1 l Volume 2 'l PROVINCE OF NEWFOUNDLAND THIRTY-SIXTH GENERAL ASSEMBLY OF NEWFOUNDLAND 2nd Session VERBATIM REPORT Friday, February 16, 1973 SPEAKER: THE HONOURABLE JAMES M, RUSSELL Number 6

February 16, 1973 The House met at 3:00 P.M. Mr. Speaker in the Chair. MR. SPEA.!{ER: Order please! Tape 126 HON. FRANK D. MOORES(PREMIER): Hr. Speaker~ I would like to ask this House to join in paying tribute to the Most Reverend Michael O'Reilly, the retired Bishop of St. George's who died on Thursday. A native of Ireland Bishop O 1 Reilly served in Newfoundland for more than fiftv years. His first ten years in this province were spent as assistant priest at St. George 1 s. In 1928 he was appointed parish priest at Lourdes. Port au Port where he led the people of that area lnto the co-operative movement.

He was consecrated Bishop of St. George's in 1941 and served in that capacity until his retirement and succession by the Most Reverend R. T. McGrath in 1970. I know there are other m~mbers of this House on both sides ~ho will want to pay tribute.their own tributes to this great man who uas one of the breed who had great influences on the province's social development in the early days of this century.

I dirl not know Bishop O'Reilly personally but I have been very impressed by the µreat number JM - 1 of people who have spoken so highly and so well of him and of his unselfish devotj_on and his deep sincerity and his tremendous contribution to our province. On behalf of this House and of the government~ Mr. Speaker, I would like to pass on our regrets and our tribute to one of Newfoundland's most outstandin~ and distinguished citizens. MR. E.M. ROBERTS(LEADER OF THE OPPOSITION): Mr.

Speaker, I am not sure if the Premier moved a resolution which is the normal way in which the House pays tribute but I assume he did. He may not have used the words precisely but I would like to second the resolution on behalf of my colleagues. In due course, for the Premier's information, the clerk or the Speaker on behalf of the House writes to the Bishop ts family if he has 378

February 16, 1973 Tape 126 JM - 2 any sisters or brothers surviving him or if not I would think to Bishop McGrath his successor in the Episcopal See of Humber-St. Georie 1 s. I like the Premier did not have the privilege of knowing Bishop 0 1 Reilly, Sir. I had one long conversation with him coming from London to Gander on an airplane once. We talked for four or five hours. It was after his retirement as Bishop. He had been home to Ireland to visit with friends and I suppose with friends from his college in seminary days.

But like any person who has been at all interested in public life in this province in the last few weeks Bishop O'Reilly 1 s nnme is well-known to me and his work is well and favourably known. He was a deeply christian gentleman in every fine sense of that word or those words. He was a man of very real social conscience, of very real feeling for his fellow man and his concern was pastrol in the best sense of that word. It went far beyond the theologicaJ, the religious concern.

That was there genuinely and deeply felt and believed by the Bishop but his concern was far more than just the affairs of the church as such. He was deeply concerned with social questions, social issues and I think the record of his years as Bishop. as the leader of the diocese, as the sheppard of the diocese on the West Coast will stand as a tribute to hin memory. Some of my colleagues rnuy wish to speak, I do not know but whether they do or not I do speak for us all when I say that we do extend our sympathy and support the resolution which the Premier has proposed.

It is a sad moment when a man of the caliber of Bishop 0 1 Reilly dies but it is one of the incidents of life in a community such as Newfoundland that our great men in the course of time do die as we all must. I think it is a good tradition and an entirely fitting one that this House representing all of the people of this province does take notice and we are happy to join them in tribute proposed by the Premier. HON. T.C. FARRELL( MINISTER OF TRANSPORTATION A.'ID COMMUNICATION: Mr. Speaker, 379

February 16, 1973 Tape 126 JM - 3 I would like to join in the tribute to Bishop O'Reilly for his many years of service to the people of Newfoundland. I knew him very well myself. He was a most kind and ~entle and very considerate man and as the hon. Leader of the Opposition has just stated,a most religious and a deeply committed Christian gentleman. He played a large part, as the Premier stated,in the establishment of the co-operative movement in Newfoundland together with the late W,J. Keough. They were both well-known and they helped to establish this movement which has done so much for this province over the years and will do a lot more in the future. 380

February 16, 1973, Tnpe 127, Page 1 -- apb Although Bishop 0 1 Reilly has been retired for many years he .still was hifhly regarded, he was particularly highly regarded by the children of our province who came in contact with hi.m. He particularly paid special attention at nll times to our children and for that alone. he was rep;arded very highly Jn the Diocese of St~ George I s. I would just like to add ny deepest sympathy to the others expressed in this House today. Thank you. JfR. F .R.STAGf.: Hr.

Speaker, on behalf of the people of the District of Port au Port in which Bishop 0 1 Rcilly resided at the time of his death, I wish to add r.1y voice to the trihutcs to Bishop 0 that have heen extended here thi!i afternoon. The Community of Lourdes on the Port au Port Peninsula was the recipient of Ids early days, his early vigorous days.

He is responsible for the formation of the co~operative at Lourdes which in still flourishing as well as the Credit Union and the Credit Society 1.n that community, Bishop 0 1 Reilly retired nt Stephenville and the people of Stephenville were very pleased to hBve him there and on many occasions he graced them with his presence. The church at Lourdes was started by Father Pinneault and finished durinf; Father O!Retlly 1 s tenure ns priest in that comnunity.

On behalf of the people of Port au Port, I wish to extend deepest sympathy to the family and hope that this House is expedient and very soon sends its regrets to the family of Bishop O'Reilly. HON. J.G.EOUSSEAU (t,1inister of Rehabilitation and Recreation: }~r. Speaker, if I may, I would first like to join my colleague the Hinister of Transportation and Communications. Having heinp: a former resident of Corner Brook, I join with him in his mcpression. I think he accurately reflected the feelings of the people in Corner Brook and indeed on the West Coast who had any dealings with the Bishop.

I think I would like to take this opportunity on behalf of all the students at the schools in Corner Brook during the late 1940 1 s and 381

February 16, 1973, Tape 127, Page 2 -- apb early 1950 1 s who had the pleasure to attend school during the tenure of Bishop O'Reilly. Bishop O'Reilly, in all our minds(at that time we were young people) was a magnificent man. He made weekly visits to the school every week at St. Bernard 1 s Academy. I remember through elementary and high school you could always expect a visit from Bishop O'Reilly. I would say without hesitation that well over ninety~five percent of the students in the classes that he visited he could name. He knew them very well.

I remember each year we put on an annual play and indeed, in my Grade XI year, we put on the play ' 1 HamJet1' and Bishop 0 1 1?eilly was very deeply involved in the production of it. Because of his interest in drama, he actually did much of the directing. I remember many Saturday afternoons that he would come over to the school with us and join in.

I remember one day in particular that we were sitting dot-."Il and there was a checker board on the table and the Bishop looked at me and nskcd ne if I could play checkers, I said; PA little, can you'l' 1 He said; ''No~11 Three r.10ves later he had all my checkers cleared off the board, which I think shows the type of wit the man had. He wns a very sincere man. His wit was touching and I am sure that on behalf of all the students who attended school in Corner Brook during the days that the BiShop was in his heydayJ that they would like for me to express their sympathy.

I believe that the Bishop has a brother alive in Ireland. As I remember, that is 382

February 16, 1973 Tape 128 !B-1 his only living relative, maybe there arc more but I think this is so. ff h:is brother is still alive, I extend to him my sympathy and I am sure join in the echo of all the people on the West Coast who are deeply saddened hy the Ions of this great roan whose life will not be forgotten verv easily hy these people. HON. A •. L MURPHY: "-fr. Sneaker, if l mav. for _lust one moment, I would like nl.so to add a word to this expression of condolence, a resolution that is to go out from this House.

I had known Bit.hnP 0 1 Rie11.v per­ sonally for 3 great many vears hoth throuv,h mv activitv as a member of this House of Assemblv for fl number of years but rr:ainly, Sir, through my connections with recreatinn throughout the nrovince and my many visits to Corner Brook, I can just sny, in br:!ef, Sir, that he was a very saintlv, dedicated clergyman and I am sure thnt neither race nor creed made anv difference to h1rn. lle was truly a Christian r,entlernan and 1 am sure that his influence, though retired, wi.11 be missed in the capaci tv that I am sure that he was consulted on on manv occasions for advice. 1 can onlv sav that I join with the Premier, teader of the Opposition and the rest of the House in extending mv sympathies to his family and verhaps to the present Rishon Brook, Reverent R.

T. Mc:Grath,nnd to all his parishioners West Coast. PRESENTINC PETITIONS HON. C. W. DOODY, ~finister of Inrlustrinl Develooment: of Corner on the ttr. Speaker, I have the unpleasant duty today of presenting a statement regarding the steel mill at Octagon Pond, the The steel mill at Octngon Pond was built by a private company, Newfoundland Steel Companv, Limited, with government financial assistance, bv way of a guaranteed loan, issued September 3, 1966, in the amount of C,5,320,000. The mill began nroduction in the fall of 1966.

Earlv in 1967 the steel m:ill required additional loan financing in the amount of $2.500,000, which was guaranteed by the government on March 30,1967 . . 3 8 3

February 16, 1973 Tape 128 IR-2 By year end, 1967, the steel mill had lost approximately $1,900,000, By early 1968, the financial situation of the company had deteriorated to the point where on Aoril 8, 1968, an additional loan guarantee, in the amount of $250,DOO,was required to enable the plant to continue operation until government could undertake a study of the mtll. Bv rnid-1968, the total accumulative operating losses for the steel mill amounted to approximately $3,000,000 on a total capital investment by the Government of Newfoundland of $5.3 million.

By this time government 1 s total financtal outlay in connection Pith the steel mill had risen to $8,070,000. Dispite the fact that this mill ,-ms mana):!ed by a hoard of men loudly and perhaps accurately nroclaimed as amongst the best businessmen in the orovince, the steel mill did not pav. In the fall of 1968 the government established a new company, Newfoundland Steel. 1968, Company, Limited: to take possession of the steel mill and absorh accumulative losses as well as its original capital outlav by converting this indebtedness into preferred shares in the new company.

The management of the steel mill was contracted to Lundrigan's, Limited, under the terms of the Government Newfoundland Steel~ 1968~ Limited, Lundrigan 1 s Limited A~reement, Act No.R3 of the Statutes of Newfoundland,1969. Under the terms of this agreement Lundrigan' s Limited was to -provide management for the steel plant and was granted an ootion to purchase the shares in the steel plant from the tovernment, out of profits, over a period of vears.

Under this new arrangement the steel mill still remained unprofitable and indeed the financial situation of the m111 became such that on November 22, 1970, government was required to guarantee an additional $1.4 million to enable the plant to stay in operation, thereby increasing the province's total financial commitment to $9,470,000. 384

Februarv 16, 1973 Tape 128 IR-3 At the time the oresent Government took office in January of 1972 the smelt shop at the mill was closed, laying off some 70 men. Newfoundland Steel

(1968) Companv Limited approached the Govern­ ment" for additional funding of approximately $300,000 to enaflle the plant to continue operations for the year 1972. In order to gi.ve time to investigate what could be done with this mill, this g :,vernment agreed to guarantee the additional sum of $300,000, brinp;infs the g 0vernment 's total commitment to $9~77(1,000. The _lobs of these workers were at stake, the management of the mi11 nt the time were negotiating with DREE and in order to give the government an onnortunity 385

February 16, 1973 Tape no. 129 Page 1 - MRW to investigate the prospects of the mill, this $300,000 was made available. By the fall of 1972, this government succeeded in interesting the Steel Company of Canada in undertaking the management of NESCO for a limited period of time, with a view to the steel company exercising an agreed option to purchase the Newfoundland Steel Company at the conclusion of the management agreement. At this time the then Minister of Economic Development, the hon. Val Ea:rle~stated quite clearly; 11 it must be made ahundan tly clear that this is the last chance for the steel mill.

The government feel that they have found the beat people to turn this mill into a viable operation and should this fail the plant will close." He went on further to say, 11 to conclude, this can only be described as an attempt to make the best of a very bad situation which was none of this government's creation. 11 This management period by STELCO was neccessary in order for that company to undertake a proper assessment of the mill. Adequate information on the mill was simply not available. The condition of the mill was unbelievably bad.

The working conditions were deplor bl and the condition of the plant had deteriorated to a state that was almost unimaginable. Sales had been made to companies at prices far below costs, below market price. The general management and physical condition of the plant was one that defies the imagination. As an example, Mr. Speaker, let me give a detail on a contract given to Brussels Steel Corporation of whom you have no doubt heard.

The total orders placed by Brussels Steel Corporation, 1972, with NESCO, amounted to 20,605 tons, although the orders,placed prior to August 28, were for small amounts and were really of little consequence. On August 28, just nine days before termination of Lundrigan's Management Agreement and at about the same time as the termination was being discussed with Lundrigan's 1 NESCO, Newfoundland Steel, confirmed five orders placed by Brussels amounting to approximately 16,000 tons of rebar Even considering the inventories existing at the time. these orders 386

February 16, 1973 Tape no~ 129 Page 2 in effect committed the total output of the plant for the succeeding six months at selling prices of over sixteen dollars a ton below market price; sixteen times sixteen thousand, two hundred and sixty-six thousand dollars, approximately - complete losstsold deliberately and knowledgeablyo Also much of the orders were for particular grades of rebar which are the most costly to produce at the mill. The Steel Company of Canada assumed the mangew~nt of the steel mill on November 1, 1972.

The detail of that agreement was made public at that time and is still available for those who wish to see it. The total operating losses to that date had amounted to approximately $2.B million and government's total COUlllitment to $9,770,000. To provide for sufficient working capital to carry on the operations of the steel mill and to reduce the liabilities of the company to an acceptable level required that the government guarantee an additional $2 million line of credit thereby bringing the total government commitment to $11,770,000.

It should be noted that this $2 million was mainly necesary to purchase scrap to keep the mill in operation since the previous management had allowed the inventories to diminish to a point where there was literally no raw material on hand and to pay accounts payable which had ~een unpaid under the previous management and which would have to have been paid in any event. It is to be noted that when STELCO began management of the steel mill,as I have said, the scrap supplies at the mill were completely exhausted. The mill itself was in a deplorable condition generally.

Tons upon tons of rebar were stock 0 -piled haphazardly throughout the rolling mill It has taken STELCO almost four months to compile an accurate,finished goods inventory. During the past four months the Steel Company of Canada 38'7

February 16, 1973 Tape No. 130 NM - l has carried out a thorough analysis of all phases of the operation. This detailed analysis has now been completed. The results of this study are such that we have been advised by STELCO that they will cease to manage the mill on March 1, 1973.

The future prospects for the mill then may be summarized as follows and I read exerpts from the STELCO report: to bring plant efficiency.conversion costs and product quality into competitive range with other steel producers serving the NESCO market area, will require government expenditures of over $1 million and can only be accomplished over a period of years.

Little or nothing can be done at the present or in the foreseeable future to alter the fact that approximately eighty per cent of NESC01 s production must be shipped off the island and approximately sixty per cent of NESC01 s basic raw materials must be imported to the island due to the geographical location of the plant. This is brou~ht about by the very small market on the island for the plant's product and the relatively limited small supply of scrap generated in Newfoundland.

Little or nothing can be done in the present or foreseeable future to compensate through selling prices for addition costs which NESCO incurs versus the other competitors and the eighty per cent of the product shipped off island markets.

These additional costs, Sir, estimated at $30 per ton on rebar and $19 per ton on grinding balls. all due to much higher handling and freiµht charges than those experienced by competitors this ,of course,ia compounded more severely by the fact that the mill was most inadvantageous situated in the first place in as much as it is far from tide water and must incur the added cost of trucking to a shipment port and from a shipment port in the case of scrap coming in.

Little or nothing can be done in the present or foreseeable future to compensate through selling prices for sudden substantial increases in prices for scrap if imported by Newfoundland Steel 388

February 16, 1973 Tape No. 130 NM - 2 from off. island sources. NESC0 1 s only recourse when this happens would be to live off inventories purchased during periods of lower and more staple scrap prices. Since Newfoundland Steel has not done that in the past and since imported scrap prices are extremely high today, the long period of recovery and the application of substantial amounts of cash would be required to achieve adequate control on scrap costs. This of course would necessitate even larger infusions of working capital by the Province of Newfoundland.

A great deal of production capacity exists in Eastern Canada and the Maritimes in relation to Newfoundland Steel's two main products and in particular in relation to Newfoundland St-eel 1 s two main products and in particular in relation to reinforcing bars. Two such mills are located in Nova Scotia, two in Montreal.with a third being constructed there to come on stream in 1974. Also reinforcing bars can be imported by users from Europe, usually at lower than domestic prices.

With regard to grinding balls, the competition comes from two Ontario based producers and one Quebec based producer, thus constant market pressures will be brought to bear on quality, service and price. Profitability to each supplier will largely depend on cost and availability of raw material, conversion cost and transportation and handling costs. In this regard, Newfoundland Steel is in a distinctively unfavourable position due to transportation and handling costs.

The problem of penetrating and maintaining a sufficient share of this market becomes incrasingly more difficult once Ne~foundland Steel ceases to be a part of the STELCO total organization. It must be said in all justice and all fairness that the productivity of the work force was never in question and the workers are to be complimented on doing a tremendous job under most difficult of conditions. 389

February 16, 1973 Tape No. 130 NM - 3 The financial outlook for the steel mill over the next ten year period is unfortunately correspondingly bleak. It is estimated that in the current fiscal year, the steel mill will lose in excess of one and one half million dollars. Projected average loss for the next eight years is estimated at approximately three quarters of a million dollars per annum. It must be emphasized that these projected loses are based on optimum conditions, assuming expert management is available 390

February 16. 1973 Tape 131 PK - l nnd contained no allowance whatsoever for depreciation. In other words there is absolutely no hope of government ever recoverinP any of the $12 million plus committed to date. He must then take the very serious and undesirous step of closing this mill as of Fehruary 28, the end of this month. This is a step which this government takes wi.th utmost regret and it is the most unpleasant task which I have had to face since taking office.

Despite the fact that the mill is located in the District of Harbour Hain, despite the fact that many of the employees are constituents of mine and of my colleague the honourahle Minister of Manpi:mer and Industrial Relations, I cannot in all conscience recommend that more public money be poured into the steel mill. The present work force of some 170 people will receive severance and holiday pay in accordance with the current very liberal union agreement and with the legislation noY-r before this House. These people not covered by these two conditions would he treated in all fairness and justice.

It was the hope of this government that the mill could be kept :in operation until the end of April, so that the necessity of findinp, alternate employment for the workers at the mill night be made that much easier. However we have been informed that a projected loss for that extra period of time would cost this government an additional $576.000. Since the severance and holiday pay and other henefits which vill be paid to the employees must total somewhere in the vicinity of $300,onn, it is felt that it is in the best interest of all concerned that the plant closP as of February 28.

The rolling mill may continue to operate until March 10 and the fabricating

section will operate a little longer. The honouraPle Minister of fA;:mpower and Industrial Rela.t:ions is taking the necessary steps to work with the Department of !Jfanpower in finding alternate ernployment for the staff of the mill. I will add for the information of this honourable House details of government commitment under the STELCO agreement and the amounts of money expended under that 391

Febtuary 16, 1973 Tape 131 PK - 2 Of!reement. (1) the government we.re requested to pay STFLCO out of project management expenses up to a maximum of $125,00D for the first six months of the manapement pedod Novemher 1 to April 3fl. As of the end of Fehrua.ry ~overnment will have paid STFLCO S55,flf)O under this clause~ We chose to stop now rather than go through the full month $25.000 for the reasons which we have outlined ahove. Government were requested to provide NESCO uith up to $650,llf)O in order to allow STELCO to carry out rlant refurhishinr,that is the necessary repairs and overdue maintenance.

Those persons who have worked in that plant under the comHtions of the roof fallen tn and the side gone out of it, the winter winds whistling throuf!h it, will know exactly what I mean when I say refurbishing. Expenditures made pursuant to this clause have amounted to approximately $145,(JOO. No addit1onal expenditure are to he incurred. The f;reater portion of this money was committed as soon as STELCO assumed management in order to repair the plilnt hui.lding in preparation for winter conditions I as t have just described.

Government were requested to provided NFSCO with sufficient working capital to allow STF'LCO to operate the mill. Inttially government guaranteed an additional line of credit of $2 million which has heen exceeded by approximately $300,000. Tncluded in this amount I might add, and t emphasts, is the $145,000 spent on refurbishing and the $55,000 management expense. As well it is to be noted that over $550,0nn of thiA $2 million was expended as soon as STF'.LCO assume management 1.n order to reduce the accounts payable of NF:SCO to an acceptable level and to allow the company to operate.

So we talk really in terms of lei:;s than $1.4 million in the 392

February 16, 1973 Tape 132 JM - 1 of that $2 million line of credit. Mr. Speaker, that is officially the end of my ministerial statement. I would sup;gest that after the ordinary daily routine of business that T propose to move adjournment of this House to discuss this matter as a matter of urgent public ioportrmce if it is the desire of this hon. House so to <lo. MR. W.N.ROHE: Mr. Speaker, I assume I have. leave as spokesman on this side of the House for matters concerned with economic development to make a few brief comments and to mention one or two questions. First of all let me say.

Sir. in all sincerity that I do not envy the hon. minister's task this afternoon. !t is a very sorry. distasteful and disappointing one for him as memher for the district and as minister responsible in this administration. It is a very sad time for everybody in the House and particularily the two hundred or so workers who are directly involved and perhaps as many as two to four hundred depending on what kind of a multiplier you use, workers who mi~ht be indirectly involved by this shutdown and then of course there are their families, their wives and children.

Perhaps there are anywhere from 2,000 to 3,000 people who will really find a pinch from this action before too much time has elapsed. One or two questions immediately spring to mind and the minister may wish to take them into consideration when we debete this issue today ns undoubtedly we will under the resolution which the minister hopes to move.

First of all, Sir, the study by STELCO, I wonder if the hon. minister or the government will undertake to make that public or if not public at the very least to allow members of this House even under an enclosed sessionrif that be necessary because of privileged information, to have that study scrutinized thoroughly by elected representatives of the people. We would also like to know, Sir, as to what efforts were made with regard to applications to DREE in Ottawa recently or not so recently to get money to put this mill into a more viable if not a completely viable 393

February 16, 1973 Tape 132 JM - 2 situation and condition. Also the minister or his colleagues may wish to mention to the House why after only three months or so following the entering into this agreement with STELCO the mill is now being closed down rather than the six month period which I believe the Minister of Economic Development at the time gave the people and the workers and us the impression, the definite impression that this amount of time would be allowed to elapse before any further drastic action would be taken.

Also~ Sir, perhaps the minister would like to comment on the fact that the amount of notice given seems to fly directly in the face of this government 1 s own announced policy of three months notice being given in respect of massive shutdowns of this type and under the union management agreement signed in January~l971, there are certain. he says,liberal provisions made and so there are fairly liberal provisions made as generally understood in the industry but I doubt if anybody or if there is anybody very few people indeed will have the benefit of three months notice with pay in order to allow themselves to look for other employment.

I am also delighted of course, Sir, that the minister has already indicated, which makes it a fait accompli, that there will be a full-fledged debate on this matter in the House this afternoon. He have many things we would like to say and I am only making these few remarks now, Sir, to allow the minister to prepare his own remarks a little more fully. Finally, Sir, the minister might want to consider and give some assurance to the House that STELCO did make best efforts in this matter and I have no desire~ Sir, to cast any aspersions on anyone.

Give us some assurance and the members of the union sitting in the gallery today~ the members of this House.that STELCO did make best efforts in this matter and that there is no possibility of any conflict between this mill here and the STELCO mills elsewhere in Canada 394

February 16. 1973 Tape 132 JM - 3 because there is this naf?;ginf suspicion and I do not want to cast any aspersions as I say. there is this m:rnp:in)',! suspicion that it maybe to STELC0 1 s over--all advantage to have this thorn in their side out of the way. I do not say that that is a fact. I say that is a nagginµ suspicion on a great number of people's part. I will have other things to say later on this afternoon, Sir, but perhaps the minister might be able to answer one or two of these questions when we debate the general issue. MR. B. HOWARD: Mr.

Speaker, I beg leave of this House to present a petition from 266 voters of Old Perlican, The prayer of the petition is that a community pasture be established in the Area of Old Perlican in the District of Bay de Verde. I fully support this petition for the simple reason that the town council in Old Perlican is about to enforce rer;ulations which will have the cattle owners to impound their cattle. This does not only affect the people of Old Perlican, lt also affects the people of the surrounding areas.

Since the upper part of the district has become a Local Improvement Area within the last few months,I understand that they will also be implementing this law or this regulation. So for these reasons I supnort this petition and I move, Sir, that this petition be received by this hon. House and referred to the department to which it relates. MR. NEARY: Hr. Speaker, I take ~reat pleasure in supporting: the petition presented on behalf of 266 voters in the Community of Old Perlican. While t supnort the petition I do not necessarily agree with the reasons ~iven by the hon. member for having a community pasture built.

It does not necessarily follow because the Town Council arc bringing in animal control regulations that you hnve to build a community pasture. I think the reason is far more important than that to have a community pasture. The whole idea of a community pasture is to have the cattle 3 !l 5

February 16, 1973 Tape 132 JM - 4 properly supervised and to make the services of a vet available to the cattle owners in that nrea. But nevertheless~ Mr. Speaker, this is an indication of the progress we are making in this province when town councils are bringing in animal control regulations and forcing cattle owners to impound their cattle

whereas in the past cattle were allowed to roam at large all over the province. I think it is an indication of progress and I have no hesitation at all, Sir. in supporting the petition. I think now it is the policy of government, a policy that was established I might add by the old whipping:"boy, the former administration~to build community pastures around this province and I hope that the new administration will follow the example that we have set. MR. J.C. MORGAN: Mr. Speaker, I beg leave to present a petition from the residents of the Community of Salva~e in my district.

The prayer of the petition is to have the road leadinp, from Salvage tn Eastport. approximately seven miles, upgraded and paved~ I naturally fully support this petition. The road is now partially upgraded and I am hopeful in the coming construction year, financial year, my r,overnment will see fit to complete the upgrading and pavinr. of this road. I move that this petition be tabled in this hon. House and passed along to the department to which it relates. MR. NEARY: Mr. Speaker, I rise to support this petition.

I honestly did not think that when Rossie was finished with the historic District of Bonavista South that there was a mile of road down there that was not upgraded and paved. I am surprised this afternoon to learn, Sir, that he had missed the road between Salvage to Eastport. t do hope, Sir, that the Minister of Transportation and Communications will find it within his power and within his means to upgrade this road and pave iL I do hope, Sir, that the problems that the employees of the Department of Hip,hways are encountering in the District of Bonavista South, especially 396

February 16, 1973 Tape 132 in the Town of Bonavista and Lethbrid~e can also be ironed out in the foreseeable future. JM - 5 MR. E.W. WINSOR: Mr. Speaker, I bei leave to present two petitions actually. The first is from the people of Gander Bay North. The petition is signed by more than 300 people and the prayer of the petition is that the up,?:rading and paving project be carried out through the Communities of Gander Bay North.

It is estimated that a population of approximately 30,000 people either depend directly or indirectly on linkage of this road~ The population covers the area from Gander to Lewisporte including Fogo Area, New World Island in Twillingnte and communities which have branch roads from the main rond such as Stoneville and Horwood. In supporting this petition, Hr. Speaker.

I have had the experience of navigating during my years as master mariner through pretty dense fog but, Sir, never was I so scared for rny life as on one or two occasions last year driving over that road in Gander Bay where the dust was so thick and the heat so intense that it was scarcely navigable without fear of collision or knocking someone down on the road, As a matter of fact, Mr.

Speaker, the people of r.ander Bay North they eat and breath dust almost twenty-four hours a day und some of the stores there are located ;1retty close to the road and you would swear that the truck is going in through one door and out through the other. 397

February 16, 1973, Tape 133, Pagel -- apb I am sure, Sir, that the honourable Hiniste.r of Transportation and Communication will give this matter his usual sympathetic consideration. I do not want to throw a bouquet at the honourable minister at this time, hut, Sir, I have. always found him to lie very co-operative,very considerate in any matter that I have had the opportunity to bring to his attention in dealing with the roads in my district.

I realize too that he has a problem of getting the dollars or soueezing the dollars out of the Hinister of Finance to he able to do all the things that he des1.res to do. ?AR. NEARY: He is not so co-operative. HR. WINSOR: No, I c.un understand the position of the Minister of Finance too, because he was so well trained to be cautions and careful in spending the taxpayers money that he is not too willin~ to let go at this particular time.

However, I would suggest to the honourahle Hinister of Finance that he be n little lenient toward the honourable !-1insiter of Transportation and Communications and f?:rant him a few extra dollars to make the people of Gander Bay North at least able to sleep comfortahle at nip:ht. I strongly support the petition, Mr. Speaker, and ask that it be placed on the table of the House and referred to the department to which it relates. I mi!'.;ht carry on, Mr. Speaker, if it is in order~with the other one. The other petition is from the people of Gander Bay South. It is almost a similar petition.

The prayer of the petition is that action be taken on the upgrading and paving of roads through the Communities of Gander Bay South, namely; Main Point, Davidville~ Frederickton, Carmanville (Carmanville should strike a note with the honourable minister) on throuzh Dead :Nan I s Bay, all the way to Lumsden and beyond. In supporting this petition, !<-fr. Speaker, all of the traffic as in the previous one, all of the traffic to and from Fogo Island, must pass through Gander Bay South. Sir, the road is pretty rough at the best of times and therefore presents a very dusty climate, especially during the hot 398

February 16, 1973, Tape 133, Page 2 -- apb weather. Again I humbly plea with the honourable minister and sincerely hope that he will be able to find a few extra dollars to go on the south.side. of the bay as well as on the northside of the bay. I am not going to criticize the honourable minister for not doing that last year and I am not naive enough to think that it is all going to be done this year. but I feel and I can see by the twinkling in the honourable minister 1 s eyes that he h,1s every intention of at least making a start on those roads. I support the petition, rfr.

Speaker, and ask to have it placed on the tnhlc of the House and referred to the department to which it relates. J,$_. H.W.C~GILLETT: Hr. Speaker. having the honour to represent one of the districts mentioned in the petition so ably proposed by my colleague and friend,the honourable member for Fogo, I would like to support that petition wholeheartedly. I think we all know, at least we should, being Newfoundlanders we should all know the conditions that exist on our gravel roads during the summer months.

I was quite perturbed last year when I was trying so vigorously to get just about five or six hundred feet of pavement put on the road in Indian Cove, where forty or fifty thousand vehicles per year pass by the houses. I was very disappotnted in not being successful in getting that bit of pavement. I was wondering just now if it has ever happened before when a motion was made thnt petitions cease?

Because actually, there must be enou?,h petitions on the desks of the various ministers in this administration, particularly I would say the Minister of Transportation and Communications to keep hio and his department occupied for many years to come. Last spring I brought in a pet:i.tion from the people of Merritt 1 s Harbour and Herring Neck concerning one of the worst portions of road in the whole of this province barring none, I have a very lengthy telegram which I received from them recently, as yet nothing 3 U !J

February 16, 1973, Tape 133~ Page 3 -- apb has been done. So like my honourable colleague representing the District of Fogo, I do see a little twinkle in the eye of his Honour the Minister of Transportation and Communications and I feel that he has his cards already to deal. Tte petitions that were presented last year, particularly mine~ Mr~ Speaker, will be attended to. I have r.reat pleasure in supportinp: this petition~ HR. ROBERTS: Mr. Speaker, speaking in support of this petition, I have only three things to say. First of all of course, I support it.

Secondly, if rnemorv serves me correctly and mcrtory 1:1ay not, the minister undertook last year to pave to Carmanvillc this year. Thirdly, both of my colleagues, the gentleman fron Tvillint?ate. and the gentleman from Fop:o, have detected a twinLle in the eye of the minister. I thinl­ I have detected it too. AN !ION. !·'E''BER: Tears~ Vil. ROBERTS: No, the tears arc in the Finance }tinister's eyes. Hhot I would like to say, Pr.

Speaker, is that I think the people in the C:nnder Bay Area and for that matter the people in Twillingatc nnd New World Islands and elsewhere would like to see a little blacktop on the ground instead of the tv-inkle in the eye. We hone that when the snow goes there will be blacktop on the ground this year. The time has come. ~~JL.THOMS: Hr. Speaker, I too rise in support of both these petitions and particularly in support of the petition for Gander Bay South.

As all the honourable gentlemen in this House realize, this is part of the Hir;hway 40 which circles right from Gander down throµS?.h Carmanville, Wesleyville and back to the Trans Canada at Gamba again. In so supporting this petition, }fr. Speaker 400

February 16, 1973 Tape 134 PK - l Mr. Speaker, may I nut fonvard one constructive suggestion which tam sure the honourable Premier will be glad tc hear. Would the honourable Hiniste.r of Highways and Comnmnications embark upon a prograrm:,e this year. I say not to pave ten miles or five miles of different sections of highway but to embark upon a programme to pave the roads within the communities hecause this is where this unearthly dusty problem is. I have roads in my community from Hare Eay right on to Cape Freels and the dust problem is atrocious. It is almost unhearable.

Our citizens are continuing to complain about it. 1 am wondering if the minister could take this and consider it and possibly if he can get on the f?ood side of the Minister of Finance he may be able to bring this idea to reality this year, not only on Highway 40 but it could be done all throughout our province. I believe this would be indeed a blessing to our people. HON. J. C. CROSBIE: (MINISTER OF FINANCf): Hr. Speaker, I would like to rise to support this petiti.on and all similar petitions. I support every petition, Mr, Speaker, that comes hefore this House requesting the expenditure of public funds.

The only trouble is that 1 will have a double provincial deht this year to even go close to meeting twenty-five per cent of the requests. Hr.

Speaker, let me say further that if the honourable !2:entleman's colleague in Ottawa, the honourable John Turner.,would turn over to the provinces some room to collect some revenue or turn over to us some revenue from the buoyant revenues that they have there this year 1 instead of retaining the money to make poH.tical wind for themselves, we would be in a far better position to do the honourable gentleman 1 s roads and all the other roads that are necessary to be done on this Island. Anyone in this Island, Mr. Speaker, who does not get his roads done this year can hlame John Turner, not John Crosbie.

I want them done. MR. SPEAKER: Are there any other petitions? NOTICE OF MOTIONS AND QUESTIONS 401

February 15, 1q73 Tape 134 PK - 2 W. DOODY (.MINISTER OF INDUSTRIAL DF'VELOPHENT) :" Mr. Speaker, I ask leave to move adjournm.ent of this House to discuss a matter of urr,ent public importance namely: to discuss the matter of the shutdovm of the Steel Hill located at Octagon Pond. I made a statement just a few moments ago which outlined in some detail the history of the plant, of its origins and of its unfortunate financial losses since that time. I have mentioned the efforts that were made by the previous administration as well ashy this one. MR.

ROBFRTS· On a point of order, the honourable gentleman will get leave, indeed ue had announced earlier that we would he applying for leave; hut before he makes his speech there is a formality of getting the leave. HR. DOODY: I have already sent one up, Sir. HR. ROB_FRTS: Nr. Speaker, you may have copies of the one that I have ready. It is the same effect. MR. D_OODY: It is already sent, ~fr, Speaker, hut I will certainly forward a second one. The previous one did not reach you,through some inadvertent reason. }ffi. ROWr:, __ !{·N·. It was restructured. Yes, restructured on route, HR.

R_q_ODY: Ri~ht. 1 require leave, Hr. Speaker. ~!E::.:.__S.f££,.KFR ! The honourable member asks leave to move the adjournment of the House to discuss a matter of urgent public importance,namely; to discuss the matter of the shutdown of the Steel Mill located at Octagon Pond. Does the honourable member have leave? }fR.:_!.O~f~TS: At this time, if I may, this is the first time in ny seven years as a memher of this House that one of these motions have actually gotten to the floor. AN HO.!!_.._J·1,F'-~ Now you have nothing to talk about. MR.

ROBERTS: No, no, I have a great deal to say hut that is not the point now, if the honourable gentleman for St. John's Centre would be as serious 402

Fehruary lh, 1973 Tape 134 PK - 3 as his colleague is, perhaps this dehate may he of some value. ':1]l _,JlURPHY: I am very serious here. The question I have, Hr. Speaker, the point of order is what is the motion not-r before the House? I have never before heard this one debated~ The House Leader rnay know what the notion is, the honourable gentleman from Harbour Main. The junior memher from Harbour Nain has moved that the House do now adjourn. Is that the motion we are dehating?

Could Your Honour tell us because I do not think that anybody in this House has ever heard it dehated except the r,entleroan for Bell Island, the gentleman for St. John 1 s Centre and perhaps the gentleman for Fortune Bay. TION~~~]fARSHALL: (MtNISTF'.R WIT!lOUT PROTFOLii.l): Hr, Speaker, if I may, this motion made by the honourable minister is governed by Standing Order (23) of the House, The motion, Mr. Speaker, is that the House be adjourned for the purpose of discussinr; n matter of urgency 403

Februar/ 16, 1973 Mr. Marshall. Tape no. 135 Page 1- MRW a matter of urgent public importance½ The nature of the matter of public importance is the curtailment of the operations of the steel mill at Octagon Pond. In answer to the question and possibly with a hope of clearing up the point of order, what we are speaking to is a motion that we now discuss the situation with respect to the curtailment of operations at the steel mill at Octagon Pond. I trust that that clarifies the matter. MR. DOODY: It ia your desire, Sir, that we discuss this matter.

Thank you~ The point of order is going to be decided on now, the point of order of the hon. Leader of the Opposition. _MR. ROBERTS: (Inaudible). MR. MURPHY: The motion was put and passed unanimously that we - MR. ROBERTS: No, Mr. Speaker, for the hon~ gentleman for St. John's Centre, the honourable gentleman was given leave. As a matter of fact if the motion is passed the House adjourns as of the moment it is passed so it will not be passed until six o'clock. MR. MOORES: I am sure that there are a great many technicalities that we could discuss all afternoon.

I suggest that we get on with the debate that we are talking about because it is serious. MR. SPEAKER: ~;t_~~~&d-} I think the matter has been taken care of quite a ~ by the hon~ member for St. John's East and I trust that we can continue with the debate. MR. DOODY: I am afraid that I am far more concerned with the matter at Octagon Pond Steel Plant than I run with the procedure or functions of this honourable House and I ask His Honour's indulgence. The hon. member for Bell Island a few minutes ago mentioned the fact that this was a Black Friday. He is probably correct.

I hope that he is not speaking facetiously. I would hope that he is not being caustic nor cynical because I remember the hon. member for Bell Island who once was very concerned about people~ He was at one time very active in the trade labour movements. He was at one time ,, 0 • 'i 'l

February 16 , 1973 Tape no 135 Page 2 very active with the unions on Bell Island½ That is right. !!R. NEARY: _!!R. DOODY: l would hope, Sir, that you share the sympathy that I have for these people who are out of work today and that the honourable member keep his comments to these matters before us. MR. NEARY: I will speak on this. MR. DOODY: I hope he will, Sir, and I hope they are constructive. HR. NEARY: They will be for a change. The honourable minister will not pay any attention to them. !!R.

DOODY: The honourable minister had to pay attention to you while I uas outside this House, Sir, for a great many years. I watched your great economic progress in this province. I saw your great strides that you made toward turning this into an industrial - HR. NEARY: You are being political now. HR. DOODY: I am not being political, Sir, but I am a little bit irritated by the honourable member's attitude towards this matter. HR. NEARY: (Inaudible). HR. DOODY: Thank you. The comments that I made earlier, Mr.

Speaker, I will not elaborate on at this time. nowever, there were. several questions raised by the hon. me~her for White Bay South which I will only be too happy to comment on now. The study by the Steel Company of Canada which he asked to be made available to the members of this honourable House shall certainly be made available. It is a confidential document that was submitted to this adminstration and I hope that the mewbers of the opposition will treat it with the confidence that it deserves.

The hon. member for White Bay South also inquired about the DREE negotiations which I mentioned in my preliminary remarks MR.. NEARY: Would the honourable minister permit a question? MR9 DOODY: Certainly.

February 16, 19 73 Tape no. 135 Page 3 MR. NEARY: Do I understand from the honourable minister that he will make this report available to the opposition? l!R. DOODY: Yes. MR. NEARY: Well 1 if he does, Mr. Speaker 1 I want to advise the honourable minister right now that if I get a copy of it~ I am going to give it to the union. It is not a confidential matter. It is a public matter. The public should have this information. MR. DOODY: Mr~ Speakeri if the union request off me a copy of that report, I will make it available to them~ I made the same offer to Mr. Parsons yesterday. I will make it to him again today.

I really expect no more from the hon. member from Bell Island than that which he just demonstrated, neither courtesy nor confidentiality nor good­ manners, I do, however, expect that the union people - MR. NEARY: Oh, come off it~ MR. DOODY: I do expect that the union oeople will treat us with the same good, honest desires that we are trying to treat them with. To get back to the point with regard to the DREE negotiations, there was a rather substantial amount of money being discussed by the then management of the steel plant and the officials of DREE, with the previous minister,( I forget the exact amount.

I have it on file) it was $1~6 million, that is what they offered.

The conditions under which this offer was made the $1~6 million were such as to make it impracticable if not impossible for the steel mill to accept the offer, The condition of sales that were necessary (as I remember it, there was nothing like ninety per cent of the product of the mill over a period of years) had to be pre-sold before the DREE people would consider giving them· the funds that they were discussing# The DREE grant of $1.7 million 1 which is what was offered, in the expansion of the modernization programme - the DREE grant of $1~7 million toward the $5.5 million expansion, which they were talking about at that time and asking for~was made$ However, the one condition 4!Hl

February 16J 1973 Tape no. 135 Page 4 that makes it virtually impossible to take advantage of this offer is, as I said, the inability by NESCO to meet the condition of obtaining a commitment from the Labrador Iron Ore Company for the purchase of 16,000 tons of grinding balls per year at $190. per ten at the start of the new operation. In short, Mr~ Speaker, the reason that this DREE grant was not obtainable wan because the steel company was unable to meet the conditions attaChed to the DREE offer. MR, W,N,ROWE: Would the honourable minister perm.it a question? MR. DOODY: Yes. MR.

W.N.ROWE: When was that application made and when was it accepted with these conditions attached by OREE? MR, DOODY: In April of 1972. These negotiations were underway at the time that we assumed office because, as I remember on my first visit to this steel mill, upon being elected to the District of Harbour Main, these were among the items that were discussed by the then management and they informed me of their attempts to get these funds from DREE and so I assume that they had been started prior to our assuming office,and subsequently they were not.

The amount of time available for the steel company to manage the plant - the honourable member suggested that it would have been in the best interests perhaps of everybody if the full management agreement time had been exercised by the steel company. However, we were not given that option and if we were, I doubt very much in all good judgment that it would have been acceptable~ We received a letter from STELCO, the fourth paragraph of which says: 11 We hereby give you notice that the management agreement is terminated effective March 2J 1973. This notice is given pursuant to paragraph (

B) of Clause (10) of the management agreement. 11 It may have been desirable, certainly it would have been from the view- point of the people employed to have kept the management agreement in operation. It would have simply prolonged the period of loss. It would be a further drain 407

February 16, 1973 Tape no. 135 on public funds and in the long run the employees at the plant would have been no better off~ Page 5 It has been suggested to us that,did we make every effort to find out, if indeed STELCO made their best efforts available to manage the mill? There is certainly no doubt in my mind on that. There were a group of people 408

February 16, 1973 T:me 136 IB-1 from STELCO and I am sure that the neople in the union will go along with this that there was a concerted effort bv the neonle in the STELC0 1 S Management Te.am who cnme down here, who made a tremendous effort to ~et that mill into profitable productivity and make no mistake about it the productivity was never in question. They did manage to reduce the cost of nrod11dng the steel in there by a considerable amount. Thev did )'~et maximum co-operation wnd rnaximiu:; asRistance and helr from the neonle uho ·worked at the m:tll.

The product that was turned out at the mi 11 was never 1n question and STELCO came tn grief only.as was nninted out in the previous statement, in marketi.ng the nrrn.foct. 'fhe freight d.ifferential and shippinp: the. product around the province or the island reallv of Newfoundland tn the r.tai.nl.and r:ia.rkets simply put the nroduet in an un­ competitive position when it reached the market place, not a very com­ plicated hut a very~ very unfortunate econom:i.c: statement of fact.

The Steel f:ornpanv of Canada, and I do not have to emphasize this, is a verv, very creditihJc company inrleed, There are few steel coopanies: in the western world who are more kncw1edt;eable i.n the marketing of that type of product and I nm convinced for one thnt they use their best efforts to manage the mil 1 and tn mi1rket the product and I think that when the hon. members r,.et n cory of the STELCO report that they will agree that i,:; so. I think, ¾r. Spenker, that I will dose mv comments for the time being ~dth these remarks and ! wi1 l speak later on todav. MR. WM. ROWE: Mr.

Speaker, I hope that I might have the benefit. beine few in number, of hearing one or two other members or ministers speaking on that side before I had to rise to my feet again* If anyone wants to speak over there I will yield and s11e.ak later. Well I have already outlined, Hr. Speaker, one or two of the considerations that concern us on this side of the House. Naturallv, we are very concerned mninlv :rr -rerhaps mainly because of our lack of knowledµe at the present as to 1d1-1.t exactly is going on. I have asked 409

February 16. 1973 Tane 136 IB-2 for a copv of the study of the report by STELCO which the hon. minister hns said he is roing to give us. The conv of teh agreement. I do not think he mentioned in his opening remnrkR. HR. DOODY: Tt has never been made nuhlic. MB_· POHJ_: The agreement has never been made nuh1 le. I think if the hon. minister checks with his colleague who was Minister of Economic Development at the time he will find that aside from his puhlic statement reported in some of the newspapers at that time. Here it is Public statement dated October l37here it is, Fr. Speaker.

"It has not heen made public. 1 • Well, okay, that point is clarified. If we could have a look at that, Hr. Speaker, "We would appreciate it very much f\ecnuse -it is a little difficult at this point in time, 11ith a lack of knowledge. not to accuse the ~overnment or one or two ministers involved 1n the government of somethinR akin to (and I hope it is not unnarliamentarv) either negligence or soneone might say bad faith.

I doubt if it ii; bad faj th hut there seems to he some. negligence in fu] 1 Y exnlaininr the whole situation to the worl:crs involved, the union members :involved, to the oovosition fuemhers of the House at the time that that statement wns made on October 13th hv the Minister of Economic Development concern:i.ng the deal that bad been entered into with STELCO. That statement from Newfoundland Information Service carrrying the ministers name had this paragraph in it. Number two of some of the points he is making.

Number two, a six months mana.1?ement contract paying STELCO an estimated $125,000 to cover all actual management e:r.r,enses to he entered into with them. The agreement to contain options whereby the management period could be extended up to the end of 1973 under the same terms and cond:i.tions. 410

February 16 1 1973 Tape 130 IB-3 Now, Sir, I would have thoup:ht that :it might have been worthwhile at the time far the then minister or his r:overnment or his colleagues to have stated clearly, ur,equivocahlv and certainlv that there was an ontion up on the part of STE.LCD app:1rently to pull out of this deal at nnv time with very little nottce LE any- notice. The definate impression which obtained nt the time T am sure which the mernhers of the union - I have had conversations with them and I am breechinp:: no trusts.

I hone - the definite impression which thev had and which we had at this ti.me uas that there \s'as a six month's term certain and that hopefully kncwin;:; the nolicies of the present adrr.inistration and the roUcy of the oripositlon in the matter with regard to three month's lead time, three month ts notice when there was goJng to he a massive lavoff, th;;t thev coi1ld count on, the men, the workers in that plant could count on nine full months from the time that this agreement Has .announced to h.ave been entered into. Now we find, not only that STELCO is going to pull out after, what is it?

Three months or so following the execution of the agreement or at 'the least the announcement made by the minister, not onlv three months has elapsed since that ti.me but that the worker,• and the union cannot even take advantage of the stated government uolicy of there being three months notice given in this tvpe of layoff. :=;o this is whv ~ Sir, that I say with all sincerity, I do not want to be partisan about it, I do not accuse the government of bad faith but I certainly accuse the government of some negligence in not making this very clear in the circumstances We are talking about two hundred workers or a little more in some cases and other neople affected directly and their wives and families.

Here they find themselves with a few 'Weeks at best to come up with the :necessary work to keep bread their tables. their families' tables. 111

February 16, 1973 Tane l36 IB-4 The union agreement, Sir, between the United Steel Workers of America~ local union 7144 and the, Newfoundland Steel Company, Limited, 1968 signed 1 1 believe January 11 1971 and extending into December 31, 197  is still in effect. In other words, states that where a employee has one year seniority but less than three years he shall recieve three weeks pay at his appropriate rate of pay, three weeks. I would submit, Sir, there are some people in that catep,orv and three weeks is a far cry from three month,.

Where he has three years seniority but .less than five venrs he shnll receive seven weeks vav. less than two months notice from the time that,I would assmne from thr. time that he is laid off. Where he has five vears senioritv but less than seven he shall receive tvelve weeks 1 which is the three month period. Seven years seniority but less than ten 1 eighteen weeks pay. I do not know how many men fall into these various categories. On the average I wonder how many men and what would be the average tenure to date of the men working with the plant? Three years? Two years? Any idea?

Three years would he about the average. So, we find that thev probably fall withtn the one to three years or some would he the three to five vears so they have three weeks pay or seven weeks pay. Still there is a substantial differential between that and the three months which is a stated nolicy of the government which we agree with over here and if we have the onportunity to vote for it, either the government or opposition,we will vote in favour of that type of legislation. So, Sir, on those two counts alone it seems to me that the men in that plant hnve been let down rather had1v hv the present administration.

I understand their concern about more public money going into this plant. When I had the honour to be a member of a previous administration, we had several meetings with management concerning this very matter and it was a terrible situation because you did have the feeling at that time that there was money going down into a sink hole that • 1" •,t t ....

Februarv 16, 1973 Tane 136 TB-5 :nrobably would never be recovered again. We used to always weigh that against the fact that there were two hundred men emp]oved there and they were making fairly decent wages and that they were at least not on the dole 1-tne, not on unemplovment insurance, not without work. Another point that 1 would like to make, Sir~ concerns the DREE agreement. I asked the hon. minister to give some -10- forr.ation about when DREE made their offer of Sl. 7 million dolJars with certain conditions attached nnrl it turns out that that was in Anril of 1972 wh:i.ch is less than one vear ago, not too long ago. Since that time we got a new 413

February 16, 1973 Tape No. 137 NM - l minister in Ottawa. We have had a federal government which has been chastened, to say the least, by voters - the Canadian electorate. I -would not be surprised, Sir~ the minister who is a Newfoundlander, although he may not do anything prejudicial to other parts of Canada, he is certainly going to bend over backwards to help his native province and if anyone believes otherwise about this gentleman or any other honourable gentleman who may be a minister in Ottawa, well then I would say they are sadly deceived.

It might be worthwhile, I do not think it is clutching at straws, it might be worthwhile, I think it would be worthwhile for the government to approach DREE again to enter into direct political discussions, at the political level I mean, not partisan politics, at the political level between the Premier and one or two of his colleagues and Mr. Jamieson in Ottawa to see if they can upgrade their offer somewhat - come up with a better deal which might make the operation of that plant a little more feasible. At least that effort should be made, Mr. Speaker.

I think that is owed to the people working in the plant and their families. As to the question which I raised earlier about STELCO making best efforts, who knows if they made best efforts or not. Certain workers in the plant (are they speaking from a position of knowledge or lack of knowledge? I do not know )seem to be under the impression that best efforts were not made by STELCO in that plant.

As I mentioned earlier, there is always the nagging suspicion, as great as might be the reputation of that steel company, there is always the nagging suspicion that this is something now that they do not have to bother about. I understand that the Newfoundland Steel Mill earlier had some very good contracts with Wabush Mines and with Iron Ore Company of Canada. It might not be a bad idea~

February 16, 1973 Tape No. 137 NM - 2 AN HON. MEMBER: All at a loss. MR. WM. ROWE: All at a loss - there have been companies in Canada supported by the federal government and other provincial governments which have suffered but which were carried on in any event.

But it might not be a bad idea and again I am not casting aspersions, it might not be a bad idea for somebody in the government to check with Iron Ore Company of Canada and with Wabush and with any other companies who might be friendly to the province, to see if STELCO has or has not, at least the point would be cleared up, to see if STELCO has through any of its other plants or any of its other subsidiary operations, recently within the last year or so, entered into deals with these two companies and then we would know whether or not there is any proof positive or lack of proof that there might be a conflict situation.

I am not accusing them of this. I nm $aying that this is a stone which should not be left unturned, that it should be looked into because there are some people who are convinced that best efforts were not made by STELCO in this. That might be bitterness, it might be a feeling of frustration, I do not know, I have no knowledge in the matter, I am merely raising the point as a question to the administration. With these few remarkst Sirl let rne conclude by saying that there have been eleven or twelve million dollars down the drain, so to speak, over the past eight or nine years with regard to the steel mill.

The capital cast was some $5.7 million or something and then there were subsidies and current losses throughout the whole operation of the plant during that time~ The old saying of cutting your losses and running might not be applicable to this situation. It might not be a bad idea to consider that to be a lossr there is nothing we can do about it, water under the bridge~ money lost. This maybe a wrong concept to begin with, maybe stupid. Who knows? An effort was made to set up this plant to give men work and to create economic development in the province. It might be an idea to consider t15

februacy 16, 1973 Tape No. 137 NM - 3 that, not to be bringing that loss to the fore all the time but to think in terms of what I have already said, make another application to DREE, talk to Mr. Jamieson 7 see what DREE can come up with, see what modernization can be made with the plant, see what new equipment can be brought into the plant, see what the plant is best suited for, Grinding balls.for example~! think is what the plant is suited for best. Apparently this is the guts of the operation - well that is the backbone of the operation.

In any event, Sir, speaking from no technical knowledge whatsoever, maybe if we put that past loss behind us and thought in terms of the existing structure, that infrastructure,that capital investment which is out there, forget about the loss and say now: nwhat can DREE do?n What in fact can the Government of Newfoundland starting afresh do by way of subsidy and by way of other plans and things, to put this thing on, if not a viable operation maybe a break-even operation, maybe even at a slight loss?

Other provinces and other countries in the world think that a certain value can be attached - a dollar figure can be attached to jobs in a country,on a ongoing basis. Maybe this will be a viable, economically sensible proposition.I do not know but it seems to me. Sir~ that there is a little undue haste, not only with regard to severance of the men but undue haste in trying to get rid of this albatross around the government's neck.

A few more months study - perhaps we can use some of the time of the four or five hundred experts,so-called 1 making big salaries in Ottawa,in DREE~to look into the situation to see if there is any possible way. Maybe it will all come to naught~ finally and conclusively but I think there is a last ditch effort to be made. I think another attempt should be made to DREE and I think that every effort for another few months should be made to keep the thing going for the benefit of the workers. 416

February 16, 1973 Tape No, 137 lffi - 4 In any event, the plant should be allowed to carry on. The very least the government should do is to allow the plant to carry on for three months more from the <late of this announcenent or if it is going to close dow-n in a few days, to give all the men there, without exception, at least three months notice with pay. and if there are any other men who can get a better deal under the union company agreement, then of course they should get it.

But the bare minimum should be in accordance with stated government policy in a bill I believe already on the Order Paper in this House, should be a minimum of three months notice. I hope, Sir, that nothing I have said today is taken as partisan or spleen or anything else. We are genuinely concerned about the men involved as I know the government are. I hope the government's vision is not clouded by an understandable desire to get rid of this albatross.

I hope they do reconsider their position and that perhaps some other method, with DREE help, with federal government help, can be come up with to keep this thing going for at least a certain period of time to allow the rnen to find a job. In any event, the governrr£nt should make perfectly clear, not as they did on October 13, but if any other consideration is going to be given, the government should make perfectly clear to the workers in that plant what is going to happen. There should not be any things left out. There should not be anything left to surmise or speculation. The thing should be perfectly clear.

It is clear now the plant is going to close down, if the government do give further consideration then whatever consideration they are going to give to it should be made perfectly clear to the men so that no false sense of security is raised in them. That is all I had to say, Mr. Speaker. I hope to hear more members on the other side as well as this side speak on it because it is a very important, it is even in a way a provincial catastrophe 417

February 16, 1973 Tape No. 137 NM - 5 and something that deserves the attention of every elected representative in this House. MR. EARLE: Mr. Speaker, I was very closely associated with this project for a matter of several months, because at that time I was the Minister of Economic Development. May I say at the outset that right from the time I beca.'n!e first involved with this project up until the present day which has ended in literally disaster for a lot of Newfoundland people, my concern has been very deep and very sincere for the workers in the plant and still is.

In fnct it goes a lot farther back than that# Hr. Speaker, I was knowledgeable about this plant away back in the days when the Liberal Government started it. I thought at the time, as I think all my colleagues did, that possibly here was another good industry for Newfoundland~ that perhaps we had something good il 18

Fehruary 16, 1973 Tape 138 PK - 1 which would go ahead and give work for men, Lut the thing had not Geen operating for very long when it becnr::e patently obvious that it could not succeed~ To hegin with the mill itself was not on tidewater, it was in a very poor place.

The cost of transport:atfon, f'oth to and from the mill, the fact that we had to buy so much raw mater.Lal outside of the province and brin;r it in,made :it terribly, terribly ohvfous that it was extremely doubtful. even hi the early dnys of the stort of this mill that it could at any time be successful, I recall very vividly when the neu scheme for the conduct of the mill was hrought up in the previous rovernment.

I tMnk a great rr:any of us had douhts at that t::i.rnP. that it could pop;sff,ly succeed rmd I for one have: no hesitation in saying at that time,Fhic-h vas some slx years ap._o or more.I recommended that the mill be closed dovn then. Pad rny voice heen accepted Newfoundland t-?Ould have heen in pocket perhaps $6 million or $8 million~ But I was only one of mnny and actually of course the majority counts in this thing and the mill vent ahead. But never in all its long history could I see daylip,ht in this operation.

Now I did not come. into contact with it ;ignin until I hecame Minister of Fconomic Development and at that time t think the mill had cost the governments of the. previous day and tiat day close to $9 million in capital expenditure and 101.u,es. We looked at it extremely closely_. 1 came in at the stage where the DREF ar,reement had been turn dO"'-'TI for the simple reason, as has been said by a previous minister, that the offer made under the agreement could not possibly be accepted. It was completely unworknhle.

We could see that obviously, from the studies in the department, that that was completely impossible and would only result in more money goin~ dmm tl1e drain and the last state of that situatJon would be worse than the first. On top of that another offer was made during my tenure of office which I took a very close look at. That was by the then operators of the mill, Lundrigan 1 s Limited. They wanted the government to plow a considerable amount of money into the thing and refurbish it and so on and bring it hack. 419

February 16, 1973 Tape 138 PK - 2 Perhaps I was criticized to soRe extent that I did not make more publicity on that or accepted it or talked about it. The 1:eason there again was very. very obvious indeed. The operators of the mill at that time were doing such a terribly bad job that any businessman had to he completely out of his mind to advance further monies to these people to carry on operating it. The mill was losing at that particular time something like $100,fJOfi a month. There were sales of steel 1,1ade $16. a ton below cost.

Then for the people who are operating on that hasis to come to government and ask for several million dollars to be plowed into this operation. to give to them to operate 1 was so unthinkahle as to he ridiculous. It could not be done. About that time the Steel Company of Canada came into the picture. Here again as my public utterances at the time and helieve me, Hr. Speaker, there were very fet-: indeed, my pubic utterances at the time showed no optimism or no great encouragement that this could be a success.

I was under extreme pressure at all times in the press and to some extent from members of the union to make puhlic statements. There was a time there when almost every day there would be requests from the press and the media to make statements on the steel mill at the Octagon I deliherately and conscientiously did not make statements because the only statements that I could have made at that time would have been extremely pessimistic and extremely detrimental to the whole project. Then we were just started negotiations with the Steel Company of Canada.

I was hoping and praying at that time that the Steel Company of Canada would come in and with their expertise and experience that somehow unknown to me they would he able to make a success of that operation. T dared not say anything at that time that would indicate any lack of faith in this thinr, which would upset perhaps a potential operator. So I had to take all the gaff and all the flax that came at me from the press and everybody else and keep quiet.which I still contend at that particular stare was the best thing to do. 420

Frebruary 16. 1973 Tape 138 PK - 3 Anyhrn,1 that is all water under the bridge at the present time, But the opposition keeps referring to 20D men. There is only one point I think, at which there were anything over 200 men there, at the stnge when I picked it up there were about 180 it is now Hifl, so it is not 20(} men that were affected. It is had enough that it is 160, but it is not over 200 men or not even 200 men or more men. Vr. Speaker. could I ask the honourable minister a question? Does that include office workers? What would he the total number? One hundred and eighty-one.

Yes, 181 when ynu take the complete management and personnel and so on. Rut these are not really in the snme class, it is the workers that I am talking about. the actual workers in the mill he cause olwiously of peak experience in the manufacturing of sucl and so on. AN HON. HEHBER: Inaudil,le. Yes some of these neople will ohviously find no difficulty in getting jobs in another operation. Hopever that is what it wns,16fl at the time.

The accusation was made at me when I made the announcement,which was read hy the honourable member for White Bay North,that vhen I made the announcement that it uas a six month contract with the option of renewal for another six months. I did not say at that time that the thin? should he clued up at any time in a matter of a few weeks or months that the thinp; could phase out.

But what 1 did say at the time and made it quite obvious in my remarks. is that it was up to six months or longer if the steel company could find that they could make it viahle, I repented that on several occasions in various things that 1 had said over the press and radio and so on. that it Yas up to six months or longer. The statement which was sent out by the Information Services merely said that it was a six months' contract with a renewal of six months if necessary. ,121

February 16, 1973 Tepe 138 PK - 4 But contingent upon that I r:iade several statements to the press and radio that it Has up to six months if they could prove it to he a viable operation, givinp no indication for my part. Hr. Speaker, that it could or could not he proved to be a viable operation at that time because frankly I did not know. 1 was hoping that it would he. I was hoping beyond anythinf; that the Steel Company would make a success of it but T nor nobody else nor the Steel Company themselves knew at that tirne whether that could he made a viable operation. We had to give them a chance to prove it.

The honourable ' 1inister of Industrial Development in his remarks pointed out quite clearly that if the Steel Company had not dra~~ out of this noo and had not agreed to close dotm, that there. would ohviously in the succeeding months .and years,however lon;r the thing was allowed to go on, a steady drain of losses.

I think the remarks made hy the honourable member for White Ray South: "Why does not the government go on with further negotiations with DREE or somebody or other and try to get some more experts to try to carry this thing?" Ohviously if the Steel Company of Canada are not experts in this~ who is? ! do not think there is anybody in Ottawa or anywhere else that can offer better advice on this type of thing than can a company which has heen in the field of business for all its history. I think that it is quite obvious that the information that they are givin~ us is correct. But further than that, Mr.

Speaker. the government when they were negotiatinp; with the Steel Company insisted that there be a gentleman for close liaison with the government. This was in the person of Hr, non Wilson who admittedly is not an expert steel man but helieve me a very keen and sharp operator in his sense of business and knows the thing when he sees it. His reports) which were coming back to me periodically, showed just how disasterously the thing was shaping up. Rut under the a~reement with STELCO they were permitted to carry on as long as they had any hope at all of perhaps proving the thing to be feasible.

Well 7 unfortunately or otherwisevtha.t has come to an end, perhaps

February 16. 1973 Tape 138 PK - 5 a shorter period than we anticipated. But nohody, I say the Steel Company themselves nor our government could anticipate at that time how long this thing would take to prnve itself. It is perhaps fortunate from a purely financial standpoint that the story has

February 16, 1973 Tape 139 .m - 1 been revealed so quickly because I think the longer it went on and the longer the thing was kept in operation the more hope the men would have that it would he a viable operation and that their jobs would last and so on,where it is obviously not true and could never be true.

The idea of goin~ into further negotiations and carrying on when the reports we have that for a period from eight to ten years that pro_iect vould continue to pour money down the drain, surely any- body that has any sense at all is not going to recommend to this government or any government that they fool around with that sort of thing,possibly a continuous loss of $100,000 a month for years hence. The Newfoundland people would never forgive us for undertaking anything of that nature.

There are far too many things required in this Province of Newfoundland for this government or any p:overnment to blatantly take on something that was throwing $100,000 a month down the drain when there are so many other thin~s of a far more viable nature that need to be done in Newfoundland. I would say politically and otherwise we would never be forgiven and I am sure that the members of the opposition if they were in our position would realize exactly the same thing.

You simply cannot afford to play around with public money knowingly knowin~ that it is just gain~ strair,ht down the drain and we quite obviously could not see any alternative. This has been borne out by the Steel Company because they can see no alternative. The question has been raised whether we are getting accurate information from the Steel Company~ I run quite sure that when the confidential report is shown to the members of the opposition they will agree that it is a factual one.

They can pick it to pieces and study it all they like but I am quite sure that they will come to the conclusion that this is a realistic and factual report. I think this happening today is far above the level of any partisan politics. We can go back and blame the past administration if we like for creating this monster. You can

February 16, 1973 Tape 139 JM - 2 accuse this government of carrying on under false pretences if you want to but that is not beinr, done. All the information that could be sensibly ~iven with the hope of perhaps somehow or other carrying this thing on was given but I would have been a fool of the first order and I think the public would recognize it, if I came out with any cheerful or optimistic statements or any statements that would have given greater credence to this thing at a time when it was just in the course of exa.~ination for proof as to whether it could operate or not.

Well the story is here now and unfortunately this is where we are. But it would be complete hypocrisy on the part of this government and complete hypocrisy on the part of the opposition to try in argument or debate to recommend.after the history of $12 million gone down the drain 1 that further attempts be made to try to rescue this operation. Gentlemen it is simply impossible.

It was impossible from the start and it is now completely impossible and as I say the Newfoundland public would never forgive us if in order to keep 160 men or so employed we continued to pour the public money down the drain at the rate that operation was consuming. HON. W.G.DAWE(MillISTER OF MANPOWER AND INDUSTRIAL RELATIONS): Mr. Speaker, it is indeed most distressinp.- and disturbing to me today to have to sit here in this House and hear my hon. collea~ue make his ministerial announcement concernin~ this situation.

Being the member for the district and Minister of Manpower and Industrial Relations makes it all that much harder to take. - Realizing my responsibility in this situation as Minister of Manpower and Industrial Relations,! hope that I shall play some role, some measure in alleviating this situation which affects over 200 men. Not so long ago we experienced another tragedy in the employment field in the closing of the Whalesback Mines~where quite a number of people were affected. I do not have the exact number right here but through 425

February 16, 1973 Tape 139 JM - 3 the Department of Labour and with the help of the staff of that department who are expert in the field of apprenticeship training and upgrading and placing people in positions and so on,it was possible before that mine closed to have all the workers of the Whalesback Mine placed in alternate positions. Before the mine closed they were all employed in one way or anothero/through the apprenticeship training or the upgrading plans in conjunction with the Federal Government and so on. Some people found employment on their own.

I have already instructed my staff to get in motion. to start working immediately on this situation and to commence a similar pro~ramne and hopefully we will be as successful in this one as we were in the Whalesback Mines incident. What I have to say following will not be of much assistance and of little consequence perhaps to the plight of these unfortunate people who work in the steel plant. It was my opinion, Mr. Speaker, and in the opinion of many people here that this in the first place was a poorly planned and poorly worked out industrv.

In the first place it should never have been located near Octagon Pond as has already been snid. If it had to go in the District of Harbour Main there ,was an alternate site which would have been perfect for it,where there is access to the water, to the Trans Canada Highway and to the CNR. Where it is located today requires extensive trucking both of raw material to the plant and of the finished product from the plant and because of a defective bridge in Manuels it has been necessary to truck the materials via the Trans Canada Highway which is about three times the distance.

Then too we have to realize that when this plant was built the machinery which was installed in it was outdated and probably was picked up from some old dump somewhere. The machinery manufactured was I think last used in the year either of 1914 or 1928, I am not sure 426

February 16, 1973 Tape 139 JM - 4 but it was one of these years. You can ima~ine the imposstbility of tryinr, to make such an industry workable and feasible with machinery like this. I do not know how anybody in this House could expect even the most experienced in the steel industry to make such a plant work with machinery such as this. This was a scheme which was conceived by the former administration, constructed by the former administration, one of many grandiose ideas of the former premier and he must have had some great and wonderful visions in his days.

It is unfortunate that they all ended up similar to this one. I have before me a sketch of the great dream of the administration of that day for the Octagon Pond Area and it is here for anybody to see. This picture comprises an area of about fifty acres and it is totally built up with various industries and they were supposed to have been machinery industries. It would have, according to this dream book, employed about 500 people and we can be very thankful today in this province that this did not get off the ground.

Even if they put brand new or up-to-date machinery in it there is very little likelihood that it ever would have been a success in the location. There is an ideal spot in Harbour Main,as I have just mentioned~ close to the water, harbour 427

Fenruary 16. 1973 1 Tape 140, Pagel -- apb C .N. R. nnd Trans-C.:mada Highway. We might today be facinf! a greater trap:edy had this ever gotten off the ground. In any event, !,fr. Speaker, I an very saddened today to learn that one hundred - well two hundred employees will be out of work within two weeks unlessTof course, we can be successful in findin~ alternate employment. Ynny of these people are my personal friends. They are people I know and have known for years.

They are my neighbours, all constituents, practically all of them, there are very few from outside Harbour Hain~ They branch from Marysvale ri~ht around to St. John 1 s. I ari. very, very saddened indeed that this tragedy has come upon them. I will certainly do all within my power to try to alleviate their situation and try to have them placed in alternote employment us ouicl:.ly as possible. HR. CR_~~IE_:. Nr. Speaker, I am sure that everybody here feels every sympathy with the workers who are to be terminated as a result of the close down of this steele rnill.

I certainly sympathize with the honourable memhers for Harbour f 1ain who of course are directly affected as representatives of that district where most of the men live, The honourable member for White Bay South suggested that perhaps this close down was being made with undue haste. This is certainly not the case, Mr. Speaker, because when we came into office January 18, last year, the steele mill was in a very precarious and sad situation.

We have spent, keeping it going up to now from last January 18, to give this another chance, the present government have spent at least $3 million since that time to keep this plant going. nhen in fact, if you are only going to examine the situation analytically and cold-bloodedly, the right thing to have done last January or February, as soon as it came to our attention~was to close it then, because we knew ..• AN HON. PE}fBER; You were going to have an election. }tR. CROSBIE: Well then, the right day if the honourable gentleman is going to talk election is fine, close it April 1, you know, after the election.

That was not in cmt minds. The right thing to do, Hr. Speaker, -12 8

February 16, 1973, Tape 140, Page 2 -- aph would have heen to close it last January or close it last April.if one worries about elections as the honourable gentleman opposite does, as we know from the enquiry that is going on now how much he worries about elections. There is a lot more that will be coming out on that. MR. NEARY: What about E .P.A.? Tell us about the millions of dollars being pumped into that. NIL CROSBIE: The honourable gentleman did the pumping. The honourable gentleman did the pumping, just as he did on Bell Island. He pumped the mushrooms on Bell Island. Mr. Speaker, if I might carry on.

Instead of closing it down last January (afi anyone should have done if they were just looking at it from the point of viev of could it succeed) or last April, or last 1-'ay, or last July, or August, or September or October. We have kept this mill goinf to give it every chance and it has cost the people of Newfoundland 1 as a result~ in excess of $3 million to do that. Yet the honourable gentleman says this is undue haste.

The honourable gentleman mentions STELCO, as to whether- he does not want to infer that STELCO has not used their best efforts, he does not want to suggest that they have not used their best efforts, he does not want to hint that they have not used their best efforts, he does not want to whisper that they have not used their best efforts, he does not want to imply that they are biased, he does not want to imply that they are just out to scuttle the steele nill, but he will mention all those things because other people are thinking it.

To say that,of course, is to put into print the idea that ST£LCO was scuttling it for some reason of their own, even if the honourable gentleman does not believe it. I do not believe that for one moment. 5TELCO did not come to us looking for that steele mill, STELCO did not approach the government, STELCO was not interested, STELCO had to be badgered hy us for two or three months before we could 429

February 16, 1973, Tape 140 1 PAge 3 -- apb i.nvei~le STELCO to take it over. Then STELCO t.rould not pay a cent, then they drove a hard bargain, then they still were not interested, then they were going to get it for one dollar if they wanted it and assume an eir,ht hundred thousand dollar obligation at the bank. We were prepared to give it to STELCO for zero if they found that they could operate it and get nothint hack and wipe off the ten or twelve million~ But STELCD did not come to us, we had to plead with STELCO to do thiR.

STELCO has given their report and the only reason why they have cone in and given it three or four months is because they now ¥now the answer. It took·_ them three or four months to find out that this does not hnve a hope, it does not have a prayer, it does not have a chance and that if they kept on taking our money they would be taking our money under false pretences. We a_rreed to spend six hundred thousand dollars to renovate the plant and to improve the mill and so on.

They did not spend all of that six hundred thousand, they could have kept going: another month or two and used up the rest of our six hundred thousand, but they thought that was not fair, they thought that was not right, because STELCO knew two weeks ago 1 as a result of their expert survey of the situation,that i.t had no chance, it was not viable, if you got it for one dollar, if someone r,ave it to you, if it were a free gift it could not go on any longer because it would continue to lose money. What did it lose in 1972? Over one million dollars. In 1971 it lost over one million dollars.

In 1972 it lost $1.3 million. It lost in the first half of 1972 over one half million dollars, then $1.3 million for the year and still we have kept it going. I well remember, Mr. Speaker, I was in the cabinet in 1966, not when this got started but when it first got into trouble. This steele mill was started by a group of Newfoundland businessmen. Ches Pippy, Gordon Pushie, Albert Hartin and two or three others started this steele mill. HR. ROBERTS: Arthur Lundrigan and Cam Eaton. 430

February 16, 1973. Tape 11,r,, Par,e 4 -- apb !ffi. CROSBIE: Arthur Lundrigan and Can Eaton. It was going to co.st one million dollars or one t'lilllon and a-half dollars. It was going to get a DREE grant, it was goin_r; to do this and that. Why did it not p;et a DREE grant then? Because they bought secondhand machinery. smm HON. HEHBERS: An ADA iz;rant. It was an ADA Rrant it was not DREE. There was goinp; to be an ADA grant but they did not get that grant because they had secondhand machinery there. Therefore, it was not eligible for an ADA grant. HR. HICKf\'A.'N'; l'R.

CROSBIF: "MIL HICK1"AN: Thnt cost money too. Thnt is not settled yet. Which? r.amma Engineerin~. 2J,R. CROSBIE:~ Gamma Engineering claim, well that is passed I snpposc 1 it is too far back. Then they came to the government having ~otten themselves in trouble and the r:overnment got them out. I well remember a meeting where Yr. Smallwood said when they were in lookinp; for another guarantee of two and one-half million dollars, Hr, Smallwood said; ''Has Ches Pippy ever been involved in anything that was not a success?n Therefore they got the guarantee of two and one-half million dollars and it went on from there.

Then they had tremendous losses nnd it ~oded up in 1968 with the Newfoundland Gover:nment with eight million in it and it was turned over to Lundri~an's to manage. We know the history of it since then. There is no undue haste about this, Hr~ Speaker, because we have not been unduly hasty.It is going to cost the people of this province over three million dollars for our effort to keep this goinp:. As a matter of fact, in the estimates for the year corning up we had to put in almost four million dollars to pay off the money guaranteed at the Bank of ?--tontrenl.

The guarantee at the bank when we took over last January of 1972, was 51.4 million. We increased it to 431

February 16, 1973, Tape 140, Page 5 -- apb $1.7 million 1 as we said,,last winter to give it a chance. Since that we had to give it another two million dollars. That has all been expended so that is $3.7 million. It will be over four million dollars that we have to pay off under that ~uarantee in the year coming up. I was involved in this quite intirr..ately from January of 1972 onwards. As soon as we p,;ot into office we had a report on the steele mill from Leonard and Pnrtners Limited, Leonard Kostaszek, who was appointed by the 11.beral Administration to review.

His review indicated chaos, total chaos admin:i.stratively, unqualifjed staff, laclr of staff this lack of manap:ernent support, lack of files,

February 16, 1973 Tape no. 141 Page l - !!RW Hr. Crosbie. lack of security, shambled. That is what his report revealed and he was there for six or seven months. Then we agreed to keep it going. We wrote,in February, 1972, Lundrigan 1 s~ Under the management agreement that Lundrigan's had the Newfoundland Government were not required to put up the money - they were required to put up some. If they needed money, they should have put it up. We wrote them on February 17, 1972? them to put up some money.

We got the reply (I am sorry, the letter is dated February 24, asking them to put up additional money) They replied on February 29 1 19721 to confirm that it is not possible for Lundrigan's Limited to advance funds to Newfoundland Steel at this time. They did not want to put any money in it, although they had thia management agreement and so it went. The DR.EE grant that the honourable gentleman talks about, if you would throw your minds back a few months, you will recall that there was supposed to he $5.5 million, an application to DREE for $5.5 million. DREE finally came up with $1.7 million.

The idea was that the whole mill should be modernized and expanded. DREE came up with $1. 7 million, disgrace - generous DR.EE up in Ottawa, that fountain, that treasure chest in Ottawa, that golden bosom motherload, up in Ottawa came up with $1.7 million That is what the DREE grant was.and $5.5 million was asked for. They put a condition on it that we had to get the iron ore companies in Labrador to agree to buy 16,000 tons of balls a year from JS for the whole life of the DREE loan,at a price of sixteen dollars per ton or some price that they never paid up to that time and will not pay now.

It was $190.00 a ton~ The iron ore companies said,- "no~ we are not going to enter into a take or pay contract with Newfoundland Steel to buy balls for $190.00 a ton for the next ten years or whatever it was. 11 The condition was not met. DREE knew that the condition could not be met. The federal government knew that that condition could not be met. That was only a political maneuver 433

February 16, 1973 Tape no. 141 Page 2 - so that time they could say that they had agreed to a DREE grant, when they attached an impossible condition to it. As it appeared later on, in any event, if you got the whole $5.5 million, it still would not have been economical to operate that mill. We had a letter from Lundrigan's on July 20. This is before they left the project at our urging and STELCO got in, July 20, 1972. The alternatives for the future are: (

a) make no capital expenditure and continue operating as long as the value to the province of 200 jobs exceeds the loss if any incurred on operation; (They estimated a substantial loss starting within six months) (

b) invest $880,000 over the next two or three years; (They then thought a profit could be achieved, which was nonsence) (

c) invest approximately $8 million, including $3 million in working capital to explore virtually new operations. Potential profits and associated risks do not justify such a large investment. Every one who has looked at this, Mr. Speaker, has concluded that they do not want to operate, that it is impractical to operate it, that it cannot operate without severe losses and, therefore, nobody but a government would operate it. Even the government at some point have to say; "No,we cannot go on11 We cannot go on with $2 million or $3 million to keep 160 jobs going. There must be better ways of creating jobs than that.

On August 18, we got a report that there was a loss of $437,000 in aix months~which is understating it. The honourable gentleman mentioned the agreement with the Steel Mill at Octagon Pond, the agreement with the steel yard with STELCO. I might just give him some of the points to that agreement. Now remember they did not want to enter into it. I do not have a copy here today but I am sure my honourable friend does not mind·- copy of the STELCO Agreement. They had an option, exercisable not later than April 2. It is in a six months' agreement with options to extend.

There was a crown representative and that was Mr. Don Wilson. They had 434

February 16, 1973 Tape no. 141 Page 3 the right to manage the steel plant, to make renovations!' renewalst alterations, such as they thought appropriate, engage employees, do all of the usual things, negotiate collective agreements, set out their intentions and all of these things - they will be paid one-half the profits if they made any. There is nothing at all unusual in the agreement. The government agreed to provide $650,000 additional capital for renovations, renewals, alterations, improvements and repairs.

They could engage what employees they like~ They had an option to take over the plant, if they decided that it was viable. They are to put in monthly statements. All !ION. MEMBER: Inaudible~ MR. CROSBIE: Right~ This can be filed, They had the right to terminate the agreement on thirty days notice and so did the government. The parties hereto acknowlege that at the date of tlm commencement of the agreement, the company is sustaining substantial losses.

Notwithstanding anything in this agreement to the contrary, the manager agrees that if at any time after six months they continue to be substantial, we could give thirty days notice to terminate and they had the right to terminate at any time on thirty days notice but they had to make a report to us on the operation,and that is the report that they have made. The honourable gentleman can see a copy of the agreement~ It will be tabled. There is nothing unusual in it except its unusual generosity, because the government wished to keep this effort going. The honourable gentlemen are going to see this report also.

I just want to read one or two sections from it: 11The geographical location of the NESCO Steel Plantt relative to its natural market areas and sources of raw materials 1 presents a financial burden through transportation costs that cannot be overcome by the best-know steel plant operating efficiencies and sound marketing and purchasing practices. There is no way. 1l Anybody who reads this that knows anything about economics or business, will have to agree. 11Eighty per cent of NESCO's production

Februnry 16, 1913 Tape no. 141 Page 4 Mr. Crosbie4 must be shipped off the island and sixty per cent of its basic raw materials must be imported to the island due to the i;en;araphical location of the plant. The additional cost of these transportations coata is $30 a ton ln re-enforcing bars and Sl) a ton tn grinding balls and so on. The net loss for 1~72 was Sl.2 million. The ioss estimated for 1973 exceeded Sl.5 million. On and on it goes, Hr. Speaker RO that tntrP 1.a no question in looking at this report hut this plant cannot continue to operate. ft ~houl~ sell Hhrn1t 38,000 tons of re-enforcing bars a year.

The market in Ne~foundland is only 6,000 or 7~000 tons. Its only natural market is Newfoundland where it has an advantage because of transportation costs. It needs about 30,000 tons of scrap each year to operate. It can only get 5,000 or 6,000 tons a year from the Island of Newfoundland so that all the scrap has to be brought ina It is an economic impossibility. To make sure, Mr. Speaker, that every possible thing was done to see Lf this plant could survive, both myself and the hon. member for Fortune Bay and the hon.

Minister of Economic Development, the present minister, did our best,at consi.derable expense to the taxpayers, to continue this effort going~with the full backing of the government. It is obvious now, 436

February 16, 1973 Tape No. 142 NM - 1 MR. CROSBIE: Mr. Speaker, that this cannot any longer be continued, that this drain cannot continue. As the Premier will explain, we are going to be as generous as possible to the people that work there. We are sorry, as they are. We are sorry that this thing was not economic. It is very regretable and a great pity. But I do not think that the honourable gentlemen, and I hope honourable gentlemen will not say again that there is undue haste or that we could possibly go to DREE and get more money for this. DUEE would not touch this with n barge pole.

DREE does not give grants or loans to an enterprise that has no economic chance of continuing. The honourable gentleman knows the rules and regulations of DREE. DREE would not make a grant to this plant today. If this plant were just starting new today and there would be a new plant put there, I would say that DREE would not make a grant to it because it would never pass the test of economic feasibility. So there is no undue haste. We have risked the taxpayers money as much as anyone could humanly expect us to in an attempt to keep it going.

The thing now is to treat the employee with justice.to keep them going over the next several months when they are going to have a difficult period,to assist them we hope in getting other jobs in other enterprises that are economically feasible. MR. WM. ROWE: Before the honourable minister resumes his seat, I would just like to state something for the record and ask a question relating to it The main part of my remarks about undue haste dealt with what I consider to be shoddy treatment of the men not being given the opportunity to have three months pay. Would the honourable minister like to deal with that point?

It has been announced government policy about this three month period, perhaps the - 4 3 '1

February 16, 1973 Tape No. 142 NM - 2 MR •. CROSBIE: The honourable Premier is going to deal with that point but I do not think the men have had shoddy treatment. I have just spoken to show what we have spent in keeping the men employed for the last year and the Premier will deal with what we are going to do in connection with the close down. There has been no shoddy treatment of any men at the steel plant~in my opinion. MR. NEARY: Mr. Speaker, the honourable Minister of Finance made one of his typical political speeches in this honourable House.

We were told at the beginning of this debate, and the honourable member for Harbour Main, junior member, also brought politics into this - MR. ROBERTS: He is the senior member~ MR. NEARY: Senior member. He will not be very senior after the next election. We were told, Hr, Speaker, that there would be no politics, no politics in this debate and I am sorry to say, Sir, that the honourable Minister of Finance has dragged politics into this, in his usual way.

Sir, he has not convinced me and I am sure he has not convinced any of my colleagues on this side of the House that the steel mill should be closed down the end of February. Two week notice~ Sir? He has not convinced me. He put up-some strong arguments, quoted some sections from the report and incidentally, Mr. Speaker, we are debating here today at a disadvantage because we have not seen that report. Maybe if we had the report we could quote sections from the report that might be favourable, that might be in favour of the steel plant. We do not know. We have not seen it. AN HON. MEMBER: Inaudible. MR.

NEARY: I will come to that. I will come to it, Mr. Speaker. If the honourable minister would just keep quiet I will deal with this.

February 16, 1973 Tape No. 142 NM - 3 A.~ HON. MEMBER: The honourable minister asked for the adjournment of the debate. MR. NEARY: Mr.

Speaker, the honourable Minister of Finance talks about the steel plant in 1972 costing the taxpayers of this province~ I think he said $1.2 million and this year 1973, if the plant continued to operate, would cost around $1 million in grants and subsidies~ Well, Sir, I did a little mathematics here while I was listening to the honourable minister making his speech, if two hundred families, Sir, are thrown on welfare as a result of this plant closing, and I want to say to the honourable Minister of - what is it - the honourable Minister of Public Works says 180 people will be effected by this close down, Sir, I say that it will average 200 or more.

AN HON. MEMBER: He said it was over 200. MR. NEARY: He did not say it was over 200. He said it was 180. As a matter of fact he used a figure much less than that to try to camouflage and to try to paint a good picture. I reminded the honourable minister that it would be clo~er to 200 because there are people outside the steel mill who are providing that steel mill with scrap, who will also be effected by it.

All the scrap dealers, all the people who go around this province picking up scrap, it will come to much more than 200~ The hnnourable Minister of Finance, Sir, has the gall, the gall and the audacity to slap up to me the enquiry that is going on downtown, Sir, but I want to remind the honourable minister that a part of that enquiry, the second part of it deals with the disposal of the DOSCO asset~~ That was not raised in this House, that should not have been a part of the enquiry and while that enquiry is going on, thirty-five men on Bell Island are forced on welfare. Thousands of tons 439

February 16, 1973 Tape No. 142 NM - 4 MR. N_EARY: of scrap is laying on - MR. SPEAKER: I feel the honourable member is straying away from the topic of the debate. MR. NEARY: Mr. Speaker, the point I want to make is that there are thousands of tons of scrap on the ground over there. You have the steel mill in here crying for scrap, it is on the ground, 1 brought it to the attention of the Minister of Economic Development about two weeks ago? told him it was there, shrugged his shoulders at it, could not care less, Sir, A.111 HON. MEMBER: Untrue. MR. NEARY: It is still there. It is still there.

The steel mill was hungry for scrap, Sir - AN HON. MEMBER: liad the agreement been legal it would have been taken out. MR. NEARY: The steel mill is hungry for scrap, Sir. It is there on the ground and it cannot be released, the minister told me, because there is an enquiry going on. In the meantime they had to close the steel mill. They had to close it. Thirty-five men on Bell Island out of work for almost a year because of the stupidity of this government. AN HON. MEMBER: The agreement was entered into, it is not really an agreement at all yet. MR. NEARY: Mr.

Speaker, it has not been proven yet if that is a legal or illegal ngreement. It has not been proven yet, but the scrap is still on the ground. The scrap, Mr. Speaker, could have been released. The owner of it, Mr. Speaker, offered to turn the scrap over to the steel plant and let the minister hold the weigh slips. No, Sir, he would not do it. The scrap is still there. It will rust.out there. In the meantime, the steel mill is importing scrap from the United States and the Mainland of Canada at much more cost than they could have had it from Bell Island 1 Sir 11

February 16, 1973 Tape No. 142 NM - 5 MR~ NEARY: Incidentally, Mr. Speaker, the honourable minister, in his opening remarks, said that he hoped I was serious about Black Friday, well I was quite serious, SirJ because a lot of these employees at that steel mill are former employees of OOSCO over on Bell Island~ who got jobs in the steel mill when it opened and relocated on the south shore of Conception Bay. These men have gone through something, Mr. Speaker. I know what they have gone through. I have gone through it myself.

I was laid off in 1966 when DOSCO closed the mine, But my honourable friend does not know anything about that. These men now. Sir, are up in the honourable minister 1 s district on the south shore of Conception Bay, now they are going to be thrown out of work again, not on your life, Sir, if I have anything to do with it. Mr.

Speaker, I did all the rough mathematics when the honourable Minister of Finance was speaking and I discovered, Sir, that even if the province had pumped $8 million or $10 million into that steel mill~ does the honourable minister know what it paid out in wages over a seven or eight year period? How much would the honourable minister say? MR. CROSBIE: It is on record. MR4 NEARY; It is on record. Hm-1 much? MR. CROSBIE: I will answer you when you are finished, go on. MR. NEARY: I would say, Mr. Speaker, nothing under $85 million in wages, nothing under $85 million. That is a lot better than welfare, Sir.

That is a lot better than welfare4 The honourable Minister of Public Works dwells on the past~ Well, Sir, if he wants to dwell on the past, I hope the honourable Premier when he stands in his place in this House, to speak in this debate, will tell us how much Burgeo is costing the taxpayers of this province. There is a subsidy. 441

February 16, 1973 Tape No. 142 NH - 6 MR. MOORES: If I might say so, could the member for Bell Island - I would ask on a Point of Order that he remain relevant to the subject. There are people who are very, very disturbed today about this layoff at the steel mill and could he just keep the politics of other issues out of this and deal with the matter at hand. I would ask for a ruling on that, Sir. MR. NEARY: Hr. Speaker, this is relevant. I am speaking on the Point of Order. This is relevant to the discussion.

I am drawing a comparison between the steel mill and the fish plant at Burgeo and the subsidy that is being pumped into both of these operations by the taxpayers of the province. MR. SPEAKER: I feel that I must agree with the honourable the Premier. The member does seem to be straining away from the topic and I would again like to remind him that he should stick to the topic in question. MR. NEARY: Well, Mr. Speaker, let me say this then - perhaps I can get away with this.

If they had spent the money at the steel mill that they spent at Burgeo before the last provincial election, it may not be necessary to close it down today. AN HON. MEMBER: Burgeo is not closed dow-n. HR. NEARY: What is not closed down. A.-~ HON. MEMBER: Burgeo is not. MR. NEARY: I am talking about the steel plant. Mr. Speaker, the member for Harbour Main talked about all the grandiose plans of the previous administration, well Sir, what about the $40 million that the honourable Premier announced the other day that is going to be spent on draggers

February 16, 1973 Tape 143 JM - 1 to get the fish plant owners off the hook~ buy draggers for them so that they will not have to spend their own money. Why not put some of this in the steel plant, Mr. Speaker? Hhy not take some of this money and put it in the steel plant, upgrade the steel plant? HR. CROSBIE: Close down the fisherv? MR. NEARY: No, not close down the fishery. Let the fish merchants buy their own trawlers. Wny should the government and the taxpayers of this province take them off the hook? Mr.

Speaker, I met with the executive of the union on a number of occasions durinp; the crisis last year in that steel plant. I !2'0t the impression from the d:i.scussions with the executive of the union down there, Sir. that STELCO had a six month contract, they had six months to take a good hard look at the steel mill and then they had an option to extend that period by another six months.

Sir, I would go as fnr as to say that the Minister of Public Works who wns Minister of Economic Development at that time and the Minister of Finance who was in on the nepotiations left the impression rightly or wronr:ly with the union members that they were p;uarantecd work for at least a six month period. AN HON. MEMBER: Nonsense. MR. NEARY: That is not nonsense, Sir. The union executive is sitting in the gallery and I spoke to them before I came into this House this afternoon and they were definitely left with that impression, Sir, rightly or wrongly.

Maybe they misun{lerstoorl the minister but the Minister of Finance they did not nndcrstnnd h:im. He left them with that impression and so, Sir, they were also told by both ministers that if the plant had to close, if at the end of the period STELCO pulled out and the government had to close the plant that they would be given three months notice.

So the men sat back, Sir 1 relaxed, the crisis is over, no elections on and they buckled down to trying to save that steel mill and they figured they had nine months to do it~ six months STELCO would be in here, three months notice if the g.overn.'nent had to close it down, 4_43

February 16. 1973 Tape 143 JM - 2 nine months and what are we here today, Sir? Three months. Two weeks notice. STELCO came in and staved three months and then pulled out for reasons that we do not yet know about nnd the government gives the men two weeks hefore they get the nxe. Ric;ht at this moment as my colleague from White Bay South pointed out the government have before this House a piece of legislation if it is passed, brought into law,Sir, will compel the employers in industry and businessmen in this province to give employees three months notice before they get the mm.

Why do they not follow their own example, Sir? The }Unister of Finance says, HWhy continue negotiations with DREE? Why continue the negotiations?!! Well I will tell the hon. minister why he should continue the negotiations because the original negotiations were not followed un on and we have a Minister of the Department of Regional and Economic Expansion today, Sir, who happens to be a Newfoundlander. AN HON. MEMBER: Worse luck. MR. NEARY: Why not go and talk to him? Why lock the doors of the steel mill? Why not go and talk to Hr. ,iamieson? Mr.

Jamieson made a statement in Western Canada when he became minister of that department that they were anxious to put money into the Haritimes. The Minister of Finance says, 11 No, do not bother him." As a matter of fact, Mr. Speaker, when that crowd on the other side campaip:ned in this province they said, "We are not going to go to Ottawa looking for handouts." They said, "The 'h' with Ottawa we will become independent. ,i That is why they will not go, Sir. Then the hon. Minister of Public Works has the. gall to get up and say: "Don Wilson,n or I think it was the Minister of Finance. AN HON.

MEMBER: Public Works. MR. NEARY: The Minister of Public Works, uDon Wilson, 11 he said, 11 is an expert, he is a sharp operator. 11 He is a sharp operator, Sir, there is no doubt about that but I would not take his advice on this steel mill. He 444

February 16, 1973 Tape 143 JM - 3 is no expert on that. He maybe an expert on politics, campaigning for the. Tory Party but he is not an expert on that steel mil 1. The Minister of Finance says if we carried on there would be another $100,000 a month down the drain. Well, Sir, if all these people that are earning a living from that steel mill are forced on welfare it will be $60,000 or $70,000 a month it will cost the taxpayers of this province. It would be far better to subsidize the operation, Sir, keep the thing going. Far better to do that to keep the people off welfare. MR. MURPHY: $60,000 a month welfare?

MR. NEARY: $60,000 or $70,000 a month for welfare. Take it with 250 or 300 families affected by it 1 multiply it,with an averap,e of five in a family. The hon. minister is a good mathematician. He knows the figure is true. The minister says they are not acting in haste, the Minister of Finance. Well, Sir. they are acting in haste. Two weeks notice. The minister talks about all the money that hns been put into it. He never mentioned all the money that hns been paid out in wages. Then