the rest of Canndn forever; (2) if we RD thnt route we have to have a willingness to develop Labrador's hydro resources for export to Quebec, thus giving Quebec virtual control over the development of those rcnources. Thnt is a consequence. 388

November 28. 1975 Hr. Crosbie. Tape no. 156 Page Third~ we will experience higher ultimate energy costs. Fourth, there is no significant reduction fn total capital needs. It is a safer course to go, Hr. Speaker~ because all the money does not have to go in on the front end. But the total amount expended will be the name and our energy costs will be higher because of the uae, p:1rti cularly of oil.

Assuming that a programme of construction of oil-fired thermal plants is initi~tcd,followed by nuclear plants coming on stream in the mid-1980's. the total funds required during the period 1976 - 1990 to create the same total generating capaci.ty as would result from the Gull pro1ect~ are estimated at $2.2 billion. which figure does not significantly differ from the funds necessary to undertake the full Gull project. It is clear, therefore. that assuming the Province is not willing to restrain demand for energy in order to conserve capital - (That is another alternative.

We can ration energy, We can increase its cost so that people cannot afford to pay for it. We can keep down the demand for energy. We can treat Newfoundlanders in a manner far different than the rest of Canada. That is an alternative but not one thnt we will accept.) - assuming that the Province is not willing to restrain demand for energy in order to conserve capital. the capitnl needs for any of the options available will not be materially different.

The option of deciding to build the transmission lines, however we have to recognize this - is dependent on both federal support and on receiving a commitment from Hydro-Quebec to permit Newfoundland nnd Labrador Hydro to have access to energy from Churchill Falls in excess of our recall entitlement. It ~ill be n:calleC: that we are entitled to recall 300 megawatts of which. I believe. we are now using in Labrador some thirty, and there will have to be some use in Labrndor that we can recnll 300. We would need their agreement to recall more than 300. MR. HICKMAN : The rate? MR.

CROSBIE: And the rate would have to be agreed. 389

November 28, 1975 'fape no, 156 Page 2 Hr. Crosbie-· While there r.eems to be little doubt that the Gull hydro site will he developed tn due course - yes, the fedenal p;overnm.ent agrees that it is n project in the national interest - it is highly desirable that any commitment from Hydro-Quebec for the supply of energy should not be for a limited period only, as the absence of any certainty regarding the supply of energy from Churchill Falls and/or Gull .~.auld create problems in funding our share of the cost of the lines.

After careful consideration of all the facts the government has decided thnt the transmission line option is to be preferred over the oil-fired thermal/nuclear alternative, provided a reasonable arrangement for the supply of additional energy required from Churchill Falls can be negotiated with Hydro-Quebec and provided adequate Federal support is forthcoming. Mr. Speaker, if hydro is only delayed a year or two years, our recall block would be sufficient, but it cannot be any longer than that.

In arriving at this conclusion we were influenced bv the. followingt First, the advantage to this Province of being connected to the eastern Canadian grid. Secondly, the fact that if this opportunity to build the transmission line is not taken it may well never be built, Thirdly, if no transmission line is built then Ouebec will he able to dictate the manner and the rate of the development of Labrador 1 s hydro resources. Fourthly, the long-term advantap,es of nricP Rtabtlity offered by hydro- electric energy once it ts in place.

Ff fH•, progress on the transmission lines will greatly ease the ta5k of developing the hydro site. And sixth, there nre signficant advantages to the Province in constructing the transmission line and then the hydro site in terms of employment, The thermal/nuclear alternative does not offer nearly ns much benefit to the Province during the construction phase. Now I come to the conclusions. Mr. Speaker. Hr.

Speaker, it is the conviction of this government that the long-term interests of the Provi.nce will best be served bv our decision to harness, for u~e in the Prnvince, the hydro-electric potential which is available in 390

November 28. 1975 Mr. Crosbie. Tape no. 156 Page 3 Labrador. We are nnw at the cross-rands. Had we decided to proceed down the oil/nuclenr route it is unlikely that we will ever he able to turn bnck. The lead time for a nuclear plant is almost ten years and on the has1s of current load growth projections we would have to cotmtit the first unit almost immediately. Once committed, the prospects for developin~ Gull Island power for use in this Province recede significantly. There is no doubt. Mr.

Speaker, that the easy decision for the ROVernment is to embark upon the oil/nuclear programme and to develop Labrador power at some future time to export to Quebec, We have been down that route once before. This route involves less financial exposure and offers some advantages of flexibility in reRpondin~ to variations in load growth. But we do not feel that such a decision is in the best long-term interests of this Province. 391

Tape 157 IB-1 1-'1' rP:OSI\1E: fn the event that the trnnsmissinn line is not constructed and that there is no n1tern~t1ve use for Labrador hyrlro-electric power in this Province, the Province of Ouebec will he tmiquely placed to rlictatc, as it did uith Churchill Fnlh, He terms and conditions of :my energy export nrranpi!ments. It i_s we11-knowi1 that Hydro-Quebec iR rurrently benefitting, to the tune of h1milreds of millions of do11t~rs nnnnn11v,fnm: the extremely favour<lhlf' terns they were able to negotiate in re-!'lper•t of l'hurchi11 Falls power. '~r.

SpPnker, tht• government has therefore concluded that 1t f';hould rontinue the work on the transmission Jines, terminals and tunnel hut thnt this r;hnuld ht> spread over n lonr,er period, for nn in-serv:lre rlRte of January 1, 19R2, tnstend of January 1, 1981. r.overnrnent h:ts nlrw decirled that pending receipt of assurances from the Covernment of Cnnnda rr>:ganHng aid for the project and thE> ner,otiation of n 5tdtnble agreement with Hydro-Quebec for the supply of cmerp:y from ChurchiJl Frtlls, expenditures and commitments on the pro1ect will be 1-~ept to the m-inimum possible, consistent with an in-11ervice dnte for the li.ne of Januncy 1, 1982.

We have instructed Nt>wfoundland nnd Labrador !lydro to re-examine their projections of 1oiHI growth and their prop:rnmme of system additions between no~r and 1982. to see whether the proposed twelve month delay in the completion nf the lines will cause supply difficult:les. In the event that any prohlems are exr'ected, 1t may be necessary to cotm'lission the installation nf ;; further 150 mcr:ctwatt o:iJ-fired thermal unit nt Holyrood. If this is tlnne, it w1:l1 r."t prejtJdice the eventunl decision regarding Gull Tslnnrl ;mil would r'nvicle nt.~cessary additional system support on the Island.

A reduced program;.;e for 1976 will enable the Province to keep its expenditures on the Gull lslnnd proJect do'i-m to an amount not exceerlinp; $55 mill:hm for rbe year. That is the year of 1976. In a!'tun1 fnct, it -Is our hop<' that su::itnble purchm~e arrangements for pot.rer form r:hurch:i11 Fttlls nnd n commitment of the necessary Federal n:l~ cnn be obtained by no later thnn the end of June 1976 m'!d thnt it would then be pos:s ible to pro vi tle fuJ l release for the 392

Novromher 28, 1975 Tnpe 157 TR-2 ~~.~nsnTF:..:_ con~tructtnn of the transmission li.nes, tenninnJs a:nd tunnel. Or in the :tl tcmnt:tve, if the Federnl r:overnment turns us down, of eo nnw, you would hnve to stop. !''r. fipeAke r, I would not ui sh nnyone tn think that we have nhnndoned hope of proceedin~ with worh on the r.uU hydro site. We have instructed rhe tnnnnr:ement of Nrwfoundland and Labrador Hydro to rnke nll possible sr:ep,o:; to ennure that the site is developed aEl soon as is prncticnhle.

There will, howevt>r, be a minimum delay nf one yenr nnd dependinf! upon how quickly the necessary funrlR cnn he !'>ecured nnd the vnrious comm1tmentn received, there should nnt he a rlelny of more th:m two or thrPr> p•nrs with this aspect of the total pro1ect:. The exnct nature_ of wnrk to he undertnken durinp: 1976, on the reducr>d rrnr:rrnnme nn the 1lnes, terminalR and tunnel, have not yet bN'O finl'lllY re">olved. However. certnin work will likely continue on the tunn~l, which iR the most critical eonstnlction n~pe~t of the entire pro1ect.

G~nernl1y spenkin~~hnwpver, only work t..-hich is present] v comm-Jtt~d or which h nec.essnry to protect the nev fn -service rl~ tc of ,J :mnnrv 1, 19R2, wi J1 he unclertaken prior to finn] re lenl'lP, uy, f;pe;'lker. bv t.•ny of f'onclmdon rmd ]eFt there he sorne who f~e} WP nre not n.1frlnp suffidently fnnt progress in f'Ompletinp, till tlv• :trrnnr-ementr; nn f!nll. or- that w-e are committinr excessive t"~n>ounts of puhlir: ftmdP in nrlvnnce of final resolution of all the Ptttstnndfnr~ m;HtPT~, lt !'li?hr hp nppropriate to refer bnck to when nf th~ prob1cml' then •xperi~nrPr if'i p11ttfng thnt project tor:Pther, the time tnkPn nn~ nf tlw 1'\"nrev nut nt risk.

He nre tnkinp risk,, Hr. Spe:~ker, wr_> nrt: r,mnh 1 in,r;, we ;~re r,nmhl inf! money on tht! hope that the Lot.'eT Chuuhi 11 c:m h£> nccoMnlisherl. He nre putting money tit riRk, nrinco firRt acnulrPtl nn option on the Churchill FnlJR untcr r!p,hrs in 1953. Tt wn!t not until tru;q, or sixtePn yenrs Jnter, that Jonr,-renn tfeht cnrftnl t.•ns fnrthcnmin~ to f-inance that $1 billion r:it~v-Plnpmf'nt. R•t the f'Ilrl of thR fir;.t rdxteen venrs $R3 million of 393

NoveMbf:'r 2R, 197) Tape 157 IB-3 equity capital '-l:'IR plnccd nr risk with no :1bsolute assurance that the pro1ect wouJd be nmlertnken. 1'h:fs cmrrparf"s with the amount of $30 mfllion we wl11 hnve SpPnt by the end of this year. There were two extemnl factors which caused a delay in the Churchill Falls proiect in the early years. One, transmission line t;echnology,anil the rthcr, a market for the large block of power. Rv flc tober 1966, t.·hcn n 394

November 28, 1975 Tnpe 158 IB-1 !''P. rnnsnrr: lett;"TO'fin"tent Wttf: rdgned on the power contract between Brinco nnct Hvctro-oueber, hoth of thoRe iRsut.•s had been resolved. Tn nddition to the many prtor years of preHminney negotiations, it took tvo yenrs hetween the sip;n:lng of the letter of intent and the t:df!ning of A definHive po ... -er contract and commitments for financing. During that period there were negotiations :i.nvolving Brinco, Hvdro-Quebec, the Federnl Government and the Province and the Province of Ouehec.

Enftineers, lnt..'j'era, accountants, insurance consultants, commercial bankers ttnd lnvestrnent bankers were involved on a full-time hasis 1 and so on. From the time of signing the letter of intent until sub!'>tantial debt funds were committed for the pro_1ect, another $50 million of cnpttal was put at risk. There are many similarities between the Gull Island project and Churchill Falls.

In many reRpects, however,the Gull Island project is more complex thnn Churchill Falls and C'ertainly the external economic and fimmcial conditions under which it :l.s being undertaken are fnr more rlifficulr than when Churchill Falls was planned and financed. }ffi. NEARY: You brought it on yourself. HR. CROSBIE: The inflation -we are delighted to grapple with the problem. He brought it on ourselves. He did and we will debate this on another occasion. I am not worried about debating thj_s, Mr. Speaker. J look forward to thiB debate. I look forward to it. PP. NEARY: Hear! Hear! MR.

CPDSBIE: As I was snying, this project :!'a more complex and the conditions are now more difficult. Mr. Speaker, because of the inflation of the past two or three years, with the energy crisis and the rest of it. As with Churchill, numerous parties have to be associated with the structuri.np; and financing of this project. There is the Newfoundland Hydro, the Province of Newfoundland, Hydro-Quebec, the federAl Covern~ent, the Province of Alberta, the Province of Ouebec- we will nll he involved. Huc.h progress hns been achieved to date. }'any engineering 395

Novemher 28, 1975 Tnpe 158 IB-2 insurance, f:inanc"U!I, environmental nnrl other consultants are hard nt work. The proier:t is receiving the careful attention of Hydro and nth~r Renior rovernment officials. It nlwnys tnkes PI p:reat denl of t:bne • effort and substantial amounts of risk r:np!tni to negotiate and finance n maJor project. and (,uJ l Island is no exception. We nre confident of the underlying economics of the full C:ull JsJnnd pro,iert nnd nrc optimistic that it can be developed and fin;mc:ed in the not too distant future. Now. Pr. Speaker, when we come to the appropriate

section of the procecdinp;s, T •.dll move n motion asking the House to support the work done to nate and our phns for 1976 so that hon. members can debate this whole project in detail. Y'P. !';PEAKETI: ,tm. f!'flBERTS: The hon. Leader of the OppoRition. "fr. Spenker, it ::Is impossible. Str, to comment in any detn11 nt this point upon n fifty page statement on a very C'Omplicnted t~nr1 complex mlltt('r. Of conrAe, our ruJes provide that those of us who lt>nrl ree-o)Zn:ized r;ronps nn this .o;ide,l.rh:fch t would fntggest ns the rPntJem:m from T~d11inrnte (!'fr.

Smallwood) an~ myself would in the orererlence of this l!our:;P, have to comment briefly - now briefly, tfr. Speaker, T vmdd think if; ;; very relative term. In view of the fact rht> minister's stntement H"S :1hout an hour nnd fifteen minutes would request that WP be :d 1o~red say f:ive or ten minutes to make n few brief cnrnments tmrl in that r-ontcxt, I would !ntbmit they are hr:iP.f. MP. SPEAKF:P: That is certnlnlv reasonable and that is ar;reed. ~'"P. nnBERTS: Well, th:mk ,-nu, '-1r. Speaker.

Let me hcp-1n hv Sn\'hlp: tlv;t I nfl' v0ry pleased that the minister iR r.ninr, to put n motion on the 0rder Pnper thatt whatever tr will ren0, to rhe effect that: thir; Hou;,e :1pproves the actions or the pnl J des of the r:overnment t;•ith renpect to the Lower (burch ill clevcl opmcnt. T hnd a note here to ask htm to do just that thj_ng and to rlo {t speecH l y. The House mnv or fll_,r1y not approve the policy of the p:rwernment with rf'spect to it~ httt one thin?- f s sure and certain, Sir • 396

Novemher 28, 9175 Tnpe 158 IB-3 that there is no matter, Pven the hud~et brought in by the hon. Minister of Finance, there fs no matter that in anywhere near as important or. I would submit, nnywhere near a~> urp,ent as the government's handlinp, and the_ p:overnment 1 s policv with resnect to the tower Churchill development. Now, 1 would hope that the minister will arrange an immediate debnte. possibly this dny....or that mav be a little too earlier. We would l fke to study the statement - but if no, early next week.

I w~uld think that that should be debated very early on because I think it may be said, Sir, that what we are witnessinr- is the greatest retreat since Napoleon left ~oscow and went to hJs doom. Now, Sir, the minister's statement came nR no surprise to many of us in the House. It may not come as a surprise to many people thrnuRhout this Province. I think :It hns long been obvious thnt nll was not well with respect to the Lower rhurchill development in the wnv in l.itich this government were handling it. But I do think, Hr.

Spettker, it Hill cowe as a surprise to most of the people of Ne1.'found] and and Labrador who have• assumerl, hasecl on the government's statements - and remember it 'IJ'BS onlv two or three months ago, Hr. Speaker, thnt the Premier went down to Forteau and across to the Newfoundland ~tdc of the Straits at Savage Cove 397

November 28, 1975 Tape no. 159 Page 1 - mw and Yankee Point, across in Forteau and blew off a dynamite charge and datmcd this to be the start of construction and said that we will carry on and that the project is going full steam ahead. Of course, that vas: iust before the election. It was part of the con-job which may well have been one of the greatest attempts to con our people we have ever seen. HR. SPEAKER: HR. ROBERTS: MR. SPEAKER: Order. please!

Order, please! l think the hon~ gentleman - 1~ that not parliamentary, Sir? - vill agree that the question in not whether it is parliamentary in that sense but that it is argumentative and debate~ MR. ROBERTS: Well. I nm grateful to Your Honour. It certainly !._s argume!ttative. Sir. and 1 ,.rill let the Premier actions speak for themselves, and let the people judge. And when it is appropriate to debate it~ I would be delighted to do so. Mr.

Speaker, most people in this Province have assumed the Lower Churchill pro-ject was going ahead. and the government have given them every reason to assume that right from the day when th~ government made their raid on Brinco and then turned that into negotiations and ended up purchasing the shares that Brinco owned in the ChurchHl Falls - Labrador Corporation. Today we are at the stage, Sir • where the Gull Island proJect, the hydro project at Gull Island. is very obviously dying.

It is very obviouslY fn the terminal stages of its life. :H it is not already dead, lt may or may not be possible to resuscitate it at some point, but ce; trdnlv, Sir:. at this stage it is being kept alive only by nrtifical and rnechanlca1 means. The transmission line project~ that hnlf of the Churchill Falls development~ the Lover Churchill development, is clinging tenaci.ously to life.

But as the hon. minister mnkes it quite clear in his statement, {t is the: first time the government have ever ndmitted it. whether or not that project lives will depend on~firnt of all~the Government of Canada and secnndly, upon the Government 398

November Z8, 1979 Mr. Roberts. Tape no. 159 Page 2 of Quebec because, of course, Hydro-Quebec is an agent, a creature of the Gove.rnment of the Province of Quebec. And that is the happy stage we have reached now, Sir, after an expenditure of several hundred millions on share purchases. which will take us forty years to pay for, and after the expenditure of $55 millions committed now, out of pocket, and all we got to show for it is the paltry amount of progress detailed in the minister's statement. And let me say as well, Mr.

Speaker, that one point which should be discussed in the debate, and I intend to do it, is I want a long hard look at the economics of the transmission line, because to move over a transmission line from the Upper Churchill, across the Labrador to Yankee Point at Forteau, and across the Straits and then from Flowers Cove and Savage Cove down along the Northern Peninsula to Deer Lake~or wherever it comes into the Island grid - the economics of that, 1 am told, Sir~ are far different than the economics of the original project to move a significantly larger amount of po-wer. In other words, Hr.

Speaker, it is one thing to move 1,800 megawatts vf power, it is one thing economically, and the economics of the project, it is another thinR to move a significantly smaller chunk of power. And that I am told raises a question, and I can only raise the question, a very real question though, Sir, about the economics of even the transmission of the nortion of the project. And that is important, Sir 1 because, of course, whatever the Government of Canada are going to do or not to do, and I hope they will help us, it is obvious that their decision will be founded in large part upon economic reasons.

And if we cannot convince them that it is economically feasible to build that line, we have no hope of doing it. Hr. Speaker, let me just raise one or t-wo other points, because all I can do is make ~a few brief comments, I realize that. There is no question that Labrador power is still the best source of power for this Island. There has never been argument, that has never been in dispute. The only question is whether it is going to be possible 399

November 28, 1975 Tnpe nn. 159 Page 3 ;,concmicnlly to bring that pm-<er here. to bring it here and develop it. And riRht from the ~tart. Sir. we, on this side. have asked qut>st ions. We have ttsked questions time and time again. We have hrtd no definitive :Jnswers. The p,overrtmentt in factJ appeared to be hiding som:cthingt and now it is obvious, Sir. why they took the course of action they did. The government told the people of this Province that everything vns okay on the Lower Churchill, that it \J'rmld be financed, thn:t the pouer vould be usedt that there w-ere no difficulties at all.

And here we are: nou, Sir, here we are now at the sorry state revealed b:t the minister in his statement, <1 t>tatement which is overdue • a statement which should have been m;tde, I submit, before the general election so the people of this Province could have judged the government's policy. AN HON~ HEMBER: Hear, hear! MR. ROBERTS: Wn.n it a blunder, Sir? Were the people misled? Have we mortga~;ed a ltir?,e chunk of our future? We are already going tn pay - :tR. SPEAKER: Order, please! Order, plese! Th0 hon. Rerttleman - Is rhnt dehnte, Sir'! Order, please!

The hon. gentleman is now participating in debate which he is not nllowed to do< hank Your Honour • Six. I do not intend to debate, bur whnt I intended to do vnR to try to ask a few questions. Tf they nrf' regurded as debntc, T v.!ll ask them again another time. 400

November 28, 1975. Tanc 1~0. Pn~e 1 -- npb ~..!-ROBERTS: 1 have been calling for months in this Hou!'e and out for 11 drhnte. hope 'We get it now and I would ask the House Leader to assure us- that we can hnve this debate as quickly as possible. The motion should he nut down today, 1 t should be called for debate on Monday or Tuesdav. AN HON._MEHBER: Hear, hear! ·.m. ROBERTS: I would even be '-lil]in~ to say, let us devote Private -·-·------ ~ember's nay to it ,it is r:hat urj:ient.

Let us give up what little timP the government allow Private Members, Because, Sir, based on the minister's statement today, I think that there arc very real doubts about the Rovernment 1$ policy. And J think there is verv real evidence beginning to emer~re that thls r,overnment, Sir, ma:v hnve- the best motives 1 I will agree- hut rnnv hav(" blundered into one of the worst blunders and one of the worst mistak('.s ever made, And they may have compounded thnt, Sir, by their actions in not givin~ the people the full story. The Lower Churchill project is one of the greatest ever to be talked of in this Province.

It has a great potential, Sir 1 a ~reat potential for good and a great potential for harm. I would hope • Sir, that the government arrange to have this matter dehated so that we can see exactly what they are doinr, and so that -we can then as a House record our judgement and see just what they have to do. But I think, and I will conclude on this, Mr. Speaker, what the minister said today may well have been the greatest retreat since Napoleon left Moscow in 1812 and headed for his abdication. CAPT. WINS"'R: Hear, hertr! MR. SPEAKER:, The hon. the member for Twillingate. HR.SMALLWOOD: Mr.

Speaker, I have no intention uhatsoever at this point in saying anvthlng more than that the words we have just heard from the minister are the saddest that I have ever heard in the House of Assembly. And I think that I myself am perhaps the saddest Newfoundlander there is at this moment. NOTICES OF MOTION HR. SPEAKER: The hon. the member for Bav of Islands. MR, HOODROW: Mr. Speaker, I gi.VP notice that T shall on tomorrow ask leavt> to mo\'e the following resolution: 401

Nov~mher 28, 1975, Tnne I (;0, Pnf'!C 2 -- a ph RESOLVED t!m:t the House of Assembly ask the federal ROvernment to reinstate ;;_t thP end of the calendar venr 1975 the $500 grnnt to those people who btlild a home for the first time, and that the Minister of Municipal Affnirs ;md Housinr: bring this to the government in Ottawa as soon as possible. HR. SPE:\KER: The hon. the Minister of Mines and Energy. HR. CROSBIE:~ t.fr.

Sneaker, r would give notice of the following resolution; Rf:SOl,VEO that the 'Memher.s of this Honourable House of Assembly annrove the steps taken to date hy the Government of Newfoundland and Labrador and the Newfoundlnnd and Labrador Hydro Corporation in connection with the df'velonment of thP Gull Island Hydro site, and the development of ;m inter~connf'ction hPttNPn r:ull Island and the Churchill Falls hydro site. the development and construction of transmission lines from J.abrador to the Tsland of Newfound]and hy way of a tunnel under the Straits of Re1Je Isle and vork in connection therewith so that Labrador hydro power can be available for thf> entire Province; all as detailed in a Min!steria] statement made to the Honourable House of Assembly by the Honourable the Minister of Mines and Enerr,v on November 28th. 1975 and this Honourable House of Assemblv :mnroves the plans announced by the r:ov~rnment of Newfoundlnnd and Lnbradnr for the nhased continuation of the nroiect durin~ l97fi. \fR.

ROFIF'RTS: Thnt is wrong. ft should say House, not members. ~R. CROSIHE; That is what it says~ this hon. House. MR. ROBERTS: The members of the House is what it states. tm. CROSBIE: No, the ilfluse of Assembly. A~SWERS TO QUESTIONS FOR WHICH NOTICE HAS BEEN GIVEN "1R. CROSBIE: hv the hon. Therf' was an oral question asked yesterday, Mr. Speaker. 402

November 28, 1975. Tape 161 RH - 1 member for Terra Nova about the life expectancy of the mine at Ruchans. The Oepartment of Hines and Energy estimates that at current. mining and milling rates the reserves at the mine at Buchans will last until 1979. The development of other nearby ore bodies and an ndvnnce in mining and milling technology could increase the life of the mines until 1985. Current reserves are estimated at one million tons of copper, lead and zinc concentrate. ~SPEAKER: Order, please! Order. please! We are on answers to oral questions right now. HR. Rot.W: To a point of order.

Am I being recognized? MR. SPEAKER! Yes. Ts it a point of order2 !A.R. ROWE: Yes. I think there is a correction to be made, Hr. Speaker, ae to who asked the question in the first place. I do not think it was the member for Terra Nova. MR. CROSBIE: It was the member for Buchans. MR. ROWE: Windsor~Buehans. MR. NFARY: Hr. Speaker, it was I who asked the minister the question yesterday, Sir, the member for LaPoile. ~R. SPEAKER: Well, I shall direct the officers of the House to track it down and we should certainlY be able to come up with the answer to that question. NR. ROBERTS: He answered.whoever asked him. MR.

CROSBIE: Hr. Spenker, may 1 answer a question from the member who did give a question. l think it was actually the member for Bell Island. MR. ROBERTS: LaPoile. MR. CROSBIF.: He is like the Wcmdo.ring Jew, Mr. Speaker. You do not know what district he will turn up in next, hut it is LaPoile, yes, the hon. member from LaPoile. There was another question, Mr. Speaker, asked the Premier several days ago by the member for Baie Verte, that is t.J'hite - MR. ROBERTS: Baie Verte-W'hite Bay. NR. CROSBIE! Raie Verte-White Bay, whic.h is a question to do with 403

:iove:mber 30, Jll75. Tape 161 RH - 2 whethPr there is :m investigation into the health of the asbestos workers at Advocate ~inrr> proceerllnr. Then'! is some misunderstanding of the Premier'A replv or whatever the situation is. The situation il'l that then• il'l no pnrtic:ular investip.:ation into the henlth of the :r~her>to!'l workers nt Advocate Hines now underway hut there is a committee appointed hy p.overnment to consider that question. of course, and nll questtons relating: to henlth and safetv in mines and industrial works in the Province.

That committee is considering the hriefs that were prest'nted by the T'nited Steel Horkers and by the miners at St. l-l'!wrence. think those were the two briefs. The committee is cnmpri~ed of the Deputy Minister of Hines. Mr. HcKiJlop, Or. Suttie from the Department of Health, Hr. Blanchard, Depnrtment of Hanpower and Lnbour Relations, Mr. Hay, Chairman of the HorkmPn's Compensation Board, Hr. ~orman Kipnis of the Department of Hines and Ener~y and a comm:1.ttee of ministers chaired hv the hon.

Minister of Manpower and Industrial Relations comprising himself~ the Minister of Hines and Energv and the Minister of Henlth are also in opPr:ttion. Ne are waiting for the report from the committee of officials. Ro the \.!hole subject has been studied includin~ the •;ft.lllition at Raic Verte. As far as Baie Verte is concerned from rlw 2Rth of October ti 11 Novemher lst the chief inspector of mines w;ts there doing an inspeeti.on of the mine conditions at Baie Verte. nw Department of He<1lth was carefully reviewing all x-rays thnt had heen taken of workPr~ in the Baie Verte mine.

But other than that there is no sp~cial invvstigation of 1ust th~t area. The situation with respect to all mining regulations anrl health and safety regulations in connection ~,;oith workers is under careful study. HR. SPEAKEH: The hon. Minister of Fisheries. !!ON. W. CARTER: Mr. Speaker. in a fJHestion to rot• on Wednesday. the memher for LaPoile questionf'd the existence or otherwise of an ttgreernent hetween the Provincial and Fedf'ral Governments with respect to the phasing down, having the effect maybe nf phasing down or of 404

November 3n, 1975. Tape 161 RH - 3 phnsinr; out smn1l fish plant op~rntors in the Province. I can tell the hon. member now, Hr. Speaker, that no such agreement exists.

The then Hin:fster of Fisheries who is now the Minister of Mines nnd Energy made a statement on May 27 at which time he said that the r,overnment would keep a careful eye on the issuance of further 1 icenses for the establishment of processing facilities having rPgard for the availability of the resource in the area, the possible effects on the existing nlants in the area and, of course, having ref!ard for their ability to meet the standards that are required of the Federal Oepnrtment of Fisheries in the_ matter of the establish­ ment of such plants. I repeat~ Mr.

Speaker, no such agreement exists at this time. 405

November 28, 1975 Tape No.l62 NM - l ORAL QUESTIONS: MR. SPEAKER: The hon. member for LaPoile. MR. NEARY: Hr. Speaker, I have a question for the Minister of Fisheries. Sir. Would the minister tell the House what plans, if any, does his department have or what plans are being firmed up by the minister to avoid in future waste of fish caught by our fishermen because of the lack of processing facilities forcing the fishermen during peak period to dump their fish hack into the sea'! MR. SPEAKER: The hon. Minister of Fisheries. MR. CARTER: Hr. Speaker. "'e do have plans for the provision of more ice~making facilitien.

We are now in the process of doing an assessment in the Province to find out exactly hou many facilities are needed and we will be making provision this year for the establishment of certain facilities, ice·making facilities especially~ in certain parts of the province. HR. SPEAKER: The bon. metnber frq· LaPoi.le. MR. NEARY: am dissatisfied with the bon. minister's anSYer, Sir, and I wish to debate it next Thursday at the late shew, .MR. SPEAKER: The hon, member for Fogo. CAPT. WINSOR: Mr. Speaker, I direct a question to the bon. Minister of Fisheries.

Can the minister inform the House whether officials of his department have carried out a survey regarding the storm damage on the Northeast Coast and other parts of Newfoundland - I might make it a double-barrelled question. Mr. Speaker- and if so any amount estimated as to the cost of replacement? MR. SPEAKER: The hon. :tHnister of Fisheries. IIR. CARTER: Mr. Speaker, yes we did. At th~ request of the fishermen and the bon. member our officials did visit the area shortly after the storm occurrrd.

We found then that most of the fishermen ~ere not aware themselves as to the exact loss of their gear, or the extent to which it was lost :md so. We have since checked and we find that the losses that were 406

Novemher 28, 1975 Tape No. 162 NM- 2 then reported were not ns great as anticipated. But I might tell the hon. member too, Mr. Speaker, that as he knows there is no ongoing programme of gear replacement, but I can inform the House that negotiations are now underway with the federal authorities with respect to maybe the setting up of a permanent gear replacement insurance programme. }ffi. SPEAKER: The hon. member for LaPoile. MR. NEARY: Mr. Speaker. I have another question for the Minister of Fisheries .

Could the minister care to bring the House up-to-date, to inform the House on whether ~r not mnrket conditions in the United States for the Newfoundland fresh cod block have improved in the lar;t few months or is the market still down'l MR. SPEAKER: The hon. Minister of Fisheries. ~. NF~RY: I have been informed that the market conditions had improved. 1 think our fish is now fetching maybe two or three cents a pound more than what it was a month ago. HR. SPEAKER: The bon • .ember for Lewisporte. HR. WHITE: Mr.

Speaker, I have a question for the Minister of Fisheries, Could the minister tell the House how his officials investigated the storm damage on Change Island? MR. SPEAKER: The han. Minister of Fisheries. MR. CARTER: Our inspector. Mr. Speaker, visited the area and talked to the fishermen in the area. longliner operators and others who were concerned. HR. SPEAKER: The han. member for Lewiaporte. MR. WHITE: Mr. Speaker, I wonder if the minister could ask his officials that particular question that I just asked him in view of the fact that I was told it was done by telephone1 MR. SPEAKER: Order. please!

I am not too sure - .MR. CARTER: Mr. Speaker, the inspection - MR. SPEAKER: Order, please! I am not sure that the question is really in order. It is a request to a minister which I would think there would be other ways of conveying rather than in the oral question p~riod. MR. WHITE: Mr. Speaker, I wonder if he would do that, and we could say yes if he would agree to do that. 407

November 28, 1975 Tape No. 162 NH - 3 HR. SPEAKER: Order, please! The hon, Hember for LaPoilc. HR. NF.ARY: did not have an opportunity to follow up my question I put to the Minister of FiRheries, Si.r, I got cut down there. Would the minist£>r, <lS n supplementary qw~stfon tu the one I asked previously. inform the House whether or not the inventories that have been in the warehouses and so forth ln the United States and in Newfoundland are now movin~ as a result of this improvement in the market conditions? Are the warehouses still glutted with cod blocks? t'R. SPEAKER: The han. Hinister of Fisheries. t-IR.

CARTER: Mr. Speaker, L \iDUld like to take that question as notice and supply the answer later. HR. SPEAKER: The hon. member for LaPoile. HR. NEARY: Mr. Speaker, I have a question for the Minister of Justice. Would the Minl!iter of .Justice care to inform the House if he: has any intention of brinp,ing in legislation controlling guns in Newfoundland, especially pellet guns? MR. SPEAKER: The hon. Hinister of Justice. ~-IR. HICK.'1AN~ Mr.

Speaker, that question is more properly directed to the Hlnister of Justice and Attorney General of Canada, bt~cause it is he 1-:l:o will hring, and r am quite C!'rtn:fn Is in the process of bringing before Parliaf!\Pnt the necess:nv leg:islatfon by way of 408

November 28. 1975 Tape 163 PK - 1 amendments to the Criminal Code which is in the exclusive jurisdiction of the Parliament of Canada. MR._Sl_E~ The Hon. Member for LaPoile. !11!.•_NEARYE~ Mr. Speaker, I have a question for the Minister of Intergovernmental Affairs. Would the minister care to tell the House if the government have changed any of the plana in connection with the Harbour Arterial Road? Are they now going to divert a part of the road to go in a different direction?

Could the minister bring us up to date on what is happening concerning the Arterial Road or has it been cut back under the austerity programme? ~~-~_?_EAKER: The hon. Minister of Intergovernmental Affairs. ~-·-S!.O,SBI~ Mr. Speaker, there have been no change in the plans of the Harbour Arterial Road. The Harbour Arterial Road is a subject of agreement be~een the Province and the Government of Canada, the originator and inspirator of the project,vhich at one time was ninety/ ten but it is now seventy/thirty.

And the agreement was that they would go seventy/thirty to complete the Harbour Arterial and engaged in the massive project to bring water to the St. John's Metropolitan area, the Bay Bulls regional water system in which - a masterly piece of negotiation and advocacy - they agreed to go 70 per cent on the cost of the trunk water line from Bay Bulls, a very, very expensive project. The two of them were entered into together in the St. John's Regional agreement under the general development agreement that we have with DREE. There has been no change in that. There has been no reason to slow it down.

We certainly do not intend to slow it dawn because it is 70 per cent federal financing, and we need all of the spending we can ret in this Province on construction, particularly if we are getting 70 per cent federal dollars. So there is no change. The road is proceeding. It is a project that is going to take,as I remember it 1 four yearstl think, including this year to complete, and the water system I think that will be substantially completed Yithin the next two years or its two or three years. So both of them are important for this area and both are continuing. !~·~EAKER: The hon. Member for LaPoile. 409

Nctremher 28. 1975 Tape 163 PK - 2 Mr. Speaker, 1 wonder if the same minister, Sir. the Minister of Hines and Enerp.v could inform the House how many companies and how many oil rip,s will he drilling off our coast next year for oil and gas? ~-·~_.S_I~F~ _H~R. -~C'~R_OSBIF.: The han. Minister of Hines and Energy. That is difficult for me to answer, Hr. Speaker, not because I do not desire to answer it, but I am not a prophet and I cannot foresee the futuret 1 am not a seer. So I can only say that we do not know ns ;.ret. Mr. Speaker, just what the plans of the oil companies are for next year.

I would be expecting to have a meeting with the Eastcan v:rouo some time in the next fe1.1 ueeks to discuss their rlans. I thf.nk it is very likely of course that they will be continuing. How many others there vill be I do not knov, There is still considerable interest in the area, and particularly off the Labrador, the Labrador Shelf area. But when I have that information 1 will he glad to give it to him. But as yet we do not know exactly what the activity will be. 1bey are making their plans. At the present time, Mr.

Speaker, th0y are reviewing the results~the rPsults they have had this year, and they access all of the data and then some time during the Winter they will decide where they are going to srend their money next vear and what areas are the most prospective nnd no on, soW(' will probably not know until during: the Winter. ~~;- SJ~S\t;~fi_: The hor-,, He:rnber- for !..,evfsporte. H~·- -~--~~-IJ§~:- Mr. Speaker I have>: a question for either the Minister of Integovernmenttd Aff:lirn or the Minister of Finance. I am not sure which in this

part lcnlar case. nut yesterday the Premier ansvered one of mv questionR hv saving: "YelL the government had protested the fact that no anti-inflation r<"Viev board office would he located in this Provincf'.' I wondt>r :f.f the minister would tell us in what form rhts protest was made to ntt:ft.•a? ~·" S_PEAKEJ'~ The hon. Hini!'lter of Inter,governmental Affairs. ~.!_~ ~C:ROSBJ!:.: Hr. Speaker, our ow-n doug:hty minister and that battler and that protector of the common man! the hon. Minister of Provincial Affa:! r~ and the Environment< brought that issue to the attention of the ~linister of finance ~Ji Canada, I th1nk it 1.1as, in hin capacity as minister 410

November 28, 1975 Tape 163 PK - 3 responnible for r~nsumer Affairs and he made a strong protest of the hct that there was no office to be established in this Province. m1nt the results of his advocacy have been, we do not know yet. and the Minister of Finance himself brought the question up at Ottawa several days ago, and perhaps the Minister of Provincial Affairs could expound on his position and what he has done. !!.~·~SE_E~. The han. Minister of Provincial Affairs. If I may, Mr. Speaker, on October 26 -October 17~ rath~r~the day following the announcement of the setting up of this committee I wired him as minister responsible for Consumer Affairs 411

Novcmher 28. 1975 Page l - niw rtf>kirlg thnt the bonn! est,1bltsh an office in Newfoundland Bo that thi~> Province. 14ith the mo;;t seriouR problem, can be given the attention needed - a rev,ional office in another province cannot propcrlv do the ioh - and M'tked for sympnthet!c: consideratiOn. T o1lso wrote ac:knovledv,-tng - following up that telegram. I received tl tdegrnm bnck on November 12 denying that request. and t again vired n telex. ;md if necessarv - hut concluded - I can table the whole correspondence concluded :;_s s1:1ying; 1 in the name of Justice.

I ask again that nn office be established here where the need is greatest. Also we feel strongly that this Province should have full-time representation on the bo.,rd." The first was October 17 and this ts a 1o1eek a~o. November 12. l.ffi. SPEAKER: Thl' bon. member for Fogo. GAJ.:L_~~ 'fr. Speaker, a question to the Ministen of Health. Could the minister inform the House whether or not a mobile dental clinic, which was donated by the Kinsmen or some organization 'lnd sent to Newfoundland, is now operating? If not, wi 11 it continue oneration? MR. SPEAKER: The hon. Minister of Health. MR. COLLINS: Mr.

Speaker. it is my understanding that the mobile clinic is operating in the Glnvertown area. lt is beinR used by the dentf.~ts in that n.rea. Is that the unit the hon. member refers to? ~--· SPEAKER: The hon. member for LaPoile. MR. NEARY: Mr. Sneaker, I would ltke to put a question to the hon. Minister of Intergovernmental Affairs, Would the minister inform the House if he {s vet ln a ponition to say definitely whether the Uniterl States Alr Force will be staving at Goose Bay or w!ll they he oull ing out? ~?EAKER: HR. CROSBIE: The hnn. Mini!':ter of Intergovernmental Affairs. Hr.

Sneaker, thls is a most frustrating situation. We are not allowed to deal d.!rect w-ith the United States Air Force~ or w-ith the U. S. Government, Yho will only deal with External Affairs at Ottawa. External Affairs at Ottawa iealously guard their prerogatives to enfi.ure thnt they do not deal with anyone else but them. In fact 1 am advised th<J.t even other denartments of the Government of Canada at Ottawa 412

November 28, 1975 Tape no. 164 Page 2 - ""' are not permitted to deal with them direct, or they have difficulty. So the latest information we have was from a meeting with the Minister of Transport, 1 think it was about two weeks ago, at which time he confirmed that the U. S.A. F. had indicated they wanted to retain a presence at Goose Bay but up to that time, and they certainly have not told us differently since, they have not said just what this presence was or what they are planning to do there.

Well, this means that you cannot get an answer then as a result of that as to what facilities are available on the South side of the base,of what the Province may he able to do to utilize or what the federal government wants. All those questions then remain suspended, which is a very undesirable situation. But ve have no other information since then. We did request, and ~e have had no answer on this, but I am pretty sure it is going to be negative. We did request that we be allowed to have an observer present at meetings between the U.S.A.F. and the Canadian authorities.

They have not permitted that to date, and I would be pleasantly surprised if they permitted it now, So that is the situation, We still have no further information on that~ and it is extremely frustrating and makes the progress up there very, very difficult to resolve. MR. SPEAKER: The han. member for Lewisporte. MR. WlliTE: ¥r. Speaker, I have a question for the Minister of Transportation and Communications.

I wonder if the minister could tell the House whether or not he is aware of a situation that existed in Central Newfoundland vesterday where a large number of automobiles had to park on the .<;-{de of the road for more than an hour in some cases while vaiting for sand trucks to arrive? Is he aware of that situation? MR. SIMMONS: HR. SPEAKER: MR. MORGAN: And what is he doing about it? The hon. Minister of Transportation and Communications? Yes, Mr. Speaker, I am aware of that situation that happened yesterday. MR. w'HITE: Hr.

Speaker. a supplementary: I wonder if the minister would tell us whether or not in view of the fact that the snow clearing 413

November 28. 197) Tape no. 164 Page 3 - mw operationfi do nC1t go into l ul t r;wing until sometime in necember, uhether or not exceptions wUl he made this weekend in view of the heavy snow fall forecast? MR. SPEAKER: The hon, Minister of Transportation and Communications, MR. HORGAN: Hr. Speaker, our shift sy~tem on the maintenance pro~ramme for this winter's mnintenance will be coming into effect December 3y next Wednesday. XR. SPEAKER: The hon, member for LaPoile. MR. NEARY: Hr.

Speaker, I want to get another ouestion in here to the Mini~ter of InterRo~ernmental Affairs similar to the one 1 nsked about Goose llny, 1 wnnt to <1sk this one about Argentia. In the discussi.ons did the minister raise the matter of the abandoned buildings at Argentin being taken over by the Province rJw base down thc>re is consolidated now and a rart of it especially the recreation buildfn~ 1 am concerned about. Has the minister done anything about that in hiR discussions with Ottawa? MR. SPEAKER: ~~---- fhe hon. Minister of Intergovernmental Affairs. 'fr.

Sneaker. the member for Placentia hns been bringin~ that sublect forward to the government. and is doing everything 414

Novcr.hcr 2A, 1975 Tnpe. 165 TB-1 he c11.n !'lee thnt snme Rction in taken. But we nre in an extremely rll ffic:ult position there also because the Arp,:ent:fn hnse- it is a rH~p11terl !"!11f>stion ns to who lep:nl1y or constitutionally 1-ns the right to prt the remnants rlnt.-'Tl there. That que~t:ion vas never settlerl, never hns heen sctt1erl nnd could ~nly be settlerl by a reference to the Surreme rourt of rnnnrln. So vc are fnccd with the situation vherP_ the Amer1c:m routhoritler;;-;md the hon.

P1nister of Finnnce iR very fnmilinr uith nll thh>.and the preA~nt 7-Hnister of Industrial !Jevf'lopment - h11t the t',S. nnthnrities insist.ns far as I understand H. on beinp. nbJ!' to C";ome hnck in nnrl tnke nver facilities on a thi.rty rlny nntlcc. This makes H very difficult to gPt sntiRfnctory arrangements for renp1~ to tnke over nvnilnhlc tmi.ldfnp;s there. Maybe the Min1ster of Tndu!':trinl nevPlnpml"nt might have somethinp, to add to this because hP is on top of the situation with the member for Plnc.entia (Mr. Pnttc>rson). nut that is the position. 1>1P.

SPf:._AKEP_: The hon. the !<!in:lster of Industria] nevelopment. M'P. LUNnPIGAN: t~r. Speaker? I Oo not have much to add to the hon. gent] emnn '"' comment~> other than to say that 1 have asked two officials in 1nrlustrf,~1 !levvlopment to hrinr, this thin{! up to date in terms of a review. The ~~mber for the area and the former federal member from the same area and mvse] f wilJ be visitinp. the area uithin a l:eek or tl:o nnrl I·Je hope thnt t..'e cnn arid some light on the situation. MR, SPf'AKFP: Th<' hon. memher for LaPoile (Mr.

Nenry). ~J:'(_:_ T dn hope the minister will take a look at the recreation center when he p:rwc:: down. Sir. cnuld the Pinistcr of Hunic,ipnl Affnirs infonn the Bouse if he hns received a request from the St. John's City r:ouncil nsVinp. for nss:h;t';mcc to install srrinkler systems in nll city schools? If so, what has the minister donP. nbout this request. ~n· SPEAJS.~!:..-:~_ The hon. }l:(nfster of Htm::l.dpnl Affairs and Housing. PR. PECKFOPO: ur.

Spenker, we havr~ rereived. 1 did receive a letter from city council :l rouple of wet:>ks a~o regarding sprjnkler systems for the schools. think thnt va~ referred to a number of other rlepnrtments for thefr comment and we are ~aiting to get information 415

November 28, l 975 Tn:pe 165 hnrk from thmn~ rlepnrtmentr; hefnre replvinp: tC\ the city counc:fl in ,, rromprPhPn~ivE' nnd rlefinftivE- wn:v. !',~-...';~!_. The hon. tneT!'her for LnPoi lP (~r. Nenry). IB-2 _~fr.,~ NF.APY: '-ir. Speaker, could T also nsk the minister if -no, T th:lnl< it is thP !o-'inister of F.ducntion T had better direct this ouestion to. The former Pinister of f.ducation made a public statement thnt a special insurance F>Upervisor or an insurance expeort would be set up tn nr>sist Sl"'hon1 boards in c.overing: their schools for insurance. Has the minister fnll o'.red this ur'?

Ts there anythinr. heinp; done nbout it? Hns this ~ent Jemnn been nppninterl yet, thiR insurance expert to advise the sc-hool boards'! HR. SPEAKE!': The h(m, f-lin l ster of Finance. "P. . H • nonnv ~ Your Honour. the Treasury Boa.r~ hns advertised for such nn :insurance expert. t\re hope to p.:et him on Stllff to review the insurnnce policirs of nll p-overnment builclinrs as ve11 as school bniJ dings and other such things to see if other thinr;s should be done and hm.• :f.t shoulcl he hAnrfled prop(>rly. So, the thin~ is be:inp: looked nt on an overall basis and the schn~l system is very much a part of it. MR.

NEARY: t•r. Spenker, the P!nister of Finance obviously is nmdous to R:tV somethinp, todav. wonder if the minister coulrl tell the House if my effort~ to have the soe:f.al security nssessment e~empt fur coats and ncgl i p,ces nnr! c-ocktnU Ore::; sea and that Rort of thi..nf!:? I understand thPrt' hns been n chnnpe in the poJ:f.cy. rou.ld the minister te11 the House 1.>hnt it is? ~ SPEAKEP:_, The hnn. the ~inister nf FinnnC"'e.

J:'B ... ! ... ~nY: Pr. ~pP.ttker. one would almost suspect thnt the hon. member for I.nPrd.le U'r. ~enry) wns psvchiC"' or C"'h:frvoyant if nne rl:l.d not know thnt hf' hnd 1nfnecl m~n;elf nnd the lwn. rnenbf'r for Lewisporte (t-•r. White) nn the "Annlvsis" prorrnmmc this morninp: and had heard me sny just that. AN 110~. 1--fE~BER: . Horth Patchinf!? VR. OOOOY: It mjpht he trorth wntchinr. T do not know. Uf!. l''U!fPHY: One-third of it is. HP. nnonY: One-thirn of ft. yes. 416

"lovcrnber 2R, 1075 T;~pe HlS IB-3 Th£> stnrv !r;, Slr, thAt the regu1ationA "Were heinp: drawn up, hnvC" her>n rlr<1wn up hv the nepnrtment of Finance in thnt regard and it might be u~>eful to the llou!le if 1 just quote a few excerpt:s from thf>m. In the definition of clothing which includes obviously l'l'.:mv items rtown to minutiae ttnd the final clause in that definition snvs that :fnrlivlclual clothing items in excess of $300 will not he exe~pted fro~ the tax. So that if somebody is interested in buying :t for coAt or :t nep;l i p.ee in excess of $300, he or she wi 11 have to p:~y ten per cent tax on it.

That !s 11lso true of many other things. There nrr n Jenr,thly list of items which are tilxab1e nnd non-taxable, Sir, t.1hich nre in the prorens of being distributed to the retail tr11rle nnd arl." heinp. se,nt to the media hopefully for their edification and for the :information of the public. Some of them nre items of ~rent importance. One would note here, for instance, thnt patterns and needles are taxnb1e but such itemr; na fnunrlntion garments nnd harrl h::~ts and J iners nnd.for thf'lse who mi~ht he interested in municipal politics in St. John's, that headb:mrhl nre tax exempt.

A."i HON, ME~~BEP: l ohject. i'N HON. MEMBER: Yes, I object to that one too. 417

Novemher 28, I 975, Tapf' 106. Page 1 -- anb Buntin~ bar-s are tax £>Xemr>t whll~ hair pieces~ Your Honour, are verv, verv taxable. Sunr;lasses are taxable and leotard tops and tights ttrf' tax exf';mrt. Leggings are tax exempt and watches, wtr,s and wallets, on the other hand, will take the full 10 per cent.

So, Sir, this is very complex and very interesting but I would conn_ratulate the member from LaPoile on brinp.ing it up just in time, iwrmwe of any speech in the House he anticipated the draft regulations which wpre being prepared by the department and which,indeed,have now heen circulated and hopt>fully would be in the hands of the retail trade who are quite ccmcerned about these things. Thank you. MR. SPEAKER: The hon. the member for Conception Bav South. --------- 1-fR. NOLAN: Could the hon. the Minister of Municipal Affairs, Mr.

Speaker, Rupply the information re~arding the amount of money spent on consultants nnd surveying and so on that was done in the community of Conception Bay South for a water and sewer project that was recently cancelled? ~R. PECKFORD: Mr. Speaker, if I understand the question- will I supply the amounts of monev for consultin~ firms? I must also correct the bon. member on hi!'t question because there were !lome erroneous statements made nnd these are that the whole idea, or the whole contract was cancelled. or the whole proj'l:'ct was cnncelled. That is untrue, erroneous.

It is dr>fPrred which is n far different matter than saying it in cancelled which nuts a finalitv on the thing that is not really there. Yes, I Rhall undertake to provide the informntfnn that the hon. mPmher re~uests. ~IR. NEARY: Hr. Sp<>.:tkt'r, could the Minister of Hines and Energv, Sir, lnform the House whnt hapf!ens now an :t rt""Sult of the stmlv that waR done with a view to estabJ [shin~ a mine college at Whalesback mine near Springdale, understand the report is in. Hhat action will he taken on that report? HR. CROSBIE: BeforP the hon. r,:entleman for Green Bay (Hr.

Peckford) gets up to say that naturallv it will be accepted ~ the hon. thf' member for f;reen Bav, the Minister of Municipal Affairs, has been pushin~ this matter miRhtily :md the report of the committee that was establ::tshed has just been received. That is iu!'lt nnw !!Din~ through a verv can~ful scrutiny through th~ Cabinet Committee svstem and on its way to Cahinet. So it it is now receiver! and the '"finiRtcr of !4unicipal Affairs is pushing it fon~ard with 41ll

November 28. 197 5 • Tape 1 flf,. Page 2 -- apb all sp~:ecl through various bureaucratic intricacies. HR. NEARY: Mr. Speakt:!r, is the Minister of Municipal Affairs also ----- pushinr, ahead with great haste and speed an investigation into the com:ui tin)!; enginePring fees for the Burin water and sewer inlet proiect? Host definitely, Mr. Speaker. And • Hr. Sne:1ker, a supplementary: Hould the minister eanc to tell the House what form the investigation is taking~) !s it a nolicP investigation.,hy the auditors of the Mini.ster's depnrtrnent, by the Justice Department or some other form? MR.

PECKFORD: We are exploring all the avenues mentioned, Mr. Speaker. HR. N'EARY: Mr. Speaker, a supplementary; Would the minister care to inform the House whether or not action is intended to be taken against nnv of the parties involved? If so, what form of action will be taken? t.li 11 f t he criminal action? Will it he civil action? Or will it be internnl action hy the DeJ'Iartment of Municipal Affairs and Housing, !:!_.R. PF.CKFORD! It will depf'nd, Mr. Speaker, on the results of the various nctions that ar~ now underway to determine whether or not that kind or wh:1t kind of nction l'lhould be taken. MR.

N'EARY: A supplement<try then, Mr. Sneake-r: Will the minister tell --·~--~ the !louse if there are any other communitiP.s, municipalities where invc>sti~ntions arc goinp, on in connection with consultinr, engineering fees and the like, and if so, would the minister care to tell the House what communities are involved? HR. PF.CKFORD: The whole question of consulting enRineering fees as they relates to munici.nnl Ph'iects in the Province are under review with no specific nnes in mind except Burin at the present time. MR. NEARY: Well. Hr.

Sppaker. a supplementary; Would the minister care to tell the llousP. whether or not Harystown is one of these communities involved, that is under scrutinv at the present time. MR. PfCKFORD: No • Hr. Speaker. ~1R. SPF.Af!'.ER: The hon. the member for Bellevue . .t!!t·~LLAN: Hr. Speaker, I would like to ask the Minister of Munf.cipnl Affairs whether or not all vater and sewer projects have been deferred until whnt time? !lave they alt heen deferred and until what time? 419

Nov(';mber 28, 1975, Tape l6h, Par,e :1 -- aph ~-SPEAKER_: Thf' bon. th<! Mfni!itf'r of Municipal Affairs and Housing. HR. PECKFORD: Mr. Speaker, they have all been deferred and thev have been deferred until the Spring of 1976. !'-lR. SPEAKER: 1'he hon. the member for LaPoile. -------- ':fR._ NEARY: Mr. Soeaker, in view of the fact, Sir, that Memorial llniver~itv Medical School nav that they are p:ettinr, 420

November 28, 1975 Tape 1fi7 MR. NEARY: far too fev bodien donatf>:d to the school, is the Minister of Mines nnd Energy, Sir, does he intend after today's statement to leave his body to the MPJllorial University Medical School? MR. CROSBIE: Mr. Speaker, I would be plensed to donate my body to the MemorLtl University Medical School if the han. t;entlemnn would donate hts brain and if we could find something that could pick it un. 000 \-fR. NEARY: Hr.

Speaker, I move, Rir, that t:hP. re-g:ular order of business of the House be ad1ourned to debate n matter of urr,ent puhlic importance, namely the decision announced today in this bon, House by the government not to proceed with the development of the Lower Churhcill or Gull Island dt>velopment. MR. SPEAKER~ An hon. members know what must be ruled upon by the Chair iH whether the matter is in order • the leave of course is p.ranted or not granted hy the House.

In ruling upon whether the matter is in order one of the most imrmrtant factors to which one must bear one's mind is not the urr,ency of tlw matter or material hut the urgency of debate and nlso the reasonable expectation of opportunities in the regular proceedings of the J.egislature for debate because the question or the leave that is being asked is that one adiourn everything to debate on that matter.

Now I notice that on the Order Paper there are motions with resnect to the Address in Reply and the Budget Debate in vhich certainly comment and debate on this matter would he in order, hut also that today tht> minister gavt> notice of a motion, and debate on that motion when it is called will certa.inlv nrovide specifically for opnortunity to debate it. So ht>nring in mind the> two mottons on the Order Paper already and the notice of motion ~.!Vt'n today I would ru]C! that it is out of order. 0ROERS OF THE DAY: Order 3, the adjourned Budget Debate. The hon. the Minister of Social Services had adjourned. Hr.

Speaker, T believe I have ten or fiftet>n minutes left, is that correct? 421

November 28. 1975 Tape No. 167 NM- 2 MR. BRETT: Before I end my remarks there are three or four points that I would lfke to make. believe I finished yesterday by saying that the time has come in our history when we as politicians must have the nerve. if that is a good word, to tell our people the truth. believe that we have to tell them that the day is gone when they can expect something for nothing. They have to be told that tt i!'l their tax dollars that we are spending in here. They have to he told that we have to restrain and cut back and they have to be told why.

We have received n fair amount of criticism for our achievements in industrial development and what I suppose, they are saying is our lack of achievement in rural development. Now I would like to go on record, Mr. Speaker, as having said that I for one am not ashamed of the fact thnt during the last three and a half years we did not build any linerboard mills lik~ the one at Stephenville which will cost this province in the vicinity of $35 million this year.

Neither am l ashamed, Sir, that we did not build any phosphorus plants like the one at Long Harbour which will cost us somewhere in the v.1 cinity of $3 million in subsidies this year, plus the fact, Sir, that thnt plant is poisoning every living creature within a mile or more. a mile radius of the plant. 1 venture to say, Str. that t}-;e only thing that is going to be :tlive in that area within the nc:xt four or five years will be people-, nnd from what I hnve heard most of them Yill have false teeth~ 422

November 28, 1975 Tape 16B PK - 1 and that is correct. fi~d I am not particularly upset because we did not build any more refineries like the one at Come By Chance. And I think I should point out here that the people of this Province should he forever grateful to this government that in 1973 we negotiated the deal that the former administration had with Mr. Shnheen. because hnd we not and should that refinery fail then this Province would have been responsible for the entire cost

whereas now we will only be responsible for the $30 million plus interest, And, Mr. Speaker, rather than being ashamed or upset over our rural development policy I am quite proud of it. I would be the first one to admit. and one of our greatest critics has been the han. 1-few.ber for - not from Burgt>o alone nowl is it? ~-·-~..!_MMONS: Burgeo-Bay d 'Espoir. !...~·~ _!!.RETT_: Burgeo-Bay d 'Espoir. (Hr. Simmons). I would be the first one to admit that we did not meet with as much success as we had hoped.

But, Sir, I am very proud when I walk into some small settlements in my district and I see boat building industries that are succeeding, sawmills that are succeeding and, of course, on the other hand I am very sorry when I see some projects that have failed. l am not ashamed, Sir, but sorry. We gambled~as somebody said, of course ue did, We took risks. A lot of them paid off. You will never hear about the good ones but you do always bear about the ones that failed. If I had the time I would love to tell the hon. member about some of the good ones because there are many in my district and I am very proud of them.

There is another point, Mr. Speaker, another thing that has heen bothering me. I would like to mention in this time of restraint and in this time when unemployment is higher not only in Newfoundland but in Canada, and from figures that I heard on the radio today almost all over the free ~orld, I feel that government projects~ government 1 s money should be challenged into areas of high unemployment~ and I believe that o:.te ar.d the federal government have to p,et away from playing 423

November 7R, 1975 Tane 16R PK - 2 politics with progratmnes such ns LIP. Now in my district in the last two weeks there were two LIP programmes approved~ one to cut Aki trails in one of the larger areas of my district where almost 100 per cent employment is enjoyed, and in another settlement where the same thing~everybody is employed, everyone that wants to be- another project was approved for a swimming pool.

And in a community about seventeen or eighteen miles away where very few people are employed a programme to complete a partially installed water system was not approved. ~~at I am saying, Sir, is that the federal government are ~oing to have to direct its funds.or channel its funds at this Particular time certainly into areas of great unemployment. You know, it has bot.hered me that no member of my staff, and t am speaking of welfare officers,has ever been asked to be a member