Volume 1 PROVINCE OF NEWFOUNDLAND THIRTY-SEVENTH GENERAL ASSEMBLY OF NEWFOUNDLAND 1 ~ . Session VERBATIM REPORT TUESDAY, DECE"MBER 2, t975 SPEAKER; TF-11: HONOURABLE GERALD RYAN OTTENHEIM!:.R Number 8

December 2, 1975 Tape no. 226 Page 1 - mw • legislature all rolled in one for nearly seventeen years and that was the penalty that Newfoundland paid for going bankrupt,for spending more money than she had and borrowing the difference until the moment came when she could not borrow the difference, when she was hopelessly in debt. We paid a bitter price for that. The humiliation, the humiliation of it, seared the souls of some of us. It was perhaps in public affairs the most terrible time through which Newfoundland ever went. So we went from rags to riches and back to rags again before, and it can happen again.

AN RON. MEMBER: That could not happen now. We are a province of Canada. MR. SMALLWOOD: It could happen now. It could easily happen now. The Government of Canada are not responsible for the budget of this Province or of any province. Once only in Canadian history did the Government of Canada come to the rescue of a province that was destitute, two provinces in fact, Saskatchewan and Alberta, in the Great Depression, the Great Depression, when Newfoundland almost literally starved to death and Canada was on the broad of her back.

Canada then came to the rescue of those two provinces by certain loans that the Treasury of Canada made to the treasuries of those provinces -once only in Canada's history. Now undeniably, Mr.

Speaker, it is great fun to borrow and borrow and spend and spend and go deeper and deeper in debt, great fun to burn the candle at both ends or as the American poetess Edna St.Vincent Millay says, "My candle burns at both ends;/ It will not last the night;/ But, ah, my foes, and, oh, my friends/ It gives a lovely light." The trouble is, of course, that it brings you also to the danger of not having a candle to burn at either end. And let us agree, surely, Mr.

Speaker, let us agree in this House that we must reject the philosophy of the American humourist, Artemus Ward, when he said, "Let us all be happy and live within our means even if we have to borrow the money to do it with." Let us reject that. That was our philosophy once, and it got us in deep, deep trouble. I am being driven, Mr. Speaker, to the unwelcomed conclusion that the government so far as their and Newfoundland's financial state is concerned, are living 560

December 2, 1975 Mr, Smallwood • Tape no. 226 Page 2 - mw in a dream world. And not only the government! I find from the nature of many of the questions that the dream world character of 'hon. members is not found only on the opposite side of t _he House. G.overnment are living, I say, in a dream world, a condition of unreality in public finance, a kind of financial Nirvana. They neither appear nor sound like realists, like people who know what they are abQut.

Now here they were facing a deficit, a shortage of little over $30 million in their budget for this present yea! on current account, excluding capital account, a $30 milli~;>n deficit in one year. So with pre-announcements of stern Cromwellian action to come they call this House together and a few hours later they bring down this allegedly harsh docUIIIent, the Fall budget,. 561

December 2. 1975 Tape NO. 227 NM- 1 MR. SMALLWOOD: and what does this pretendedly stern budget say? That the budget is absolutely and absolutely to be balanced on current account this year 1 that the $30 million shortage is to b_e wiped out through new or increased taxation and also through sweeping economies; that the government would not dream of ending the year with a deficit. No 0 indeed. something less. something a lot less. Some economies. yes. Some increased tax revenues. yes.

Enough when put together to leave us with a deficit. not of the whole $30 millions but the paltry. the trifling. the inconsequential amount of just over $11 million. Now the minister himself did not quite pooh-pooh the size of this paltry deficit of $11 million. He used a milder term. manageable. whatever he might have meant by that. ~nageable, And so after just four years. not quite four years. not until the 18th. of January next. a date I have good reason to remember and the bon. the gentleman who is my successor has even better reason,perhaps~to remember. more pleasant reason anyway to remember. MR.

NEARY: Our absent comrade. MR. SMALLWOOD: Not quite four years of this present administration. our financial deliriua has reached the state where an $11 million deficit on current account is something that we are not supposed to get excited about. It is manageable. even though in this very same financial year by their borrowing they are winding another millstone of over $25 million a year around the people's necks by their borrowing. How are we to fathom a government. Mr.

Speaker. that in the one same budget confesses aiscalculatioas of the~r own making of $30 million. declare their intention to reduce the $30 million to what is still • startling $11 million deficit for the year1 In the same budget announce that they are still going to borrow $55 million in what is left of the year. on top of the one hundred and sixtv odd millions already borrowed this same year; and then in the same budget. almost in the same breath announce yet another $200 millions that they say they will be borrowing next year. to bring the Province's total debt then up to $1800 million.

How are we to fathom such a government? Can they even fathom themselves? 562

December 2, 1975 Tape No. 227 NM- 2 MR. S~ALLWOOD: I find 1!:l the goverpment a grievous absence of a realistic bard-boiled, down-to""1!arth realil:ation of the very perilou!l state of our economy and of our public finances. I see no sign of an intention in them to take the bard, realistic, difficult, unpopular steps that must be taken, that would have to be taken if I were Premier, that would have to be talcen whoever was Premier and whatever the label of the party that formed the administl:ation.

I see no sign whatsoever of any such determination in t ·he government, Indeed this present budget, Sir, is replete, chock-.-block full of rosy promises of !)usiness as usual as the House will easily precieve by looking especially on pages one, two, three, eleven, twelve and nineteen of tbe budget, business as usual, Now let me say that I look, I ezpect, I look for no breast beating from the gove'['!'llllent, no poor mouth, 563

December 2, 1975. Tape 228 RH - 1 no wailing or gnashing of teeth. I do look for resolute decision by then to slow down our great forward leap of the past quarter century, and to slow down perceptibly and adequately for the next two or three or four years until the Newfoundland Ship of State rides out the storm and gets once more on an even keel. It can be done and it should be done.

Now the great Winston Churchill was not thinking of Newfound­ land but of his own native land, his own native island when with astonishing, prophetic vision Churchill said 1and I quote his words precisely, "I have watched this famous island descending incontinently, fecklessly the stairway which leads to a dark gulf. It is a fine, broad stairway at the beginning but after a bit the carpet ends. A little farther on there are only flagstones and a little farther still th~se break beneath your feet! 1 Mr. Speaker, our Province has descended all too far down that fine, broad stairway. Another thing, Mr.

Speaker, to which I invite the attention of hon. members is that governments ought to base their policies on well defined principles and so it should be today in this present predictament. The governmenrs decisions and actions in this matter should be based on principle, Common justice, common fair play, common sense and above all, sound economic principles all require, all,that there be equality in the sacrifice that the population are compelled, asked and compelled to make so that the government can achieve a balanced budget. Equality of sacrifice is a sine qua non of this whole situation.

It is a mockery to tax a millionaire and a poor bread-winner at the same arithmetical rate of tax,for the same ten per cent that is disasterous to a poor widow is not even a flea bite to a rich man. It is only the equality of the sacrifice that can leave Newfoundlanders patient and good natured in this whole sad predictament. Mr. Speaker, I propose to move a sub-amendment, an amendment to the amendment seconded-not by the hon. the Premier,though I would gladly welcome his action if he were to second this sub-amendment, 564

December 2, 1975. Tape 22~ RH - 2 but not having consulted him, he now being taken by su~rise ,t really do not expect him to second it though 1 hope he votes for it- but seconded by the bon. the member for Bellevue, I move the addition of the following words to the amendment moved here in this llouse yesterday, "and deplores the inordinate swelling of the rublic debt of recent years and ur~es the government to limit severely for t he foreseeable future the amount by which the debt is increased . " Mr.

Speaker , I have the honour to send a copy to Your Honour and a copy to the Premier in the hope that he will give it his most ardent support:and a copy to the Leader of the Opposition and a copy to the Independent Liberal member for LaPoile anc anyone else who wants i t and at the same time to the ~entlemen in the press gallery . 565 ~·

December 2, 1975 Tape 229 PK - 1 Mr. Smallwood: If the sub-amendment,if the amendment to the amendment is in order, Mr. Speaker, I will continue. And may I say I have not got a long speech, Altogether on everything I do not think it will reach quite an hour. AN HON. MEMBER: It has. MR. SMALLWOOD: We111 having moved the sub-amendment I think I have - AN RON. MEMBER: You have ample time. MR. SMALLWOOD: Well all right. Okay. And I will try,so help. me God, be fair, honourable, and sensible. Order, please!

The amendment to the amendment has been submitted to me, and,of course 1now for that to be debated it is supposed to be proposed by the Chair. It has been moved, as the hon. members know,by the Member for Twillingate (Mr. Smallwood) and seconded by the hon. Member for Bellevue (Mr. Callan) and reads; moved and seconded that the following words be added to the amendment~ "And deplores the inordinate swellinB ef the public debt of recent years and urges the government to limit severely for the foreseeable future the amount by which the debt is increased." The hon. Member for Twillingate. MR, SMALLWOOD: Mr.

Speaker, let me illustrate for the House the deadly nature of this frenetic,crazy borrowing. In the current financial year,which terminates on the 31st. of March next,the total amount of borrowing is $222 million, in one yea~ - page 10 of the Budget Speech, In the coming financial year,which commences on April 1st next,another $200 million is to be added to the public debt - page 12 of the Budget Speech. Now that is a total of $422 million added to the public debt in two years, only $78 million below half a billion in two years. And we are not talking about Ontario, we are talking about Newfoundland and Labrador.

Actually an amountt$422 million, an amount two-thirds as much as was added to the debt in the twenty-three years preceding. In two years two-thirds added on, not counting the preceding two years just this year and the coming year $422 million equal to two-thirds of all that was added to the debt in the preceding twenty-three years. I suggest, Mr. Speaker, that $422 million in two 566

December 2, 1975 Tape 129 PK - 2 Mr ._J;_llllll_lwood; years that is frenz-ied finance if ever there was fr~nzied finance. Do you know what the yearly cost of that vast sum is, M~. Speaker? The yearly cost of it? You borr.ow $422 lllillion and it has a yearly cost. We Newfoundlanders have got to pay interest on those loans, interest and sinking fund, not once, bQt every year in every yearly budget.

The Minister of Finance has got to show it in hi.s Budget S"Peech, and, more than that,he has got to pay the interest and sinking fund each year without fail. and he has got to find the money with which to pay it each year. Forget for the mo.ment the scores and hundreds of illillions that we had already borrowed before this latest burden, this $422 million, for the moment forget that vast and almost unbelievable sum.

We have to pay interest and sinking fund on what we bo~wed tn those earlier years, but forget those hundreds of millions for the moment and have regard only to this late.st burden, dtis year and the coming year,of $422 million. On it, Mr. Speaker, we will have to pay every twelve months not less tha.n $50 million>every ~elve 567

llecember 2, 1975 Tape 230 IB-1 HP. !WALLWOOn: months in respect only of the borrowing of these two years, the present year and the coming one. Fifty millions a year, the unfortunate ~nister will have somehow, someWhere to find because he is the one Who is expecte~ to pay it. MR. NEARY: That is provided we can get close to some money. MR. SI-"ALLWOOD: Now, we have to pay it every year for the next ten, fifteen, twenty years, whatever happens to be the life of the bond issues. It comes, ~r.

Speaker, to ninety dollars every year from every man, every woman, every child, every infant in our Province; $450 or so a year from every family, $450 a year from everv family in Newfoundland just to service the debt contracted this year and to be contracted in the coming year, that $422 milliont Fifty millions a year,not less,comes to $450 a year,not less,from every family in the Province. That is the debt that has been run up or will have been run up in just those two years alone. I realize of course, Mr.

Speaker, I realize having been Minister of Finance myself, having written twenty-three budget speeches - ah yes, the minister may smile but there is no Province in Canada of the ten in which it is not the Premier who is the real "'inister of Finance always. He may not carry the title. He may not have the portfolio, but finance is the heart and soul of every administration and no Premier can allow that to get out of his hands, get out of his grip.

He may indeed choose one of his colleagues, respected, popular if possible,to be the administration's minister, the Queen's Minister of Finance, and he may leave it to that minister and the Treasury Board and the very competent and able men in the great nepartment of Finance -and it has become a great Department, and I am rather proud of the fact that I began that, I began to build the Treasury Board without which the minister would have a much more miserable time than he is having 1as he would be the first to admit.

I realize that it may be the government's strategy when faced by a current account deficit of over $30 million in the present year, it may be their strategy to tackle that appalling deficit in two bites 1 or with two bites, $20 million this year and $11 million next year. After all,they probably argue, if they can wipe out $20 millions 568

nPcPmber 2 , 1975 Tape 230 TB-2 ,'R • S"'ALLWI'I!'n: of it in this year. ~'> r 1.1h:1 r is left of this year ... .ntrh is on] y, what i !' it, four or fi Vl' me>nth", if they c:An some he>" Hnd " "'llY hy incre i! setl tax:~t:lc>n and economies tC\ sa v ~ $20 m:i llinns in rm11t is left of this year, they ~y he t~inking to themselves, well. it ~hould not be ton diffic:l'lt fn the cominlt ye;~r to ;~.bsorb the rema1n1n!! $11 mill1.on !'n that this yPar will enrl next year on an even Keel with re~tard tn cnrrent act'Oim t. That, I would 1.1"1l!line, is their th i nkinr..

Perh:~ps it is possible to do it, pe r haps it :Is . But, Sir, next year will brin g :Its own cares and demands and problems. As .1 us t one example of that. the present budy.et speech tells us that they inten~ to add another $200 million to t he public ~eht next year. That vtll c:ost us anothe r $25 million, it will cost ROvernment, :lr <>Hl cost Newfound] and, 1100ther $25 mil1 ion in inte re st ;~nd s:lnk:IOlt funnl!.

That much, $25 million,pJus the $ll millic>n to be t'arr:letl over from this year to next vear,means a total of SJh million extr:~ that we wfl) h;~ve to find in next year's budget, and that h only one e ~Ample. I do not say that it cannot be done 569

December 2, 1975 Tape No. 231 NM- 1 MR. SMALLWOOD: Surely we should have no doubt in our minds in this House, we should have no doubt in our minds about the government's i~lacable, relentless resolution to balance next year's current account of income and spending. I would hate to think it was otherwise. I would hate to think that the government would contemplate, even for a split second, the idea of ending this year with a deficit of $11 .tllion and ending next year with another substantial deficit.

I would hate to think that our Province, the government of our Province,is being ad•inistered by bon. gentlemen so lamentably shortsighted. I am not too much concerned at this moment on that side of the situation, the current account side. I aasume that~you tnow,with resolution, with a keen, vivid, realization of the mess our dear Province is in in its financial affairs, that the government will take care of that current account situation. It will mean an awful lot of belt tightening, it will .ean an awful lot of denials to the people, And they will never find me condemning them for doing what must be done.

They will not find me joining i• any hue and cry against them. I hope I think too much about Newfoundland for that. I hope I can put Newfoundland's cause sufficiently ahead of any partisan interest to do that. What concerns me,rather,is the capital account side, the debt side. Is the minister, is the Premier, are the government and their supporters in this House reconciled, are they reconciled, are they resigned to that $200 million figure of yearly swelling, distention, inflation of our public debt7 Do they accept $200 million additional debt as being now a normal condition? Are they reconciled to it?

Are they resigned to the idea of adding $25 million a year in the interest and sinking fund ' burden? Are they reconciled to that? $200 million or more,and sometimes much more, has been this administration's yearly dilation of the debt since they came in. Some years it has been much more than $200 million. In fact~this current year it is $220 million and in their four years they will have averaged well over $200 million a year added to the debt. Do they really and truly risk, are they willing to risk Newfoundla~d's destruction at the rate of a continued $200 million a year expansion of the 570

December 2, 1975 Tape No. 231 Nl' - 2 ~. S~'AI.L~OOD: debt? Are they willing to take th;~t chance? f.ach succeedin~ year $200 million will add a new and additional vearlv hurden of $25 ~t~illlon. Borrow $200 million next year and for the next fifteen years afterwards you will have to find S25 millions n year to service that deht. The year after borrow another $200 million and every year then for fifteen or e1ghteen years you have got to find another $25 million . The year after that borrow another $200 million and that is an extra $25 million a~ain. That is $75 million a year until, ~'r.

Speaker, until the debt reacheR the point where nobody, no bank, no insurance comapny, ro lending institution anywhere, even Saudi Arabia , no one anywhere will be willing to risk any more money wf th Newfoundland. 571

December 2, 1975. MR. SMALLWOOD: Tape 232 RH - 1 Now, if the present administration remain in office as managers of our economy the full constitutional term of five years from October 19 past•which I expect them to do,very frankly- and during those years they add an additional new $200 millions every year to the debt, they will then be increasing the debt by $1 billion higher than it is at this moment. Have I made myself clear? Constitutionally the present administration mav stay in office for five years dating from the day that this House was constituted.

Wh~ we came in here that morning, signed the role, took the oath, elected a Speaker, from that date constitutionally the present administration, so lon~ as they continue to command a majority of the hon. members in this Chamber,will be the government and if they remain there for those full five years at the rate of $200 millions a year added to the debt they will have added another $1 billion, another $1,000 million to the present existing debt. Now to service that extra amount of debt,to pay interest and sinking fund on it, it will cost Newfoundland an extra $120 million a year.

That is an extra $120 million a year over and above the present $100 million a year that it is costing us now for interest and sinking fund on the dreadful public debt that we already have. I would have no love for this Province if I failed to warn the Premier and Cabinet and this House and the people of Newfoundland, warn them of the grievous calamity toward which we are rushing with fearsome velocity. "Not once or twice in our rough Island story ,» to quote, Mr.

Speaker, "the path of duty was the path to glory!' My appeal is that we follow the path of duty in Newfoundland beginning now in this session before it is too late. The preposterous character of our public debt is easily seen when it is compared with Nova Scotia's public debt. That Province's population is around 800,000 souls as compared with our 540, 000. They have over a quarter of a million people more than we do. So, of course, the comparison of the debts of the two Provinces is 572

December 2, 197S. MR • S~IALJ,t.non : Tape 232 RR - 2 perhaps best show~ as a per capita fi~ure. What is the d~bt of each man, woman and child in Nova Scoti~ and what in our Province? Our publ ic deht is $1 . 6 ~illions , $1 . 6 billions . EXpressed pe rhaps more simply the figu r e is $1,600 million. That vast fi~ure is the total of two different amount, the total net direct debt and the t otal indirect debt of the Province. Now that is a per capital debt, for every man, woman and child in our Provi nce i ncludin g the vounRest or latest baby born of $3,000.

Any infant born next week or n~xt month or until the end of March will find a $3 ,000 debt faci n? it as its share of the public debt , $3,000 per person. It is 573

December 2, 1975 Mr. Smallwood. Tape no. 233 Page 1 - mw a lot more per family. After next March, when we enter the new financial year, and the total debt is increased by another $200 million, the per capita debt will go up another $370 for every man, woman and child in our Province, Every living person in our Province is in debt $3,000. In Nova·Scotia the public debt is $676 million net, direct and also indirect debt, the two together, taking exactly the same formula in the two provinces. And I talked with the Finance Department of Nova Scotia. I could have called other provinces.

I called only Nova Scotia to get their latest figures. The net direct debt in Nova Scotia is $319 million, The indirect debt is $357 million, total $676 million altogether in a province with one quarter of a million more, half as many more population as we have. Now, Mr. Speaker, that is $900 million less than our debt, one quarter of a million more people with $900 million less public debt, And their per capita in Nova Scotia is $800. Ours is $3,000. MR. DOODY: Mr. Speaker, does that include Nova Scotia Hydro? MR. SMALLWOOD: That includes all their debt, direct and indirect.

Debt is debt, There is no question about that. Almost four times the debt that every Nova Scotian young and old owes, almost four times that,we owe in Newfoundland. Now our Province has been going in debt more than $200 million additional each year. One year succeeds the other, another $200 million, $220 million,.$230 million, $240 million, $250 million and the present Budget Speech tells us that the government plan to go another $200 million next year. We cannot go on at this rate, Mr. Speaker.

We cannot, and we must not, Our Province stands desperately in need of at least a partial moratorium on capital account spending and capital account borrowing. We must stop and catch our breath. We must have an .~rmistice in our twenty-six year old war, Newfoundland's war on poverty, backwardness, underdevelopment, undevelopment, this noble war that our Province has waged to this moment. We must have an armistice, a cease fire, a prorogation, not a dissolution, a prorogation, 574

December 2, 1975 Tape no. 233 Page 2 When we finish this session the Lieuteant-Governor will come here and prorogue us, not dissolve us, not end us, j ust prorogue us. We wil l meet again in the following session. What we need now with regard to our public debt and borrowing is a prorogation, Prorogue this borrowing, defer it, delay it! If we hesitate now in this matter in our borrowing, mad, headlong borrowing, if we hesitate now, we will live to fight another day. It is not the end. It can beoome. the end. Now, Mr.

Speaker, such borrowing and such spending could be justified,but only if in the same period there had been counter balancing develooment of the basic industries of this Province . While we were borrowing and spending at such a breath-taking pace we bad been creating industires and developing and elq:'andinll. and strengthing and broadinJI, and deeping our economy, 575

December 2, 1975 Tape 234 PK - 1 ~~Smallwood; perhapswe could have taken that borrowing and spending in our stride. Butwill anyone argue that in recent years the fishing industry, the mining industry, the forest industry, the agricultural industry have seen new projects or expansion of old projects to match those sensational increases in borrowing and spending? Could anyone argue that? We have seen the virtual termination of construction at Churchill Falla and at Stephenville and at Come By Chance and at Long Harbour and at Marystown and at Bay d'Eapoir.

Admittedly, admittedly, admittedly,undeniably we have seen hospitals and schools and houses going up at a cost of tens and even hundreds of millions of dollars, and we have seen hundreds even thousands of millions pouring in here from Ottawa through DREE and ARDA and LIP and half a dozen other federal agencies.

And we have seen hundreds of millions of dollars pouring in here from Ottawa for unemployment insurance, and more hundreds of millions from Ottawa for family allowances, old age pensions, Canada pensions, veterans allowances, military pensions, railroaders salaries and half a hundred other good and useful and welcoming benefactions from Ottawa. But how many new basic industries have been created by all of that money? It has been welcomed,that Ottawa money, more than welcomed. Welcome is hardly the word for it. Newfoundlanders are much tha <better, incomparably the better for Ottawa's generosity.

There are no two ways about that, Mr. Speaker. And it is one of the many reasons that we may thank the mericful Almighty God for Confederation. We would be on the broad of our back today without Confederation. But, Mr. Speaker, it was not to become a federal poorhouse that we joined Canada. And being a poorhouse will never make us the atrong,vibrant ProYince that we want to be, and certainly will never make it right to do the phenomenal overborrowing and overspending that we have seen these past four years.

Andwhy, incidentially, why,in passing, should I not ask the House to try,at least to try to imagine the catastrophe that would overwhelm our Province and people if for any reason Ottawa were to turn off the tap, if Ottawa were to shut 576

December 2, 1975. Mr. Smallwood: Tape 234 PK- 2 off a large part of tha~ flood of dollars :pouring into our Province? It is not a pleasant ~bought, Mr. Speaker. If your rich uncle puts yo.u on a fairly generous cash allowance, enough to let yQU get along somehow or other~you ~ get to feel no strong need to have a trade or profession of your own, no need to have your own independent means of making a living. You may even get to feel that you can go on, juat go on living on your rich uncle's grace and favour.

You may feel th.us, bu.t i .t is a way of life that is dangerous,inse .cure, impermanent, somewtt.t 8ati.sfying while it lasts perhaps, but liable t .o be cut off at any time,or at least drastically reduced. Mr. Speaker, the Rouse will perhaps not begrudge me a moliiA!nt in passing to draw ,articular attention to the vast, the almost inconceivable sums o.f money that the Government o:f Canada are pouring irito our Province •ach year these times. 577

December 2, 1975 Tape 235 IB-1 MR. SMALLWOOD: -The figures I ~ive at this point are not precise. They are more in the nature of ball park estimates, but I believe that they are not far out. They do not roam into the past, they deal with the here and now. I helieve that in this present financial year Ottawa, in a variety of payments made to the government of the Province and other payments made direct to the people,are delivering well over $1 billion to this Province, this year.

Indeed, Sir, when you add up the amounts paid to our government and to the CNR and the CNT and the r.Bc and the airports and marine establishments and lighthouses and the federal civil service and in unemployment insurance, in veterans allowances, in Canada pension, in old age assistance, in family allowances, in civil pensions and through JlP.EE and ARDA and LIP and several other such agencies, r.entral ~ortgage and Housing Corporation, military establishments, federal police, courts, trade schools snd other agencies, almost too numerous to count, if you add these up, I think that you will find them to total at least $1,250,000,000 this year coming from Ottawa into Newfoundland.

The figure,of course,is gross,not net. Mr. Speaker, do we really and truly grasp what this means to us this year in Newfoundland, that $1,250,000,000 from Ottawa? Do we fully grasp the almost incalculable significance of it?

The total amount of Newfoundland money - and I am drawing a distinction between Ottawa money and Newfoundland money - the total amount of Newfoundland money ,.oing into the pockets of the scores of thousands of men and women in the pulpwood and paper industries and the mining industries and the fishing industry and agriculture and in factories and shops and offices and schools and garages and gas stations and truck and bus and taxi drivers and a half a dozen other trades and occupations, the total of all that money is possibly as much as $1 billion, not much less tha.n $1 billion, Newfoundland money going into the pockets of our people or only $250,000,000 short of what Ottawa is putting into our people's pockets this year.

Now, a]l of these figures are gross~of course,for both federal and provincial taxes and fees and profits and other charges 578

necember 2, 1975 T11pe 235 18-2 I-'ll. S)'ALLWOOP: have to come off to arrive ;tt the net firure . l~e must make sol!'e :'!llo~ance for overlappin~ and duplication . ~r . Speaker, Otta~a money is givin~ a 11vin~ to more Newfoundlanders in Newfoundland torlRy than Newfoundland money is rloinR . The total wa~e bill of 1111 our industry combined does not reach the fi~ure of the amount that Ottawa is J>OUrinjt 1.n here to the !!Overml'ent to be passed on to r.he people or direct to the people.

Of all the people working fn Newfoundland todav and not working, li'Ore of them are jtettinl" cash from the Ottawa government than from the Newfoundland government or anv other Newfoundland source. The net effect of all this is enou~h.even If there i~ nothing else, enoujth to fill the heart of everv livin~ Confederate with happiness and pride. Try to picture us without it. 579

December 2, 1975. Tape 236 RH - 1 MR. SMALUJOOD: Mr. Speaker, what of the future? There was a general election a few weeks ago. In the normal course of events the administration have a maximum of five years still to go before another dissolution and ~eneral election. They have in this House if not a lar~e or over­ whelming majority, at any rate a safe working majority- twenty-nine to twenty-one, majority eight. They do not have to be timid in their approach. They have ~ot five years ahead of them. They do not have to be timid. They do not have to be fearful. They can dare to be big, to be bold, to be patriotic.

They can dare do it. Unpleasant things need to be done to get our Province in good financial shape. Do them! Do those things! Sacrifice will be needed from the public. Do not hesitate to request it. The people will respond. I tell you they will respond provided the government play it straight, provided the government make it abundantly, abundantly, absolutely, abundantly clear that they are determined to get the Province on an even keel once again and above all provided that there is that equality of sacrifice of which I have spoken.

Petrenchment, retrenchment is what is needed, pulling in the belt, economizing, saving money; eliminating waste, eliminating luxuries. Simplicity is what is needed, cut out the frills. Do this everywhere, in everything, in buildings, in motor cars, in heat and light and paper and telephones and telegraphs and travel and airplanes and rented space and 100. 500 other fields and activities.

Retrenchment, relentless retrenchment, even perhaps briefly, a year or two, cruel retrenchment because we still have not caught up, you know, in this Province in spite of our twenty-six years, twenty-seven years of expansion and growth and forward and upward movement, 1~e still have not caught up with any but the very poorest of the remaining Provinces of Canada. It seems heartbreaking, it is heartbreaking for us to have to slow that down but we have got to do it. We have no choice -well we have a choice. It is not a good choice. I will not use the word to describe that choice.

I will not be quoted for the use of that word that is in my mind all the time, the possibility of it. Retrenchment and simplicity 580

neceJnber 2. 1975. tfR. SHALL\,'OO!l : Tape ~36 RH - 2 anrl reform - do not pulJ vour punches on re form . Reform ou~ht nnt, in any sense or degree, he a monopoly in the thinkinl! of the small J!TOUp of uo; here. Reform should he in the minds of Pverv hon. meJnber of this !loose on both sides because if ever there was a time when Newfoundland needed reform it is now.

Retrenchment, simplicity, reform and do not pull your punches on that. • Do not forget for one moment that 1-:P. are still a small t'rovince, still a pnor Provin ce, ooor in arrived vealth - notential wealth . we belie ve that we are not aJJ thllt poor,hu t we hllve not r,ot that. You cannot cash a cheque on that . You cannot pay a grocer on it. He are 11 poor Province. \~e are a small r rovince. He are still a rrovincc that just cannot afford to keep up with the Jones across Canada. ~·e cannot even keep up with our nwn record of t he past decade or so. 581

December 2, 1975 Tnpe 237 IB-1 MR. Sf.IALLWOOD: We have got to reduce spending these next few years by scores, yes, by hundreds of millions of dollars each year. When the Premier declared in an interview a few weeks ago that we would have to lop $100 million, maybe $150 million a year off the spending of the govP.rnment, he was too modest. That will not do it. It has got to be more than that. And, Mr. Speaker, let us face it man fashion.

If the people of Newfoundland are told, if they are made to understand without our using certain ugly words which would be quoted outside Newfoundland, if the people once understand that we have got to pause, we have got to mark time, not go back but just stop going ahead for a couple or three years, stop borrowing, stop spending to an enormous extent, get her on an even keel again and then go to it. Hundreds of millions - how long, Mr. Speaker, how long will all this retrenchment take, all this economizing, all this belt tightening?

Some of it, I suggest,right on :f.nto the future, the next ten, fifteen, twenty years, some of it. The more violent part of it, the more drastic component,for the next three years or four years at least. Cut borrowing down to the bone, down to the point where the interest in sinking funds will cost us no more than, say, an additional $5 million each succeeding year. That means a borrowinp of less than $50 million a year, perhaps well below $50 million a year. r.ut the spending down to a maximum of $700 million a year, current account and capital account combined.

It will raise cries of anguish and the loudest cries will come from the members of this House, the ministers and all who represent constituents. They will be immediately the butt of their constituents, attacks on them, demand!", clamorous demands - He have waited so long for this. This settlement had water and sewerage, why can we not have water and sewerage1 That settlement has artesian wells, why cannot wet That settlement has its main road paved, why cannot ours be paved1 That place had e road rebuilt, why cannot our road be rebuilt1 That district has a park, why cannot our district have a park?

This school needs to be demolished and a new one put in its place. The number of students in a classroom needs to be reduced, it is too 582

Dece~ber 2, 1975 Tape 237 IB- 2 ~<r • S"ALLHC'I(IT): heavy a burden on the t eacher, Tetluce the number. A hospital need~ to he built he r e . A hospital needs to he built there. A hospital needs tn bP built somewhere elsP . A rlinlr here, a clinic: t here. 11 ~11n want,:; but lit t le he r e below,/ Nor wants that little lon~." Tell t hat to an elected me~ber of this Rou,:;e, that the people want little Rnd do not want it lon g.

Tt is f~r from that , and ~~ we ~mbe rs wiJ 1 be· tt>e vi~tims of the f i rst :~ttack. and :I t will c:ome over the te l ephon e o r by telegram or by· lette r and by personal Alri!tht, jf we l'lre prep~ren , if,numher one, we reAli?.e that .Ne'l-·f~undlanc! fs in a par lous state , 583

December 2, 1975 Tape 238 PK - 1 Mr. Smallwood: if we realize it, and 1number two, if we agree that we must cure that, and,nuaber three, if we agree that this can be done only by drastic reduction in spending and above all in borrowing, if we agree on all of that, in short, if we agree to put Newfoundland, her cause, her welfare ahead of ours as this party or that, as this member or that, if we can agree on that, and I do not see how in God's name we can fail to agree on it - that is why I was not really joking when I said that I would like to see the hon. the Premier second this sub-amendment.

When tt is voted on it will be the first motion to be put by Mr. Speaker, and then the amendment and then the motion. I am sure there are four votes,if we are here, there will be four votes cast for this sub­ amendment. I would like to see it carried unanimously, because a rejection of it, a vote against it is a vote against Newfoundland. I say, Mr. Speaker, it will raise cries of anguish, but it will aave our Province. SOME RON. MEMBER: Hear, hear! MR. SPEAKER (MR. COLLINS): The hon. Member for Kilbride. HON. R. WELLS: Mr. Speaker, we have liatened to the hon. Member for Twillingate (Mr.

Smallwood) and I think it would be remiss of me if I did not say that he has raised the standard of debate in this House. AN RON. MEMBER: Hear, hear! MR. WELLS: I have heard him before when I sat in the galleries, but it is the first time that I have sat on the floor of thia House as a member and heard him speakyand it has raised the standard of debate. AN HON. MEMBER: Hear, hear! MR. WELLS: I am sure he will not mind - SOME HON. MEMBERS : Hear, hear! MR. WELLS: - he ia right in a great many respects, but he ia not altogether right in my opinion, Mr.

Speaker, I am aure ~e will not mind if I tell the brief story of a friend of mine who went to a speech that the hon. member gave some sixteen or seventeen years ago, and he came to work the next morning and was talking to me about it. And he aaid, you know, I was there, and I heard the Premier(as he then 584

December 2, 1975 Tape 238 PK- 2 Mr. _llells: was~ I heard him speak and it was a marvelous speech,.and it was about a subject that I knew a great deal about, the person telling me said. He said, I heard him speak and a lot of what he said was true, and a lot I did not agree with, but when it was all over I stood up and cheered with the rest. Such~ of course, is the power of the member's oratory. But today, Mr.

Speaker, in a sense, he has been like a lawyer:or as a lawyer on a case, and I know aomething about that, who has the trick of being able to put-and I do not say this word 'trick' unkindly, but the knack, perhaps, is the better word- of being able to put something to one side of his mind and concentrate on the thing which is in the forefront of his mind and let everything else go and follow that through to a conclusion as though there were no other. Now having said that I have to say that the hon. member is quite right in many things which he said. We are in a serious situation, but the hon. member speaks, Mr.

Speaker, as though the government of the Province was in vacuo. as though the government was a closed thing unto itself, and it looked at the finances of the Province and it looked at its books and it said,well,we will do this, and we will borrow that, and we will borrow $200 million this year, and $200 million next year without regard to the future of the Province or without regard to where the money was spent. But, Mr. Speaker, what is this money being borrowed for? Where has it gone? We have not eaten it. We have not hidden it under the floor boards in the House.

Every bit of this money has gone to benefit in some way or other the people of this Province MR. SMALLWOOD: Hear, hear! MR. WELLS: ------ - who elected all of us and put us here. MR. SMALLWOOD: Of course, of course! It is a shame to stop it. MR. WELLS: Now let us review, if I may,briefly, the situation in the last twenty-five years, Mr. Speaker.

We vent into Canada.and the hon. member knows more about this than anybody,! suppose~living, we went into Canada a poor Province, a Province that had very little, a Province with almost non-existent public services, and the hon. member as much as anyone living brought public services with the aid 585

Dece!llber 2, 1975 Mr. Wells: . Tape 238 Ptt. - 3 of Canada to Newfoundland. And when he started, and I remember well when be started, Mr. Speaker, I was going to Memorial. We had nothing. There wen abnt 380 people, I thi'lllt, that year ngil!ite~ in all classes in all yean at what that year became Memorial tln:Lversi ·ty, about 380 pHJ~le. And we did .~t have mu.ch. 586

December 2, 1975 Mr. Wells. Tape no. 239 Page 1 - mw people, And we did not have much, and we did not want much because we did not know reallv Mhat we lacked. Some of us, older than I at that time.had been elsewhere and seen, I have no doubt, other parts of the world. But I suspect, Mr. Speaker, that what they saw elsewhere was not real to them, but what was real was NPwfoundland, and Newfoundland did not have much, and I suppose most of us never thought that we ever would. And so the pressure and the demand for services did not really exist ~n 1950.

It was not dreamt of, it had not begun to build up, and I suspect, Mr. Soeaker, it did not begin tobuild up, as I see it, until sometime in the early 1960's, but then it accelerated and built and built and built throughout the 1960's and into the 1970's. And I think that the hon. member and his governmnet, the previous government of the Province of Newfoundland was in a sense - MR. SMALLWOOD: MR. WELLS: MR. SMALLWOOD : My administration. I am sorry. I never had a government. MR. WELLS: No.

Your administration, the hon.member's administration was as much a victim of that insatiable demand which Newfoundlanders developed for services. Now, I think, in also considering our financial situation- when I say 'our' I mean the situation of the Province, Mr. Speaker­ we have to consider also the attitude of Canada toward this Province since the time of Confederation.

I am sure all hon. members have view!! nn this and they may differ, but my view, and I have expressed it privately to my friends and acquaintances in discussion but never publicly,is that Canada has looked uoon Newfoundland in this fashion a~ one would look upon a man who was down to his chin in the salt water, let us say over the head of a wharf,and Canada reaches down and puts its hands underneath the collar of the man in the water, to use the analogy, and says, you will not drown, you have no fear of drawing, I will not let your slip under, but I will never lift you up out of the water and set you on dry land.

And if you look at Canada's record with respect to this Province, Mr. Speaker, that is what you will see. There have been millions, upon millions, upon millions, 587

December 2, 1975 Mr. Wells. Tape no. 239 P~e 2 upon billions of dollars come into this Province. No one would deny that. No one for a moment would be unappreciative. But what have these dollars been for? They have been for social welfare. They have been for capital programmes such as a share of hospital building~. They have been for every conceivable purpose except to develop. MR. NEARY: Some of them pretty foolish. MR. WELLS: Some of it foolish, some of it wise. But they have been for every conceivable purpose except to set this Province on its feet as a viable economic enterprise.

I remember friends saying to me years ago, when I said, what is the point of building power lines, for instance, to various parts of Newfoundland? What will that do? Is it not better to put a diesel generator in to serve 200 or 300 people? Is it not better to go that route? And I remember my friends saying to me, no, that is not what matters. If you put the infrastructure there, if you put the power there, if you put the roads there, if you put everything else that goes to make up modern life in the twentieth century, then industry will follow. But, Mr.

Speaker, we are a living testimonial in Newfoundland to the fact that it did not work that way, and that is our tr~edy. More than anything else, I think that is our tragedy that when we electrify the Province of Newfoundland- when I say 'we' I use it in the broad sense -when we put electricity throughout this Province, when Bay d 1Espoir was developed, when the Trans Canada was built, when the trunk roads were built by the previous administration and by this administration in its term, did industry come?

Did the mighty firms in Southern Ontario say, we are going to relocate a branch in Newfoundland, we are going to manufacture something in Newfoundland, to build something in Newfoundland? MR. SMALLWOOD: Only selling! MR. WELLS: Only selling, only selling and that, I think, is our tragedy. And so, Mr. Speaker, this is where I get the analogy of holding the Province steady in the water with its head above, able to breath, but never lifting it out on dry land. And what do I feel should have happened? 588

December 2, 1975 Tape no. 239 Page 3 - mw And what do t feel that would have meant t hat Confeder ~tion could mean so much more to us , perhaps with an overall lesser expenditure of money, and what ! mean, Mr. Speaker, is that somehow, somewhere the Government of Canada should have found a way to encourage these great industrial and commercial firms of Canada to come in here into Newfoundland and to put something here, to build so.mething here, to produce products here, which could be sold elsewhere in Canada and across the world. And yet 589

December 3, 1975. ~~R. !YELLS : Tape 240 RH - 1 what have we got here in Newfoundland and Labrador today, Nr ( Speaker? We have the Price mill, which was there before Confederation, and the Bowater mill, which was there before Confederation, the Buchans mine, the Bell Island mine has closed. We have the mines in Labrador, which are new - when I say new I mean since Confederation. The mines on the Baie Verte Peninsula which are having - J.fR. SMALLWOOD: They started before Confederation. MR. WELLS: You are speaking of Labrador. MR. SMALLWOOD: Yes, the mines. MR. !.JELLS: Yes, yes, that is right. MR.

SMAJ,Ll.JOOD: They did not operate but they were there. MR. ~JELLS: That is right. The idea was there hut it came to fruition after Confederation. We have these few things that started since Confederation hut they, of course, are primary resource developments - NR. DOODY: Overseas investment. MR. WELLS: - and overseas investment, money from outside Canada, as the minister says, has put them there. But when we look to our country, the country to which we belong and of which we are proud, yet, Mr. Speaker, we have to say that that country has not caused development of this Province which is part of that country.

SOHE HON. MEMBERS: Hear! Hear! MR. HELLS: And I am more sad, and I am sure the hon. member of Twillingate is more sad today, that this is inescapably so than anything else that I could say, or perhaps he could say, or perhaps any member of this House could say. So what has happened since Confederation, ~r. Speaker? That has not happened, that development which we wanted.

I remember as a young student at the time when Confederation was going through - I was not old enough to vote, but I was a Confederate in my own mind, as was my family - and I remember saying to myself, this is what I presume it will mean: We will develop - I did not even know the terminology at that time - but young as I was, a student, I felt that this would come and it is a 590

DQcemher 3, 1975. HR • I .JELLS : Tape 24fJ Rll - 2 tradegy beyond measure, ~r. Speaker, that it has not come and that we are still accepting money from Ottawa,and God knovrs He need it, hut that money is not being spent in ways which wil 1 develop. •·lo,,•, hmv could the Government of Canada have done this? The only Nay that occurs to me, rlr. Speaker, is to make it profitable for a company to forego revenues hut to maloe it thereby profitable for a company to estahlisll and manufacture in Newfoundland. N01v how much revenue would have to he forepone I no not know.

It may run into t~e hundreds of millions of dollars over the years,hut the hundreds of millions of dollars are cominp. into Newfoundland an~vay and they are not achieving the development which ••e nee<i, So if tax concessions had to he given to a manufacturing firm to locate in :le,rfoundland, eventually, as you started adding to the ante, Nr. Spe1!l:er, eventually you lvoul d reach a point ••here the firm would make a greater profit organized and operating in Newfoundland than it would in Southern Ontario. But I sadlv fear, Hr. Speaker, that this Hill not come about.

I ~hould imagine the hon. member for T'Yillingate 1-1hen he led the administration in this Province tried something like this. I am sure he did. This p.overnment is trying and will continue to try to develop manufacturing and industry in Newfoundlnnd and will endeavour to argue with the federal Government in every f ashion to get this kind of concession made, this ldnd of industry in here. I pray to God somebodv will succeed, in my lifetime, I hope that somebody will succeed. Yet I am afraid with the centre of political power in Canada being so far outside of :!ewfoundlano.

I am afraid that it may not come to pass. And if it does not, l!r. Speaker, we will he here- not us, we may be retirecl or dead or gone- but other people representing the electorate of this I'rovince 1dll be l1ere in this Province,in this le!!:islature debating th<' self same thing and struggling with the se] f same financial problem. AftPr all, ' 1r. Speaker, what has happened to our people in twenty-five 591

December 3, 1975. MR. WELLS: Rfl - 3 years? They have got a taste, just as so many people in so many countries of the world have got a taste~of services which they did not have before . You may call it,if you wish,high living. The hon. member for Twillingate has called it high living. Uow much is one really entitled to? That is a question everybody has to answer for himself or for herself . 1 have been involved, I' remember over the yea rs, in court cases arising out of the pollution of private water supplies, wells in communities when 592

December 2, 1975 Tape 241 IB-1 fofll. vffiLLS: sewerRre from septic tanks went into these and rotte~ them. So what cal'le 1!1" wRs " bucket of filth that ~11•~ unfit to ~rink 11nd fu1 1 of colifonns, or ~·m~ttever these things are calleii, that "'ould make people sick 11nd did ~~~ke people sick. So you ~ay, can we afford water :md se•·•Prape svstpms? r.l'n ""' indePi!? T i!o not knn"'. 'Rut, ""' God, ~r. Speaker, can we ~"v to thi'SE' people that •·•e cannot Rffnri! them?

T th:lnk no nne "''C'II1d dispute thllt people h~tve r1ier1 in Newfounnl11nd ~uring our historv - when I sav our history, I mean our history up to twentv-fiv" ye11rs ;op:o, our pre-Confederat:lon history - died becau!'le medical services werl' not available. Sc- ••hen you talk about buildinr: new hospitals, when you talk about puttin~ a doctor some~mere, when you talk about puttin~ a clinic, Mr. Speaker, are you talkin~ about something that they shonl d not have'? This government <vhich has been accused, ani!

T do not think it hAs been accused unkindly torlav, but :l.t has been Recused of spending more than this Province can afford. Yet there ••erP pressures that emanate~ frOI!' far bevond thjs Province, there were pressures that hegan back in the 1950's that grew Rnd expandeii :In the 1960's and that have cnlminated.if in fact they have culminated, in the 1970's, pressures which were there from the people who put ll!'l there. When we c:1rrierl on a proj!;ramme of expansion of hospitals 'l which we dirl and on which we have spent $101 million jn the past four year!', I m~tke no apolo~v for it, }'r. Speaker.

I think these pro~rammes ••ere needed. I know that there are further programmes that are needed :l.n hospital construction. I know that at this time we cannot afford it and <-•e have had to defer it. t make no apol Of!Y for that either, but T make no apolop.v for saying that ~en the period of ~efer.ment, whether it be six mc-nths or a vear or a year and a half or whatever, when the period of dE'ferment is over, when ~·e have cauj!;ht up somewhat as I hope and anticipate ~tnd expect we will, then this projects will p.o :1hean. T have no hesitation, ~r.

Speaker, :l.n assoc1ntinr myself with the statements of this p.overnment which say deferments are necessary. Of course they are necessary! We make no apolop.y for that. We say it is necessary 1but ~~ do not say that this Province has to be 593

necember 2, 1975 Tape 241 IB-2 MR. WELLS: cut to the bare, bitter bone, that deferments and retrenchment must go on and on and on to the extent where nothing is happening in this Province. I think ~·e have to be aware, Mr. Speaker, that we are on a road which is not of our making, which is perhaps not the making of the previous administration, but is the making of Confederation with Canada, the bringing in of monies,the raising of expectations, and not only that,but with precisely these same things which are happening all over the Western World. If you read headlines, Mr.

Speaker, in London, in Toronto, in Montreal, in New York, in Washington, in Florida - I do not mind where you go - if you read headlines in other Canadian provinces and in other cities all around this country? in the countries of Europe,you come inexorably to the same conclusion, that people everywhere are demanding more and they are not prepared to put up with no. I agree with the hon. member when he says we have to have the courage and we have to call upon Newfoundlanders to make sacrifices.

Of course, that is what the Throne Speech said and that is what the Throne Speech meant and that is the attitude of this government. Yes, we will call upon the people of Newfoundland to make sacrifices. We will call a halt. We are calling a halt to the inordinate expenditures not of the last four or five years,but in an ascending ratio of the past. especially fifteen years. But we do not intend, Mr. Speaker, to run this country right into the ground. We do not intend to run it into a pool of poverty.

We do not intend to cut off the expenditure of public monies to the extent that there is nothinr doing in Newfoundland, and I think we have a duty to the people nQt to do so. The hon. the former Premier, the hon. the member for Twillingate (Mr. Smallwood) talks today like a banker, and that is his right. That is his right. Re can add up figures. He can talk about the financial position. But he talks like a banker. 594

December 2, 1975 TaJ)e 242 PK- 1 Mr. Wells: ----- I suggest, Mr. Speaker, that he knows, and I know, and the government knows, and we all know that you cannot approach the running of a Province such as Newfoundland purely as a banker approaches the running of a bank,. Yet that is what he has urged today. Now he mav be very quick to say, and I am sure he would, that he did not mean that it go to that extent. But as I heard him,listening to hi~ excellent speech, Mr.

Speaker, that is how it appeared to me, that we would have to be brutal in the coming months and the •coming years,that we would have to cut back expenditures to the very bone. MR. S'HALLWOOD: $700 million a year. MR._WELLS: To $700 million a year, Mr. Speaker, the hon. member says, To $700 million a year would mean barely to keep going, barely, in fact not entirely I aaspect, Mr. Minister of Finance, we would not then entirely be able to supply to our people here in this Province the services that thev now have. I do not know what that means, That would mean closing schools or parts of schools.

It would mean I suspect closing hospitals. or parts of hospitals. This question of health care, for example - Laying off part of the civil service. MR. __ WELLS: Yes. As the minister says, closing down or laying off part of the civil service. This is what this might well mean. I learned in the four months of this past Summer something about the matter of health care and the expenses involved.

And I think it is time to say that the hospital corporations throughout the period when I was in the Department of Health were coming to the provincial government and were saying, you are not giving us enough money to run on, that what we expected we could run on last year and what we put in our budget and what was given us in the budget of last Snring is not enough, and the costs have escalated to the point where we cannot run, That problem, Mr.

Speaker, is still unresolved and the hospital corporations are staggering along from day to day, and I susJ)ect,and the Minister of Finance and President of Treasury Board can probably comment on this better than I, but I suspect that 595

December 2~ 1975 Tape 242 PK- 2 Mr. Wells: ------ they are not going to,with the best will in the world on our part, that they are not going to get all of the money that they need to provide the basic services in these institutions for the rest of this financial year. What, Mr. Speaker, about the school boards? It is common knowledge of every person living in this Province that the school boards are staggerin~ along day to day without enough money to operate properly. We can sit in an ivory tower and cut back. We can say there is no money.

We can say to Memorial Universit~as we are saying all of the time, you cannot increase your budget, you cannot do the programmes that you want to do, Bu~ there is a limit to which we can cut back without destroying that institution as a university of which we are very proud in this Province. There is a limit to which we can cut back on the school boards without putting the school boards into bankruptcy. There is a limit to which we can cut back on the hospitals without putting the hospitals or the hospital corporation into bankruptcy. So it is one thing to say as a lawyer, arguing one aide of the case, Mr.

Speaker, it is one thing to say this is what must be done, and the idea is good, but it is another thing when you have the responsibility to balance not only financial matters but you have to balance also health matters, education matters, the public service and all the various arms and facets of government. And I have not said a word yet about the desperate need for an attempt on the part of the government of this Province to encourage development. Now, Mr.

Speaker, it is one of the themes that we hammer and continue to hammer and will continue to hammer that this Province will not survive unless development is actively encouraged and promoted, and mo2e than that, Mr. Speaker, development must be successful. Now this is a time for frank speaking, and we lobk back over the last twenty-five years, and look back at some of the projects of the past, some of the projects which the administration of the bon. member for Twillingate (Mr. Smallwood) attempted. 596

December 2, 1975 Mr. Wells. Tape no. 243 Page 1 - mw His administration attempted with the $42 million or $40 million cash, which they had when we became part of Canada, attempted to encourage development, and I feel sure attempted with a good heart and hoping that that development would succeed. Some of it succeeded but much of it failed, Mr. Speaker. That previous administration attempted on many fronts to develop, and in some cases succeeded, in some more cases failed.

But I think one lesson that we all have to learn from that and that is not that it is a mistake to attempt to develop, but that in the particular economic and geographic circumstances of Newfoundland, it is harder to develop here than it is in Southern Ontario or in parts of Western Europe or the Eastern Seaboard of the United States. We talk often, politicians, when we are putting the best foot forward, wetalk about our strategic location. We talk about the wonderful advantages that Newfoundland has in world, in the trade routes, both by sea and by air. We talk about our resources.

We talk about many things, and it is true they are there. But there is another side to the coin, Mr. Speaker. We are a long way from markets. We do not have the population here in this Island and Labrador to sustain an industry when it needs a local market to get going in the development of industries.So that we have disadvantages. We do not have local capital here of the type that is necessary to put a worthwhile manufacturing operation into effect.

How long would we have waited for the Bowater mill in Corner Brook or the Price mill in Grand Falls or the iron mines in Labrador or the mine at Buchans or any other big industrial enterprise in this Province, how long would we have had to wait, Mr. Speaker, if we had waited for local capital? I say we would have waited forever! We would be waitin~ now, and we would have all been inshore fishermen and very little else, We would have been waiting now, and I suspect we would have been waiting twenty years from now. We have had to look to outside capital.

We need outside capital, and you can talk all about Canadianism, and nationalism and all the rest but if we do not attract outside capital to this country, to this Province, Mr. Speaker, we are lost. We need that outside capital, 597

December 2, 1975 Mr. Wells. Tape no. 243 Page 2- 1IIW and as I say, one of the shames, one of the sadnesses of Confederation, is that that capital, that outside capital has not been Canadian capital. It has in a few instances. But that is one of the sadest sadest things. So what I say in answer to the member for Twillingate (Mr. Saallwood) - and I say quite freely that it was a speech worth debating that he made, It was the kind of debate that all of us would like to see in this Rouse and to participate in, but what I say in answer to him, Mr.

Speaker, is this: We cannot cut this Province beyond a certain level, Now if harsh economic facts descenrl on this government or whatever government happens to be in power twenty years from now,or ten years from now, that is one thing, If the economic system of the Western world collapses, that is one thing. But as long as the system remains in operation, as it still does despite the oil prices emanating from the Middle East, despite inflation, despite all the things which are crippling the economy of the Western World, as long as it continues to function at all, we must aake the best of bad bargain.

We have to cut back and retrench, but not to the extent that we destroy what had been built by way of public services for the past twenty-five years. And I am proud to say, Mr. Speaker, that this government, and we may be castigated for spending a lot of money in the last four years ," but this government has contributed significantly to the public services in this Province, and I take nothing away from the previous administration which did a great deal in its twenty-three years. But in four years we, too, have done a great deal, and I, for one, am proud of that. I, for one, do not want to see that wiped out.

And,so, Mr. Speaker, there is a limit to what this Province can cut back on unless the whole thing turns belly up. If the whole thing goes into bankruptcy, if Canada goes into bankruptcy, if the Western World goes into bankruptcy, if oil costs $50 a barrel, and we cannot afford it, then if these things happen, Mr. Speaker, it is all gone anyway, But as long as 598

December 2, 1975 Tape no. 243 Page it continues to function, we must behave responsibly and we must not, I sug~est, cut out and nullify the achievrnents that have been won. 599 3- mw

December 2 1975. Tape 244 RH - 1 MR. WELLS: Now to come back to the immediate financial problem and the immediate financial problem that faced the government in this fiscal year. It has been suggested,! think unfairly, Mr. Speaker, that this government ~~ent about the country saying everything was rosy. This Province cut back and held the line with hospitals. It held the line with University. It held the line with school boards,and it did its best to hold the line with public bargaining all throughout the past year. It did not go around saying we are bankrupt,because we are not bankrupt, Mr. Speaker.

It is not saying, the government is not saying now that we are bankrupt but it held the line by action. I do not know what other ministers said, but when I was Minister of Health and went around parts of this country talking to people, both privately -when I say privately as hospital corporations,and publicly in speeches. Right in the middle of the election I made it very clear that lines had to be draWn financially, very, very clear, and other ministers did the same thing. When this government brought a budget down last Spring, I say, Mr.

Speaker, that that budget was realistic bearing in mind what the government knew at the time. The government budgeted a certain amount for the increase in the cost of public service 1 and when I say the cost of the public service I do not mean just the civil servants in Confed­ eration Building. I mean the broader public service. I mean the people who take their salary from the public Treasury. And that figure, Mr. Minister, was what? $43 m:lllion. MR. DOOnY: Eighteen per cent, $45 million. MR. WELLS: $45 million. The government had to be realistic in budgeting. Eighteen per cent was not realistic.

The government knew that inflation was then running around 10 per cent in Canada, 10 per cent or 12 per cent. Was it unrealistic to budget 18 per cent? I do not think so. I think it would have been unrealistic and dangerous to budget more than 18 per cent. But what did we get into, Mr. Speaker? 600

December 2, 1975. l-1R. WELLS: Taoe 244 RH - 2 1-'e got into a situation which I feel was not realistic on the part of the public service. I am not condemning them. 1-lere I a public servant I would fight just as hard as they did. And a few years ago when I acted for public servants in the very same capacity in bargaining. T fought .iust as hard as they fought and for them. Our various roles in life compel us all at ti~es to take sides. ~ut the P,overnment cannot take sides with the people whom it is elected to serve.

Th<> government has to make .1ud~ents on the facts and tJ,e data which are available to it at the time. And the government reasoned that lR oer cent <~as a legitimat.e amount fnr Hhi ch to hudp.ct because T hate to think what ~mulci have happened to the public service <vage bill, ~:r. Sneaker, if we had budgeted 25 per cent or 30 per cent.and yet the salary demands were coming in at the level of uo to Jn~ per cent. So we budgeted, I think, ler.itimat~lv and fairly. And what hanpened?

Negotiations tonk place and I think it is fair to note that in these negotiations we fared no worse than any other Province of Canada. Is that not correct, Sir? PREMIER MOORES: That is right. ~R. J.!ELLS: lve fared nC" <vorse. He farE-d better in T'lanv cases than other Provinces of Canada in dealin!l' l>ith specific groups of public employees. And yet when it was all over and the contracts were signed the wage hill for this year <>ill be ~2n million~ odd higher. Now, T do not knm·r what we should have done. It is all very well to say in hindsight we should not have paid so much. I do not knm•, Hr. Speaker.

The puhl ic service of ~lewfoundland as of a verv few years ago had a long way to catch up. I do not know if it is for me to cast the first stone and to say that these increases were inordinate, th~t the p,overnment went too far. I do not think it did b~cause 1 think there are public servants in Ne<~foundland today who are earninp salaries <Jhich do not put them in the luxury class 1because r.od knows, "r. Speaker, it is hard enough to live in this Province even on <Jhat we consider a fairly decent salarv. 601

December 2, 1975 Tape 245 IB-1 MR. WELLS: A very few years ago $4,000 or $5,000 a year was a very decent salary, a living salary,and yet I suspect today that $10,000 a year coming into a family is barely enough for a family of a husband, wife mnd two or three children, barely enough to struggle along on. I remember reading a few months ago that $8,000 was someWhere about more or less the poverty line in Canada and with price increases that we have experienced, I dare say $8,000 a year is a realistic poverty line in Newfoundland, and I say that very, very conscious, ~r.

Speaker, that a lot of people have no more than that to live on and in fact have even less. So, did we do the wrong thing? Many citizens, many members, may think we did. I, for one, ~r. Speaker, do not think we did the wrong thing and I stand by what we did even though it put $20 million on the current account cost of this Province for this year. The ~inister of Finance in his budget refers to a $30 million deficit. Part of that was, the greatest chunk,is that $20 million. A further chunk was the equalization matter Which I know took place.

J do not think it took place, in fact I know it did not take place through any fault of the Government of Newfoundland. It was one of these things over Which we had no control. I know that Medicare is costing us more money. I remember an order having to go through, an order in council for an extra million anc' some odd dollars to Medicare which I was the Minister of Health. That was no fault of the Province of Newfoundland. That was caused by r.hanges in the Ontario regulations regarding payments for Medicare. It is a complicated formula. I do not know if I could fully explain it now if I tried.

Suffice it to say this, that when one of the larger provinces makes a change in their internal approach to what is paid under Medicare and how it is paid, this affects the ratio of the Whole country and other people can get less. Well, our Medicare Commission got a letter from Ottawa one day saying it was getting $1,500,000,in round figures,less. We had to find that money, ~r. Speaker. What were we to do? Say, too bad, 602

December 2, 1975 Tape 245 IB-2 :MR. WELLS: tough lu~k, find it where you c~n, go bankrupt, ask the bank for an overdraft? Not so, Mr, Speaker. 1~e had to find it, and that was what happened all through the piece in this year. And the rate of galloping inflation was such in Canada this year, Mr. Speaker, that I sug~est that no one could have foreseen accurately, even in April, ~arch of this year, what :It was going to be like in November. I do not think }'r. Trudeau saw it. It is said we had an election coming up and we did not let out the whole story. ~r.

Trudeau did not have an election coming up in ~arch of this year,and yet he did not find it necessary to take the drastic action which he has taken until November or October, whatever it was,of this year because no one could f~resee the extent. Everybody kne"' in flat :I on was Clangerous, everybody knew it held the seeds of destruction of the whole Western 1~orld, let alone r.anada, everyboc'y knew that hut nobody knew the 11ccelerating nature of this. Nobody knew how quickly it would catch up to a country or to a province. And it caught up not just to the Province of Newfoundland.

It caught up to the Province of Ouebec. It caught up to the Province of Ontario, New Brunswick, the western provinces, all perh:1ps except oil wealthy Alberta. It caught up to~anc1 :It caught up to countries and states far beyoncl our territory. So shouln "'e be expectec" to have 1T'Ore grasp of the future, more insight irto what is r,oing to happen in economic terms than the leaders :In ~ontre~l and Toronto, Quebec r.ity, Ottawa, British Colmnhi;:~, Nl"w York St:1te'Z l'Jo, ~r. Speaker.

We n:ld l~hat we <lid l•rith the rea,;onable expectation that it was ~oinp: to be alrir,ht but world conditions and national connitions beyond our control have made it necessarv for us to ~ake the readjustment which we have made in this hunget presented to thi,; House. Now, I want to say something too, ~'r. Speaker, about the labour scene. ~ore than .iust the public service vis-a-vis the government but about the labour scene generally in Newfoundland and the laiJour scene in r:anada. 603

December 2~ 1975 Tape 246 PK - 1 Mr._Wells; If we look and read and hear about what has gone on, let us take two other countries for purposes of argument, for purposes of consideration of our own argument, let us look at England with which we are familiar, and let us look at the United States. England has been going in this last three or four years down the slippery sraircase that the member for Twillingate (Mr. Smallwood) talked about, the staircase with the nice carpet· at first and then the broken flagstones and then the abyss.

Because the rate of inflation in England jumped to something of the order this year of 25 per cent, and if they do not control it they are gone. And where was the pound two days ago in terms of the dollars, Mr. Speaker? An unprecedented $2 to the pound, a $1.99 point something. And I remember when I was in school, and it is not that many years ago, it was $5 to the pound, then it want to $3 something, then $3, then $2.50, and for a long time it was around $2.50 and $2.35, and now it has gone down just below $2. Why, Mr. Speaker? I think I know why. I think it is obvious to the whole Western world why.

It is because the people of England--and I am talking about the labour unions, and business as well, and government as well- but everybody has wanted too much out of the pot. It is a simple concept, Mr. Speaker, that an economy is only able to stand so much. You remember the British movie " I'm all right Jack", and that was the attitude. Let a bit of trouble occur in the plant the shop steward comes in. sees the men,down tools, out, the wildcat strike, ball game over. We will go back when we get satisfaction, we will go back in two weeks time, we will go back in six months time.

Who cares? we are going to have what we want. And by the same token we have heard all about management in England, of expense, of waste, feather­ bedding, the whole sort of British industrial life which has brought a very great and a very proud country almost to its knees. Why? Because its people kept demanding too much from the pot. It was not there to support the lifestyle and the way of life which everyone wanted. 604

December 2, 1975 Tape 246 PK- 2 Mi'. Wells: ----- Now let us take a look at the United States,which I happen still to believe is the greatest and most powerful country on the face of this earth, and great not just in industrial might hut great in the will to succeed. And with all of the faults and all of the criticisms that have been levelled at that country, that country is still to my mind a great country. What has the U.S. done in the last two years when it perceived what was happening, when it preceived with all its wealth and power that it was on the same route as the United Kingdom? What did they do?

Individuals, because, you know, in the end, Mr. Speaker, this all comes back to individuals; we are all individuals in this country and on the face of this planet, Individuals said, we will take less out of the pot, we know that we have to sell in order to live, we know that we have to be competitive in order to live so we will take less and we will put the country back on its feet. So what has happened in the United States in contrast to what has happened in England? That country, Mr.

Speaker, has begun to turn the corner, has begun to put its house in order, has begun to realize that you have to produce something and sell it at a competitive price and make a profit and keep your industry going and keep your country going, and with all its Watergates and all its crime and all its faults that country has perceived a basic fundamental indisputable fact. Now where does Canada go, Mr. Speaker? What route is Canada going to take? I do not know, Mr. Speaker, if you have read the book by, I think it was Richard Rohmer wrote it called Exodus, It came out recently. I read it.

And it outlined this dilemma and it talked about Canada, and it talked about England, and about the U.S., but chiefly it was about England. But where does Canada really stand? Have the citizens of Canada really grasped the problem which has faced them? And I do not think so, Mr. Speaker. I do not think this long and bitter postal strike,which fortunately now is over, I do not think that could have happened if the 605

December 2, 1975 Tape 247 IB-1 ~1R. WELLS: people of Canada real] y grasp the fundamental thing, that when you demand wages,especially from the public sector,that someone has to pay for it. It is the taxpayer who has to pay for it. If the taxpayer has to pay, the government must take that money in in revenue, and that means higher taxes. That means a greater drain on the product:l .ve capacity of the country. In other words, the piper has to be paid. This has been for~otten in Canada, end I suspect and I say, Mr. Speaker, :It has been forp,otten in Newfound] and.

I.Jhen I say that I say we are no worse than England, we are not worse than other Canadians. We have failed to learn a fundamental lesson which has been learned more quickly by our neighbors South of the border. Unless we learn that here in Newfoundland, unless we can read the warning signs and act on them,we have had it, Mr.

Speaker, because no industry, be :It the pulp and paper industry, be it the mining industry, be it any other industry such as we have in Newfoundland 1or the very government of this Province itself can survive if unrestricted demands on the public purse are made, and particularly unrestricted demands ~m:lch make it more difficult for private business to survive in the meantime. I think we are very much - the hon. member for Twillingate (¥r. Smallwood) says we are at a crossroad. Yes, we are, Mr. Speaker. We are at a crossroads in Canada. We are at a crossroads in Newfoundland.

And I think we have fa:lled often to understand the real nature of the problem, to understand that there are limitations on what we can take out of the pot. Let me deal with one little aspect of something in Newfoundland which has often made me wonder. Let us consider unemployment insurance. The regulations as they now stand, Mr. Speaker, allow,as I understand it.for you to work four weeks and draw benefit for forty-eight. SOME RON. MEMBER: Eight weeks. MR. WELLS: Eight weeks,yes and draw benefits for forty-e:lght. SOME RON. MEMBER: Forty-four. ~. WELLS: Forty-four. MR. F. ROWE: Not for the fishermen. ~.

WELLS: Not for the fishermen. Now, unemployment insurance is one 606

December 2, 1975 Tape 247 IB-2 !>lll, HELLS: of the best things ever to happen in Newfoundland. But is it a productive thin~, Yr. Speaker? Am I not back to my old anal~gy of the m~n being lifted with head just above the water1 You will stay afloat. You wiJJ not starve, my son.hut you will n~t be lifted out on dry land. I say nnw that although this has been of inestimable benefit to Newfoundland,and is one of the finer pieces of social legislation in Canada, yet if this is going on all over Can&da, if it is?and being abusecl as it is, then somewhere, "Mr. Speaker, a halt Hill have to be called.

Tlnemployment insurance is for the genu:lne layoff, the person who wants to work but is out of a job and cannot get a 1ob and then for a peri.od should be supported by the ftmd. That is fine. That is right. That is good. Yet we all know that there are many workmen f1rst in line to the supervisor or foreman saying, let me h~ve the first layoff slip,old man. Is that not the truth? Would anybody deny that it is so? Would anvbody deny that some of these pro~rammes such as unemployment insurance,which are fine programmes,are being abused in Canada and abused in Newfoundland?

You would have to be hiding your head in the sand, ~'r. ~peaker, not to know th~t this is so. MF. MOORES: So is business and industry abused. _ 1-'R. HELLS: s~ is business and industry. You talk about inflation. ~1'. NEARY: You have to set an example for these people. ~P. WELLS: N~body sets examples. He ~re all the same. He are all the same. We all loved inflati.on, let us face it. Inflation meant for government the revenue shot up. 1nfJ at ion meant i.t ';as easier to borrow bec~use you p~i.d back t'.renty-five years from now or twenty years from now or ten ye~rs from now in worthless dollars.

Inflation made it p.rand to go and r,et a mortga~e to buy a house because you knew, never mind the interest rate, you were going to pay back in worthless dollars. F.vervhody l~ved inflation and everybody is to blame and evervbody must shoulder their part of the blame. We have got to realize this in Newfoundland. But the labour movement- the professions have to realize it, business has to realize it, but so, Hr. Speaker, has the labour movement 607

December 2, 1975 Tape 247 IB-3 _lfP. . \'~ELLS : 1110re important even than the others . The reason 1 ~a y that is not a qualitative thing but sheer quantity bf!cause the number of p.eople as part of the labour movemen.t who is they do not Tealize this are· suffieieat of themselves t .o sink the Province. And business a!l.d the professions and government and the rest if they go along the sllllll! route will just help to sink her d¢eper. So, we hl!lve all got a responsibflity and we have all got to realize. ~r. Speaker, that we 111USt take ·steps to corrt!et the situation. 608

December 2, 1975 Mr. Wells. Tl\pe no. 248 Page 1 - mw Now I would like to say a word about the federal guidelines because I believe they are fundamental to our position, fundamental to our budget,and I believe, Mr. Speaker, we are going to have to live with them longer than we think. Now I had the privilegeof attending the Finance Ministers' meeting with our Minister of Finance in Ottawa last week. I saw the nucleus there of the anti-inflation staff of the programme which is being built up to do this job.

Now I have to say at the outset that, as the Premier has said, this government agrees in principle with the steps that have been taken. Why? Mr. Speaker, it agrees that something was necessary. We would probably say, if we had the choice, that there should have been a complete wage and price freeze for a period of three months while details were worked out. This, of course, is what Mr. Stanfield advocated three years ago , but that was not to be. That was not to be. The federal government at last came up with 1\ programme and it may not be in detail what we would wish, but in principle we have to follow it.

It is necessary that something be done. What I think has hanpened here, Mr. Speaker, is that the Government of Canada, rather than putting a freeze on-maybe for political reasons or mavhe not-hut rather than putting a freeze on, has started to develop a system to control the economy of Canada. And I feel, and I fear, Mr. Speaker, that ten years from now, in some form or other, it may still be there. In fact twenty years from now it may still be there. I doubt, Mr.

Speaker, if we will ever go back to the completely free and uncontrolled situation, and I use that in a relative sense, which obtained even two or three months ago. Because I feel that when this great bureaucracy is set up and set in motion, set in operation, it may well be like the income tax in the First World War, when it was instituted as an emergency, temporary measure, and it may be with us always, Mr. Speaker.

Inexorably,it seems,that the demands of the free market and the abuse of the free market system has meant that govern~ent is going to start and has had to start to institute controls of our economy As someone who believes in the free enterprise system, 609

December 2, 1975 Mr, Wells. Tape no. 248 Page 2 - mw believes in free collective bargaining and believes in the utmost freedom for the citizen, I reckon it a bad day, Mr. Speaker, that this had to happen and yet I recognize that something had to be done, It was almost a case in Canada and in the Western World of beggars riding their horses to death, We did not have sense enough to pause, as a people, and say, there is only so much in the pot, I can think of no better way to express it. And so, Mr.

Speaker, I think the message is there for the professions, for business, for government and for labour here in Newfoundland that there is a limit, and that if we do not imooFe limits on ourselves, then forces beyond us , more powerful than us and outside our control completely,will assert themselves and our faces will be pushed right down into the dirt as a Province and as a country, Mr. Speaker, whether we like it or not.

So the real questions, I think, facing this House of Assembly, the real questions facing the government and all of us who are here as members, without narrow· partisan considerations, the real questions are, how should we handle this situation which began years almost before some of us were born, that accelerated and developed in the last twenty-five years, that accelerated and developed not only in Canada and Newfoundland hut in the Western World, that were accelerated again by the increase of oil prices in the OPEC countries and throughout the world.

And we are now faced with them with a population that needs services and demands services without end. We are faced with all these things, and we are faced with no real solid industrial base, We have a base in the fishery, which is tenuous at best, that may be brought back with control of the Continental Shelf, but that, I think, Mr. Speaker, is going to take three, four, five years, if we are lucky, if we are lucky 610

necemher 2, 1975 Tape 249 IB-1 ~ • 1VF.LLS : and ,.dse, and if. Canada mana,:tes that rontinental Shelf • if it can ~et its han~s on it for mana~ement purposes, if it manages it well and we are lucky, five years from now the fishery may he back somewhere where ft was only a few years a~o. That is somethin~ devoutly to be hope~ and prayed for by every r.anadian and every Newfoundlander, hut especialJv every Newfoundlander. ~'ining, where does mining stand?

We hope and we intend to ~et more revenue from mining, not to destroy the mining companies, not to make their operation unviable .if there is such a word~ but none the less to Fet more revenue from this nonrenewable resource which is going out of our Province and going elsewhere in the world, and is not bei_ng manufactured into anything here, is not even beinJ.! manufactured into bars or ingots or steel slabs or whatever you have. What else have we got? We have the forest industries and :!.t seems to me, "r.

Speaker - and I think it is just as well for me to say :It - it seems to me that our forest industries have almost got to the po:lnt insofar as large mills are concerned where there is not much, if any, possibility of future expansion.

I do not know 1.f the line - h!T'l!l? 1~ell, I hope the bon. rne111ber is right but yet here we are in the position with that 11nerboard mill out there-and some day I hope to advert further to that in debate, but this is not the g:lst of the debate ">hich lJe are involved tn no~1 - but this government took over that linerboard mill when it was out there nearlv Hoi shed and had cost the government someth:!n~ under $200 million, and "-'liS on the verge of going belly up,ttp the spout, nowhere, just a piece of eouinment which would turn into rustin~ junk if it "'as left thPre, and this p.:overnment hcod the ap,onizinp: Clectsion of whether or not it would put !l'ore money in, t~>ke it mre-r, try to rtm it or let the precious nollars provi~e~ by the people of this Province ~o up the ~pout r.ompletely "nd p.one.

Nm~, m11ny will ~~~y that l·'le were "'ron~ to t10ke it over, and perh11ps '•'P. were. And I reme!"her so well the ~eb11te in this House of Assembly in Nhir.h T for one spoke and 1 sa:ld, we can on.ly go on trust l'!nd fa:lth that that Hnerboard can be Clone somethin~ with, that :It '~ill 611

December 2, 1975 Tape 249 IB-2 t'P.. WELLS: not be too, too great a drain on the Province. l~e ca'l only go on faith, that what the consultants tell us is so. And I for one voted for that. If it was now and J had the same information in front of me, I would vote for it again.

F.ven today when we in government look at the linerboard mill and the amount that it is costing the Province of Newfoundland to keep going,which is substantial, even then one wonders,every day one wonders should the government close it down and be rid of ittor should it for the sake of the money that has been invested up to now ancl the jobs that are there, shoulcl ~ carry on a.nd keep it open. tTp to now, 1-'r. Speaker, this is exactly "'hat we have done. There may he many whn would criticize us. It is a matter of opinion. Yet this is the kind of nitty-gritty question that this government faces.

This government, as J said earlier, does not operate in a vacuum wher~ it can close itself off and look at its books and add up colunms of figures and say, we cannot affon~ to borrow $200 million a year, we must bring the cost of current account down to $700 million a year. We cannot do that, ~r. Speaker. We have to face in the life of this Province real situations, situations that daily we have to grapple with and hope to God that we are right or even half right or three-quarters right or 90 per cent right.

You take the Lower Churchill which is going to be, Gull Island,which is going to be debated in the House of Assembly this year, and the resolution is alreacly on the Order Paper. Let us look at that 1 look at the magnitude of that. I 1dll he forgiven.,although there is going to be a debate on it, I will be forgiven,! hop~if in this budget debate I allude to it in a few sentenses.

This Province has got to make, and the government has made, the tremendous decision, the great leap in a sense into the dark 1to do this thing, to build this thing, not .1ust so that it is built and goes to the Province of Quebec but in the hope ancl the prayer and the wish that it is built and the electricity comes into the Province of Newfoundland to benefit this Province and this Province's energy needs. 612

December 2, 1975, Tape 250, Page 1 -- apb MR. WELLS: Sure, if you closet yourself in a room and you sit down with the books of account and your bank balance and your bonds and all the things that go to make up the financial picture of a country or a province and you say, can we afford the Lower Churchill? Of course the answer may come that we cannot afford it if you look at it in the banker's light, Mr. Speaker.

But can we afford for the future of this Province ,for our children and their children, can we afford to say, no , we will not do this, we will go nuclear, we will go oil-fired furnaces, we will develop the small sites of electric power around Newfoundland - which will cost us just as much in the next twenty years - and we will forego Labrador, What would happen then, Mr. Speaker? What would happen then? Some day Labrador hydro, the Lower Churchill would be developed. And do you know when it would be developed? When the Province of Quebec said, "Well, boys, we will buy it off you now.

We have taken the load from James Bay, we have reached equilibrium, we are looking around, we want more power. If you like, and you can give it to us at the right price, you can develop Lower Churchill and we will pay you whatever for it." What would happen then, Mr. Speaker? Where would that part of this Province of Newfoundland and Labrador be then?

I feel,and I feel very deeply, that if this Province does not establish such a link with Labrador as the tunnel and the hydro power the transmission line will provide, I fear that ten, fifteen, twenty years from now that part of the Province which is Labrador may not be part of this Province. SOME HON. MEMBERS: Hear! Hear! MR. WELLS: And I think we have to go, I think we have to take steps - SOME HON. MEMBERS : Hear! Hear! MR. WELLS: - I think we have to take approaches and steps, Mr. Speaker, which transcend and go far beyond the balance sheet when we are thinking about these auestions.

We have to be financially responsible, Mr. Speaker, and I suggest that we are being financially responsible, but financial responsibility cannot be interpreted in a way that means that we have to squeeze the life out of this Province and squeeze the hope out of this 6l3

December 2, 1975, Tape 250, Page 2 -- apb MR. WELLS: Province. Because if we have anything to live for it is for the development of things like the Lower Churchill, the development of the fishery and the development of something which I want to allude to later in my remarks, the development of something like off-shore oil. These are the cards we have in our hands, Mr. Speaker. We have a responsibility to ourselves, to the people wbom we represent, to our children and the people who come after us.

We have a responsibility to behave and deal with this Province's funds and credit in a manner that will ensure the development of these things, not in a manner that will sacrifice them because we want to balance the budget today. Now we must balance the budget, Mr. S~eaker, but not in a way that would prohibit and prevent the development of what is vital to this Province if this Province is to survive. So I say, Mr. Speaker, we have many advantages, we have many things to hope for in Nellfoundland and if handled right and handled wisely I feel, and I have confidence,that some of these things are p,oing to pay up.

AN HON. MEMBER : Hear! Hear! MR. WELLS: If I did not believe that I would not want to be a member of the House of Assembly, I would not want to be a member of the government, I would .1ust stay downtown and forget it, and hope to retire somewhere else and get out of here and hope that my kids, my children, went somewhere else to live because there were greater opportunities. But that is not what I hope Mr. Speaker. I hope to live here, to be a part of this and sy family after me and a great many more families and people throup,hout Newfoundland.

And I hope the time will come when people elsewhere in Canada and elsewhere in the world will want to come into Newfoundland and live here and work here and be able to do so because there will be work enough to strengthen and build this Province. SOME HON. MEMBERS: Hear! Hear! MR. WELLS: And these are the things that we have to work toward, Mr. Speaker. So when you talk about services, if we turned off the tap, if we were completely and callously brutal, if we said,no,we are going to close down wings of hospitals, forget hospitals now or in the future, 614

December 2, 1975, Tape 250, Page 3 -- apb for2et education -we are not concerned with that - forget univeristy, if you want to be a doctor go somewhere else and we do not care if you come back or not. If we took that approach, Mr. Speaker, what would the future of this Province be? I will tell you what it would be, Mr. Speaker, 615

December 2, 1975 Tape No. 251 NM - 1 MR. WELLS: it would be, Mr. Speaker, it would be a winding down, it would be a downward spiral that would put us all in the end somewhere on social welfare, that is what would happen. So what we have to do at this time, in this difficult financial time which is not of our making, Mr. Speaker, and which would have applied whoever sat in these benches on this side of the House, what we have to do is proceed with care and caution. We have to be financially responsible. We have to restore what credit we may need with the financial community.

We have to demonstrate to the financial community that we are responsible and careful. We have to do all these things. We have to make sure that our current account is in a position that enables us to borrow on capital account because it is unrealistic, Mr. Speaker, to say that we can cut out capital borrowing in this Province. It is unrealistic. The construction industry I am told in Newfoundland has accounted in recent years for 46 per cent or 47 per cent,I believe.,of the Gross National Profit, is that not right? MR. DODDY: Gross Provincial Product. MR.

WELLS: Gross Provincial Product, That is a fantastic figure, ~r. Speaker. If<we had nothing else in our minds when considering the economy of this country, this Province, we could not in a year wind it down in such a way that 30 per cent or 35 per cent or 40 per cent of the Gross National Product of the Province would disappear overnight, Capital account expenditures are borrowed on the credit of the Province to build things now which, in the judgement of the people who are governing the Country when we talk of public affairs and public matters, are needed, We cannot abrogate this responsibility, Mr.

Speaker, it would be damning and dangerous and foolhardy to cut out these capital expenditures because they are going to be spent on things which are needed by the Province of Newfoundland. Mr. Speaker, I believe it is very close to six o'clock and I will with the concurrence of the House now adjourn this debate, SOME HON. MEMBERS: Hear! Hear! MR. SPEAKER: It being six o'clock I leave the Chair until eight this evening. 616

The House rPsumen at ~:r0 p.m. J·fr. Speaker in the Chair. TApe 252 (Nipht Session) RF - 1 ~ IR . Sl'EAKFF : Order, olease! The hon. Minister without Portfoli .o adjourned the debate. HR. R. WELLS: Thank you, Mr. Speaker. I had intended when I began my remarks, Hr. Speaker, as it is the first major debate of the session for most of us who are speaking and my first time speaking in the debate, T harl intended before that to congratulate Your Honour on assuming the Chair of this hon. House.

The heat of dehate was such this afternoon 1 and the remarks of th£' hon. the memher from Twi 11 inp,ate so fj red me up. that \•hen I hegan my remarks I forRot Hhat I had intended to do , to congratulate Your Honour and also the Deputy Speaker and other officers of the House. !lay I express the vie\,,which I am sure I express on hehalf of all of us>that Your Fonour will enjoy.as I am sure Your Honour 'Will, a distinguished tenure of office in that Chair Hhic:h Your Honour so ahly fills. SONF HON. '-!EMBERS: Hear! Rear! !lR. HELLS: Mr. Speaker, I have really come very close to the end of my remarks. MR.

DOODY: No, no! MR; WELLS: The House has been very indulgent with me , hut I would like to make one or two points in conclusion and to draw together as it were the thread of my remarks. Basically they are these, Mr.

Speaker, that we in Newfoundland, not .1ust the government, not 1ust the House , but the people of Newfoundland now find themselves and ''e find ourselves in a position that is perhaps 60, 70, 80 per cent the making of forces heyond our control,of international forces, of national forces, of Middle East forces in the price of oil, in financial forces emanating out of London, out of Paris, out of New York, out of Montreal. All these thtngs have their impact on this Province and they are things beyond our control. 617

December 2, 1975. Tape 252 RH - 2 MR. NEARY: How about Indonesia? MR. WELLS: Well, the hon. member interupts and injects a note as usual of levity in the debate. It is good for us,perhaps. But the point cannot be denied, Mr. Speaker, that these forces as always in Newfoundland's history have exercised greater control over what happens here than perhaps many of the things that we do ourselves.

This is the point that I want to make, that although these external forces have their influence, although they have a great aspect of control over us, they do not take away from us the right of self determination, the right to work and work hard to build a better and more productive life for us in this Province. The government, Mr. Speaker, has found itself and found this Province in a certain position largely not of its making, not even of the previous government's making, but a combination of many things external and internal. responsibly and well.

The government, I feel, has acted The government in its budget,which is a state of the financial picture of the Province at this moment,has done in my view and is doing what is necessary at this moment. We cannot look ahead too far into the future and say now what might be necessary in some far future time nor can we act as we might have acted ten years ago or twelve years ago had we been in the position. We have to look at it now, Mr. Speaker, in making financial decisions. But there is one thing I think we ought to beaT in mind. 618

December 2, 1975 Tape No. 253 NM - 1 MR. WELLS: When we make a financial decision now it is not made in a vacuum. We have to answer 1 and we do not just have to answer to the people of this House and we do not just have to answer to the people of this Province. But our financial decisions are reflected in the financial community of the Western World and if we do the right thing, if this budget turns out as I expect and hope it will, to be the ri~ht thing to do at this time, it will be reflected not a year from now but even months from now in our position on the financial market.

If we have done the right thing it will be reflected immediately in the way they look at the Province of Newfoundland. If we have to do other things four months from now, one year from now, they will be done. But the point is we have a yardstick to measure our progress by, a yardstick by which to measure our stand 1 and that yardstick is the regard and the weight that the financial community of the Western World gives to the Province of Newfoundland, and Mr. Speaker, it will not give any weight to the Province of Newfoundland if you get what I might ,describe as a going overboard in any direction.

That will not help the Province. What the financial community is looking for is in the end exactly what the citizens are looking for and that is a balanced and reasoned approach to the problem. I feel, Mr. Speaker, that the action that has been taken has suited the now, has suited this moment, has suited what is necessary to achieve financial stability without bringing the Province to its kness. If it does not work more will have to be done, but I think it is the proper and correct and essentially proper approach for this time. And it will be very few months before we begin to see, Mr.

Speaker, whether that is so or not. And I sincerely hope for my part, and believe, that it is the right and proper thing. Now we have two amendments to the motion, I have not got them in front of me, Mr. Speaker, but I believe that the original amendment was that a failure of the Province, a failure of the government to disclose to the Province - yes, regrets the failure of the government to disclose completely and fully the present financial situation of this Province and the government thereof. Well, Mr. Speaker, I listened to the Budget Speech, I have read it since and I am reasonably familiar,! believe, 619

December 2, 1975 Tape No, 253 NM- 2 m\. WF.I.J,S: with the financial position of the Province and this budget, and Mr. Speaker, I cannot see how it could be more clearly expressed. The government has set out the financial position, The figures are there. They show the true position and the remedial action is set out also •. and what the remedial action will achieve or is hoped to achieve, Now, Mr.

Speaker, I think that no government could do more than that, In fact I think that it is refreshing and good to see the financial position of the Province laid out with such total clarity and I am glad to have seen that done. So I know that there must be a vote first on the sub-amendment,but just addressing myself for the moment to that amendment, there is no way that I, as a member of this House and a member of this government, could support it, Mr. Speaker.

When we come to the second, which was a aub-a.end.ent, an -endment of the ~ndment, 11 and deplores the inordinate swelling of the public debt of recent years and urges government to limit severely for the II foreseeable future the amount by which the debt is increased. "The inordinate swelling of the public debt of recent years~ ' that swelling of the public debt, Mr. Speaker, baa been to provide services which the people of this Province wanted and sorely needed in many cases. That 110ney bar. not been thrown to the four winds.

That 1110ney baa gone into water and sewerage systems, into schools and hospitals, the things I spoke about this afternoon. I do not begrudge that, as a citizen I do not begrudge it, as a taxpayer I do not begrudge it, as a man who will pay his taxes in the future, and the interest on the money, and my children after me, I do not begrudge it. I think it had to be done and it was done and I think if we want something it has to be paid for, these capital works cannot be provided out of current account, so that the 1inordinate swelling of the public debt of recent years 1 has not been an inordinate swelling, Mr.

Speaker, it has been high, it has been considerable, but it has been done so to provide needed services to the Province of Newfoundland, The government has taken the action to limit, perhaps not severely, there is a limit to the severity that is called for, but the government bas imposed a programme of stringency which I think is satisfactory, Therefore, Mr. Speaker, I cannot support the sub-amendment either. 620

necember 2, 1975 Tape 254 (night) IB-l ~'1'. 1-IELLS: Let us look for a moment to the future, ~r. Speaker. What have we got? Ouite apart from the forces 1 as I say 1 wh:i ch are outside this Province, we have the greatest natural resource of al],our people. Now, much has been said ahout Newfoundlanders by many people in recent years and recent months. Some of the criticisms are correct. I do not think we are as energetic perhaps as we were before there were so many social welfare benefits.

I think it is time for certai .n segments of the communU ies to get out of hed :In the morning and get to work, and I make no apologv for saying that. But at the same time, ~r. Speaker, I do not think we have d:l.ed as a people. Whenever any challenge has heen put on this small Province of Newfounrlland - ann before r.onfe~erat1on, this country of Newfoundland - Newfoundlanders responded. ~~en the time came in the First World War and in the Second Horld War there was no need of conscription, Newfoundlanders rallied to the call.

Newfoundlanders were not the least and the last and the most lackluster people in the Rritish Empire to Answer the call. Whenever it has been necessary, Your Honour, Newfoundlanders have r:lsen to the occasion. I, for one, believe that with the message being brought home to them, the message of financial restraint, the message that government programmes cannot go ahead with the same speed. We may have gripers. We may have people who want to grab as much as they can from the pot, but at the same time, ~r.

Speaker, t believe that the majority of the people of this Province w:lll see common sense and will say, yes 1 a pause has to be instituted, sometimes we have to call a halt until we are ready to go again and we will stand with the govern~nt, stand with the legislature and do the necessary. If I did not have that hope and faith in this Province, I would not want to live in it, ~r. Speaker.

But I think that in all the great things which I believe will come :l.n the future to the Province if we are prepared to work for them, T believe our people have it left in them to stand up and be counted, to make sacrifices, to go to work. Because if any nne of us doe,; not believe that there :l.s really no place for us here. We mip.ht as weJ] get out while the going is good. He might as well go 621

necember 2, 1975 Tape 254 (niy.ht) IB-2 MJ! • wro.L S : someWhere else Where we can find a place to believe in. But I for one think that we have the stuff in our people and that is where it really is, to stand up and do a day~ work and be counted and perhaps to admit that things might have gone too far in recent years and that we might have asked for too much, we mi~ht have asked for more than we can afford, and that we might have asked too mach from the public purse • ~r. Speaker, I think we have limitless opportunity if we have the boldness, the courap.e, and the ability to work, to produce it.

Nothing came to any country without work and effort on their behalf. I think I might have to modify that. It seems to me that the OPEC countries for their oil recently mi~ht have gotten dollars for very little effort but that is out of phase, that is out of kilter with the human experience everywhere in the world. In the case of most countries, if you look at the United States, if you look at England in its day, if you look at Germany and all the countries of Europe, if you look at the strides that have been made in Canada, they all come back to the entrepreneurship and the work of its people.

The efforts of the people of a country count for more than the effort~ of a government. A government can only direct and assist, prime the pump, take directions, exercise leadership, but the real - it is just the same as saying that generals win wars. Wars are won, sure,by generals leading and directing as the case may be,but wars are won by the fiber of a people and the fiber of the men they have in the field and the men back in the country who are supporting and maintaining them. So it is with a country, Mr. Speaker, so it ia with a Province.

Many thinr.s are beyond our control but many things are within our control. I think we have two great frontiers left. I believe quite apart from the development of power in the Lower Churchill, quite apart from that, I believe in the concept of a tunnel under the Straits of Belle Isle connecting Labrador with the Island of Newfoun~land. I helieve that even :If the Churchill Ri.ver dried up:.which is not likely, hut even if it dried up and was not there and there was no power 622

December 2, 1975 Tape 254 (n1ght) IR-3 1'1'. HELLS: tlevelopment in the Lower rhurahill, I still believe that ~~e should press on with the tunnel underneath the ~tr~its of Relle Isle. 1 helieve th~t much of our - ynu see,I believe our future is tied in with the p,reat nevo>lopments possible in T.abrador. T believe our 623

December 2, 1975 Tape 255 (Night) PIC.- 1 Mr. Wells: - ----- future, and perhaps the ~reatest thing we have in our future is the offshore oil and gas which I believe to be off the Labrador Shelf. If you consider it for a moment, Mr. Speaker, if gas is found- and gas is now lighting the stoves and heating the houaes in London, gas from the North Sea- we know that gas is there and we hope it is in commerical quantities off the Labrador Shelf. How is that gas going to benefit us? I have no wish to stop any development of Quebec.

But if the gas comes ashore and follows a pipeline or a route on into the Province of Quebec, what will that do for Newfoundland? It might give us some royalties. It might give ua, and would give us some financial benefit. But I visualize the day, Mr. Speaker, when that natural gas cooks food here in St. John's, heats homes perhaps here in St. John's and down on the South Coast. If it can be dooe in England with gas from the North Sea, why can it not be done with gas from the Labrador Shelf? But without that tunnel, Mr. Speaker, how is it going to be got across to us, the market within the Province?

I think that tunnel, and I must confess, when I heard the concept of a tunnel mentioned first which was about seventeen or eighteen years ago, I thought, pooh! what nonsense. We could never afford it. What an expense. It would never be justified. What a pie in the sky pipe dream. But, Mr. Speaker, great things are not done by sitting down minutely balancing books, Great things are done by having a vision and a concept which transcends the present but means something for the future. And I believe - MR~NEARY: You do not remember the first time I mentioned it. MR.

WELLS: I do not know when the hon. member mentioned it. Funnily enough the first man who I heard mention it, mentioned it to me in conveBsation once back in about 1958 was E.D.C. Hiscock. MR. NEARY: No,he was talking about a causeway not a tunnel. MR. WELLS: No,he was talking about a tunnel when he talked to me. MR. NEARY: No,he was talking about changing the Gulf Stream. 624

December 2, 1975 Tape 255 (Night) PK- 2 MR. WELLS: But any w~y. you know, the hon. member may have mentioned it. And whoever pooh-poohed it or not at the time, I think that is an idea whose time has come. And I believe if we are ever to be the Province that we hope for,that that tunnel must come, and it must not just be a tunnel that can carry electricity.

I believe it must be a tunnel with a much broader concept, no pun intended, but a tunnel that some day would carry natural gas, that perhaps might carrv crude oil, that would carry freight, that would carry passengers, a tunnel which would be a link between the two parts of this Province. And more than anything else I believe this is a concept that goes beyond the mere discovery of oil and gas,important though that be, I think this is something that should be a provincial project of the highest order and beyond that a national project. And so, Mr.

Speaker, these are the kinds of concepts we must work towards and develop. A government cannot do that alone, and this is where the role of the people of this Province comes in. The people of the Province have got to stand with the government, stand with the people in the House of Assembly, we have got to be united in a desire to bring this Province forward. How often do we pooh-pooh Newfoundland? We say Newfoundland has nothing, we are only a rock, only stuck out there in the Atlantic.

And it reminds me of the story where one Newfoundlander said this to a German, and the German said, "Well,that might be, but I wish we had it." Yes, Mr. Speaker, and I dare say that if certain people had had Newfoundland in the past they might have done more with it. But I think in this new age of advanced technology, of greater awareness of the outside world and of greater understanding of the opportunities which are presented, I think we too have a future if we would stand up and grasp hold of it. So I believe, Mr. Speaker, the challenge is ours. I think it faces not only government, but the people.

Poetry has been in order today, Mr. Speaker, and perhaps it is a refreshing change for the House of Assembly. We have not heard much of it. those of us who have been here in the past four years. So I would end up in answer to the Premier's quotation- the former Premier's quotations today. It is funny, you know, 625

... ~ --- -- December 2, 1975 Tape 255 PK-3 A~ OON. lofF.1'!BFR: It is a slip - MR. WELT.!>: Jt i,; a slip everybody makes. He became Premier, the hon. member for Twil11ngate (Mr. Smallwood) when I was 1ust finishing Grade XI, and I supnose all these years afterwards it comes as the slil" of the tnn~e, quite naturally. AN RON. MEI'IBF.R: \'le all do it. MR.

WELLS: But, you know, what he quoted today , I will Quote from Tennyson when he said "Tho ' much it taken much abides, and tho' I l~e are not nnw thnt strength which in old days/ l'foved earth and heaven: that which we are, we are:/ One eQual tempers of heroic hearts / Made weak bv time and fate, but stronR in will/ To strive, to seek to find and not to yield." And that is the attitude, Mr. Speaker, that is demanded, not only of members of government, not only of members of the House, but nf the peonle of Newfoundland . SOMF. RON .... EMRERS: Hear, hear ! 626

December 2, 1975 Tape no. 256 Page 1 - mw MR. SPEAKER: The hon. Leader of the Opposition. MR. ROBERTS: Mr. Speaker, let me begin by saying that I did not have the opportunity to hear all of what the hon. gentleman from Twillingate (Mr. Smallwood) said when he put his sub-amendment this afternoon, nor did I have the opportunity to hear all of what the han. gentleman from Kilbride (Mr. Wells) said this afternoon and this evening. I heard most of it, and I think, as I believe the hon. gentleman said in his remarks, that this has been one of the better debates in this session of the House of Assembly.

I may be misquoting the han. gentleman from Kilbride (Mr. Wells) but I do not think I am misrepresenting him. I think he said essentially the same thing. I would concur. I think that is a very reasonable and a very straightforward statement and an entirely merited one. And I think the hon. gentleman for Kilbride (Mr. Wells) in particular spoke with eloquence, and I know he spoke from the heart. The hon. gentleman from Twillingate (Mr. Smallwood) spoke as always with eloquence and as always from his heart.

I listened to most of what he had to say, some of it on the PA system and some of it not on the PA svstem, because, of course, the hon. gentleman from Twillingate (Mr. Smallwood) was in a good voice again this afternoon, and it was not necessary, being in my room, it was not necessary to turn on the speaker system. I shall be relatively brief tonight, Mr. Speaker, because we are on the sub-amendment to the motion that Your Honour do leave the Chair. We still have ,,those of us who have not yet spoken, including the hon. gentleman from Kilbride (Mr.

Wells), still have the opportunity to speak in the amendment debate, upon the amendment moved by my friend and colleague, the gentleman from Burgeo -Bay d'Espoir (Mr. Simmons) and, of course, then there is still the main motion itself, the budget motion moved by the Minister of Finance at least eight days ago, yesterday week passed. So there will be loads of opportunity for us to speak, and I hope all of us will,because I believe that, not just the budget debate 627

December z, 1975 Mr. Roberts. Tape no. 256 Page 2 itself, but the matters to which the budget debate gives rise are of such importance, particularly at this time in the history of this Province, that it behooves us all to say what we believe, say what we think and speak as we find things. I do feel that the hon. gentleman from Kilbride (Mr. Wells) this afternoon and th