~---------------· Volume XL Friday • ~ . . Province of Newfoundland FORTIETH GENERAL ASSEMBLY OF NEWFOUNDLAND Third Session VERBATIM REPORT {Hansard) Speaker: Honourable Patrick McNicholas .... Number 38 8 May 1987

The House met at 10 :00 a.m . MR. SPEAKER (McNicholas): Order, please! Statements by Ministers MR. SPEAKER: The han. the Government Leader. SOME HON. MEMBERS: Hear, hear! MR. OTTENHEIMER : House Mr. Speaker, I am rna king this statement on behalf of the Premier, who is at Hotel Newfoundland and will shortly after be making a similar statement there, with respect to an important new development in Newfoundland.

I am very pleased today to announce an agreement in principle has been entered into that contemplates a multimillion dollar joint venture arrangement between the Government of Newfoundland and Labrador and ' the Sprung Group of Companies of Calgary, Alberta, for the construction and operation of a revolutionary greenhouse system for growing agricultural products. SOME HON. MEMBERS: Oh, oh! MR. OTTENHEIMER: T hi s i s qui t e big s tuff . I wo u 1 d not just dismiss this with a laugh.

This system will enable the people of our Province to enjoy fresh locally grown produce year round, thereby reducing Newfoundland's dependency on products that now have to be imported. The facility will be located in the St. John's Metropolitan Board region, and on Ll992 May 8, 1987 Vol XL agricultural properly presenlly owned by the Newfoundland and Labrador Housing Corporation near the provincial Agriculture Building on Brookfield Road. This highly innovative growing technology was developed and is owned by the Sprung Group of Companies, of Calgary, whose principal is Mr. Philip Sprung.

This company has inVE!Sted upwards of $35 million in extensive research and development activities over a ten year period to produce this unique growing s y stern. The proposed Newfoundland facility will be one of a kind, and would be the most technologically advanced greenhouse system in the world . Because the facility is on the leading edge of a new and highly innovative technology it will be the center of international attention among the agricultural community.

While I do not want to go into the technical details of the growing system, as this matter is best left to people well informed on the technicalities of it, I would like to point out that the facility is highly computerized in terms of monitoring and controlling different ingredients that are essential to plant growth, and that is does not use soil. Instead, plants are placed in water containing essential growing nutrients that are continuously recirculated, giving each plant a precise and constant supply of food.

This process, known as hydroponics, provides the best attributes of mother nature and results in exceptionally top qualify crops without the use of pesticides or herbicides and wi 11 produce approximately 7 million pounds of saleable product annually. No. 38 R1992

Th1;:! Sprung Ci~oup oF Coillparl'i~~s, who own this pro c e s s , has b N! n in existence for almost one hundred years in thE! Calgary area. It is a highly successful private company, whose other business interests extent into sport clothing manufacturing, pre·-fabri cated bui I ding structures which are marketed throughout the world. To help establish this $18,400,000 facility in the Province, government is announcing the contribution by the government to this process. Firstly, the Province will provide an equity contribution of $3.5 million.

This contribution consists of providing to the joint venture company thirty acres of serviced land, valued at approximately $1 million. The balance of the Province's equity contribution of $2.5 million will be in the form of a cash advance to the joint venture company. The Strung Group of companies will also contribute $3.5 million to the project in the form of cash. In return for these equity contributions both the Province and the Sprung Group will hold E!qual amounts of voting shares in the joint venture company.

Consistent with government 1 s desire only to assist and enhance the private sector in this Province, provision is included to permit government's preference shares to be brought back at an amount equal to the issue price of the shares plus a cumulative annual premium of prime rate plus one percent once the operation is well established. The second element of provincial assistance is a $7 million government loan guarantee to assist with the capital construction cost of the faci 1 i ty.

The Sprung Group of L1993 May 8, 1987 Vol XL Co1npardl~S tJJil".l provid1':! a ~j;1)00,000 guarantee to the joint 0enture for the same purpose. Thirdly, the government will provide a retail sales tax exemption, in the estimated amount of $900,000, that would otherwise be payable by the joint venture company in the initial constructing and equipping of the facility. For this contribution the government will receive non-voting shares in the company equal to the amount of the retail sales tax exemption.

The Strung Group, on behalf of the joint venture company are arranging a lease/purchase agreement for the instc:~.llation of $3 million of growing lights in the facility to ensure maximum production levels are achieved. In

summary, this brings the total cost to $18, 400,000 of which the government is committed to provide a $3.5 million equity contribution, a $7 million loan guarantee and a retail sales tax exemption which would amount to $900,000 for non voting shares. The Sprung Group will contribute $3.5 million in equity and provide $500,000 loan guarantee. The joint venture will fund the $3 million cost associated with the lease/purchase arrangement for th lights. With reference to the management of this multimillion dollar facility, I am pleased to report that the Spru.ng Group lAlill assume direct responsibility.

The Sprung Group will provide the Newfoundland facility with highly specialized and competent senior people who will relocate from Calgary. These personnel have extensive experience in development of this new technology No. 38 R1993

and l~he day l:o day opera t:ion of thE! factltty. The government SE!E!S this arrangement as being an important ingrediE!nt toward thE! success and ongoing viability of the project . In addition, the government will have direct control ove1n certain typE:~s of business decisions of importance to the Province, and for this purpose will be represented on the company 1 s board of directors. Like a previous arrangement with Newfoundland Energy Limited, the Province has entered into a 11 heads of agreement 11 with thE! Sprung Group which is an agreement in principal.

This agreement requires that over the next few weeks certain conditions must be met related to project financing, site costs. etc.. Once these conditions precedent are achieved, a formal legal agreement will be entered into and construction of the new facility will commence immediately when land preparation is completE!d. Construction of the facility will take approximately six months, during which timE! up to 330 local people will be employed for a total of 200,000 person-hours. Once the facility is operational, it will provide approximately 150 long-term jobs.

Today 1 s society is becoming increasingly complex and competitive and demands that new technology be developed to ensure movement to the forefront in the international marketplace. For the Province to ensure its competitiveness in the marketplacE! and diversify its economy it must take advantage of opportunities to develop and transfer new technologies. This announcement today will place Newfoundland and Labrador front and centre as a world leader in a new and innovative technology.

As a 1.1994 May 8, 1987 Vol XL goVL~rnment, this is COil sistt!llL with our existtng policy of developing 11 centres of excellence 11 similar to those initiatives which we have already pursued in our marine and offshore sectors. Today we are embarking on a new Field of technology for the people of this Province, and the government is confident that this will provide the same measure of success as the prevtous initiatives. SOME HON. MEMBERS: Hear, hear! MR. SIMMONS: Mr. Speaker. MR. SPEAKER: The han. the Leader of t:he Opposition. MR. MATTHEWS: He is amazed . Not a word . MR. SIMMONS: He is awake, Mr. Speaker .

Mr. Speaker, first of all we thank the minister for giving us a copy of his statement. We are a little surprised, first of all, at the method that is being used to peddle this statement - I think that is the right phraSE!, 1 peddle this statement. 1 The sooner the Premier realizes that the House contains all the elected people throughout the Province and therE! is nobody directly that he has to answer to but the people in this House, the better. and he ought: to be here. The · argument givE:~n by the government a minute ago was that the people involved cannot be here. Big galleries, Mr.

Speaker, largely empty since this government continues to slide down hill. The place to make those statements is here in this particular House. No. 38 Rl99lJ.

MR. OTTENHEIMER: 'rhat is what I doid. the statE!mE!nt. I just mad c MR. FLIGHT: By the Premier. MR. SIMMONS: Mr. Speaker, we understand that the minister just did that. He just discovered, by the look in his eyes, that he just did it. He We just realized that he did it. understand he did it. We are saying that if the leader of the government thinks it is important to be outside Chamber, that is a comment more this itself on what he thinks about this House. MR. TULK: Right on! MR. SIMMONS : Now, Mr.

Speaker, the announcement itself is an announcement we welcome in principle; it is an announcement that says we are going to have some focus on applying high technologies, new technologies here in the Province. And that would be almost an exception, because the general pattern is that if it is high technology it belongs in Central Canada and very few companies look at us here. I wondered, when I heard the first part of the statement about this Sprung Group of Companies from the West, as to why they were coming here.

It was only when I got well into the statement I realized why they are coming here: They are coming here because they have a gotten a very, very sweet deal - a very sweet deal. Mr. Speaker, we have just seen the stateme!nt for the first time, and we· will want to scrutinize it in some more detai 1, but my initial Ll995 May 8, 19 87 Vol XL reaction is two -fold: First or all, the idea of a new technology, particularly in this area, an area where consumer items can be produced for consumption within this Province, is a marvellous idea and needs to be encouraged.

The second point is that if this is a deal as sweet and as skewed in the direction of the company as it appears to me on first glance, then it is one that does require a 1 o t more s c rutin y not on 1 y by us but by the government itself. Because, Mr. Speaker, it is the taxpayer who is most exposed here, it is the taxpayer who is considerably more at risk than the investors. The statement spells out that in terms of equity contributions you are talking $3.5 million.

The taxpayer has an exposure, also, in terms of exempted retail sales tax and in terms of loan guarantees as well, so that the exposure, the risk of the taxpayer in Newfoundland here is considerable. The risk of thE! entrepreneurs who are coming in, and we welcome into the Province and, if they are going to generate some job opportunities we welcome that all the more, but we believe, Mr. Speaker, very strongly that these people, whether from Calgary or Newfoundland, ought not to be getting a deal that is overly sweet and that puts the taxpayer at undue risk. One of the soundest principles, Mr. Speaker - SOME HON.

MEMBERS: Oh, oh! MR. SIMMONS: Mr. Speaker, this is serious. We listened with interest to the minister, and I would hope he would ask his colleagues t:o do me the same courtesy. They know thE! No. 38 Rl995

garnP thE!Y ar E! playing. In a minute, the Spr?.aker will gel: up and tel1 mE! my time is up. What he does not bol:her to say every day is that half my time is up because he allowr:-d people on t:he other side to kill my time. Mr. Speaker, I want to have a word or two on this. It is a serious matter. It has serious economic implications for the Province, and it has some financial implications, particularly if the de!al is as sweet as it appears to be. Mr. Speaker, a key phrase on page 4, the minister says, 11 Like a previous agreement with Newfoundland Ene!rgy Limited. 11 My Lord, help us!

If it is like that agreement, we have much reason to be concerned. I would ask hirn a couple of questions: If, like that agreement, this one is going to boggle labour relations further, it is going to further mess up things in terms of labour relations. Is that going to happen? Has this agreement copper-fastened what the government failed to copper-fasten in the Newfoundland Energy Agreement? SOME HON. MEMBERS : Oh, oh! MR. SPEAKER : Order, please! I would ask hon. members to my left to please give this speaker the courtesy of silence.

He has some extra time to continue, because he has been continuously interrupted. MR. TULK : Good ruling, Mr. Speaker. r'!_R_._S I MMQN.~ : L1996 May 8, 1987 Vol XL lhank you, Mr. Speaker . Mr. Speaker, secondly, if, as the• minister says, and we take him at his word, it is like the Newfoundland Energy Agreement, does that mean that there is going to be hidden owners hip here, that the real owners are going to be tucked away in Bermuda somewhere?

Is that the pattern for economic development in this Province, labour strife stirred up by an insensitive government, and hidden ownership aided and abetted by an uncaring government, by a sneaky government? Mr. Speaker, labour statistics released yesterday indicate that St. John's is the worst city in Canada to get a job. I can take you to some towns in Newfoundland which are even worse off than St. John's, but this outfit is coming into St. John's. It is a good thing it is coming here and not elsewhere in Canada.

But that, itself , is a comment on the performance of this government, that after fifteen years living off the public fat, living high on the hog, their legacy is that they have to draw in with massive tax incentives, massive exposure to the taxpayer, somebody from Western Canada - and we are glad to have them - to help them bail out, to help alleviate the worst employment situation of any city in all of Canada, Mr. Speaker, a government that has devastated the lives of youth because of the inability to get a job out there, a government that has generally savaged the economy. t1R. SP.f-AKER: Order, please!

The han . member's time has elapsed. SOME HON. MEMBERS: No. 38 R1996

Hear, hear! MR. FENWICK: Mr. SpeakE!r. MR. SPEAKER: The han. the mr:~rnbE.~r for Menihek. MR. FENWICK: Thank-yQ·u-.-Mr. Speaker. Thank you for a copy of the statement. I was j us t doing a 1 itt 1 e bit of mathematics here while the babbling was going on from the other sidE!. We are committing $3.5 million in equity to this, which wi11 a1low them to buy back if the company is successful. We have $7 million loan guarantee. If I add that to the $3.5 million, that gives us a little over $10 million, plus $900,000 we are giving them in a direct grant by sales tax giveaway.

That, by my rna th, works out to $11.4 million for what looks like, according to the statistics, 150 permanent jobs, that is permanent jobs at the end of the line. I should indicate, Mr. Speaker, that that should not be 150 jobs in an absolute term because, of course, we have some greenhouse operators in the Province now who may suffer as a result of this competition, in which case, there will probably be some layoffs in their operations and it may mean on 1 y 1 00 j o b s or 7 5 j o b s or whatever it is. Mr. Speaker, that means that we are putting up about $70,000 per job or more. SO~_E HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please! Ll997 May 8, 1987 Uol XL MR. FENWICK: That was thE! division I was do'ing there, which, I would suggest: l:o you, if you look at the other projects in terms of rural deve!1oprnent, is extrE!mely expensive in comparision to what we have be!en doing with thE! Minister' of Rural, Agricultural and Northern Development's pr6ject. But, Mr.

Speaker, the grE!at.E!St folly with this programme is the concept that we can bring this high tech hydroponic system in herE! and that somehow, by putting it in here on a proprietorial basis, which is what 1..1.1e will do, we can i:hen expand the technology into the rest of the Province, which is the implication of what the minister is saying and which, of course, is not true. This company owns completely the technology, and certainly it would be extremely upset if anybody were to try to do the same thing elsewhere. In other words, Mr.

Speaker, the major problem with this project is the lack of technology transfer to other operators in this Province, which may have made it a good deal, but which is not provided for in this agreement and wh1ch, therefore, makes it a very questionable one. The second concern I have, Mr. Speaker, is it does compete w:i. th present operators, operators who do not get that kind of $11.4 million and, as a result, may have a difficult time in competing with it. And it goes completely, Mr.

Speaker, against the concepts of the House Royal Commission that. said we should concl:!ntrate on rural development, small enterprise production and so on. MR. EFFORD: On a point of order, Mr. Speaker. No. 38 R1997

MR. SPEAKE I~ : Order, plE!ase! On a point of order, thE! hon . thE! member for Port de Grave. MR. EFFORD : Mr. SpE!aker, we, on this side of the House gave our attention to the minister when he was making his statement because of the importance of the statement to every Newfoundlander. We listened to the statement, and the leader of the N.D. P. did the same. The member for Carbonear (Mr. Peach) has not shut up one second, Mr. SpE!aker, since he came in, nor has the member for Burin ·- Placentia West (Mr. Tobin) or the Minister of Culture, Recreation and Youth (Mr. Matthews). I mean, this is an important matter.

We, on this side of the House should be and want to be heard, and we want the opportunity to hear the views of everybody concerning what is important to every Newfoundlander. SOME HON. MEMBERS: Hear, hear! MR. SPEAKER: Order, please! There is no point of order. The han. the member for Menihek. MR. FENWICK: Finally, Mr. Speaker, we are talking about a company, the Sprung G~~up, from Calgary. Calgary, ·as everybody knows, is a high altitude area with very dry air, a very sunny place. It is a long way from St. John's, ~here we have a much more humid climate.

We have much more cloud cover, much lower levels of sunlight. Mr. Speaker, the transfer of the Ll998 May 8, 198 7 Vol XL l:E!ChnolO<JY 1nay liJOI"k but, a·o; liJio' see, $11.4 million of Lhe $18 million is our r·isk on it . So I would like people to know that when we are going forward on this, this is really our initiative; we are giving them an opportunity to bring their technology in here and do it. They have, it: appears, about a $3.5 million exposure, the rest on a rent/purchase agreemE!nt.

So, from that point of view, we should realize that we are the ones putting up the money, we are taking the risks to produce these 150 jobs which may compete with other opera tors, and we are getting no technological transfer. Mr. Speaker, on those grounds, I do not think it is such a great deal. MR. MATTHEWS: oh,o~· Against jobs again. MR. SPEAKER: Order, please! Oral Questions MR. SPEAKER: The han . the Leader of the Opposition. MR. SIMMONS: Mr. Speaker, I would like to put a question to the Minister of Energy (Mr. Ottenheimer).

It relates, first of all, to the recent announcement, indeed an announcement this week, of some additional investment by a private entrepreneur in the Beaufort Sea as far as oil development is concerned. And I wonder if, assuming the minister is aware of that development, as I am sure he would be in his capacity as minister, would he indicate to the House whether he has any concerns that that projected development in No. 38 R1998

the Beaufort has any possibility of adverse effect on a start up date for the Hibernia development? MR. SPEAKER: The hon. the Government Leader. MR. OTTENHEIMER: HousE! Mr. Speaker, the government certainly views the two as quite separate. While, obviously, recently there have been announcements of renewed interest and investment and that with respect to the Beaufort Sea, as han. rnembe!rS are aware, the Beaufort area and the frontier energy -are!a there of course have been known and quite active on the Canadian scene for a number of yea~s, almost paralleling, I suppose in terms of time, the Hibernia one.

We do not view with dismay any announcements of interest there. I suppose our focus as a government obviously has to be within the area' of our own immediate interests ~nd our own competence and, as hon. members know, about five or six weeks ago there was a meeting of federal and provincial officials with Mobil and company officials whe!re a position was put. It was a common federal/provincial position and there have been some contacts back and forth since and we are expecting a more or less definitive reply from the companies within the quite near future. So, no, I would not make a linkage there.

Obviously everybody knows there is only a certain amount of money to go around for investments and this and that, but I think what we have to do is pursue everything reasonable with resp(~ct to our own offshore, and obviously people who have interests in other areas of energy are going to do L1999 May 8, 1987 Vol XL t h E! s arnE· t h i n g . A n d r E! a 11 y a 11 lAJ E· can do is pursue in a reasonable• way our own concerns. MR. SPEAKER: .T h E!-h·a·n-~-the L.e!ader· of the Opposition. MR. SIMMONS: Mr.

Speaker, the minis t.er may not see a linkage but he will be aware, or let rne make him aware, that an oil analyst in the last few hours has made that very linkage and has postulated that the start up of the new development in the Beaufort would impact very seriously and adversely in terms of a projected start up date for Hibernia. Mr. Speaker, the minister made reference to an aspect of my follow-up question having to do , with the Mobil proposal. Could he indicate, in as specific terms as possible what the time frame is now?

He will be aware that the much-touted Atlantic ~~ccord was signed more than two years ago, and it was going to solve all of our problems the next morning, and that is now twenty-six or twenty-seven months ago. He will be aware that the earlier projected start up date for Hibernia is already a year behind schedule. Will he indicate now, in as specific terms as possible, what the projected time frames are now?· When can he expect a resolution of the matters involving the federal/provincial government and Mobil? And when can he expect the actual start up of the first one or two phases of the Hibernia development?

MR. OTTENHEIMER: Mr. Speaker. ~R_._SPj:AKER: The hon. the Government House! No. 38 R1999

Leader. MR. OTTENHEIMER : Mr. Speaker, I can ansWE!r l:h•:.> first pclrt, which is when I would expect that we will have a definite work back from the oil company. There I will have to give a bit of time leeway, but I would say we shall almost certainly have that dE!fini te word back from the oil companies by late June. I would rather go ahead a bit and, you know, contract the time, so by late June. Now the second part, of course, depends on the first part. The second part of the han. gentleman's question is could I give an indication or an estimate when the start up date for the development would be.

I cannot truthfully do that because that very much is going to depend on wha~ is the reply of the companies to the offer put forward. I mean the reply could be this is a regime that we can live with, but we are going to have to negotiate different details, and this and that. I suppose in theory, certainly in theory, the reply can be 1 This is out of the ball game completely 1 • And there can be intermediaries. So for me to give even an estimate of the start up time of the project would be purely speculative because it is going to depend really upon the content of the company•s reply. MR.

SIMMONS: Mr. · Speaker, I have a supplementary, if I may? MR. SPEAKER: The han. the Leader of the Opposition. MR. SIMMONS: L2000 May 8, 1987 Uol XL The minister brings rne VE!I''Y njcE!]y to the third point I wanted to raise with him, and that is : Where in real terms are these negotiations? I realize the negotiations by their nature are private, and my question is not that they be made public. My question is different: Are we at the cosmetic stage now or are we at the finishing touches stage?

Or, as I surmise from the minister 1 s most recent answer, are we possibly at the stage where this thing could yet come unstuck? Are there serious differences between the government, on the one hand, and the private sector, Mobil, on the other?

Is the effective rumour true - and let me put it down as a rumour that I do not invent right now but just peddle in this House for the first time - that we are now getting the classic conflict that had been expected from the beginning, that the government, on the one hand, has been saying we will not give away the shop in the interest of developing Hibernia, and that Mobil is, in effect, asking for the shop in terms of tax concessions? Has it come down to that classic conflict or is it rather a matter of just putting the finishing touches on an already agreed to set of accords and principles? MR. OTTENHEIMER: Mr.

Speaker . MR. SPEAKER: The han. the Leader. MR. OTTENHEIMER: GovernmE!nt House Mr. Speaker, at the present time I would say it is really neither of those. The matter which has gone forward to the companies is a substantial and quite specific proposal with respect to the No. 38 R2000

fiscal ar-rangement~s. It is quit£::• specific. It is not sort of a general, vague, philosophic thing, nor is it something with eVE!ry 't' crossed and 'i' dotted, but a very specific proposal. Really we do not yet have back the companies' reply to that.

So it has not gotten into that stage that the han. gentleman refers to, which obviously is a possible stage of that kind of a situation, in a negotiating position where obviously governments are maintaining, as quite properly they have to, and maximizing the public benefit, the benefit to the Province, and where companies obviously are seeking what they can for their corporate interests.

Right now it is not a vague, philosophic document, but a quite substantial and specific proposal, with respect to the fiscal regime, that has gone forward and we have not heard back yet whether that is generally acceptable or not. So it is at that stage. It is quite specific but, I suppose, pre!liminary to the other kinds of considerations which the hon. gentleman referred to. MR. SIMMONS: A final supplementary, if I may, Mr. Speaker. MR. SPEAKER: A final supplementary, the han. the Leader of the Opposition. MR.

SIMMONS: The minister in that latest answer, I suggest, implied that even under the best . of circumstances the most favourable responses from the company would need to be further refined. Unless they come back and say an all-out yes to everything you L2001 May 8, 1987 Vol XL asked For, there is going lo be need for further negotiations. So my point is there is an extra time delay introduced in terms of where we are now. Can the minister, in those terms, project the earliest possible start up date? Have we lost everythtng for this yeclr, have we lost eve!rything for next year in terms of physical activity?

What is the best scenario, giVE!n that. Mobil comes back wit~h ,3. generally positive response but one which has to be refined and further discussed, in terms of the earliest start up date for Hibernia in that context? MR. SPEAKER: The han. the Government Leader. MR. OTTENHEIMER: House Mr. Speaker, I have to think, perhaps on my feet, to the extent that I should reply to the question. I do not mean that as any discourtesy. But one thing I do not ~ish to do is to be accused -you do not mind being accused, I suppose -or give the public reasonable grounds to think that one is giving false expectations.

So that is the kind of dilemma that I am in. I think I could say this without venturing into that, that obviously we are in an area now without sufficient knowledge because we are waiting to hear back from the companies. So, essentially, until we hear back from thE! companies, we are not in a position to say when the development is likely to start. But if, in a hypothetical sense - this was, I suppose, in a sense implied in the question everything went positively in te!rms of thesE! negotiations, if everything went No. 38 R2001

posHively --if- Lht.H\ obviously there could bE! some acU .vi ty this year. I am not forcasting that is going to happE!n bE!CaUSE! I do not know. We rea1ly are not going to know until a reply back from thE! companies, which government would expect to have by no later than late June. tJR. LU .?H: Mr. Speaker. MR. SPEAKER: The han . the member for Bonavista North . MR. LUSH : Mr. Speaker, I have a question as we'll for the han. the Government House Leader. It is related to Mr. Wilson 1 s proposed and long-awaited tax reform. In view of the fact, Mr.

Speaker, that it has been reported that the provinces have given their tacit agreement to the overa11 thrust of the tax reform, I want to ask the minister whether the Province has decided its position with respect specificially to the national sales tax scheme. For example, under the proposals of the federal government national tax scheme, provinces may decide to hold on to their own sales tax scheme or they rnay decide to have its sales tax scheme replaced by the federal sales tax scheme. I am wondering whether the Province has made that decision. What is its position?

DOE!S it intend to hold on to its own present sales tax scheme or dOE!S it agree with having it replaced by the national sales tax s chE!ITie? MR. OTTENHEIMER : Mr. Speaker. MR. SPEAKER : The~-n--.- the Government House L2002 May 8, 198 7 Vol XL L e ad( ~r. MR. OTTENHEIMER : Mr. Speaker, I am surE! thE ! hon. member will agree his question, to a CE!rtain extent, is hypothetical. All we really know now is the federal Minister of Finance (Mr. Wilson) is going to bring forward a White Paper, available June 18, with respect to tax reform . Certain statements that this may be explored and that may be explored.

It is not a piece of legislation and it is not a statement of specific policy. I think as the Minister of Finance (Dr. Collins) indicated yesterday, when we know precisely what is in the White Paper, rather than replying to speculation, then the government of Newfoundland will make its own analysis of the various provisions and will make know to the people of the Province and the Government of Canada what our position is. Now we are really in an area of surmising and hypotheses .

A White Paper is not a piece of legislation or a statement saying, 1 This is going to be done. 1 What it is is an invitation, I suppose, for comment, debate and discussion. When we know specifically what is there, then we will do our analysis as a Province and, under the capable direction of my collE!ague, the Minister of Finance, han. members can be sure that it wi 1.1 be done in an assiduous manner. Then we will tell the federal goVE!rnment, indeed the people of the Province, what our position is. But we haVE! specific information in front of us rather than hypotheses. MR. LUSH: Mr. Speaker. No. 38 R2002

MR. ~>PEAKER: rhe hon. the melflber fol~ Bonavtsta North. MR. LUSH: Mr :· Speaker, I wani: to tell the minister there is nothing hypothetical about this situation. This tax reform now has escalated into national conCE!rn, and because there is going to be a white paper does not preclude discussing it now to make sure that the government is aware of the concerns of Newfoundland. Mr. Speaker, certainly the Province has decided now which way it is going to go. Should it decide to maintain its own sales tax system, the federal government will then put in its scheme.

Should the provincial government decide to maintain its own tax system, the federal government would have two options, the business transfer tax or the federal added value tax. Has the Province decided which option it will be supporting, whether it is the business transfer tax, which has no exemption, and includes everything, or whether they will go with the value added tax? Certainly they must position on this. important, Mr. Speaker. MR. CALLAN: It is very important. MR. SPEAKER: have This a is The hon-.-the Gove!rnment Leader. House MR. OTTENHEIMER: Mr.

Speaker, the goVE!rnment has to date d~cided not to make statements with respect to hypothetical positions or various options in terms of tax reform. The government's intention is to see the entire package and the L2003 May 8, 1987 Vol XL inter-relationships. As the hon. gent:1E:1illan is aware, these' dre extremely complex matters. I suppose eve:~rything in a tax sense is inter-related probably much more than in most othr?.r areas, and you really need to see what the inter-relationships are to see what specifically is proposed if you are going to say anything anyway intelligent or reasonable.

So we want to see what the specific proposals are -all of them, not just some of them -how they are inter-related, and then I think the gove!rnrnent' s reply will obviously be much more informed and, I would hopE! and think, much more influencial and much more weighty. So really I can seE! no benefit in the government making a statement now based on hypotheses or based on various options -and these are options for a white paper, options for discussion until it is there specifically and one sees the inter-relationships. Because without seeing the inter-relationships you really are talking very airy-fairy. MR.

LUSH: A supplementary, Mr. Speaker. MR. SPEAKER: A final supplementary, the hon. the member for Bonavista North. MR. LUSH: Mr. Speaker, that is pr1ecisely our concern. We are afraid that the people of Canada are not going to see a full package, that this is going to be introduced in a piecemeal form. Now then, Mr. Speaker, my final supplementary to thE! ministE!r is: Wi11 the minister, will his government ensure that as a result of these tax refo1nms t:hal: the people of Newfoundland and No. 38 R2003

Labrador, ·thE! c0nsurnE!rs and stna11 businesses, will be better off and not worse off? And will he assure this House, since the consumers of this ProvincE! alrE!ady have the highest cost of living, that food will not be taxed in this Province? MR. SPEAKER : The han . the Government Leader. f"1R. OTTENHEIMER: House Mr; Speaker, unless I WE!re to seek a nomination in the by-election and WE!re to be elected and, even then, were to be come Minister of Finance, all of which are extremely unlikely, I could give no assurance of what the contents of the tax measures of the Government of Canada are going to be.

I can give an assurance that the Government of the Province, when we know specifica1ly what is in the White Paper, will do everything possible to protect the interests of Newfoundland in terms of our representations to the Government of Ottawa. There is no doubt about that . SOME HON. MEMBERS: Hear, hear! MR. OTTENHEIMER: But unless the hon . gentleman is going to lead a •oraft Ottenheimer for St. John•s East Federal Campaign•-SOME HON. MEMBERS : Hear, hear! MR.

OTTENHEIMER: and unless I am then elected aftE!r thE! nominating conVE!ntion and then get to Ottawa and then become Minister of Finance, I could not give an assurance of what the financial policy of the Government of Canada is going to L2004 May 8, 1987 Vol XL bE •. MR. SIMMONS : What a shame! MR. OTTENHEIMER : Well, it is. MR. SIMMONS: Could I be the first to 'contribute to your campaign? MR. EFFORD: Mr . Speaker. MR . SPEAKER : The hon . the member for Port de Graue. MR. EFFORD: Thank you, Mr. Speaker. Mr.

Speaker, we had intended to put some more questions to the Minister of · Finance concerning this White Paper, we think it is very important, but he is not here, Mr. Speaker, .so I want to direct my question to the Minister of Social Services (Mr . Brett). Mr. Speaker, for some years now the minister and his department have been advocating and promoting the Mental Development Association in Newfoundland, and rightly so because they are doing an excellent job . We have a provincial association which is working voluntarily and working very hard towards the development of mentally handicapped people.

I would like to ask the minister, in the number of years tha l: these people have been involved, cou1d he te1l us how much his department contributes towards their operational expenses, and if Lhere has been any increase over the past number of years? MR. SPEAKER: No. 38 R2004

rhe hon. the M.in.isl:er of Soc1 .a1 Services. MR . BRETT: I do · not have the figurE!S right at my fingertips, Mr . Speaker, but I thtnk the!re are two or three grants. One goes t:o a group in Labrador, and there is another grant to the Newfoundland Association herE! in St. John 1 s. I do not have the exact figures I but they have been getting grants the hon. member is right - over the years and we are doing the same thing again this year. There was no increase in that particular grant, but they did get the same amount that they have gotten for a number of years. MR . EFFORD : A supplementary, Mr. Speaker . MR.

SPEAKER: A supplementary, the hon. the member for Port de Graue. MR. EFFORD: Mr. Speaker, I asked that for a very important reason. I have been talking to some people who have told me that they have made application to his department for an increase of funds. The original amount of the grant, I will tell the minister, was $30,000. That is the only money they have to operate on and the cost of operating that associaf..ion is in the vicinity of $100,000.

Now, I would like to ask the minister why 1 after representation had been made by this association, they have been turned down for more funding when they say that they do not have the funding? They came up with $200,000 to fund their former political buddy, Mr. Hickey. MR. SPEAKER : L2005 May 8, 198 7 Vol XL fhe han. the Minister of Social Services. MR. BRETT: Mr.

Speaker, we are funding several organizations in the Province - the Canadian Paraple!gic Association, the Newfoundland Association for the Hard of Hearing - and there are several dozen organizations and groups in the Province which receive funding from us. SeUE!ral million dollars are paid out yearly to these different groups. I guess it is a matter of dollars and cents, Mr. Speaker. This year we will be spending in this department $192 million. That is a fair sum.

Over the last three or four years, when we have seen many things in government frozen, including s t a f fin g , and , I wo u 1 d suggest , in other departments cuts in programmes and funding, this is the one department of government that has not received cuts. As a matter of fact, there have been increases in almost every single programme for the last three or four years and I am quite proud of that. I realize the problem, Mr. Speaker, as well as the hon. member.

You know, he does not have a monopoly on caring for the people of the Province, those who are less fortunate, the indigent peoplE!, but there is only so much that we can spend. The three main social departme!nts, Education, Health and Social Services, will spend in E!XCE!SS of 52 per cent of our total budget. I would suggest, Mr. Speaker, that we haVE! to ask ourselves just how far we can go? There is nothing I wouJ.d like more, Mr. Speaker, than to be able to give the Canadian Association for the Mentally Retarded, the Newfoundland Branch, No. 38 R200S

more money, and a11 the othE!Y' people t.uho are co ming to me for ' more rnonE!Y. But. therE! is only so much, Mr. Speaker, and you have to spread it. around and try to make it go as far as you can. And all the organizations that. receive money from us are worthy organj zations, thE!Y are alJ. doing good work. But again you have to spread the doJ.lars to make them go as far as you can. MR. EFFORD : A final supplementary, Mr. Speaker. MR. SPEAKER: A final supplementary, the han . the member for Port de Grave. MR. EFFORD: Mr.

Speaker, what: the minister is saying very clearly is that this voluntary association had to operate on $30,000 annually over seven years with no increase while his department sees fit to pay a salary of $65,000 to a former buddy of his . How can the minister justify that they had to operate on the same budget of $30,000 annually seven year's in a row when he gave an increase to one of his own buddies for whom the original estimate was $57,000, but in a matter of weeks they jacked it up to $65,000? He admitted that the other day in the Estimates Committee? These people need more money.

They should get more money because it is a voluntary organization and they are doing an excellent job. SOME HON. MEMBERS: Hear, hear! MR. EFFORD: Will the minister explain that and will he not carne clean and give those people more money, which they need? L2006 May 8, 1987 Vol XL MR. BRETT ': Mr . Speaker . MR . SPEAKER: The hon. the Minister of Social Services. MR. BRETT: ~Speaker, I do not know if the han. member is suggesting that I should rob Peter to pay Paul, but I am not going to. I have no intentions of taking any services away from l:he juvenile sector, the misguidE!d youth of this Province.

And I make no apologies for the Review Board which the hon. member is referring to. This government is in the process of final planning, which is just about completed, for a new building. We wi 11 be selecting a site now very shortly for a new Correctional Centre for the East Coast of the Province. This is going to cost the Province anywhere from $8 million to $11 million, and that service is required . You know, it is easy to single out any service in the Province and say they are not getting E!nough money, and maybe that is true.

I wish that our standard of living was equal to that of Ontario or Quebec or Alberta. But the sad part about it is that after all those years in Confederation, Mr. Speaker, we still have the lowest standard of living in Canada, we still have the highest rate of unemployment. MR. FLIGHT: Mr. Speaker. MR . SPEAKER: Order, please! The hon . member for Windsor- Buchans . MR. FLIGHT: Thank you, Mr. Speaker. the Mr. Speaker, the Minister I have a question for of Consumer Affairs No. 38 R2006

(Mr'. RUSSE!l]). As thE! m:inist.E•r l.1.1ill be aware and remE!Inber Lhat the government told us back in when l:ht~ airlines were ta1king about deregulation, that the result of deregulation in Newfoundland would mean increased services and improved fares. Is the minister satisfied what has happened in Newfoundland in air travel under deregulation has indeed increased the service and provided better fares for the travelling public of Newfoundland? MR. RUSSELL: Mr. Speaker. MR. SPEAKER: The han. the Minister of Consumer Affairs. MR. RUSSELL: Mr.

Speaker, I suppose everything is relative when you are talking about increases in services and increases or decreases in fares. I seem to think that there have certainly been more airlines providing more and better services and better connecting schedules in this Province since deregulation took place than there were before. MR. FLIGHT: A supplementary, Mr. Speaker. MR. SPEAKER: A supplementary, the han. the member for Windsor-Buchans. MR.

FLIGHT: The minister will know that with d~regulation the argument was made to replace j E!t serviCE! in Newfoundland with commuter servicE!, Air Atlantic and Air Nova. fhe biggest argument for that was for the economics of it, that the people could expect cheaper fares.

Could the minister explain to the L2007 May 8, 198'7 Vol XL House why cornrnu ter rE!placed charging with an so, as Why is operating the same it is that lhe new services that have the jet servicE! are exactly the sarne priCE!S, increase every month or the jel: service chargE!d? it the two companies Dash 81 s haVE! to charge fares as the :i et SE!rvice c har·ged? MR. SPEAKER: The han. the MinistE!r of ConsumE:~r Affairs. MR. RUSSELL: Mr. Speaker, on the fare rates and so on, the member will know, of course, I have no jurisdiction over the fare rates being chargE!d by the airlines.

I am assuming they are in a competitive business. MR. TULK: How come you were investigate Air Canada? get a special deal? MR. SPEAKER: Order, please! MR. RUSSELL: going Did to you No, Mr. Speaker, I did not get any special deal or anything likE! that, unlike the member, who is now eating food in the House of Assembly and should not be permitted to do so. ,BN HO~r:1EMBER: It is a beverage, boy. MR. RUSSELL: Yes. I hope there is only milk and sugar in it. Mr. SpE!aker, the hon. me!lnber will realize that these new airlines that have come into effect since deregulation are in a very competitive business.

I would like nothing more, of course, as all members in this House would, No. 38 R2007

than to see the fa re schedules and the far es r edu ced in this Province. MR. FLIGHT: A final supplementary, Mr. Speaker . MR. SPEAKER: A final supplementary, the hon. the member for Windor- Buchans. MR. FLIGHT : Mr. Speaker, my concern was to see if the minister was interested in taking advantage of getting the Newfoundland people the advantage of deregulation. Now, is he aware that CP, on the one flight out of Gander and out of St. John's within the past few days, have doubled their rates from $53 to $105, the same fare being charged by Air Atlantic and Air Nova?

Newfoundlanders are paying exorbitant rates to those commuter companies, Mr. Speaker, and they are not getting the benefit that the minister told us we would get. Why is it that CP have suddenly doubled the rates on that Gander - St. Jonn' s run? Will the minisb.H' confirm that the reason is that it is to force off the few people who are travelling on it anyway, so they can wipe out the jet service in Newfoundland altogether? Is that the reason we are seeing those increases in the fares? MR. SPEAKER: fhe han . the Minister of Consumer Affairs . MR. RUSSELL : Mr.

Speaker, the hon. member is well aware, of course, that my department has no jurisdiction over the setting of fares .. MR. FLIGHT : Make representation. MR. SPEAKER: L2008 May 8, 1987 Uol XL Order', pJ.E!aSE!! MR. RUSSELL : Mr. Speaker, if the crack ie from Windsor - Buchans will be quiE!t, I will try to give him an answer. MR. SIMMONS : Well he is a consumer. MR. RUSSELL: Mr. Speaker, he is a consumer. consumes a lot of words. Mr. Speaker, certainly if fares have incr'eased, as the member has indicated, over past number of days, I certainly be prepared to somebody take a look at it. MR. FENWICK: Mr. Speaker. MR.

SPEAKER : He · thE! hon. the will have The han. the member for Menihek . MR. FENWICK: Thank you very much, Mr. Speaker . My question is to the Minister responsible for Energy. It is a follow-up to the Ministerial Statement he made earlier this week with regard to the small hydro development at Mary's Harbour. My question to the minister is this: Could you indicate to us how much the electricity rate in Mary's Harbour will decrease for the consumers in Mary's Harbour? MR. SPEAKER: The hon. the GoVE!rnmE!nt Leader. MR. OTTENHEIMER: HOUSE! Mr.

Speaker, as a result of the small hydro development in Mary's Harbour there will be nei thE!r an increase nor a decrease in the cost to the consumer. What No. 38 R2008

happens her·e :i.s that as you gE!L more and 1nore of theSE! small ener·gy pr·ojects, thE!n you lE!Ssen your dependence upon the diesel in the PDD districts. And with a number of them, then naturally as you lessen your dependence you bring down your subsidy, because there is now about $22 million annually in subsidy in thesr:1 PDD districts, and that obviously will allow the government to continue to do as it did earlier this year, and that is help the consumers of electricity in the PDD districts by raising the life line or the amount which they get at a lesser change than what is in excess.

So one project will neither increase nor decrease the cost of electricity in Mary's Harbour, but what it is is part of a process of diversification and of lessening dependence on diesel, and with a number of them then obviously that permits government to help the consumer of electricity in the PDD areas by other mechanisms becaUSE! their subsidy goes down on the PDD, and the most obvious one is increasing the life line. There could be others as well. MR. FENWICK: A supplementary, Mr. Speaker. MR. SPEAKER: The hon. the member for Menihek. MR.

FENWICK: My supplementary is: Would the minister please give us some indication of the amount of money that will be saved by Newfoundland Hydro through its PDD utility, and then would he please let us know why some of that cannot at least be given in terms of reducing the rates to the individuals themselves in Mary's Harbour. MR. SPEAKER: L2009 May 8, 1987 Vol XL The hon. the Gover·nrnE•nl fiOUSE! l..eader. MR. OTTENHEIMER: With_r.e .. sp·E-;ct-t 0 the a !TIO U n t 0 f money, I would prefer to take that as notice and get it as a specific esttmate which I would not want to make up.

But the second part of the gentleman's question is why, if there is a saving is that not applied to the residents of Mary's Harbour? Number one, the electricity generated from this small project will meet approximately half of the needs of Mary's Harbour, not all of the needs. You would not want to increase further discrepancies within the system.

I mean, you have all of the PDD areas now; some like Mary's Harbour are fortunate E!nough to be the locale of possible alternative development, whether it is a small hydro, whether it is biomass, which is being investigated in certain areas, whether it is wave power, which is being investigated in certain areas. But in certain areas, because of geography or whatever, you would be introducing further discrepancies. I mean, there are discrepancies now for the consumer of electricity in terms of costs throughout the Province, but you do not wish to further introduce a regime of discrepancies.

So I do not think that that would be an appropriate course of action. I think it is much better, with a number of these then to be able to do sornei:hing for all of the PDD conSUITIE!rS such as further increasing the life line of electricity. MR. SPEAKER: The time for Oral Questions has No. 38 R2009

now el.apsrc>d . Notices of Motion MR. OTTENHEIMER: Mr. Speaker . MR. SPEAKER: The hon. the Leader. MR. OTTENHEIMER: Government House on-behalf·--·of thE! Minister of Finance, I give notice t:hat I v..lill on tomorrow move that the House resolve itself into a Committee of the Whole on Supply to consider certain resolutions for the granting of Supplementary Supply to Her Majesty. That is last year's budget. I also give notice that I will on tomorrow ask leave to introducE! a bill entitled, 'An Act: To Amend The Financial Administration Act, 1973. 11 Orders of the Day MR. OTTENHEIMER: Order 22 . Continued debate on second reading of a bill, 11

An Act Respecting The Return Of The Business Of Fishery Products International limited To Private InVE!Stors ." (Bill No. 34) MR. SPEAKER: The hon. the Minister of Fisheries. MR. RIDEOUT: Mr. Speaker, members will recall that I briefly introduced Bill No. 34 yesterday, just before adjournment. MR. WARREN : L2010 May 8, 1987 Vol XL Would l:hE:' han . 111i11'is l:.ur · 1nind d point. of order? MR. RIDEOUT : Stand up and say it, so I will not lose my place. MR. WARREN : A point of order, Mr. Speaker. MR. SPEAKER: A point of order, the han. the member for Torngat Mountains. MR. WARREN : Mr.

Speaker, a few days ago one of the - MR. FLIGHT: No respect for the hon. gentleman. MR ·-.-~1L.RREN: I asked the hon. minister . A few days ago, Mr. Speaker, one of the reportE!rs in the House of Assembly, Maudie Whelan, won the Canadian Institute of Mining Journalism award. I thought I would ask the House to unanimously send her a congratulatory letter on the magnificant work she has been doing in the House _of Assembly, and also on what shE! did on two articles: One

article on LabradoritE!, the prE!cious stone in Labrador, and the other on slate on Random Island. I think she should be congratulated by t:he hon. House. SOME HON. MEMBERS : Hear, hear! MR. TULK :_ Mr. Speaker. MR . SPEAKER: The han. the member for Fogo . MR. TULK: Mr. SpE!aker, while gentle1nan should have No. 38 the han. had to have R2010

lc>ave al: t:he l:.ime l..o do whaL ho did, we did not object because Maudie Whelan is perhaps one oF the better reporters and a very tireless worker. I have observed her around the LE!gislaturE!. as I know a lot of other people have. She is one of the most tireless workers in the news media. And while she may at times bug the life out of us politicians, she does so with a view, I think, to getting at the truth of the matter rather than, as some people in the media are wont to do, to just make a sensational story.

So, on this side of the Legislature, in spite of the fact, as I said, the hon. gentleman rose at the wrong time in the Legislature to do it, we would, of course, give leave and we would concur with a motion of congratulations or a letter of congratulations to Maudie Whelan on her winning of the award mentioned by the hon. gentleman and we would hope that the example of Maudie Whelan as a press reporter in this Province will be looked at by some of the other press people. SOME HO~. MEMBERS: Hear, hear! t'IR. FENWICK: Mr. Speaker. MR.

SPEAKER: I will recognize the hon. member for Menihek, and then I would want to make an observation about the point of order. The hon. the member for Menihek. MR. FENWICK: Mr. Speaker, just to echo the sentiments of the two previous speakE!rs, I think the other thing that should be noted about Maudie L2011 May 8, 1987 Vol XL Whelan is l:ha!: she hds <:J.n abicling interest in Labrador·. She has probably produced more stories about Labrador than any reporter in the Province on an ongoing basis. On that basis.

I know thE! members from Labrador all appreciatE! the eXCE!l1E!nt. work shE! has done and we would wish that the other media would be able to cover Labrador as well as her work has done. I echo the same sentiments the previous rnernbers put forward. MR. SPEAKER: Order, please! To that point of order, there is no point of order. I think it would have been more appropriate if the hon. member had asked leave of the House before bringing that matter up. The hon. the Minister of Fisheries. MR. RIDEOUT: Thank you, Mr. Speaker.

In the. few rninutE•s I had in introducing Bill 34· yesterday, I reviewed for hon.. members what I referred to as the privatization process, number one, of FPI and how successful that had been in the company divesting itself of fourteen of their fift(~en inshore plants. I also reviewed. for the benefit of members, Mr. Speaker, the events leading to privatization, as contained in the Fisheries Restructuring Agreement of 1983.

I reviewed the position of the Province, based on the fiscal advice of consultants that WE! had retained, as to why t:he time was right for privatization now, and I also reviewed the participation in the company by the employees of this company which is, in rnany No. 38 R2011

... r~.e~spt>cts, rJ!r. ~3pr:>.aker, a un:i.que labour managE!InE!nt E!XpE!rience in Newfoundland and Labrador . I briefly gave an overview of those situations YE!StE!rday in the few minutes that t had available to me, and what I would propose this morning, Mr. Speaker, is to take hon. membE!rS through the biJ.l clause by clause so that I can try to point out to thE! House, to the Legislature, exactly what this piece of legislation is about to accomplish and what it is doing in terms of the restructuring agreement of 1983 which, of course, is

an act of this Legislature and which this particular Bil1 34 is arnE!nding in a number of clauses. Mr. Speaker, the principle embodied in Bill 34, which we are debating here today, is that in order to facilitate the privatization proposal which led to the privatization of FPI formally on April 14, 1987, the Province has deemed it appropriate that we would enact legislation that would place certain legal obligations on the company.

There are certain things incorporated in this act that will become the law of the land that could just as easily have been incorporated in a privatization agreement between the two major shareholders - well, all three shareholders really the owners of FPI, that we wanted, for the protection and the benefit of the people of Newfoundland and Labrador, to enshrine in legislation. This legislation that we are deb a t.i ng herE! . today wi 11 rE! strict the transfer, the ownership and the voting of shares in FPI, and it will also affect the composition of the Board of Directors of FPI. Moreover, Mr.

L2012 May 8, 1987 Uol XL 5PE:'d,ker, speciFic .:unendJJWnl:s l:o the Fisheries Restructuring Act, which are outlined tn

Schedule A of the bill, are also deernod appropriate to the privatization of FPI. All legislative requirements and amendments that we are introducing in Bill 34 here today have been agrE!ed upon with the company and with the Government of Canada. So these are not unilateral. There were other signatories to the restructuring agreement, 1983, which were enshrined in legislation in this House, Mr. Speaker, and those specific legislative amendments that we are introducing here today have been agreed to with the other parties.

Once this legislation is approved by the House it will be deemed to have come into effect on April 15 past , because it was on Apr i 1 1 5 past that the company was formally returned to the private sector. So there can be no misunderstanding as to the intent and to the legality of this piece of legislation, since the company was p r i vat i zed j us t two or three weeks ago. Mr. Speaker, the principal components of this bill are, of course, outLined in thE!

short title. I will pick them up in

Section 3 in the bill.

Section 3 in this bill refers to the amendments to the Fisheries Restructuring Act. Members will appreciate and remember that when the GoVE!rnment of Canada and the Government of Newfoundland introduced or agreed to the Fisheries Restructuring Act, 1983, we, at that time or shortly thereafter, passed a piece of legislation in this House called the Fisheries Restructuring Act, 1983. So

Section 3 of thts bill deals with amendments to the No. 38 R2012

Fisheries Restructuring Act. fhe agreement referred to in the section, and which is attached to the bill as Sche!dule A, as I :indicated a few moments ago, provides that specified cJ.auses of the 1983 Fisheries Restructuring Agreement between the Government of Canada, the Government of Newfoundland and thE! Bank of Nova Scotia be amended. As a result, the 1983 agree!mE!nt re!mains in place. As a result, the 1983 agreement, the Fisheries Restructuring agreement remains in place except in t.hose areas which are outlined in

Schedule A in this bill, and those areas are specifically clauses 2, 3, 4, 5, 7, 8, 9 and 11. Those clauses that were in the Fisheries Restructuring agreement, 2, 3, 4, 5, 7, 8, 9 and 11, are the clauses that are being amended in this particular piece of legislation. All the rest of the Fisheries Restructuring Act, 1983, remains in effect. Now, Mr. Speaker, I would like to refer to E!ach of those clauses so that hon. m(Hnbers, hopefully, t~lill have an appreciation of what clauses we are amending and what the effects of those amendments are on the Fisheries Restructuring agreement.

The first clause that we will be amending in this Bill No. 34 is clause 2 of the original restructing agreement. Now, clause 2 had to do with corporate structure and the shareholdings of the company first. So this clause addressed the manner in which the shares in FPI, restructured, were! held by the federal government, the Province and the bank . This share structure disappeared upon privatization. Clause 2 (

a) addressed the amount of shareholdings by the Government L2013 May 8, 19 87 Vol XL of Canada, the 60 -odd per cent that. thE! GoVE!rnrnent of Canada held, the 30-odd per cent: that : the Government of Newfoundland held, and the 12 per cent that the Bank of Nova Scotia held. Obviously, upon privatization that shareholding disappears, because the governments and the bank no longer hold any shares in the privatized FPI - the ba nk has some under the put option, but that put option enables those to be bought to be brought out by 1994. Clause 2 (

b) has to do with the redemption of the Bank of Nova Scotia's shares. This matter has no further legal implications for the Province or for FPI. All that was was that there was a number of shares guaranteed by the federal government under the Restructuring Agreement of 1983 thro ugh what we called a put opt ion. The privatization agreement has funded that put option so that the federal government is no longer on the hook for funding the put when it expires tn 1994. The Province was not on the hook anyway, so there was no financial implication for the Province.

But because! the privatized FPI have made arrangements in its privatization proposal as contained in its prospectus to fund the put option, therefore, clause 2 (

b) will disappear because it no longer has any relevance. MR. EFFORD: A point of order, Mr. Speaker . MR. SPEAKER: Order, please! A point of order, the han. the member for Port de Grave. MR. EFFORD : I do not want to interrupt the No . 38 R2013

han. membE!r 1 s speech, but, Mt '. Speaker, it is a job to hear, and this is a very, very important bill. There is a conversation going on in the corridors, we haVE! a conversatton going on, and the minister is trying to clarify thE! points put forward in the privatization of FPI. We, as members on this side, take it with great interE!St, because it is important to fishermen all over the Province. MR: SPEAKER: To that point of order, there is no point of order. I would ask the people on my left to please be quiet while the minister is speaking. The hon. the Minis·ter of Fisheries . MR. RIDEOUT : Mr. Speaker, to continue on, clause 2 (

c) of the original Restructuring Act had to deal with Newfoundland guarantees. Obviously, there are no Newfoundland guarantees in place now, they were, of course, removed when the last equity round was put in place. There are no outstanding obligations by the Government of Newfoundland under guarantee to FPI, so clause 2 (

c) is being eliminated from the restructuring agreement. Clause 2 (

d) has to do with the composition of the Board of Directors. We were entitled under the restructuring agreement to name a number of people as representatives of the Government of Newfoundland and Labrador on the Board of Directors of FPI. As a result of privatization, governments will no longer have a direct role on the Board of FPI. We are not naming any government representatives to the Board, because we no longer have any L2014- May 8, 1987 Vol XL OWnE!rship i.n LhE' COiflpany. Therefore, Clause 2 (d), which too k care of that provisio n in the res truct uring agr eement, is bei ng repe aled. Clause 2 (

e) had to do with significant corporate decisions that could have a negative social impact. Under the restructuring agreement, 1983, significant operating decisions like plant closures and mechanization, resulting in permanent employee changes, required the approval of both governments. Under the privatization agreement, FPI is required to give governments ninety days notice of any planned shut-down of any plant that they own, and F PI would providE· a mandatory option to both governments to cover the cost associated with keeping any plant that they might want to close down, in operation. Now, Mr. Speaker, this is under Clause 3 in the act, which repeals Clause 2(

e) in the old act. This shut-down option is basically, word for word, the shut-down option that was contained in the restructuring agreement, 1983. In other words, I want to make it abundantly clear, so that members of the House and the public of Newfoundland understand, FPI, by law a privatized corporation, has the same obligations to the Government of Canada and to the Government of Newfoundland today as they had in the restructuring agreement of 1983; they must give us ninety days notice of any planned shut-down of any plant that they own. If both governments disagree with that shut-down option, then both governments must share S0/50 the cost of keeping that plant in No . 38 R2014-

opE!rat.i.on. If onE! gover·nlfiE!nt objects, then the objecting government_ bears the cost of subsidizing the operation of the plant, and that is word for wo1~d, basica1ly, as I said, the agreement that was in place in the old restructuring agreement of 1983. So the shut-down provision, the shut-down protection, is still law and is still binding on the privatized FPI, just as it was under the restructuring agreement and the Restructuring Act of 1983. Clause 3, Mr.

Speaker, has to do ~ith relations between the government shareholders and the company, covering the areas of the business plan, consultation, authorized issued capital, no material change, dividends, by-laws and wind-up. Now, this clause has been repealed because these matters reflected the owners hip oF F PI prior to privatization by both governments and the Bank of Nova Scotia. As shareholders, those parties could direct the affairs of the company, which is no longer the case upon privatization.

Obviously, we have no right now, since we are not owners of the company anymore, to say how much your dividE!nd issue is going to be, to say you have to file your business plan with us on an annual basis, things of that nature that were covered in clause 3 of the restructuring agreement, 1983. Clause 4, which is being repealed, has to do with the divestiture of shares or assets. This clause, in the original agreement, reflected government's commitment to return FPI to the private sector. Obviously, that is what we are doing.

The init'ial phase, as I indicated yesterday, envisioned the return of f'ifteen plants, and privatization, phase two, is being L2015 May 8, 1987 Vol XL accornplishE!d by So c1ause 4-, in was, in E!ffE!Ct, here today, privatization of Lhis acL today. tht~ old agrE!enwnl: what WE! arE! doing legalizing lhe FPI. Clause 5, which is being rE!pE!alE•d, had to do with corporate organization. The Fisheries Restructuring Agreem(~nt, Mr. Speaker, envisioned a specific organizational structure for FPI.

However, goVE!rnmE!nts, eVE!n prior to privatization, agrE!ed that this mattE!r should be bE!St left to thE! company management. Even though it was in the restructuring agreement, both governm•?.nts agreed that once a competent board of directors and a competent management team were put in place, it was not the right thing for governments and the bank to tE!ll the company on a daily basis that they should divide themselves into a marketing d'ivision or a new products division or a procurement division or a purchasing division.

Those kinds of corporate structure decisions WE!re best left to the management of the company, and they were. And obviously, of course, flowing out of privatization, we have no right to tell the company how to organize their corporate structure, so that clauSE! is bE!ing repealed. Clause 6 had to do with the fishing industry structural study. This clause addressed the specific proposal which was not pursued during the period that FPI was owned by governments.

Once it was decided that thE! corporate structure should be left to the F PI managemE!nt, and it has no further application to FPI, therefore, it is being taken out of or being repealed from the 1983 Act. No. 38 R2015

~ MR. 1ULK : "Af}oi -~of order, Mr. Speaker . MR. SPEAKER: A point of order, the hon. thE! member for Fogo. MR. TULK : If you look at the bilL Mr. Minister, Clause 6 is not taken out. So whether that is a mistake by the draftsman that you wish to correct at the Committee stage, it is something you should take a look at. MR. RIDEOUT: Yes, that is right. Clause 6 is not in my notes, either. I am sorry. Clause 6 is just in on this briefing note. That has not been taken out. The ones that are being taken out are 2, 3, 4-, 5, 7, 8, 9, and 11. Clause 6 is still in there. That was a mistake on my par•t. MR.

SPEAKER: To that point of order, there is no point of order. The hon. the Minister of Fisheries . MR. RIDEOUT: Clause 7 is being Speaker. That had marketing, marketing repealed, Mr. to do with for the all, and of a Planning FPI. independents, first of the establishment Newfoundland Market Co-ordination Council by Now, immediately, Mr. Speaker, prior to restructuring, there were considerable marketing problems being experienced by many of the small and medium-sized fish processing companies in the Province.

Consequently, during the restructuring process, a need was identified for FPI to play a major facilitating role in this area. Once the restructured FPI L2016 May 8. 1987 Vol XL was E!Stabl:lshE!d, FPI did, :l.n f'act, enter into marketing arrangements wi .th a number of small plant operations.

Further•more, a number of marketing consortiums were established and expanded involving small and medium-sized firms: We had the Bay Shore group, for example. we had Seafood Exporters Association, we had a whole bunch of seafood marketing companies, that were put together within the last two or three years, where independent processors came together and formed associations for marketing purposes. Nevertheless, in the spirit of this clause of the restructuring agreement, FPI did enter into a number of arrangements with independent firms in the Province to take care of their marketing.

However, after some of those other arrangements were formed, the need for FPI or, in fact, the dE!Sire, the request for FPI to do marketing on behalf of some of the smaller operators disappeared and that diminished, in the view of governments, the need for a formal marketing council. But FPI have indicated, and have indicated to all and sundry, that they are prepared to continue to market products if they are requested and if the desire is there on behalf of other smaller independent processors in the Province.

Obviously, as a private company, FPI is free to pursue any of those arrangements that might be mutually acceptable to them and to any of the smaller independents who might want to have FPI do their marketing for them. As I have said, Mr. Speaker, and as members of the House are aware, there have been a number of smaller marketing organizations put together over the last two or three years that have negated the No. 38 R2016

n'?.cessil:y for somE! of Lhe smaller· companiE!S to want sornE!body biggE!r to market for them. In fact, National Sea does do marketing for some small, private fish processors in thE! ProvinCE! as well. So that is nothing new and that can continue under the privatized arrangement. Clause 8, Mr. Speaker, had to do with thE! procurement of fish for the resource-short plants. Under this c 1 au s E! • F PI was r E! quirE! d to co-opera·te.

It was not said that you have to do it or whatever, but FPI was required to co-operate with the resource-short plant programme participants in harvesting of the resource-short plant programme allocations. At the time of restructuring, of course, there was considerable difficulty in obtaining vessels, especially Canadian bottoms. to harvest resource-short plant allocations. Since then, since the res tru c turing in other words, FPI has, in fact, co·-operated with resource-short plant participants and from time to time FPI have, in fact, harvested fish under this programme for the resource short-plants.

The rE!Source-short plant programme group. however, as members may or may not know, have, I belieVE! since August or September of last year, now formalized their own operations, and the participating plants in that group have formed themselves into their own operation called' Newfound Resources Ltd. .

Newfound Resources Ltd. have gone and done a business deal with Harbour Grace Fishing Company, and the Harbour Grace Fishing Company is now landing the fish for the resource-short plant program and Newfound Resources Ltd., owned by the resource-short plant L2017 May 8, 1987 Vol XL operators, fish from plants in Province. is dis tr· i b u l: i 11 g l:. h"' Harbour Grace to thedr various parts of the Howe•VE!r, Mr.

Speaker, FPI wilJ still co--operate:~ if necessary. and if requested by NE!Wfound Re!sourcE!S and any other operator who is part of thE! resource-·short ·-plant. program, in the harvesting, if they can and when they can, of resource-short plant fish. MR. TULK: --···-----Can the government require them to do that? MR. RIDEOUT: WE! could not the old act, co-operatE!. require them under that said they had to AN HON. MEMBER: Will it continue now? MR. RIDEOUT: They have give!n · the commitment that that commitment would continue scenario .. under the privatization Clause 9, Mr.

SpeaketM, in ·the rE!Structuring agre!eiTlE!nt, had to do with the social compact between the rE!Structured cornpan~r and their employees. Members w:U.l recall that FPI did not enter into a formal social compact with the Fishermens' Union, the OVE!ralJ. spirit of the socia1 compact has been reflected, I believe it is fair to say, in the company/union agre!ements. The union, which is their own prerogative, chose at the time for whatever reason, again their own prerogative, not to enter into - AN HON. MEMBER: Will the minister be tabling his notes? No. 38 R2017

MR. RIDEOUf : Mr. Speaker, theSE! arE! rny speaking notes and I have no difficulty in tabJ.ing them, but I would remind the hon. member I am not bound by the rules to do so as a ministe!r speaking from documents. They are just my speaking notE!S. This is technical information. I might have a half decent head, but I cannot remember alJ of those technical details. The Fishe!rmens • Union, for whatever reason in the restructuring agreement, and this is their own business, were offered a social compact in the restructured FPI and a seat on the board of directors, but the union chose not to accept that arrangement.

Therefore, the social compact, in the legal sense, was not put in place, but, in fact, there was a social compact between the company and the union, in that long-term agreements were put in place between the employer and the employees.

The company now, of course, as I already indicated to the House yesterday, has offered a free stock share plan to its employees: Seven million dollars worth of shares in the company have been given free to the unionized employees, a subsidized stock option plan is available for the employees to buy further stocks through payroll deduction, and, of course, there is a profit-sharing arrangement in place between the employees and the company.

As has been said and is now public knowledge, the union have accepted a position on the board of directors, and I believe Father Des McGrath has been appointed to the board of Directors as the union•s representative . Therefore, Mr. Speaker, the only L2018 May 8, 1987 Vol XL social is Ls I know of Luho have· any difficulty with the restructuring agreement ts the NDP. I have not heard anything negative from the union: In fact, the union has accepted its position on the board of directors. I have not heard anything from the President of the Federation of Labour, who is an employee of the Fishermens• Union.

The proof of the pudding is in the eating, and the union have accepted their position on the board of the dire!ctors, they have accepted the stock option plan, they have accepted the beneficial granting of shares. So there is a lot in this, I think, for the employees. So, Mr. Speaker, the social compact, even though it did not go in place under the original agreement, certainly has gone in place under the privatization agreeme!nt. Clause 11, which is the other remaining clause that will be deleted, had to do, Mr. Speaker, with plant utilization.

The company has indicated in its prospectus, publicly filed at the stock exchanges across the country, that the company is committed to the ongoing operation of Harbour Breton, Gaul1:o'.is, Ramea and St. Anthony. The company, upon privatization of course, as I indicated earlier, must give governments notice of any plant shut·-down and provtde a mandatory option for governments to cover losses associated with any threatened plant. Now, Mr. Speaker, we are naming those plants because these were the so-called social plants that members wi 11 remember.

These were the so-called social plants in the restructuring agreement that had No. 38 R2018

t:o be kt?.pl~ opt:.>n, iF I J"ernc~Jnber Lht:! agreement correctly, until 1988, and then there was to be some doubt - you know, thE!re had to be• negotiations - what would , be the future of those plants. Well, Mr. Speaker, l:he privatizt:~d FPI is saying to the world, the privatized FPI is saying to the Canadians and Europeans and Americans who purchased shares in this company, that Harbour BrE!ton, Gaultois, Ramea, and St. Anthony are part of the corporate family of FPI as long as there is an FPI. Harbour Breton, Gau1t.ois, Ramea and St.

Anthony, which were the sa-called social plants, now have the same status in the corporate family of FPI as does Marys town, as does Fortune, as does Burin, as does Grand Bank, as does Bonavista. Those plants art~ the corporate family of FPI. If there should be, for whatever reason, some change in any plant, not those any more than any others, not those any less than any others, but if there should be some re!ason why thE! corporate entity known as FPI would want to close down a particular plant, then the closedown mechanism and protection that I outlined earlier is applicable. So, first of all, under clause 11 (

a) the future of all the plants owned by FPI is the same. There is no discrimination between a Gaultois and a Bonavista, between a Harbour Bre!ton and a Marystown, they are all equal and they are all part of the corporate family of FPI and will be operated by FPI. Clause (b) - MR. TULK: How long are you going to go on? MR. RIDEOUT: L2019 May 8, 1987 Vol XL You lAJould not 1nind, I suppo:;e, iF I went a little bit over time? MR. TULK: Summarize that Section, Number 11. MR. RIDEOUT:

Section 11 has a number of provisions in it. The first provision was, rt:~rrH~mber, in sub-cJause (

a) of the original clause 11 of the 1983 Restructuring Act, Harbour Bre!ton, Gaul tois, Ramea and St. Anthony were identified as social plants and nobody knew what their future was after 1 9 8 8 - right? - but F PI had to operate them up until 1988, and then we would see what happened after that. The privatization agreement, and this is, as I said, in the prospectus, it is on this basis that the company have gone to the public of Canada and North America and Europe, to some degree, saying that those plants are part: of the FPI family with no discr·irnination.

As long as there is an FPI, FPI will be in a Gaultois or in a Harbour Breton or in .a St. Anthony. They now haVE! the same status; no social plant stigma; FPI have turned them around. They are making money for the company.

The company is pleased uJith the productivity and the changes that have occurred in those operations and FPI is saying clearly to the investment community and to the people oF those communi ties, that your plant in Gaultois has the same status in this corporate family as does the plant in Marys town, or Harbour Breton has the same status as does the plant in Bonavista, or Rarnea has the same status as dOE!S the plant in Burin. So, Mr. Speaker, that is what is happening here and, of course, all No. 38 R2019

of them put togE!lhE!r, eVE!ry pJ.anL they own put toget:hc?r, is covered by the close-down option that I referrc:!d to earlier, which remains part. of thE! J.aw of the J.and. ThE!Y have to give ninety day notice, governments can intervene, governments can subsidize, all that that was in the original agreement, on top of this, is still in this agreement. Secondly, Mr. Speaker, part (

b) of clause 11, Burin 1 s role as a secondary processing plant and trawler refit centre, has beE!n fulfilled. That was what clause 11 (

b) said in the original agreement, that Burin would be, and, of course, that is exactly what has happened at Burin. Clause (

c) said that Grand Bank would continue to remain open as a pri1nary processing facility, and, of course, it has. Clause (

d) referred to the St. Lawrence plant. Of course, that has been sold by FPI and it is operating successfully now . Clause {

e) dealt with Fermeuse. That has been sold by FPI and it is operating successfully. Clause (

f) dealt with Hermitage and Belleoram. These plants are operating successfully under new owner operators. Clause (

g) dealt with the Triton plant and, of course, the outstanding shares of the Triton plant were purchased by FPI some months ago, and that continues to be operated by FPI as one of its offshore landing plants and will continue to be so. MR. TULK: Who owned that? MR. RIDEOUT: It was a joint venture Dorman Roberts Limited, betweE!n local the those a and of person in Triton, Nickersons. It was one L2020 May 8, 1987 Vol XL 50/50 arrangements . MR. TULK: Have Nickersons sold that plant? MR. RIDEOUT: Yes. MR. TULK : How is that? MR.

RIDEOUT: Well, in the sense that the Royal Bank held their shares because of the defaults before restructuring. FPI had to deal with Dorm Roberts Lirni ted and the Royal Bank. MR. TULK: So it was really the Royal Bank and Dorm Roberts. MR. RIDEOUT: Exactly. Not were out of it t:ime. Nickersons, they at that point in So, Mr. Speaker, these are the clauses in the original Restructuring Act that will be deleted as a result of the privatization agreement and as a result of Bill 34.

All of the rest of the clauses of the Restructuring Act remain in place and have the same effect in law as they had before this bill was brought in. The only changes are to clauses 2, 3, 4, 5, 7, 8, 9 and 11 that I have gone through in some detail here this morning. Now, Mr. Speaker, I would also like to,- as briefly as I can, t.ake members through the particular sections of Bill 34. This took care of

Section 3 which deals with the amendments to the Restructuring Bill, 1983. The rest of the Bill: I would like to briefly take members through the various clauses and briefly No. 38 R2020

oxpla.in l':l1t:Hn. I havE:~ be£:~n told [ haVE! five minutE!S lE!ft, but I am sur e members would not mind tf I went a little bit beyond. AN HON. MEMBER : You can have lots of leave! MR . RIDEOUT: Lots of leave? Okay . As I said, I have dealt with

Section 3 which was the changes to the clauses in the original Restrurturing Act. The next Section,

Section 4, has to do with the holding company restricted owners hip. Remember now, there are two companies here, there is FPI Limited, which is the holding company, which owns the shares in FPI International, FPIL, which is the operating company. We wanted \:o make sure that they could not get around this share restriction by doing some fancy legal work, so

Section 4 puts the ownership restriction on FPI Limited which is the holding company. This Section, Mr. Speaker, gives the force of law to the 15 per cent restriction for FPI Limited. The text of the share restriction is attached in this bill, word by word as

Schedule B, so members can go through, if they wish, the restriction and pursue it. But it is there in its detail in

Section B. This

section requires the companies to include the share restriction that is set out in

Schedule B here in their constating instruments. In other words, their instruments of association. This is just a n.ew, fancy legal term for their instruments or articles of association.

The companies will then be not entitled to amend or delete their restriction without L2021 May 8, 1987 Vol XL f :i r s L h a v i n g l: h e 1 E• 9 i s 1 d t· i. o 1 1 arnE!ndE!d. s~:~cU .on 4· rnakE!S t.hj s app 1 i cable l:o the holding c Oiilpany. which owns the operating company, so that the 15 per cent share restriction is part of the articles of association of this company and cannot be changed without the consent of this Legislature. Now, if some government, for whatever reason tomorrow or the next day or twenty-five years down the road, wants to do that, obviously, you can amend legislation at any time.

But until such time as that is done, the company cannot vio late the 15 per cent share restriction. MR. TULK: Which is what? That no shareholder can own any more than the 15 per cent? MR. RIDEOUT : That is right. Or they cannot get together and vote any more than 15 per cent by three or four ganging up. All that is outlined in

Section B here. MR. TI,J~: Could I ask the minister a very serious question? And you can go on, because it is an important issue. Could three or four people agree to vote on certain decisions of the company with, say, four of them holding 60 per cent of the company? Is that possible? MR. RIDEOUT: I suppose, Mr . Speaker, anything is theoretical . MR . TULK: Yes, get together in a back room . MR. RIDEOUT: It is possible to get together in a back room, but there are laws No. 38 R2021

governing what own ers , shareholders, and boards of directors of a company can do. MR. TULK: oh:--r-- appreciate what you are t.rying to do. MR. RIDEOUT: There was a guy flicked off the New York Stock Exchange just recently for some pretty serious stuff. So the law is there and the 1 aw, I suppose , is as good as the peoplE! who are following it. But if some people became devious and ganged up in a back room, there are probably numerous things that could happen. But I am sure the law would find a way of taking its course. MR. TULK: You never know.

Fourteen members of the Liberal caucus could hold 60 per cent of the company. _MR. SPEAKER: Order, please! The han. minister's time is up . SOME HON. MEMBERS: By leave. MR. SPEAKER: Leave has been granted . MR. RIDEOUT: Okay. Government support for a 15 per cent share restriction, Mr . Speaker, reflects the government's view, reflects our view, and this is why we agreed to it. This is not something new, by the way.

Members might recall, when the Alberta government privatized Pacific Western, which has since taken over CP, that there was a share restriction built into that legislation, basically the same kind of share restriction that is built in here, and it worked very L2022 May 8, 1987 Vol XL lJ..JE• 1.1 . BUt it Wa S d 0 n E ! bE!

C aU S E' j t. was our view that a shar e restriction would enhance the overall corporate impact of FPI on the Province, that you would not be able to have this co1npany, which employs 8,000 Newfoundlanders, which operates in so many nooks and crannies of this Province, subject to the corporate dictates of one large conglomerate . That was the reason behind it: By spreading out, by diversifying, by diffusing the ownership of the company, you lessened that kind of danger. In the absence of such a share restriction, Mr.

Speaker, as members would appreciate, a single shareholder would have a great degree of flexibility to adjust the operations of the company to meet the various corporate objectives. For example, in the prospectus that went to the public to buy this company, they were told what the dividend limitations would be.

You would never be able! to do that if you did not have a share restriction, because if Swifts or Canada Packers or Nordsee were the majority shareholders, they would be able to say what the corporate direction of this company is going to be without any reference to how the board of directors feel or anything else.

Section 5 of the act puts the ownership restriction on FPI International, the operating company.

Section 4 made the owners hip restriction applicable to the holding company because the holding company conceivably, if we did not do that, could have purchased all of the shares in the operating company and then they would be free of the restrictions. So the restriction applies to the holding company in No. 38 R2022

Section 4- and l:o Hw op(H'al: .ing company in

Section 5. This

section applies the same share restriction to FPI Limited, but includes an exception in sub-section 2 to permit FPI to own all of the shares of the holding company. So the operating company could own all of the shares of the holding company, but the holding company is restricted by the share restriction on the operating company.

Section 6. Mr. Speaker, deals with the restrictions on changes in jurisdiction. This

section is important because it eliminates a loophole which could be used to defeat the share restriction by changing the jurisdiction of the company's corporate registration from Newfoundland to another jurisdiction which prohibits share restrictions such as the one created in the bill. Now, our law does not prohibit, Mr. Speaker, share restrictions. But unless we put in

Section 6, which does not permit the company to change its jurisdiction, they could have gotten around this by changing their corporate jurisdiction from Newfoundland. say. to Ontario. for example. by moving their head offices. It could even be on paper . But

Section 6 does not permit that. They cannot move from this Province to another jurisdiction which prohibits share restrictions. This

section specifically prohibits both companies from applying for such a continuance, which means a move or a change in corporate registration. MR. TULK : In the side notes to words 'foreign prohibited', does the bill, the continuancy that mean outside the country outside the Province? or just L2023 May 8, 1987 Vol XL .M.!L . _jtLQf..9 _v_[ : I·t means eithE!r, becauSE! J.t i.s a jurisdiction -- MR. TULK : Foreign to the ·province? MR. RIDEOUT: Foreign to the Province, yes .

Section 7, Mr. Speaker, deals with the restriction on the sale of the business of both companies. Members will notice in

Section 7 that this

section eliminates - MR. FENWICK; Would you entertain a question on

Section 6 before you go on? MR. RIDEOUT : - -···-~- Sure. MR. FENWICK : No microphone . MR . RIDEOUT; This is incorporated in Companies Act in jurisdictions now, so it is new. Our legal advice is this is within the competence this Legislature to so do. MR. TULK: Do what? The courts? MR . RIDEOUT: the some not that of God bless them! I do not know, but that is our legal advice .

Section 7, Mr. Speaker, as I said, puts the restriction on the sale of business of both companies, the operating company and thE! holding company . This

section eliminates another loophole · in the share restriction, whereby the property and the assets of the two companies could be tra nsferred to a third company which is not subject to share restriction . No. 38 R2023

This SE!Ct.ion prohibits the sa]E! of a11, or substantially all or the property and thE! assets of either company relating to the follol~Jing, and this is thE! key part of the section: the harvesting, processing and marketing of seafood. The companies are perrni tted to t.ransfE!r property not relating to its fish business without subject to this section. Example: FPI • s Board of Directors might decide they have good capital assets built up to invesl: in·- I do not know - MacDonaJ.d • s hamburgers and chips.

We 1.1.li.ll have no right to say they could not transfer or sell their interests into hamburgers and chips. But any assets associated with the harvesting, the processing and the marketing of seafood cannot be transferred from FPI to sorne third company to allow them to get around the share restrict:ion. MR. FENWICK: There is nothing here to show (inaudible). MR. RIDEOUT: That is right. MR. FENWICK: So they have to keep the American plant? MR. RIDEOUT: That is right. Denvers is part of the structure here. MR. FENWICK: Even if we wanted to set up secondary processing plants in the Province and get rid of those?

MR. TULK: Well, what would be required there would be a change of legislation in the Province. MR. RIDEOUT: L2024 May 8, 1987 Vol XL Yes, there would have to be a change of legislation . I do not : think that is in thE! cards . They have a secondary processing operation in the Province now. MR. TULK: I do not imagine it would take very long to get it done~ either. MR. FENWICK: No, the point I was making was, •all or substantially all', I would take that to mean a big chunk of the company and the two plants in the States may not be defined as all or substantially all. MR.

RIDEOUT : Would not be defined as all or substantially all. That could very well be. I could have that checked, if the han. member would want. MR. FENWICK: Okay. MR. RIDEOUT: Now,

Section 2, Mr. Speaker, of clause 7 makes it clear that the companies can mortgage their property for purposes of corporate financing without the restriction in this

section having any effect. In other words, to build up an operating line at the bank or whatever, they can go out and mortgage their trawlers and their plants and so on against their operating line. This

section does not have any effect on thE!ir ability to finance the company, but what it does is prohibit the company from transferring all or substantially all, as the act says, of their harvesting, processing and marketing into a third company that is not bound by the share restriction. MR. TULK : No. 38 R2024

Gover·nlnte!l'lt wou1d thE!rE!, would it? MR. RIDEOUT: ----·-·-----·---·-No. MR. TULK: have:! no control We, as a Legislature, or the government itself would have no control over them doing this? MR. RIDEOUT: Under subsection (2) the gentleman means? MR. TULK: Yes. MR. RIDEOUT: We could do it, but, I mean, look what we would be doing. MR. TULK: -·--··---But not under this agreement. MR. RIDEOUT: No. We could say you can only mortgage 15 per cent of your assets, but look what you would be doing in terms of limiting their ability to have a $100 million working capital line, for example. MR. TULK: I understand that. MR. RIDEOUT:

Section 8, Mr. Speaker, deals with the restriction on the merger of both companies. This

section deals with another loophole in .the share restriction whereby the two companies could be merged with a third company so that the resulting new corporate entity would not be required to maintain the share restriction. This

section prohibits such mergers or amalgamations. So, obviously what we have been trying L2025 May 8, 1987 Vol XL to do :in rE!S triction possible possibility devised to restriction. 1na.king this shdr'IC' as loophole free as ts that ge 1: covering every couJ.d pE!rhaps be around the share

Section 9 in the bill, Mr. Speaker, has to do lAri th the residency requirement on the board of directors. This

section requires both companies, the holding company and th1E! operating company, to maintain boards of directors, the majority of whom are to be residents of Newfoundland. MR. TULK: That was not the old restructuring it? MR. RIDEOUT: case under the agreement, was No, it was not. The federal government and the bank had more members on the board, obviously, because they held more shares than we did. As it turned out, I should say to the han. member, there . were a majority of Newfoundlanders, at least on the revitalized board, after the last round of equity. MR. FENWICK: Mr.

Speaker, there are a few points on that that I would likE! to have clarifi1?.d. As the board members are put on, are thE!Y designated as Newfoundland resident board members or is it just a general pool? Secondly, if I was Harry Steele and I was sitting on a board as a resident of Gander and I wanted to move to Halifax and decided to heck with you, I am going to fight you in the courts, do you have a legal opinion on whether or not he would be able to get away with it? No. 38 R2025

MR. SIMMONS : What is it he wants, to be Harry Steele or to moue to Hal ifax? MR. FENWICK: The ancillary part of it : How is a Newfoundland resident defined? How long have you got to live here? MR. RIDEOUT: A N ewfoundland resident, I believe, is defined as somebody who is a resident of the Province for a month, or something like that. Whatever entitles you to vote, I would think, and I believe that is a resident of the Province for one month . MR. FENWICK: Is tha ·t the criterion? It is nol: like the offshore oil regulations, where it is a different criterion? MR.

TULK : I would imagine it is lhe Newfoundland residency reguirement. MR. RIDEOUT : Yes, the normal Newfoundland residency requirement . Now, I missed the first part of the hon . gentleman's question. MR. FENWICK: When you are put on the board, are you called the Newfoundland board member versus the other one? MR. RIDEOUT : No, when you are put on the board of this privatized company, you are a member of the Board of Directors of FPI, There is a caveat which says that you cannot serve on that board, as part of this legislation, part of this agreement, unless you are a resident of Newfoundland.

I remE!mber the han. now the second part of gentleman's question, L2026 May 8, 198 7 Vol XL wh ether that is legally enforceable or not if it should happen to be challenged and go through the courts . I can tel1 t:he han. genthHnan t:hat there are differences of opinion, honestly. I mean, I obviously cannot misinform the Legislature. There are differences of opinion as to what the result would be if that were challenged. That is being blatantly honest with you. MR. FENWICK : We sort of suspected so. MR .

RIDEOUT : Nevertheless, what is wrong with having a requirement saying that the majority of the board of directors of that great company ought to be NE!Wfoundlanders, since it is a company that means so much to Newfoundland? MR . FENWICK : Nothing, if it will work. MR . RIDEOUT:

Section 10, Mr . Speaker, of the bill deals with the management restriction on the board of directors. This

section prohibits more than one member of the management of either company from sitting on the board of directors of either company. It is the Province • s view that the board of directors of both companies should be autonomous from the co111pany management and, consequently, the Province made this a condition of the privatization agreement. In E!ffect, what this says is that only one member of the management team can also be a rnembE!r of the board of directors. At the present time, of course, the Chief Executive Officer, Mr. Young, is a member of the Board of Directors. Mr . Norris cannot be. Mr . Wells cannot be. There can only be one No. 38 R20·26

ITIE!ITibE!r of the managE!rnenl Learn at any one point:. in l::irne a mr:.'!1nb~H' of the board of dirE!Clors becaUSE!, tn our op-.inion, that lAJi11 mean that the diversified view of the company, because of the share restriction, will have morE! of an impact and be bett:er able to carry the day than if you had two, three, four, five, or any number of management, who are managing the company on a day to day basis, also on the board of Directors.

Section ·11, Mr. Speaker, has to do lJJith ·- MR. TULK: You do not need to go through that. MR. RIDEOUT; conflicts of other acts. As rnembE•rs can see, this bill makes this act paramount over any other act that there might be conflicts tAJith, like the Companies Act, the Corporations Act, or any other particular piece of legislation that might be in conflict with t hi s a c t . T hi s wi 11 t a k e precedenCE!. MR. FENWICK: -----1 have a question on that. Is there a direct involvement with the Companies Ac-t we passed last year? Would it have restricted some of these things? MR.

RIDEOUT: fhe share restriction clause could be a problem with the Companies Act that we passed last year. MR. FENWICK: How about the board of directors? MR. RIDEOUT: Not that I am aware of. I would not want to be definitive on that, but that was not flagged with me as a problem. L2027 May 8, 1987 Vol XL MIA. Spe,akE!In, there il.. :is. Not Lo bore l:he House in the leav,:· \:hal: thE!Y gaVE! mE!, but just briefJ.y to summarize: We th-.ink that: we have built into a privatized FPI the legitimate protect-.ion that the people of Newfoundland and Labrador deserve from the operations of this company.

We also believe, as a result of this privatization, t:hat a n1:!lAJ and dynamic company has been created out of the ashes where nobody thought there -would have bE!E!n any success three or four years ago. Granted, the taxpayers of N1?.wfoundland w"ill leave behind an investment of about $20 million in the privatized FPI. Our total exposure as a result of thE! restructuring was around $66 rniJ.lion, and we got back in cash $48.7 million, I believe. Our total investment in the restructured FPI, Mr. Speaker, was nowhere close to alJ. being in cash equ-.i ty into the company.

We had some guarantees on some of the older companies that were restructured, we had some guarantees, first mortgages on trawlers that were assumed into the new restructured company. When you put all our assets together, as a Prov-.ince our total equity and cash amounted to around $60-odd million. MR. TULK: Sixty-four million, was it not? MR. RIDEOUT: Sixty-four million. But, as I said , that was not a 11 cas h on the barrel hE!ad. We have ~JottE!n back out of that $47.8 million, we have gotten back a company. MR. TULK: A rose is a rose is a rose, though. MR. RIDEOUT: No. 38 1~202'7

Right . WhE!rE ! we did not E!XpE!Ct to get back a cent, we have gott en back a company that is dynamic, a company that is on l:he move, Mr. Speaker, a company that is the best of its kind, which can go shoulder to shoulder in the market place with any other seafood producing company in the world. So I think that the restructuring that was done has certain 1 y been successful . I believe that the management and the employees of the company are to be credited with doing a fantastic job.

Obviously, there were other factors external to the company, like favourable discount and interest rates, lower fuel prices, the market taking off in the U.S., which probably nobody would have pre!dict.ed two or three years ago. National Sea is in great shape, but as the CEO of National Sea was telling me the night before last, FPI is even in greater shape, because National Sea is still carrying a significant percentage of its restructured life in debt. But this company is carrying a debt-free bottom line, Mr. Speaker.

This company, we think, is now in a position to be able to go with the ebb and the flow of the fishing industry. There are going to be bad times again. MR . FENWICK : They have some debts, do they not, about $15 million or so? MR. RIDEOUT : Not as related to capital take-over. They rnay in terms of capital acquisitions, like a new trawler or something like that. They would finance that. MR. FENWICK: It does have a bit of debt, just a srna11 ratio. L2028 May 8, 1987 Vol XL MR . RIDEOUT : Yes, very, very insignificant. small, al1nost This company, Mr.

Speaker, as I was saying, is now 'in a posi t:.ion that we are confident that no matter how the ebb and flow of the industry goes over the next number of years - and there will be good times and bad times, that is typical of the fishing industry­ that it can sustain and grow with the good times and that it can sustain and hang in there in the bad t:imes. That was the intent of restructuring, Mr. Speaker, and I believe that that intent: has been realized. It is therefore with a great deal of pride and pleasure today that I moue second reading of this bill. MR. TULK : Mr . Speaker . MR .

SPEAKER : The hon. the member for Fogo . MR. TULK: Mr. Speaker, our fisheries spokesman, I think, is in his district on business. Yesterday when the hon. gentleman started his speech, the Leader of the Opposition was absent . I want to start off by saying to the Minister of Fisheries that he is talking about one of the most important issues that has arisen in the fisheries in this Province in a number of years. I want to congratulate him on his presentation this morning and yesterday. He has done a great job of that.

I want to also say to him that I believe, as privatization processes go, he has done a good job of privatizing Fishery Products International. No. 38 R2028

If I have a quarrel with the rninist ~er, i.t is not ~ with his abilit .y to do what he has donE!, but rather, perhaps, i.t is Found in the last few words the minister gave us, which are, 'the ebb and flow of thE! fisheries in thE! Province.' I want to say t:o the minister in starting my remarks, to use his own words, that we have been able to sell Fishery Products International and gain a good price for it in the stock market . r understand the stocks that we put on the stock market at $12.50 arE! now selling for somewhere around $17.50 to $18.00, in that vicinity, which is - MR.

RIDEOUT : They have been up to $18.25. MR. TULK: I want to say to him that yes, he has done a good job of privatizing FPI. There is no quarrel. But I do have to say to him, Mr . Speaker, that the real probJ.em, as I see it~ with what we have done here, and the real concern that. I have about: the privatization of FPI is found in the history of the fisheries in the Province and perhaps in the his tory of Newfoundland.

The minister started off by saying Fishery Products I nte rna tional was able to gain for us in the marketplace and in the stock market a good price fo .r shares and it had a tremendously successful year last year. I think thE!re was a profit of something over $40 million. I say to him I wonder if FPI, the corporate structure or the supposed, and I use the word carefully, the supposed bright young people who sit on that Board of Directors, I am not so sure that they have proven to us in any L2029 May 8, 198 7 Vol XL or LhE! cat:.E!gOdE!

S that t.hE•y have been :in, and I say this lAJiLhout any maliciousness towards the chieF executive officer, I arn not~ so sure that he has proven to us in this Province that he has been able to take - what I am talking about in particular is the man that WE! tout. around this ProvinCE! as being the godsend of FPI, and I do not want to namE1 him. I do not want to be specific with the names. For example, if we look at the CEO, if we look at him, if you look at him very carefully, I understand the han. gentleman was a former advisor to a former Premier of this Province, which did not take a lot of effort .

I understand also that. he was, at one point, the Chairman of Newfoundland Hydro which, in my opinion, is the sa me thing as having your own printing press to print money. If you go in the whole with Newfoundland Hydro, if you make a mistake with Newfoundland Hydro, then all you have to do is up the rates, and there are very little controls on t.rJhether you are allowed to up !~he rates or whether you are not.

We then transferred the hon. gentleman, that bright young gentleman to Fishery Products International, and I have to say to you in all fairness, if you give my thirteen year old daughter $3 million of capital in the form of equity or· cash, thE!n I think she too, under the circumstances that FPI has found its•;!lf in the last couple of years in the marketplace, would probably make a profit of $40 million last year for F PI . I say that without any personal or political maliciousness toward the han . gentleman. I think it is a factor we have to consider. No. 38 R2029

The fact of the matter is last year FPI, as l:he Minister of FisheriE!S (Mr. Rideout) has just said, 1nade a profil: because of an upturn in the marketplace for fish. Fish has come to be considere!d a health food and has replaced meat in many instances. I_ think last year there was a decrease of 8 per cent in the consumption of meat and there was a corresponding rise in the consumption of fish of 8 per cent as well. Now, 8 per cent seems 1 ike a small figurE!.

But if you look at the huge United States market for either fish or meat, then 8 per cent means millions of pounds, and, of course, what it does is create demand for a product in this case namely, fish. So the marketplace improved tremendously as a result of some of the change and eating habits of people in the United States. Of course, there has also been a lowering of the interest rates, which has helped the Canadian fishery substantially. There has also been a change in the value of the Canadian dollar on the US market which again has helped FPI International last year.

There has also been a change in fuel prices. There has been a downward trend in the cost of oil and that again contributed to the success of FPI. As I said that company in 1-9 8 3 was it, the old restructuring agreement, in 1983 that company was granted $300 million public funds.

It is the same thing as if you took Abitibi-Price today, bought it out and gave it to anybody in this House to make a profit with, and then you would have to compare them to somebody who bought out Air Canada or let us say the Air Atlantic portion of Air Canada, they had to buy that out on a private basis and - no, let us L2030 May 8, 1987 Vol XL Lake two corresponding places. Let us take Stephenville and Grand Falls. You gave one person the plant in Grand Falls and you said, 11 No, run it.

Make a profit with it. 11 On the ot:her hand you required the other gentleman to buy it and you said, 11 Now you run it and make a profit with that business . 11 Of course , the two could never meet. So I say to the Minister of Fisheries (Mr. Rideout) that while I be!lieve he has done a good job in the detail of privatizing FPI, I have some! very serious concerns, and this party has some very serious concerns, about whether we should have privatized FPI or not. I am not against private business and neither is this party against private business. We are not, as the hon. gentlemen to my right would be - MR.

FENWICK: I am too your right as well as to your left. MR. TULK: That is my left, is it? No, you are to my right, you are to rny left philosophically perhaps . MR. SIMMONS: To your physical right and all over the map politically. MR. TULK: All over the map politically, yes, that is true. Mr. Speaker, the point of the matter i-s that we had a company, We were saying FPI was making $40 mi 11 ion worth of profit and tha L that was expected to rise in the next five years, those werE! the predictions that were coming from the government and from Mr. Young and from the rest of the Board of Directors of Fishery Products.

No. 38 R2030

IF thal: WE!InE! l:he case, tAJhy l:hen wouJd we, as a pE!OplE!, SE!ll ·that company? We owned 25 per cr:.~nt of it, so if it were $40 milJion worth of profits, that l:urned -.into the treasury of this Province $10 million. Why se11 a company thal: is making money? The second and perhaps the most important reason of all that I can see for· us not selling a company is thts: No, let me come back to the $10 million first.

We also heard last year a great cry that the inshore fishE!ry nE!E!ded to be restructured and in order for the Provincial Minister of Fisheries to sign the new restructuring agreE!ITlent to privatize FPI, he wanted an inshore restructuring agreement signed. Why did not the minister recognize that in his own hands, his own company, Fishery Products International, he had $10 miJ.lion that he could have immediately taken as profits from that company and turned into the inshore fishery itself? Why did he need to sell that company to get the money? The absolute truth is he did not. But perhaps, Mr.

Speaker, the more important thing that one has to consider, and the member for Fortune-Hermitage (Mr. Simmons) will remember this as well as anybody because it was a political factor in his time in Ottawa, the like of which this Province has never seen, the restructuring of FPI. Han. members opposite will remember it as well, and we on this side remember. Fishery Products International today is a very prosperous company.

I would suggest to you that fifteen years ago Fisheries Products, the old Newfoundland Fishery Products and many of the other deep-sea companies that L2031 May 8, 1987 Vol XL existed along l:he ~3ou Lh Coas l:. of­ this ProvinCE! WE!r'e very suc:CE!S~JuJ companies as wel1. Our history ts that we have had a deep-sea fishery at u~rtain tim~:!S l:hat has beE!I1 very successful and at othE!r times has not been. There are not guarantE!E!S, in spitE! of what the minister has dom~ and ~Ln spite of his atte!ntion to detail.

The minister or no one else cannot guarantE!e this LE!gislature that in five years time WE! will not have thE! same situation that we had in 1981--82, and 1983 where we saw fish plants being closed because they could not survive in the marketplace or because of mismanagement by the people that owed them. You would normally say, Mr. Speaker, if it were a Kentucky Fried Chicken place that we werE! talking about, you would let it close.

The real truth of the matter is that the fishery in this Province is so important that if we find ourselves in three y1?.ars time, having already passed out $300 million, $20 million, I think, which the ProvinCE! will never recover, and even rnore from the federal governme!nt which thE!Y will never recover, having already passed that out in 1983, in 1988-89, 90 or even 95, we could find ourselves in the same position that we found ourse1ves in in 1981-82. By that I !TIE!an, the Provincial deep---sea fishery is bottom up again. Mr. Speaker, I ask you, where then are those people going to carne to look for funds?

That fishery is a vital part not only of our economic life but of our social life in this Province, a fishery without which Newfoundland wouJ.d not survive. Where are! t:hey then going to come to look for the cash to bail them out? Mr. Speaker rnay No. 38 R2031

nol: be lw('e, [ 111ay not bt~ here:.~ and none of the members of lhis Legislature 1nay not bE! here. I would not bet on that. I would not hold any bets against you being here at all. Mr. Speaker, we may not be here but the truth of the matter is they will return to this Legislature. That is part of the history of Newfoundland. DR. COLLINS: Would the hon. member permit a question? MR. TULK: Of course. MR . SPEAKER: The hon. the Minister of Finance. DR.

COLLINS: Would the hon. member not agree though that. the restructuring was really more than a bai 1 out, thE! restructuring put things in place that even if this company got into financial difficulties, those good things that WE!re put in place are still there. We are dealing with a very, very different deep sea company now than what was there when the Lakes and the Munros and the Pennys were there, which was a very run down sort of operation. I am not blaming those people but it was a very run down operation. Now the operation that is there is in a very good situation.

Even if it got into financial di ffi cul ties, you cannot get away from the fact that the plants are good, the trawlers are good, it has a good management structure in place, it has a lot of marketing work done and all that type of thing. WouJ.d the hon. me!mber not agree that we have a better thing on our hands now the!n we ever had before? L2032 May 8, 19 8 7 Vol XL MR. ~3PEAKER: rhellOn "~ -the mE!mber for Fogo . MR. TULK: I wi1l not disagree with thE! minister at all, Mr. Speaker. What the minister fails to see is that does not destroy the argument that I am putting forward, not at all.

Fishery Products International today is a very modernized company. Whether they keep re-investing to see that that company is kept modernize!d is another question, that is another question in five years time. This is where my real fear as an outport Newfoundlander comes from. The history of the fishery in this Province has been that those people who have managed it have, in many cases, taken the profits when they are there and stuffed them in their own pockets at the expense of the people of this Province and, in bad times, come back again to the people of this Province to bail them out.

That is the history of the fishery of this Province and that is t:he history of private investors in this Province. The reason that Fishery Products went under, the old Newfoundland Fishery Products, is that they failed to keep pace with modern technology because they knew bloody well that when they went under, because of the social pressures that are put upon the government, regardless of who is in power, they would again be bailed out. We saw H.B. Nickerson come into this Province and buy up anything they could laid their hands on.

They did not look and SE!e whether they had the modern technology, whether they had the modern management plans in place that were required to keep that company No. 38 1~2032

gcd.ng, all they want:E!d was a n:ichE! in the Newfoundland fishery knowing full well that whE!n thE!Y caJilE! t:o where there are social pressures for the government, we would buy them out. So there is no guarantee.

In spite of what thE! han. gentlE!man says, and I appreciate what he says, today Fishery Products International is a very modernized company but there are no guarantees built into this programme that we arE! now looking at, to the privatization of FPI, that guarantees us that we will not see the same gr·oup of people, the private investors, the so·-called private investors·--and if they were I would say God bless them but they are not because we have subsidized them to the tunE! of $300 million. That ts not private investment. That is not private enterprise.

If the Speaker wants to get: engaged in a company, which should be perfectly legal for him to do and is, if he is to call himself a private investor with private funds, then he puts up the cash, and he takes the risk. I say to the Minister of Finance that that has not happened in this particular case.

I say to him that there is no guarantee in three years that the plant in South Dildo will be open, there is no guarantee that the plant in Ramea will be open, there is no guarantee that the plant in Gaul to is wi 11 be open, there is no guarantee that the plant in Harbour Breton will be open, unless we are prepared for the day when FPI, and I mean ~e, as a government, WE!, as lE!gislators, comes back to put up the cash that is necessary. So for thE!

Minister of FisheriE!S 1..2033 May 8, 1987 Vol XL to stand tn his plaCE! and say L.hcd. because we have done this and done another thing -he has done a good job within th~C! bounds l:hat: he could -but for him to say that we ar·e now guar·an tE!!'d ng the fu tu r1:> of the deep-sea fishery in this Province is either misleading or comes about of his not knowing what he is talking about. So, Mr. Speaker, on that onE! basis, I am not sure at this potnt that: there was any point in privatizing FPI. Let us J.ook at what the Minister of Fisheries says in the agreement.

Let us look at what the Minister of Fisheries has replaced out of the old restructuring agreement, Mr. Speaker. I am concerned about the social components of the old restructuring agreement, becauSE! that was the one reason why it was brought in. It was not for the good of private investors in t:he Province, but to SE!e that communities like Gaulto:is, Harbour Breton and so on, survive. The Minister of Fisheries tells us that before Fishery Products International can close down certain plants in this Province, the so-called social p1ants, thE!Y have to give the government ninety days notice. Now, Mr.

Speaker, big whoop-de-do! They are having lhE!ir cakE! and they arE~ E!ating it too! If t