PROVINCE OF NEWFOUNDLAND AND LABRADOR HOUSE OF ASSEMBLY Volume 1 Number 121 4th. Session 34th. General Assembly VERBATIM REPORT FRJDAY, JULY 17, 1970 SPEAKER: THE HONOURABLE GEORGE W. CLARKE

I I Jj July 17th. 1970 Tape 1305 PK - 1 The House met at 10:55 A.M. Hr. Speaker in the Chair. MR. SPEAKER: Order! liON • .J. R. SHALLHOOD: (PRENl ER): ~~r. Speaker, the House might like to hear a little more than I '\oras able to say yesterday about the incident that occurred at Churchill in connection with some twenty-two Newfoundland workers. These twenty-two men ~.;ere twenty-two of a total of twenty-eight Newfoundlanders that v1ere employed by Foundation Lundrigan, the finn that are doing a lot of the work down there. And they were employed on staff, as members of the staff, monthly men.

They, therefore, did not come and they do not come under the joint Union Labour Agreement for the per~od of the project. The House is aware that the vast majority of the workers on the Churchill Project are covered by a collective union agreement signed by, I think, sixteen unions and the contractors for the duration of the job, ei~ht or ten years, with built-in increases in pay and escalation of one kind and other for the tvhole period. But, these men do not come under that agreement because they are not hourly men, they are monthly men paid so much a month.

And tvhat happened apparently, (and I say •apparently" because the•· matter is being very carefully investigated) ~.· hat happened t7as that some of the men, three of them I believe, were to be demoted to be labourers, because the employers alledr,ed a surplus,that they had more men than they needed. The job, I suppose that particular job, survey job, rod men and so,on was coming to an end and they needed fewer men.so three of the men were reduced in status and therefore came at once under the union agreement. But the remaining men did not, they were staff.

So the remainin~ men signed a declaration that the three men had to be restored, their status restored,or they would quit. So the question arises; did they quit or not, as the case might he? Now 1iTithin that broad problem there is the problem of rates of pay. And how 7750

July 17th. 1970 Tape 1305 PK - 2 MR. SNALUiOOD: many days or how many hours a month these men on staff, not covered by the union agreement,might be expected by the employers to work in a month. How many days? How many hours in a month? And at what rates of pay? That is an important aspect of the matter. But this is as far as I can r;o at the moment, and my colleague, the Hinister of Labour and his staff, his very able staff 1 are following up the matter very, very carefully indeed. It was first broup,ht to my attention by one of the t\.1enty-two men who telephoned me and gave me the story. I took on·from there.

As further information is obt~ined it will be passed on to the House. HR. A.J. Hl'RPHY: (LEADI:R OF THE OPPOSITION): Hr. Speaker, possibly I might be excused if I just ask one or two questions of the Premier on this matter. We had the statement. The first time it has come to my attention "'as yesterday when the Premier made the statement, the press or nobody else had any record of it. And it was suggested that possibly a committee should be set up. We had a select committee go down there and apparently they made the report and everything was in order. HR.

SPEAKER: The hon. member may ask a question but not make a speech. MR HURPHY: Thank you, Mr. Speaker. I will ask the Premier now, in view of his statement and very many other isolated requests that we get, is it nof essential that some type of ~omrnission be set up to investigate all the working conditions at Churchill Falls? MR. SHALLI.:OOD: Hr. Speaker, the Government do not think so,sincerely and honestly do not think that ought to be done. This House of Assembly sent three of its members to Labrador last year 1 6ne hon. gentle .man from the Opposition side, and two from this side of the House.

These hon. members went down there and they met many people and came back and reported that an overwhelming majority of the talk you would hear Has without foundation. Now on every great project there is bound to be talk, bound to be. Some of it will have foundations, some of it will not. We do not think there 7751

July 17th. 1970 Tape 1305 PK - 3 MR. SHAL1.HOOD: is any need at the moment to have an enquiry. \ve have a man stationed there 1an experienced labour man,in the person of Mr. Conway, AN liON: HEMBER: Mr. Thomas Conway. MR. SHALLHOOD: Hr. Thomas Conway,with many, many years of experience, a Newfoundlander, a common Newfoundlander like all of us, living there right on the spot)in touch with all the situation,and the unions are there. We had some discussion of that earlier in the session. We do not think, frankly 7 that there is need. The moment we think there is need of a public enquiry we will have it.

Why should we not? But we have to think there is need of it before we will appoint it,obviously. We are not going to appoint a public enquiry until we think there is one needed. lve would be pretty stupid to appoint something we did not think there was need of. At the momen~ we do not see any need for such a public enquiryJ hut we are watching the thing very closely. I may say that I personally take the phone and I call the Chairman of the Board of that company and I call the President of that company and the Chief Executive Officer, I call the top men of that company there in Churchill Falls.

I am in constant touch with them. I call the contractors, In this case I called the contractors involved. But that is a sort of · ex cathedra . sort of thing that I do . as Premier,throwing a little weight. But it is the Dep~rtment of Labour that does the real investigating. I take it up with the hfghest levels and I get them jumpinp. and I get them hopping. And they do hop. They do not want any trouble. They do not want any ill-t-:111 1 and they are very eager to prevent it or to cure it. I can assure the House, I can assure my hon. friend of that. PRLSENTING PETITIONS tffi . J OHN CROSBIE: Nr.

Speaker, before you proceed _to presenting petitions I have a question or two in connection with the Churchill Falls situation. Are is the Governrnent aware or the hon. the Premier aware that in connection l~ith the "' administration of justice at Churchill Falls the two Tremblett brothers,who 7752 I l

.. July 17th. 1970 Tape 1305 PK - 4 ~IR.

CROSBIE: were shipped out of Churchill Falls several months ago before the matter of which they were charged came to trial, They were later prosecuted in Grand Falls antl since no prosecution witnesses appeared, the charges against them were dismissed. lhat being so, would not that indicate that there is some need for an enquiry into the administration of justice at Churchill Falls as well as hiring practices and the efficiency of the union organization there as wellY The fact that the Newfoundland Government has a representative there has not prevented this kind of situations from arising. HR.

SHALLIVOOD: I quite agree with my hon. friend as to the need for a hard look,to say the least,into the question of the administration of justice. I verily believe that the Department of Justice had been doing precisely that thing and are continuing to do it. 1he fact that the case was handled the way it was handled is fair evidence, if my hon. friend can read between the lines, and my hon. friend from Humber East he will know what I mean and so will the former tfinister of Justice.

As to the general practices of hiring, I do not; think there is any particular inquiry needed into that - they are well known. tfuat there is, of course, is a widespread discontent on the part of men who do not get jobs. There are going to be thousands of men trying to get jobs and failing, because there are not that many jobs do~~ there,unfortunately. ANSWERS TO QUESTIONS liON. E.S. JONES: (NINISTER OF FI NANCE): Further answer to a question by the hon. the member for St. John's West yesterday, wh~n he asked me- if that t~ere were any funds of the Province of Newfoundl~d~were invested in foreign banks?

The answer yesterday was "no,. and the answer today is ''no~" ORDERS OF THE DAY HR. H.R.V. EARLE: Hr. Speaker, before calling Orders of · the D;ly may I be permitted. Yesterday when I asked a question to the hon. the Premier concerning 7753 I'

I , July 17th. 1970 Tape 1305 PK - 5 J'.IR. EARLE: the national park at Bonne Bay, There was some doubt raised by him as to whether I knew what I was talking about and he referred to Hansard. I have the quotation from Ilimsard of Nay 20th. and this is exactly what the Premier said. Referring to the national park in his address he said; "This is what we are ~oing to have.

This is what ~~e are goinp; to get, And I prophesy here today in my closing words, I will make a prophesy we will have it, we will have it in less than a year. t-.'e will have it in less than six months, >Ae will have it in less than a month, ~e will have it, well, in less than a month. I will make that prophesy. The whole program as we put it there, the whole program as in the White Paper, I have summarized the hir.hlip,hts of it, the highlights,there are details in between and we do not insist on every detail.

We are not unreasonable, we are not stupid, we are not unreasonable, we are not foolish, we do not insist on every detail, but the broad plan from Deer Lake to St. Anthony and across the Strait of Belle, that is our plan. It will cost $60 million, it will take four to five years to complete it." That 1 Hr. Speaker, bears out ,T think, the gist of my questions yesterday. MR. J. CROSBIE: Ur. Speaker, b~fore we go to Orders of the Day I would like to ask - MR. SPEAKER: The hon. the member for Gander has the floor. MR. II. COLLINS: 1-fr.

Speaker, before we get into Orders of the Day, I have a question 1•hich I would like to direct to the l'!inister of Highways. In due of the great discontent and dissatisfaction voiced by truckers engaged in the upgrading program on the Trans-Canada Highway in Central Newfoundland, has the minister conducted an investigation into the char~es made by those people?

If he has conducted a full investigation, can he indicate to the House whether he intents to modify and update the restrictive regulation which does not permit for the greatest of safety in terms of operating and certainly does not permit the men to earn a decent days wage? liON. H. STARKES: (t!INISTER OF HIGHWAYS): '~r. Speaker, the question involved

July 17th. 1970 Tape 1305 PK - 6 ~m. STARKES: is whether or not there should be special amounts permis~ible on the rear axle of a truck. The present amount is 18,000 pounds on a single rear axle. That is standard across Canada, from St. John's to Vancouver and the Yukon and the Northwest Terrorities. We allow a ten percent tolerance, and that is high as any province of Canada allows. MR. COLLINS: Mr. Speaker, we have to take the minister's word that this is standard across Canada. It has also been indicated that the restriction, I call it a restriction, has been approved by the Canadian Good Roads Association.

But, Hr. Speaker, this is in terms of operatin~ on pavement. And the particular . . . MR. SPEAKER: Is the hon. gentle~~n now going to ask a question or is he presenting an agrument? }ffi. COLLINS: No, I have to give a little background before I pose the question. Those people are operating on pavement in Central Newfoundland - are they going to be torn up and destroyed or to be buried by fill~ }m. SPE.~ER: The hon. member is now presenting an argument, and not asking a question. Would he please come to the question? MR. COLLINS: Hr.

Speaker, well might I rt:'{ue;;t the minister,on behalf of the truckers of Central Newfoundland,to have a thorough investigation carried out, because those people still feel that they are being discriminated against- and on the basis of what I have seen - ~m. SPEAKER: This is not a question. I have to advise the hon. member that it is not a question. He is making a request to the minister and he is in the presenting an argument. It is not even/the guise of the question. MR. COLLU:S: Well, Hr.

Speaker, let me say this, will the minister indicate to the House whether he will have a thorough investigation carried out? OP~ERS OF THE DAY MR. CROSBIE: I v10uld like to ask the Hinister of llealth whether he can report to the House on '1-rhether or not negotiations with the representatives of the Registered Nurses of Newfoundland are concluded? And if so, what salary arranr,ements or other arrangements have been entered into with the nurses? 7755 I I I j

I i July 17th. 1970 Tape 1305 PK - 7 J!O ~_._J~I\ERT S: (HINISTER OF HEALTH): Nr. Speal:er, the ne~otiations are not concluded. I will be communicating with the Association of Nurses during this day, further to the ne~otiations vhich were carried on by my officials, and the represcntativesof the nurses all day Wednesday and discussions yesterday. . I I do not think it would be in an~1ay in the interest of the nurses or of the public to say anything more at this stage. iiegotiations are still going on, Sir. HR . CROSBIE: !'r.

Speak e r, I would like to ask the Acting House Leader, the Hinister of Health,whether the Hansard is completed up to the time ~ve adjourned in June? And if so, when will we receive copies of Hansard? There are about three weeks missing, I think. HR. ROBERTS: Hr. Speaker, I do not know, I will lDldertake to get in touch with the Editor and find out the answer and indicate it to the House. ~m. CROSBIE: Mr. Speaker, I would like to ask the hon. the Premier a question.

Kave there been any further guarantees made or any further advances of money by the Government or any agency of the Government to Sea Hining Corporation Limited, since the matter was last reported to the House in April or tlay? :1-ffi. SPEAKER: That question could more properly go on the Order Paper. HR. CROSBIE: I have asked a question, Hr. Speaker, perhaps the hon. the Premier would like to answer it? HR. SHALLHOOD: Hr. Speaker, I know I am not required to answer, but the hon. gentleman is so courtesy, polite and ingratiating and handsome, especially handsome, hirsutic, (He is hirsutic all right!

There is no doubt about tha~l that I am willing to say that in my recollection the answer is no. I do not think,since we last reported to the House,that there has been any increase in loans to that company. I may add that the company is being very carefully reviewed and examined by people in the United States and in Canada and in this part of Canada as well, namely, ~Iewfoundland . and that it is entirely likely that some reorganization,rather sweeping reorganization,is about t o take place. 775(i

July 17th, 1970 Tape 1305 PK - 8 MR. l!ICKHAN: Mr. Speaker, a supplementary question. The investigation that the hon. the Premier refers toJsea mining, is that be~ng carried ou~ by a Ur. Kenneth E. Winfield in behalf of Government_, this Government~ l-!R. SMALLHOOD: The gentleman in question, who is by way of being a bit of an expert in that field, but only one aspect of that field, namely; sales - ales promotion of the finished product is only one small part of the enquiry where the hard look is being taken. It is just one smal1 1 one of the smallest parts of the look that is being taken.

He is representing the Government in the matter. though. ~11, he is technically representin~ the Government, though the Government are not paying him. MR. CROSBIE: ~fr. Speaker, I would like to ask the hon. the Premier another question, he appears to be in such a reasonable mood this morning. ~IR. SHALL\-.'OOD: I am always like - I am always that way, where the hon. gentleman is concerned, I am always the milk of human kindness. MR. l!ICKNAN: Oh! there is another plot on the go sometvhere, I can see that. NR. CROSIHE: \,Tell I hope that there is not going to be any curdly cream before this session is over .•.

"the milk of human kindness." HR. S!!ALLI-IOOD: That depends. That depends. MR. CROSBIE: Well, Hr. Speaker, while the Premier is so apparently reasonable, can he tell us whether the Government has appointed, as yet any firm to act for the Government in the supervision of the Helville Fourth !!ill Project at Stephenville? HR. SMALI.\~OOD: The answer, Mr. Speaker, is ''yes" and "no." "No," technically, "yes, " actually. He have appointed Sandwell-and Company of British Columbia and two of their key men have been there and discussed the matter with us.

And they have been thoroughly breifed by the Department of Justice, as to the agreements and the sort of thinp, that they ·1-1ould be expected to E-upervise, to check and double check in behalf of the Gov~rnment from a technical point of view, not from an economic or a leeal point of view, but .,rhat are the thin~s the leJZislation requires shall be done technically, because they are techniciRns. 7757

.July 17ch . 1970 Tape 1305 PK - 9 ~.fALLWOOD: And they have accepted the job and we are waitin~ to hear from them, as to hol-1 much they will charge. \ole do not l\Tant to close it finally without knowing exactly what they intend to charge us. But Sandwell, one of the great paper mill engineers, pulp and paper enp.ineers of Canada, it was with that firm that our Olm Newfoundlander, Hr. Gerald Penny, former Nill Manager of Corner Brook was employed for years uatilo he went with the United Nations. The answer really practically speaking is "yes, we have engaged Sandwell." HR. CROSBIE: In that connection, Hr.

Speaker, is it not so that under the ~telville Agreement the Melville Company would have to pay for the services of his - }!R. SHALLlJOOD: That is right, they do pay for it, but it is only right that we should know the price as we are engaging them. 7758

July 17th, 1970 Tape 1306 JM - 1 MR. HICKM.t\N : Mr. Speaker, on Orders of the Day, would the hon. Minister of Public Works indicate to the House when work will commence or has work commenced on the three Expo huildings as indicated? MR. CHA~KER: Mr. Speaker, I will take notice of that question. MR. HICKMAN: Again on Orders of the Day, Mr. Speaker, would the hon. Minister of Mines, Agriculture and Resources indicate to this House what steps he has taken as a result of representations from the Fortune-Grand Bank Town Councils concerning a new community pasture in that area? MR.

CROSBIE: For the member to go out on. ORDERS OF THE DAY: MR. COLLINS: Mr. Speaker, before we go into Orders of the Day, I have a question for the tfinister of Mines, Agriculture and Resources. There is a community pasture already being cleared in the Baie Verte road area and it is my understanding that people working there have not received their pay check for the past six weeks, can the Minister indicate if their time has been received or if the cheques have gone out? MR. HICKMAN: Mr. Speaker, would the hon. the Minister of Supply indicate when advertisements will be carried to fill the post of Ombudsman? MR.

SPEAKER: Order! MR. CROSBIE: Mr. Speaker, I have a question for the Minister of Municipal Affairs, could he tell the House whether the audited statement of the accounts for the town of Bay Roberts,audited by the Auditor General,have been received for the year 1969 and if so would the Minister table them in the House? MR. DAWE: No, they have not been received but I will take notice of the question.

On motion of ·the hon. the Premier, a Bill, "An Act To Amend The Government-Newfoundland Refining Company Limited(Agreement) Act, 196R, And To Ratify, Confirm And Adopt An Agreement Made Between The Government, Newfoundland Refining Company Limited And Other .Companies And To Make Provision Respecting Other Matters Connected Therewith," read a first time, ordered read a second time now,by leave. MR. SPEAKER: Is it agreed? 77ti9 I ' II I J

I I II July 17th, t<l70 Tape 1306 JM - 2 HR. MURPHY: We agree, Mr. Speaker, if the Acting Leader of the House agrees to close at six o'clock of this day. MR ~BERTS~ That we agree to adjourn the House at six o'clock, and meet l'fonday morning. That is wh:~.t we agreed? Motion: Second Reading of a Bill, "An Act To Amend The Government- Newfoundland Refining Company Limited(Agreement) Act, 196R, And To Ratify, Confirm And Adopt An Agreement Made Between The Government, Newfoundland Refining Company Limited And Other Companies And To Make Provision Respecting Other Matters Connected Therewith." MR. SMALLHOOD: Mr.

Speaker, I do not intend to engage the attention of the House very long because I do not see any particular need for me to do it. The Bill that was passed into law a couple of years or more ago is still on the statute books, it is the law of this lan~ ~hat we are asking the House to consider is a series of amendments to it. The amendments, of course, had been drafted by lawyers, lawyers representing the Government and lawyers representing the Shaheen people, and these amendments are long and torturous,phrased in legal terminology,and will doubtless be considered in great detail in Committee of the Hhole.

I think it is enough for me to say,in moving Second Reading of this Bill, in other words second readinr, of these amendments, in asking the House to adopt these amendments, it is enough for me, I think, to speak in the broadest possible terms about them. The first point I wish to make is that the Come By Chance program so far as concerns the Come By Chance, so far as concerns the refinery, so far as concerns the actual physical work,is unchanged.

The project is exactly as it was passed by this House two or three years ago, that is to say it is a 100,000 barrels a day oil refinery or.more properly,--a core.chemical plant, a sophisticated plant producing a number of products including core.chemical, that is the core stock for petro-chemical industry. There is no change in this. t is the same plant. t is the same project, It is the same thing exactly,physically,as was envisaged from the beginning. What we are asking the House to do is to agree with the Government in the changes we have negotiated on the economic side of this project, Physically, 7760

July 17th, 1970 Tape 1306 JM - 3 Y.fR. SHALLWOOD: technically,it is exactly the same, no change. The same size, the same appearance, the same design, the same number of barrels a day, the same number of employees, no change, in the same place,Come By Chance, no change. The changes we suggest and we ask the House to agree to are on the economic or financial siue of the deal .

Now it is absolutely imperative that I should point out to the House the urgency of prompt action, not precipitant action but prompt, that we should apply ourselves indefatigably,in the interest of the Province,to our consider- ation of these changes. The House is aware of the fact that its British Banks, (nine,I think,of them} that are financing this here,in the main.

These banks are putting up well over ~100. million in Canadian dollars, this syndetic of banks in England and Scotland headed by Kleinwort-Benson,at five and a half per-cent interest, probably the lowest rate of interest in the world today, Interest is running eight, nine, ten, eleven, twelve per-cent but this is five and a half per-cent. The reason the British Banks can lend this money, this first mortgage money,for eight years at five and a half per-cent,is that the British Government areguaranteeing it.

If the British Government were not guaranteeing it the banks in England would never dream of lending that money at five and a half per-cent, there would not be a chance in the world. But the British r~vernmentJthrough ECGD, that is to say the Export Credit Guarantee Department of the Government, which is in very close connection with the Bank of England and with the British Boa~d of Trade,which is a Department of the British Government, Export Credits Guarantee Department guarantee the repayment of that money to the banks but they lay- down the rate of five and a half per- cent.

If they did not guarantee it at a rate that they lay down, and remember it is ECGD that lays down the rate, not the banks. They are told what interest they are to collect on the loan, they are told by ECGD and the banks agreeing to that rate as the price the banks pay for getting the guarantee off the British Government. Now. Sir, when the rate cf five and a half per-·cent was laid down it was not very much below the going rate in Britan for first class paper for large industrial projects. I do not know, in fact, what the goin~ rate was 7761

July 17th, 1970 Tape 1306 JM - 4 MR. S~!ALWOOD: but it was not as low as five and a·half per-cent and I would say not as low as six and a half per-cent. It was probably around seven, seven and a-half per-cent, something of that order, I really do not know. I do know that there was not all that difference between the five and a-half per-cent rate set by the British Government and the going rate on the commercial market. But, Sir, since then see what has happened!

The five and a·half per cent rate to this moment stands unchanged but the going rate on the commercial market has gone up continually until today it is not too far short of double the fi'tre and a- half per cent. Th_e result is that the banks are kicking, they are kicking strenuously. Let me give the House an example of it~ I will table this for hon. members to see for themselves. This is the ''times', the"'London Times""of Monday, July 6th, 1970, that is eleven days ago. the"Times·: the thunderer, the o,ld thunderer, the"Times of Londonhand this is what they said. I will table it and I will do better than that.

I have had photostats made of it and I will distribute these to all the membership of the House and to the press as well. This is what the ''rimes .. , the business

section of the"Times of ,, London,said about this five and a·half per cent. "British bankers are now optimistic that the Governmeat': lthat is the British Government)'' will permit an improvement in the concessionary terms on which credit is made available for the benefit of British exporters and shipbuilders. Last year's agreement, to continue supplying credit at 5~ per cent,-for periods of over seven years, formally expired last Tuesday." Now would the House please take note of that.

On the 6th of July,which was'a Uonday,the'Times"says that the agreement between the British Government and the British Banks,for 5~ per cent money, formally expired last Tuesday, that is the 30th of June. "But the banks are continuing to make credit available at this rate, the 5~ per-cent rate, :fn the face of rising demand from exporters who fear that the terms may soon be •:hanged." Now here it is quite evident. The banks would like the rate raised, the exporters would like to keep the rate dot~.

It is for the benefit of Rritish exporters, factories of all kinds in firitan, for them it is good that the rate 7762 I.

July 17th, ]!)70 Tape 1306 JM - 5 HR. SMALLWOOD: is only S!:; per cent because that hrinr:s business to them, to Britain for export. So the exporters, the factory people 1 want the rate held at 5~ per-cent but the banks are ~rumbling furiously and are demanding that the rate be raised. The banks are continuing to make credit available at this rate,in the face of rising demand from exporters who fear that the terms may soon be changed, hey fear the rate may go up.

There has been a change of Government in the United Kingdom. ','The change of Government makes a speedy end to the negotiations, which began in May, unlikely though some bankers hope that a solution may be reached within.t:he next month or two. At issue is both the rate of interest charged and the possibility of the authorities assuming more of the burden of financinp, export credit themselves. A rate',(now hear this, ~fr. Speaker, to quote a famous Newfoundlander hear this)'' a rate of 6~ or 7 per­ cent would accord more closely with overseas practice.

The problem will be to find a rate which is likely to be reasonable not only now, but in the future. This makes it necessary to take a view about interest rate trends, since the purpose of export credit facilities would be defeated if the rate had to be changed at frequent intervals; They cannot change it too often. "The position is further complicated by the review currently bqing undertaken by the Organization for Economic Cooperation and Development ,"(OECD) "of the whole question of export credit. They are concerned about the implications of the growth of such credit which in Britain's case amounted toXJ42m.

In 1969 alone;i342m is 3/4 of a billion dollars, something of that order. Now that is the news item and then they have an editoral on it and I will circulate both to hon. members. "Export Credit: the Banks' unprofitable task" is the heading.

"The problem of reaching a new agreement with the clearing banks on the provision of credit lines for the benefit of British exporters and ship­ builders· will not be an easy one for the authorities ~'lthat is for the Govern­ ment) ·rn the first place they will face far stronger demands than before from the banks to raise the rate of interest charged from the current S~ per cent level, improve the existing offical refinancing facilities or both. But they 77G3 I i

July 17th, 1970 Tape 1306 JM - 6 will also have to pay regard to the growing international concern, notably within the Organization for Economic Cooperation and Development, about the worldwide escalation of export credit facilities generally.'' Now, Mr. Speaker, this is one of the most important sentences I have read for the last ten years in my personal experience.

I happen to know that the Government of Canada has recently, within the last month, raised with the Government of Britain the question of exports from Britain into Canada based on this cheap interest rate because obviously Canadian manufacturers of, ; for example, paper mill machinery, Canadian manufacturers of, for example, many of the things that go into an oil refinery. Canadian manufacturers find it not only difficult but quite impossible to compete with British goods shipped out here at a cost of 5~ per-cent money.

So, I happen to know that there has been discussion between the two Govern- ments on this question of export credits from Britain, the rate of interest, the low rate 510 per-cent, and not only that but throughout the world there is a growing concern about this same thing and there is a growing demand,certainly with OECD. a growing demand that there be a curb placed on this kind of concession because it is a sort of free trade, a type of free trade within a protectionist society.

"The banks' case is a simple one. ( The 5~ per-cent rate was fixed in 1962 ;• Will the House bear that in mind, this 5~ per-cent rate of ECGD was fixed in 1962 when it compared favourably with the return open to the banks from other lending and investment opportunities.

"Since . then the banks have assumeo reponsihility for providing credit at 5~2 per-cent for over seven years, for over seven years they have been lending this money at 5~·per-cent, the total volume of export credit has escalated sharply and, above all, prevailing , interest rates have been·far higher than envisaged in 1962. (that is the going rate).

"In March" (last March) "the banks found themselves with about .E850m. of "cheap" credit on their books and faced forward committments of the same order •• " Not only with ~850m. on their books but faced forward committments of about the same amount,~l600m. or ~1700m •. Multiply that by 2~ and the House will see what a staggering sum of money the banks in England have 77G·l I'

July 17th, 1970 Tape 1306 JM - 7 MR. $HALLWOOD: - ---------- advanced under this Rritish Government guarantee scheme. ''These are large figures in the context of total advances, bills and credits of underi6,500m. Moreover, the blue chip interest rate and the deposit rate are R and 5 per-cent respectively and were recently a point higher apiece. ''The banks could earn far more from deploying their funds in other ways, .• the British banks obviously can earn far more than 5~ per-cent if they lend it in almost any other direction, and it is even doubtful whether lending at 54 per-cent shows a profit margin at all.

It is questionable whether they make any profit when they lend money at 5~ per-cent. 'Nr. Mather, general manager of the Midland Bank, spoke for much of the profession when he said in his recent presidential address to the Institute of Bankers that "banks are business enterprises, with responsibilities to customers and shareholders and not primarily instruments of government policy. The word ''primarily" is the key.

Most bankers still accept that they have a public service to perform, or at least that life could be made unpleasant for them if they refuse to recognize it;· (made unpleasant for them by the government of the United Kingdom.) "The banks' relations with officialdom are ones of swings and round- abouts. Providing cheap credit is probably a swing on which the banks must expect to continue to lose money. However, they are entitled to try to reduce the loss by pressing for better terms.

Most industrialized coun~ies employ rates higher than 5~ per-cent--the average probably lies between 6 and 7--and many operate more generous refinancing facilities. These should be concluded as soon as possible: the present state of uncertainty has led to an undesirable I escalation in applications for credit while the 5~ per-cent rate still obtains. The fear of the rate going up has caused all kinds of applications to pour in for guarantees under the ECGD program of 5~ per-cent money.

This again is putting more pressure. ~101o1 we have the S!1 per-cent money so long as it is 5~ per-cent money.F.CGD have agreecl TI1ey will give us 5~ per-cent if we close the deal before the rate goes up while the escalation and applicatjons for credit while the sti per-cent still obtains. But they will have to pay regard to the thinking of the O.E.C.D.,which is concerned that the rate of expa11sion of export credit(40 per-cent worldwide in 196~ alone) is getting out of hand. 77G5

July 17, 1970, Tape 1307, Page 1 -- apb MR. S~..ALL 'If.'OOD (J .R.): • Existing international agreements are flimsy: the Berne Union~for instance, has very little to say on the question of interest rates, the dangers of cut-throat competition are severe and there is little point in stimulating world trade by inflationary mechanisms which may impose impossible burdens of debt on importing countries.

"Any new British arrangement may have to be reviewed if O.E.C.D. export credit group comes up with positive proposals for rationalizing matters.• I circulate this to all bon. members of the House and also in the press gallery. Now Sir, we believe firmly and fervently that we must get these two contracts signed before the end of this present month. There are two that must be signed. One is the financial agreement with the banks, under which these banks, this syndicate of banks,will put up the money at five and a half percent interest.

We must get that signed , and we must get it signed before the rate of interest goes up. The other agreement we must get signed is the one with Procon for the construction of the plant. These two must be signed and there ' is no use signing one without the other. It is no use getting the construction contract signed - useless, waste of time, waste of paper, waste of everything to sign the contract for the construction unless we first get the contract for the ~inances. So the two go hand in h~nd, back to back, to be signed together.

On the same occasion. in the same office on the same desk, the two agreements will be signed back to back, one to provide the money and the other for the construction contracts. We want to d.o that. We believe "!ith all our hearts we must do that before this month expires. We have good reason to believe that the rate will not be increased in this present month. We have good reason, ex~ellent reason. Hay I say apropos that statement,Mr. Speaker, that our lawyer in this matter is I,.ord GoodlTlBn. Lord Goodman is now perhaps the greatest lawyer in England today.

There was a one hour -(he is a very expensive man but he is England's greatest lawyer)- there was a one hour sho"]? G f on the B.B.C., the other night just about Lord Goodman, one hour. He is an

July 17, 1970, Tape 1307, Page 2 -- apb incredible figure, wei~hs about 300 pounds. He was personal lawyer for Prime Minister Harold Wilson, and while he was his personal lawyer he was also the personal lawyer for Opposition Leader Edward Heath. Now he is the lawyer for the Prime Minister,Heath, and the Leader of the Opposition, Harold Wilson. Be is the personal lawyer, the personal solicitor for both of these men. For the British Government he has performed incredible tasks - legal tasks and others as well. He is one of the most fascinating figures in the whole of England today. He is our lawyer, and he has played a notable

part indeed in getting the approval of E.C.G.D. We are convinced,Mr. Speaker, that the rate - the interest rate will not go up in the present month. We are convinced of that - that is why we want to sign this deal before this month expires. Now today is what? The s~venteenth, We .want to sign the two contracts on the 30th. of this present month, the 30th. The contracts have to be written and they are not written, They have to be written and they will not be written until after this ler.islation is adopted,if it is adopted.

After it gets Royal Asseent and is the law of the land, then and then only will the lawyers draft the contracts. The contracts have to be vetted by this Government. Our lawyers have to vet them. we will engage other lawyers from outside to help us to vet them. The E.C.G.D. lawyers will vet them. The British Bank's lawyers will vet them, the Shaheen people's lawyers will vet them, It will be a gigantic legal vetting program,after they are drafted. We have had some pretty interesting experience in dealing with lawyers,in these massive matters,i~ recent weeks and recent months.

They would send you up the wall, I do not wish to be offensive to any bon. member in this House who is a lawyer, but they would send you up the wall - they would send you berserk, they would send you into a gibbering idiot needing a straight jacket. Your Honour, I exempt Your Honour - Your Honour would not do that,! know, but I do not know about other lawyers. They are really a race of men apart. Now, if we do not sign these two agreements by the 30th. it could be the 31st. I think that is puching it a little too close. I want to 77G7

July·: 17, 1970, Tape 1307, Page 3 -- apb get them signed on the 30th. of this month, · And the rate goes up, here is what it will cost Come by Chance, here is what it will cost. Let the rate go up one-half of one percent from five and one-half to six per cent far eight years, that will r~n to about three quarters of a million dollars a year. I have the figure here, $700,000. This would be, in fact, the figure I have is from $700,000 to one million, somewhere in that order.

This would be over the period of the first mortga~e, seven years, eight years. this would be a $2.5 million more cost to build Come by Chance. $2.5 million more, that is one·half of one percent interest increase. MR. WELLS: Six million over eight years, three quarters of a million a year. MR. SMALLWOOD: It is so much the first year, less the.second year, less each year, it is a declining balance •••• MR. WELLS: So it is not three-quarters of a million per year. MR. . SMALLWOOD : Not for each of the eight years. It would be that, between three-quarters of a million in the first year.

It would be less than that in the second year. It would be still less in the third year, but it would run we think to about $2.5 million for the period of the first mort~age,which is eight years. Now, at one percent increase, if the Btitish Government put up the rate to six and a-half percent,this would be one and a-half million to two millions extra per year,in the first year, and declinin~ in amount in each of the succeeding seven years, but running to a total of about five million dollars for the term of the first mortgage.

So orie.half of one percent increase in the interest rate will cost the refinery $2.5 million more to build and an increase of one per­ cent will cost $5 million more to build. ls it worth the while of this House, and of every bon. and patriotic member in it, land every member in it is honourable and patriotic) is it worth the while of every hon. and patriotic member of this House to save $2.5 or even perhaps $5 millions in the cost of this oil refineryl To do so, it is absolutely imperative that we get this legislation considered and debated . and go into Committee of the Whole and 7768 •

July 17, 1970, Tape 1307, Page 4 -- apb take it line by line and word for word, and get the Royal Assent to it early in the coming week. What date will Honday be? The 20th.?. Tuesday will be the 21st., and Wednesday will be the 22nd. Thursday will be the 23rd.,leaving seven days in lvhich to write and vet these crucial, vi tal contracts. Now I will say right off, and I would be less than honest if I failed to say right off that these contracts do not have to be started from absolute scratch. You know, the day this legislation is given the Royal Assent, they know what will be in them, But Hr.

Speaker, I have had the bitter experience of having a conference and presiding over a conference with ten or twelve lawyers representing different sides and we came to complete agreement and then the lawyers went off to draft and then it started. Then the fur began to fly. When these differing lalryers who had agreed in a conference as to what was to go into an agreement got down to the nitty gritty, the nuts and bolts of writing the words and getting these lawyers to agree on what should be the final words in this clause or that, this is what eats up the time.

This is why lawyers are such successful men, and very few of them ever are so unfortunate as to go on the dole. Most lawyers manage somehow or other, especially other, to keep off the dole. Perhaps one of the most useful ways they have is in differing in their ways of expressing,in words,ideas on which they are in complete agreement. But, when they get it down in words the agreement seems to have disappeared and you start all over again, another conference, and the lawyers go back again,and again another conference.and it goes on until you are ready to be tted in a straight jacket.

How many time in the two and one half weeks I was in New york and London was I fit to be tied1 How many times did the lawyers on one side look upon the lawyers on the other side as. cretins, look upon them as complete imbeciles, look upon them as criminals and imbec:iles, no doubt having those feelings reciprocated by the lawyers on the other side. MR. ROBERTS: (Inaudible) MR. SMALLWOOD: -------- ---- Yes, and there was some doubt about the ancestry of some of 77G9

July 17, 1970, Tape 1307, Page 5 -- apb them. Now, Mr. Speaker, what are the changes? The changes, though they are described in the Bill in very complicated language, lawyers language, necessarily so because it could always come to the court. Therefore lat~ers have to look·ahead to the possibility of this point or that point or this clause or that clause or this contention or that contention being submitted to a court and hammered out in court then ~oing on maybe to a higher court, So they try to anticipate every possibility, rherefore, the language is complicated, it is torturous, it does not read like an novel.

I have read easier things than this Bill~in my life. Hearing this today, really what we have are fortified, perfectly simple proposals. They are easy to discuss and easy to settle in principals. Number one is that the Government of this Province shall share in the profits of that enterprise,directly. We know they will share - every man that goes to work produces revenue for the Government. No man can go to work in Newfoundland at anytbing,if be gets paid for it,without contributing to the treasury of the Province.

I do not mean that, I mean direct sharing in the actual companies own profits_ sharing in those profits, so the legislation provides that the Newfoundland Governmen~for all times, forever, as long as the refinery may last, throughout its entire life, shall receive five percent of the gross profits of that refinery. This means·off the top"to use by jargon commonly employed~people in industry, in finance and tax circles. Five percent off the top, before they pay any tax, before there is any depreciation, right off the very top, the gross profit, five percent of that.

Now we are getting eight percent from Brinco, It was this Brinco plan which I devised twelve years ago, fifteen years ago, how long ago? It is longer than that. I devised the Brinco formula in which the Government of the Province was to share in the profits,off the top, the ~ross profits before taxes, of all the gross profit of Brinco. I devised that. That is my baby. But it is eight percent off the top, and it is eight percent because Brinco has no assets except what this Government gave them, none, none. We gave them the minerals in the Fround or the right to exploit. We r,ave 7770 II

July 17, 1970, Tape 1307, Page 6 -- apb them the Churchill Falls power - the whole Churchill water3hed. We gave them that and we said; " all right, as we are giving you these assets belonging to the people of Newfoundland, we are giving them to you to develop and make profits from, we want a share of those profits, apart from taxes." Of course we get taxes too, of course we get employment, of course we will get revenue through the employment, of course the treasury will benefit;"but over and above all that we want eight percent off the top of your gross profits" . and we got it.

This is what gave me the idea to go ~o Shaheen and ask him for a share of the profits,off the top,and accompanied by the President of the Council, the Minister of Justice, the ~inister of Health, the Minister of Supply and Services, I went to New York - the four of us went to New York in January past, 1 think it was the 24th. of January, we went to New York and we submitted this idea,to Mr. Shaheen, of a share in the gross profits right off the top, before anybody got anything except the bare expenses of the project.

The first charg~ when the expenses were met, before anyone got any taxes, before anyone got anything, it would be five percent off the top for the Newfoundland Government. Now I began those negotiations with Mr. Shaheen just about a year ago, but in January - January 24th. I had it far enough ahead to go to New York for a showdown and we had the showdown and Mr. Shaheen agreed.

He said, " It is not the deal we made." I safd, " I know it is not the dea you made." " Are you going to renege on the deal you made?' You know the argument, you know the businessman's jargon, you know the way a business man looks upon a contract as a sacred thing. Once it is made it is made, there is the contract, there is the law, there is what you made with us, •are you going to renege on that?" My answer had to be;no there is no reneging we want you to agree, we want this to be mutual.

Let us both agree that you will pay five percent, Of course I had all I could do to keep from smiling at that because you know this mutual agreement, It was really the bludgeon. Uhat else was it? Then we negotiated later here in St. John's, and we brought Mr. Shaheen down here and some of his key men, and came in the Cabinet and we told thea that we wanted some money out of the refinery before he would take it 7771 I ,.

July 17, 1970, Tape 1307, Page 7 -- apb over, after the debts were paid off. He had to pay off all debts, he had to pay off $155 million worth of debts. He had to do it in fifteen years and when he had the debta paid off then he had the right to buy the whole property for $2,000. - buy the shares of the company that owned the property. We said ·, when we told him that we wanted more than $10 million - $10 million is what we finally ~ot by the hardest kind of hard bar~aining - that hardest possible kind of hard and tough bargaining we got $10 million for it.These are two things we have. Now •••.. MR.

CROSBIE: (Inaudible) MR. SMALLWOOD: No we are not, we are only putting up $30 million. MR. CROSBIE: (Inaudible) MR. S}~LLWOOD: No we are not, no, the British Government are, the British ·---· Banks, no, no, the British Banks guaranteed by the British Government are putting up the money except for $30 million, and $10 million. Shaheen is putting up $10 million, we are putting up $30 million, that is forty and the British Banks guaranteed by the British Government are putting up the rest. We are not guaranteeing any of that. MR. ~ARSHALL: Who will pay it back? MR. SMALLHOOD: The enterprise, Technically we do.

The House must be well aware of the fact that the structure, the refinery,when it was passed by this House two or three years ago.was based on the idea of its being a Crown Corporation for the non-payment of corporation income tax to the Government of Canada. HR. HICKMAN: That is still true is it not? MR. SNALLHOOD: No, that is not true. MR. WELLS: It is still the corporate position, but it is not the purpose any more. That purpose is abandoned. MR. S!1ALLWOOD: It is not even the corporate position. The position of the Corporation is that they must pay taxes like any other corporation HR.

WELLS: I meant the technical structure of the Corporatio~. MR. S~~Lt-l'OOD: The technical structure is still a Crown ~orporation. 777~! 'P

June 17, 1970, Tape 1307, Page 8 -- apb Technical!~ yes. MR. WELLS: Rightl MR. St-'ALU.TQOD: -------- -- Yes it is, oh yes, That has not changed but this Crown Corporation has ceased to be a Crown Corporation in the very field for ~,rhich it was made a Crown Corporation. It was made a Crown Corporation so that it would be exempt from the payment of taxes to the Canadian Government. MR. WELLS: ----- -- But that reason for its being a Crown Corporation no longer exists. MR. Sf-1-ALLWOOD: That is gone. ~IR.. WELLS: It is gone, yes. MR. SMALLWOOD: Now, Mr.

Speaker, in addition to that $10 million, that five percent off the top, and the $10 million for the shares when all the debts are paid off, in addition to that we save,something of the order of $1 million a year for fifteen years for a total of $15 million,on the power. The House will not find that in the legislation. In the legislation.that was passed a couple of years ago, it is provided that power shall be sold to the refinery for two and a-half mills, two and one-half-tenths of a cent or one-quarter of one cent a kilowatt hour.

Of course, at the time that was done the power would not cost much more than that if any - much ot any more than that at the time that was done, But there has been a great escalation in the cost of power since the~ a very great escalation indeed. for them to get power at ~·o and one half mills now, would involve the Power Commission in a heavy loss and only the Newfoundland Government could pay that loss,under the Act as it was passed a couple of years ago. We have argued with Hr.

Shaheen that it is not right in view of the heavy escalation in the cost of power production, in view of that it is not right that we should continue to sell him power for two and one-half milia a kilowatt hour if that means we have to pay the Power Commission or we have to pay anyone roughly $1 million a year for fifteen years~ it is only for a period of fifteen years. The power price,in the legislation passed two years ag~,covers a period of fifteen years. It is not for the life of the refinery 7773

July 17, 1970, Tape 1307, Page 9 -- apb but only for a period - the first fifteen years that the refinery operates. That will run into about $15 million for the period. We argue that it is not right that we should have to pay the Power Commission that loss, indeed, it is not right that the Power Commission should have a loss. They should be able to sell the power without loss. Now we have accomplished that - that is happening. It is not through the legislation before the House today, it is not in that legislation. The legislation that was passed two years ago is unchanged in that regard.

That will stay in the Act as it appears there now. Power will be two and one-half mills, but that loss, what matters is not the rate at which the power is sold to the refinery, what matters is, whether there is a loss and who pays the loss. At the moment,under the legislation,the Newfoundland Government pays the loss, but we have an arrangement made,about which I wil~ tell the House,under which we do not pay it, Mr. Shaheen pays it or the project pays it we do not, the Newfoundland Government do not. Now, these are the three gains that we have made.

Number one; five percent off the top,forever,after the first mortgage is paid. It goes on for all times. It does not begin until the first mortgage is discharged - paid off. Five percent off the top. $10 million for the shares. We get those as soon as he buys the shares. If he could buy the s.hares five, eight, ten - if he could buy the shares nine or ten years after he goes on stream, that is just fine for him and fine for us,obviously.

That means that the $30 million will be paid off and the first mortgage would be paid off, the full $155 million would have been paid ofL l .f he can pay it off in nine or ten years then he can buy the shares at that point,when he pays off the debts and he pays us $10 million for them. Finally,as I say, the third point is that we save approximately ·. $1 million a year to the treasury in connection with the power. Now, let me say this.Mr. Speaker, without this Bill,that is before the House today, the Government in any case stood to take in a substantial sum of money from this refinery.

In a thirty year period we stood to take in $88 millions,Without any changes, without any of these improvements, the total 777j was $88 millions, That is in the first thirty years. In the second thrity years ••••

July 17, 1970, Tape 1307, Page 10 -- apb MR. CROSBIE: How is it arrived at? MR. SMALLWpOD: Well I am coming to that, in the second thrity years there be would~another $88 million or more because, I cannot 7775

July 17 1970 Tape 1308 page 1. imagine in the next sixty years this world not escalating and everything not going up. It is either going to go up or going to go down. It is unlikely to stay still_ highly unlikely. That $88 million would come to us in any case, Suppose the House adjourned today, no, if it adjourned today there would be no oil refinery. I mean if we prorogued today, suppose we did not pass this legislation, I was going on to say we would get $88 million anyhow. Of course we would not because there would be no refinery.

But suppose we did not have to have this legislation that is before us today, then the legislation that was passed two years ago wouud pump into our treasury of this Province the sum of about $88 million. Now, the House may ask how do you come to that figure? We get it in a number of ways. For example: Half of every dollar they make they have to pay to the Canadian Government in Federal Corporation Income Tax. Little over half is it not? TWo per cent of that is our tax, somewhere arourtd there. Anyhow fifty-two cents out of every dollar they will make goes to the Canadian Government.

And we get about quarter of what Ottawa gets. Ottawa pays back to us about one-quarter. That runs into a lot of money in thirty years. Then in addition to the corporation income tax and we know of course in the Government, the Opposition do not know because we have never tabled and we have no intention of tabling the original feasibility report done by U.O.P. We have tabled that to the Canndian Government. They have had it. And we have tabled it with the British Government. They have had it. And we have tabled it with the syndicate of British banks. They have had it. And we have tabled it with Procon.

They have had it. It is easier for them to have itJalthough not necessarily did they ha~e to have it, not necessarily. Even though they are wholly owned by U.O .P., the people who made it, They are pretty well at arms length in the conduct of their different businesses. We have never tabled it in the House and we have no intention of doing for reasons that the House knows. All the commercial secrets of that enterprise are there in that report. But the House has received the Jacobs report on it. 7776

Julj. 11 1970 Tape 1308 page 2. The Jacobs Engineering Company's Report,appraisal. Their assessment and their evaluation of the U.O.P. report has been tabled in this House and the Rouse knows from Jacobs Engineering that it is a profitable and viable enterprise. This is known. The House knows this. And we know in the Government what the profits are of this enterprise. They are good, They are quite good. It is a profitable enterprise.

And fifty-two cents of every dollar profit that they make goes to the Canadian Government and we get quarter of it back, handed back to us, Every three months, .from the Canadian Government, a cheque is sent down to this Government. That is revenue coming into this Treasury from Come by Chance, true via Ottawa hut it is from Come by Chance. Then in addition to that tax, corporation income tax, there is a federal personal income tax collected from every employee in the . refinery and every employee connected with the refinery.

And we get,of that, one- quarter of the corporation income taxes,the refinery will pay.out of that we will get in our Treasury in this Province. And cue-third of the personal income tax that the employees and everybody connected with it , pay Ot"tawa, one-third of that comes back to us. And we can estimate that within $100,000 a year. And we have done so. That personal income tax is both federal and provincial. Now before any of that is paid to the Canadian Government, five per cent of the gross comes to us. Remember that, Before any of that tax is paid we get five per cent of the gross.

Then we get the S.S.A. that comes into us every year. We get the gasoline tax. We get the generous profits that are made on beer and liquor. Now all that we get on the agreement that was made two years ago. That comes to about $88 million for the thirty years. But the additional amount we get, additional revenue,is made up on top of that $88 million,is made up of five per cent off the top of the gross profits of the enterprise. A million a year saved on the power subsidy - that is only $15 million - because it is only for fifteen years. And $10 million to us for the sale of the shares.

That comes to $76 million And when the two amounts are put together we do 7777

July 17 1970 Tape 1308 page 3. not lose the $88 million because we are getting this $76 we get both. And that is $164 million, during the first thirty years. I heard on the CBC last night, twice, and again this morning, once 1 I heard:~ the CBC announce that I had declared that the Government were going to get this $76 million after the thirty years. We have to wait 1 in other words, thirty years to get that. The word "after" does not belong there. The word is not"after"the thirty years the word is "during"the thirty years.

If there is anyone from the CBC 1I have the temerity 1 the boldness to suggest to the CBC that they owe a duty, not to me but to the people of Newfoundland 1 to correct that. They did not deliberately set out to mislead the public they innocently and unintentionally deceived all who heard them. Will they please correct it? It is during the first thirty years this exact $76 million will be paid into the Treasury of this Province as a result of the Come by Chance project. Or putting the two together $164 million or a yearly average, in the whole of the thirty years, a yearly average of over $5vmillion.

Five and a.half million, five million, five and a-quarter million something of that order. Now it could be more because,obviously,toward the end of the thirty years it is likely that ' profits will be higher, that wages will be higher that they will pay more to Ottawa in federal corporation income tax,they will pay more to Ottawa in personal income tax and as they do we will get that much more for us. The amount is almost sure to go up during the thirty years, toward the end of it rather than at the beginning of it.

Now, Sir, I want also to say this: That this amount of $164 million during the thirty years is just for a 100,000 barrel a day refinery and nothing else. This does not count, this does not include any other revenue that the government might take in, in fact the sovernment would take in,if the refinery were enlarged. And I will be one of the most surprised persons,if I am alive if I am still living 1 if in the next five, eight years that is not put up to 200,000 barrels a day, I will greatly surprised. This is the record of oil refineries. They do grow. They do get to be enlarged.

And if this oil refinery goes to 200,000 barrels a day the profit they will make will grow. 7778

July 17 1970 Tape 1308 page 4. The corporation tax they will pay Ottawa will grow. The number of employees will grow. ·iThe personal income tax they pay Ottawa will grow. Our revenue will grow. As the refin~ry grows so will our revenue, it must. But this $164 million has to do only with the-refinery as it starts off at 100,000 barrels a day. And this sum of $164 million. in thitty years, takes no account of petro~chemical plants to be built in Come by Chance,based on the refinery or based on the core stock that would be produced in the refinery and sold to these chemical plants.

Now there are active negotiations with three large petro-chemical concerns. I only wish I could tell the House their names. I only wish I could tell this House and this Province the names of these three great firms whose names are internationally known, who have agreed to come into Come by Chance and establish petro-chemical plants, using some of the outputs of the refinery as their raw material. MR.WELLS: Already have agreed - and are coming in. MR.SMALLWOOD: Agreed to come in, if,as,aod when the refinery is built.

Obviously they did not agree to come in to Come by Chance without the absolute assurance of an oil refinery there. MR.WELLS: But it is a certainty they will come! MR SMALLWOOD: Certainly they will come. And one of them - I wonder if I dare say this - I wish I could - One of them has only three shareholders. And each of the three shareholders is a name that is known acress the world. I wist].·· I could give their names. I have saia a thousand times,Mr.

Speaker, that I would no more be interested in asking the Government of Newfoundland to put $30 million in that oil refinery for the four hundred or four hundred odd jobs after the construction is over, then I would fly. It is not just the oil refinery. It is the oil refinery as the ba~is of other things, other things.which can come if there is an oil refinery. But will never come,not to the crack of doom will they come if there is no oil refinery. It is these other things. 7779

July 17 1970 Tape 1308 page 5. It is the escalation in the industrial fabric, the industrial apparatus of Come by Chance that appeals so much to me and to my colleagues and my friends on this side of the House and I hope will appeal to all hon. gentlemen on the other side of the House and to all Newfoundlanders. It does not include this $164 million. It does not include any revenue that would come into the Treasury of this Province from a paper mill in Come by Chance. Now could I say something about that just in passing Your Honour? I know I must be relevant and I will be.

I have been asked to bring another piece of legislation before this House. I have not consulted my colleagues in the Cabinet on it. I only received it yesterday. But an approach has been made in England for the financing of a paper mill in Come by Chance, The contracts for the sale of the paper all signed sealed and delivered. They have the contracts from twenty-one newspaper publishers in the United States and in England. These publishers between them publish about 100 daily newspapers. They have the contract signed for the sale of the paper from this mill.

They Bre now rlegotiating for the finance to finance the mill, but, and here ~s the but, if you look at the Act you will find that the date has expired. They have no rights. Their rights have been lost. MR.WELLS: Expired in July. Expired July 7th. MR.SMALLWOOD: It expired I think same days ago. They have no rights. Now if the House is good and considerate and if my colleagues in the Cabinet will authorize meJI will bring a Bill before the House to extend it a year or so. House would agree to do that. I believe the MR.WELLS: No. No.

It is being extended, not without good reason- MR.SMALLWOOD: That is right, I know it has been extended. But the reason for the delay is the fact that the full concentration has been on the refinery. And my hon. friend,if he thinks a moment,will see the fairness of that statement. The concentration has been completely on the refinery. And you have to complete the financing of the refinery before you could take up the financing of the paper mill. And it is only in recent days 7780

July 17 1970 Tape 1398 page 6. MR.WELLS: The paper mill was on the go years before the refinery. MR.SHALLWOOD: I know, I am well aware of that. Ten years, twelve, fifteen years ago I was trying to get that paper mill. But not including any revenue from a paper mill, or from an enlarged refinery or from a petro- chemical complex at Come by Chance, the revenue to go into the Treasury of this Province in the first thirty years is $164 million. Now, what other changes are we asking the House to make~ We are asking the House to allow Mr. Shaheen or Mr.

Shaheen's organization to buy into one of out three crown corporations. There are three, holding, refining and building. Three crown corporations. We are asking the House to authorize us to allow Mr. Shaheen to buy ten per cent of the shares of holding, to be sold back to us at the same price,if the deal did not go ahead. The shares are only $200. Ke could manage that I guess. But he has to resell to us these shares/at the same price, if the deal does not go ahead or if anything happened to it after it went ahead.

On the other han~we are asking the House to adopt an amendm~nt here,giving the Newfoundland Government four directors instead of two on his company, on the operating company. MR.WELLS: Why does he want those shares? Why does he want - MR.SMALLWOOD: What he wants is this: He does not eeally want them. He does not need them and he does not want them. He wants them,he asked for them, but the reason he asked for them is because we are asking to have doubled the number of directors that we will put on his operating board. They are going to tun it. We are not going to run it.

I really do not know how to run an oil refinery. This is why we are making the deal with Shaheen, who does. He has built a number and he is running some. MR.MURPHY: Yes, I know, but this doubling the directors you know - HR.SMALLWOOD: Well we thought that to have only two directors on,out of twelve or fourteen or whatever it is,was somehow undignified. ·Maybe that is not the word - It somehow, did not look right. So we said; let us double the number of directors. He saidjwell I do not mind. He said, "you are ~oming in in a bigger way,into my company,will you let me go into your holding company 77R1

July 17 1970 Tape 1308 page 7. for ten per cent?" The minister of Health and the minister of Community and Social Development, both of whom are lawyers,were present at these and negotiations and helped to draft all these clauses,will be able to give much more explanation of the detail of this than I am able to do. I can only talk in the broadest generalities ,which is what I am doing here today. Talking just the broad generalities of these changes, and these great improvements,as we believe,that we are asking the House to make in this whole project. Now, Mr.

Speaker, the House has decided that there shall. be an oil refinery. This was decided here a couple of years ago. How long is it, when was that Act passed? Anybody remember? MR.'WELLS: May 1968. MR.SMALLWOO.t Two years ago. Just a wee bit over two years ago the House decided that there should be an oi~ refinery project and laid down the terms. Now we are asking the House not· to decide whether there would be a refinery- that is set, that is settled, that is decided in the Act of two years ago. This House passed that law, Made it law of this land that there shall be a refinery.

Today we are asking the House to amend that project by way of improving it to the extent of $76 million additional money into the Treasury of the Province. I have no desire and I know I have not the right, no matter how much desire I might have,to debate the original deal. That is ultra vires of the House at this time. Under ·the rules- we can- MR.WELLS: Oh no, no it is not - the whole thing - MR.SMALL'WOOD: The hon. gentleman will find that it is. If he looks up the rules he will find that when

an Act, when a Bill becomes

an Act and becomes law aud the next month or the next year or the next decade an amendment to it is brought into the House ,what may be debated is the amenc.ment not the original Bill. That is law. MR.WELLS: The whole agreement is up for discussion not the Bill, I agree, but the whole agreement,as it is now amended,in toto is up for discussion. 7782

July 17 1970 Tape 1308 page 8. MR.S~~LLWOOD: Well we will see as to how far the hon. gentleman is right about that. Now, Mr. Speaker, in conclusion I want to give Procon,'s time table. Procon assured us in London that if we can get this construction cOgtract signed by the thirtieth of this month, that on August 15, fifteen days later they would be in Come by Chance calling for tenders for local works there, excavation and the like, I suppose, and that approximately fifty men would go to work in September. By the end of September a total of about 150 men would be working.

The end of October approximately 200 men, would be working. The end of November approximately 300 men and the same number right through December add the winter and after April to go up by a hundred men a month, to a total of approximately 1100 men. Now that is the refinery. That is not the wharf. The wharf will take 450 men. So you will have 1500 or 1600 men working there in Come by Chance next year. That work would go on for about two years. Construction would go on for about two years,not counting work on a paper mill and not counting work on petro-chemical plants that would be built.

In the meantime, while the construction of the oil refinery was proceeding,construction of petro-chemical plants would begin. not counting any of that.it would be a total of fifteai, sixteen may be seventeen hundred men for the next couple or two and a-half years. MR.MARSHALL: Mr. Speaker, I wonder if the Premier has any letters of intent from any petro-chemical plant complex and so on. MR.SMALLWOOD: The petro-chemical companies in question would come to the government,if at all,only as a courtesy. They are not asking the government for any financial assistance of any kind, cash or guarantee in any form.

Even the land on which they will build their plants is land that already forms part of the refinery land. They have I think 1500 acres of land, which they have purposely for that purpose. So that they could go to petro-chemical companies and offer them not only the core chemical stock from the refinery but the land on which to build and operate and also could tell them that the ~overnment of Canada were building a large sixteen 7783

July 17 1970 Tape 1308 page 9. or seventeen or eighteen million dollar wharf, and that petro-chemical companies2 coming there would have the advantages of a wharf already built, of core stock raw material and land on which to build. So the~e,I am well aware 1 I have met them but they do not need to give me any letter of intent. Their deal would be with the refinery. They would make their business deals with the refinery not with the Newfoundland Government. Now they might very well come to the Newfoundland Government and ask for some help.

For instance in this kind of way: They might come and say: "Look as you have not got trained men living iru :Newfoundland who could go right to work in a petro-chemical plant, what about training them?" They are familiar with the manpower training schemes that the Government of Canada,through the Newfoundland Government and other provincial governments, have instituted.

They know that and they would probably come to us and say: "Would you help us to set up classes to train men to go to work in the petro­ chemical plant when we get it openedl" That is the normal thing that happens all across Canada and Canada Manpower not only give the training but pay the men while they are being trained. They do it through the Newfoundland Government. So to get thet done they would have to come to the Newfoundland Government. This is about the kind of approach they would make to us. I do not think of any other 7784 ll

July 17th. 1970 Tape 1309 PK - 1 MR. SHALLHOOD: because they do not want any money from us. They do not want any financial assistance or any financial help whatsoever. They could buy Mr. Shaheen and sell him over and over. They could buy him and sell him - they could buy and sell the oil refinery over and over. They are very big, very big internationally known companies,who would come to Come-by-Chance not because they love me or the hon. the member for Humber East or the new member for St.

John's East, not because of any love they have for us, not because they love the Liberal Government or a Tory Government, not because they love the climate of Newfoundland, not because they love the scenery of Newfoundland, not because they love the name of John Shaheen, they would come to Come-by-Chance because ; (

a) there is a magnificent seaport therer (

b) There is a magnificent wharf there, (

c) There is a magnificent refinery there, (

d) There is lots of land there, And (

e) It is a magnificent center from which to serve the world. MR . CROSBIE: And yet all the money is put up by us. ~IR. SMA.LL\mOD: He would not put up any money. t\Te t~ould not put up a dollar. Not one dollar! We would provide the harbour and that did not cost us anything. He would provide the wharf and that will cost us nothing. It will cost the Government of Canada something for a while, until they get paid back. They have to be paid back by the refinery.through a user charge over a period, I think, about twenty-five years. So much a year they have to pay and the Canadian Government is paid back.

So we would be providing the harbour and the wharf and the land, but God provided the land, so the Ne'l-7foundland Government would not be providing anything except the oil refinery, and that is provided mainly by the British Government and the British Banks. We are putting $30 million in it. MR. CROSBIE: We are responsible for it. We have to pay it off. HR. S!·{ALUWOD: Did the hon. eentleman ever look into the question of the difference hett-11!'en a Crmm Corporation and an Agency of the Crown? llas he ever looked into that? Has the hon. r,entleman from llumber East? 7785

July 17th. 1970 Tape 1309 PK- 2 HR. C. t.rr:LLS: I am well aware of the ler,al difference. There is no doubts at all ahout that. I.Jhat I am concerned about is there is no practical difference. It is just the sa~e as letting a direct ar,ency default, if we let it default. That is where our liability comes in - practical benefit. HR.

Sl!J\J.I.FOOD : He have had a very sp,ecial reason - in the Government or some part of us in the Cabinet, those of us l-7ho have been ner.otiating and the Cabinet as a whole 1 a very, very special reason to look into the distinction, a very important distinction, between an Agency of the Government and a Crmm Corporation. There is a very, very important difference, which is noted in Enp,land, noted in Ottawa. A definition was asked of Ottawa,not by this Government, a definition was asked of the meaning of Crown Corporation in Canada and a Crmm Agency. And there is a substantial difference.

Hm,ever, that is quite really beside the point. ~ffi. CROSBIE: An agency like the Power Commission compared to a Crown Corporation, this is the difference. NR. SHALLWOOD: The N.I.D.C. is, I bel~eve. ;~r agency. The Workmen's Compensation lloard, I believe, is an agency. The Liquor Commission is an agency. But there are certain Crown Corporation that are not agencies. And there is a very definite distinction. I can tell the hon. gentleman this - •there would not have been a chance in~(! do not know if it is permitted- it is getting the permissive society now.

It permits the use of the word ''hell" I understand in FarU.ament<1ry Bodies ( ,if it is a proper word I sayJ "there would not be a chance in hell of the banks in Britain putting up a dollar for that refinery except on the guarantee of the British Government." Now if it had been an agency of the Newfoundland Government and not a Corporation,they would be putting it up for the Newfoundland Government. But they were not asked to put it up for the Newfoundland Government or for an ap.ency of the Newfoundland Government.

They were asked to put it up for a Cro't.rn Corporation and there was not a chance in hell of their doinp, it without the guarantee of the rlritish Government. People who havt! made this 7786 I j

I i July 17th. 1970 Tape 1309 FK - 3 HR. S:·1ALL\\OOD: money possible are the British Governrnent backing the British Banks, not any Crown Corporation. And let us not kid ourselves! Let us not kid ourselves for one moment on that: !·1R. C. 'VffiLLS: \,'hy maintain them as Crown Corporations - for what reason? The tax factor is gone. HR. ROBERTS: No it is not. HR. C. \JELLS: It is. }!R. S!-IALLI.JOOD: lio there is a deferment. The bon. r,entleman knows what the fact is. The Crown Corporation is taxable. It is taxable, but they have deferred collecting the tax.

They have given an accelerated depreciation, which means that when they do begin .... MR HELLS: Inaudible. HR SHJ\LLHOOD: No, that is not so. It is not so. HR IJELLS: Accelerated depreciation has been done before . MR S }~LLWOOD : Of course it has.

It took a very special order of the Minister of Finance,after in his Budget he had brought legislation fo~ard to take away the tax immunity of this kind of Crown Corporation,after that, through a special measure, he gave accelerated depreciation for seven years, \.:hich only means that when they be!!in to pay taxes they pay more, because they have exhausted their acceleration. HR. \~ELLS: Like any private company. liJt. SHALL\700f): Exactly! ~o the corporation is fully taxable, but it was not fully taxable when ue formed it.

And when we made the deal and when this !louse passed the ap:reement two years ago and passed the ler,islation, when that was done the Cro~~ Corporation was exempt from taxes. It lost its exemption. It is now t~:~xable, like any other company, like Bowring Brothers, like nowaters, like Price, like nuchans Minin~, Iron Ore Comrany of Canada, like anyone else they are taxable, but they have accelerated depreciation for a very lar~e period of time, namely: seven years. But they are taxable. I move ;;econd readinJ?;, Hr. Speaker. I intended to table this - lay it on the Table of the 11ouse. 7787

July 17th. 1970 Tape 1309 · PK - 4 HR. C. t-ll~LLS: Hr. Speaker a great deal needs to be set straight on that. I realize there can be differences of opinion between men who may have basically the same concern. They may. basically want to achieve the same ultimate end,havin~ a great variety of opinions as to how that can best be done. This is one example, Sir, were there is a host of different opinions on this particular matter. A great many opinions have been expressed inside and outside of this House. And· a great many have been stated as facts, inside and outside of this House. So that, I think, Mr.

Speaker, in general terms, some of the record need to be set straight with respect to the Bill that is presently before us. I personally was directly involved in the initial nerotiations along with the hon. the member for St. John's Hest and the hon. the member for Burin, who was involved in it as well. rHe had other heavy duties too at that time, as Minister of Justice. I believe a number of other agreements and negotiations were unden -ray that took him a~ray from it - perhaps a little more than the member for St. John's West and myself.

But, Sir, the impression that has been area ted that what ~·as the Bill ,that we are nm~ amending by this Act ,is what the hon. the member for St. John's Hest and the hon. the member for Burin and myself proposed. I cannot speak for the hon. the member for Burin in that respect. I am sure he will speak for himself, but I can speak for the hon. the member for St. John's West and mysel~ To suggest for a moment that that is what we propos~ is totally wrong.

The Bill that we are amendin~, as it is at this momont, before this amendment goes through, is not what we suggested, I do not mind saying. !Jay be I will be accused by somebody of breaking Cabinet secrecy or some such thing as this, but the statement has been made on numerous occasion that this is as we ner,otiated it.

Just recently, in an news conference about this matterJwhen the Premier was asked, when it was stated that this Bill was now to be brought before the House and the Premier was asked why what is now proposed was not done in the beginninr, as reported in the newspapers, (I was not there, I assume it to be correct) 7788 II

July 17th. 1970 Tape 1309 PK - 5 MR. 1 ~ ELLS: and the other news media. His response was~'' I do not know. Ask the people tvho ner,otiated the ori~inal deal t~hy they did not ~et that in the beginning. Ask those who did.'' I believe the neHspaper indicated that a newsman present asked if that meant the hon. member forSt John's West, the hon. member for Burin and myself, and I believe but I am not totally certain that the response was~ •yes~ l-1R SNALLHOOD: No, that is not so. }IR WELLS: That is not so, but in any event that was what was intended. I do not think anything else was intended by it, quite obviously.

I say; Mr. Speaker, that is not so. The three of us who did the work on this agreement tried to do our best. As I say, 1-!r. Speaker, I tV"ill not attempt to speak for the hon. member for Burin. He is in a slightly different position on it than the hon. me!'lber forSt John's Hestand myself. MR. HICKMAN: When you are wrong, I t-lill correct you. MR. HELLS: Very well. We tried to do our best, what we thought was best. We thought we would in fact be negotiating. We did not •rant the power subsidy. We wanted to share in the profits. 1~e did not want to pay out salary expenses plus a hundred percent.

I do not mind saying that we did not want to do it. I will advise the Government, I tvill speak for myself, I advise the Government not to do it. I will let the other hon. members say what they advise the Government to do. But when,Sir.a slate of facts is being put fonrard as facts, that this is what we negotiated, or what I was responsible for. then I will disclose in detail exactly what I advisedthe Premier and the Government to do. And that is totally untrue.

I felt then basically as I feel now.My opinions have not altered substantially on this matter, from Hay of 1968 when I resigned from the Cabinet over this matter. }!y opinions have not altered substantially in one way or the other. I felt then, as I feel nmv, that this is not a ROOd deal for this Province - tvhat is proposed in this Dill the net result, if this Bill is passed, what we will then be left with,is not a good deal for this Province, it is a bad deal for this Province. And tve 7789

~I I J J~ly 17th. 1970 Tape 1309 PK - 6 NR. HELLS: had no more ability to negotiate. 1\Fe were acting in fact as lawyers for the Government, and'that is the way I felt, Because what I propos~or the hen. the member for St. John's West would propose and say. "no, we are not going to go alon11; with that 1 " 'the next day we would be advised that that had previously been agreed, so there is no point arguing it. That previously it had been agreed ,long before we were invalved in it. We did not negotiate the thing. Sure, we sat down and worked out the words, the detailed words.

And we are responsible for some portions of it being fn,there or being taken out of what was proposed. But this is not what we sat down and negotiated and then said to the Government, "here is what we recommend.'' That is not so. Hy recommendation was·, "do not sign it." We wanted to be able to declare dividends.

If the company was as profitable as it was indicated it might be, (And I saw figures on what, I think, was the profit or the expected profit} lf the company was as profitable as it was indicated it might be - and in the circumstances,where we would be taken a very substantial responsibility and a great deal of risk, we wanted a share in the profits. He did not want the clause. "that no dividends would be paid." Yet that clause appears in the Act, and the Bill that is now before us does not alter that. No dividends can be paid by the Refining Compamy,which is a Crown Corporation.

It cannot pay any dividends to its shareholders, which would be the Government of this Province. So if it makes huge profits in the meantime, they just accumulate in the company for the promoter Shaheen to buy.The price then was $2000. The price now is $2000. It is a fiction to say we are going to get $10 million for the shares, If we look at this agreement that is a total fiction.

That is not what is proposed in this agreement. l\Fhat it says is ,after the option has been exercised by Shaheen, in other words after he decides to purchase the share for $2000, after he does that then the Government will be paid five percent of the adjusted - the phrase is /the adjusted net profit contributable to the project.• t.;ow "-'e all know, Jfr. Speaker, what that means. It may mean $10, it may mean $10 million or it may mean nothing. Adjusted net profits is after

July 17th. 1970 Tape 1309 HR. HELLS: everything else is taken out including income tax. UR. P.OBERTS: But not dividends. HR. WELLS: But not direct dividends. AN HON. HF.XUER: Inaudible. HR. \.:ELLS: nut after Mr. Shaheen's five point one percent - PK - 7 }ffi. ROBERTS: Right, but that is an earned sales fee and let us not confuse that. HR. \,TELLS: That is what he is taking out of it. Now that is genuinely off the top. l~at we are talking about is not even in the middle. }ffi . ROBERTS: And that five point one percent is genuinely earned - a misrepresentation, the hon. gentleman surely , .. }ffi.

WELLS: I have no intention of misrepresenting. All I am sayin~ is,no matter what,whether that refinery works or does not work, operates at a profit, operates at a loss, or whatever, percent;. Shaheen makes money by it - five point one }ffi. ROBERTS: Five point one percent of the sales. MR. 1-lF.LLS: That is CIDrJ:ect. That is genuinely off the top. MR. ROBERTS: Inaudible. MR. WELLS: Not in any such thing - he is the promoter of this thing. ~m. CROSBIE: Reimbursed all his expenses. }ffi. WELLS: Right! ~m. CROSBIE: Five or ten million a year clear. ~m.

ROBERTS: Oh! nonsense! liR. \.JELLS: Plus all of his expenses. }ffi. ROBERTS: Oh, come on, be straight on it. MR. HELLS: I am being straight on it. MR. ROBERTS: Well the figures we saw, the figures they showed us, unless they are entirely different,showed that refinery makin~, (and I do not mind sayin~ it. about $506 , mlllion in fifteen years. 7791

July 17th. 1970 Tape 1309 PK - 8 }ffi. ROBERTS: The figures are incorrect. MR. HELLS: Sure. MR. CROSBIE: That is what it shows. MR. HELLS: That is what the feasibility study show~ . MR. ROBERTS: I do not doubt that is what the hon. gentleman was shown . I am saying the figures .•.••• MR. WELLS: Over $30 million a year. ~IR. ROBERTS_;_ The figures are incorrect. MR . CROSBIE: t.rell give us the new one. MR. WELLS: Give us the new one. Just do not say they are wrong. Show me they are wron)!:. MR. ROBERTS: I have as··much right to say they are wrong as you have to say they are right.

MR. \-JELLS: I am saying that is what they were - MR. ROBERTS: Inaudible. MR. CROSBIE: We know you are not going to reveal anything. That is obvious already. You are not going to reveal a single thing. MR. ROBERTS: Inaudible. MR. CROSBIE : You are going to reveal what you think you should reveal.which is about nil. MR. SPEAKER: The hon. member has the floor. Please remember that . !-IR. C. t-.TELf.S: Thank you, Hr. Speaker. Mr. Speaker, it is a complete fiction to say that the shares are now going to be sold for $10 million, in addition to the five percent of the gross profit attributable to the project.

After the option is exercised five percent of the net profit attributable to the project, as defined in this proposed amendment, will be paid to the Government,up to a maximum of $10 million. Now if it goes on and it can be operated for twenty-five years and be operated at an effective loss, where all the profits are siphoned through subsidiaries, chartering of ships, mana~ement fee, salaries plus a hundred percent and everythinp, else - there is no net profit, so five percent 6f nothinr is nothinr,. He mip,ht or we mip,ht not get $10 million, or we might get $10.00 77f)2

July 17th. 1970 Tape 1309 l'K - 9 HR. \JELLS: or $10,000 · in fifteen or twenty or thirty years, not when the option is exercised, we would have had paid $2000 the original price of the shares. But once that has been done, then we are entitled to claim as well as five percent of the gross, five percent of the net up to $10 million. That is where the $10 mill ion comes in, let us be not misled about that. It might amount ~o somethinr, or it might amount to nothinp.. To be ~uite frank with the House, Mr.

Speaker, because I have not the figures before me at the moment, the updated ones or whatever they are, I cannot say they will or they t-7ill not. Because we have not the aJ:!_reement; because we do not have the second mortgage document; because we do not have the financial agreement and all of the other documents that have been si~ned in connection '-lith this • I cannot say whether or not we are goinjl; to get a cent. It is beyond me to say 1 no absolutely 1 we are not going to get anythin~. I do not know but I suspect '"e can be robbed and in effect get nothinr;. That can happen.

I cannot say with certainty -· that it will, but it most certainly can happen on what is before us. To be convinced that it cannot happen and there is any degree of certainty • that we will get more, I had to see those documents. Because they are fundamental, They are part and parcel of the whole thing. On this 1what is now before us ,that cannot be seen and cannot said to be so. All I can say is that it is a possibility only and by no means certain. This is \vrong and deceitful to put myself and the hon. the member for St. John's West' in the position of being responsible for this as it was.

We were •not, and I have explained why. He have maintained the same position ever since. I submit, Hr. Speaker, we halfe been proven to be right on the position that we did take in Hay of 1968, when we resigned over this issue. I suggest, Mr. Speaker, that it is equally wrong to say that the Government have now come, the Premier has now been able to do this, or the Ninister of Health or the Hinister of Community and Social Development hnvc now been able to r,o fonvard and do great things that the member for St . .John's \~est and I could not do - renogotiate this, get this share of profit and so on.

Utter nonsense!

July 17th. 1970 l'ape 1309 PK - 10 MR. HELLS: The truth is these conditions were imposed by the Government of Canada. HR. ROBERTS: That is totally and absolutely incorrect. HR. WELLS: Mr. Jamieson has been quoted in the newspapers on several occasions and so have others, as saying that this is so,and it has never been denied. HR. ROBERTS: Table the newspapers. Table the statements. That is not a quotation from Don Jamieson, I know the'"Globe and Hail" articles. Table it - •The Globe and !-!ail: MR. HELLS: The Globe and Mail magazine of May 30th. 1970. MR. ROBERTS: Read it and then table it. MR.

WELLS: Just six weeks ago. Amongst other things that are not pertinent - what he does not say is that Jamieson only agreed to find the money if the Come-by-Chance deal were sweetened to guarantee more for Newfoundland. MR. ROBERTS: IVhat else has it got to say. }ffi. WELLS: ~The modification not yet announced calls for the Province to get an off top five percent of the refinerj'.~s pre-taxed profits, even after the formal ownership is passed over to Shaheen. The Come-by-Chance deal demonstrates, as well as any, the change of the old relationship.

In the past Smallwood,'(! am just quoting the article, so I am not beinr. disrespectful to the Preoier) "Smallwood ~·as the patron and mentor, Jamieson the heir-apparent. But Jamieson chose to stay in the Federal game and is now in the driver's seat." MR. CROSBIE: Right! That is right, that is as far as we go. t~. ROBERTS: Come on now! Come on now! HR. HELLS: And this is not the only paper, it has been reported in other newspapers MR. ROBERTS: Is not this lie being spread. And I happen to know it is a lie, }fR. CROSBIE: It is not a lie. HR.

ROBERTS: unless the hon. gentleman can prove that statement, he must withdraw it. }ffi. CROSBIE: Arthur Lain~ says that •.•.• ~. ROBERTS: All right then, this has been reported. ..,..," ..

July 17th. 1970 Tape 1309 PK - 11 HR. lliCI:GL\..'1: Wait now! Uait now! Let me hear the statement. HR. RORERTS: The hon. Mr. Jamieson has made a statement, and I will get it and table it when I come to speak on the debate in which he said, ''The Government of Canada agreed to build the wharf with no conditions, no nothing except the wharf be paid for.• Arthur Laing did - first of all, (if you would excuse me for a minute) Arthur Laing does not know what he was talking about. HR. CROSBIE: You do not like Arthur Laing do you? He speaks out. The hon. Hr. Lewis. t~ SPEAKER: Order! MR. ROBERTS: }~r.

Speaker, let the hon. gentleman prove his statement by tabling it or withdrawing. MR WELLS: No! No! I am going to withdraw nothing. I made a statement that Mr. Jamieson was quoted, and it has not been denied publicly by Mr. Jamieson. I maintain that position. MR ROBERTS: Read it. He has not read anything quoting Mr. Jamieson. He bas read an

article by Hinsor, in the "Globe and Mail'. I have read it. Hr. Speaker, to a point of order. The hon. gentleman has made a statement which is incorrect. He must either prove it or withdraw it. }ffi WELLS: That is not ri~ht. I have not made any statement that is incorrect. MR ROBERTS:. You have. MR. HELLS: I say, ltr. Speaker, and I express this ~onest opinion. Now I the Prime Hinister did not tell me and the hon. Mr. Jamieson did not tell me but I have this opinion that this was imposed by the Government of Canada. I say I will withdraw nothing. }ffi.

ROBCRTS: The difference is I have talked to the Prime Minister and I say it was not imposed. }ffi. WELLS: He can say so, when he gets up to speak. Mi. ROBERTS: I will, but I just do not want the lie to be spread any further. ?795

July 17th. 1970 Tape 1309 PK - 12 HR. SUALLHOOD: The hon. gentleman started to quote Mr. Jamieson - now quote him please. Quote Mr. Jamieson. HR. l.ffiLLS: All right! I am quoting, Mr. Jamieson, okay? HR. SMALLWOOD·: Quote Hr. Jamieson, 77!)6

July 17th, 1970 Tape 1310 JM - 1 ~fR. WELLS: his words quoted in the ne\~spaper, "The problem with Joe is that he can ratjonal- ize the situation so well that he ends up heli~ving in it. I have had my reservations about many of the schemes especially the refinery if it does not also generate a petro-chemical complex but when you are in Newfoundland you have to accept the tJnconventionnl. '' MR S~~LLWOOD: No! No! Quote. On the Canadian Government forcing us to get the five percent. Quote Jamieson. MR WELLS: Quote anybody. Quote anybody. MR ROBERTS: Ah, come off it! You are being even stupider than normal.

Come on .• MR WELLS: I put forward the true position. This is put forward as an interview with the hon. Donald Jamieson. MR ROBERTS: Right. By Hugh Hinsor. MR HELLS: Put forward as an interview in which Mr. Winsor puts forward, in this paper, what Mr. Jamieson said to him. MR ROBERTS: Yes, but quote it. You have not quoted anything yet. The hon. member has made a flat statement and has no evidence to back it up. MR SPEAKER: Order! MR HELLS: Thank you, Mr. Speaker. That is the position. In my honest opinion this was imposed by the Government of Canada as part of the deal for their going along with it.

It is somewhat peculiar, Mr. Speaker, that the three things that are now proposed or put forward by the Government: the sharinr, of the profit, the elimination of the subsidy for hydro-electric power, which I will come to later by the way, and the explanation that we are being paid $10. million,which I have just gone into, peculiar, peculiar coincidence. If those were primarily the three things,although not in those proportions, but those were primarily the three basic things that the hon. member for St. John's WeRt and myself have been insisting on since 196R, peculiar coincidence, most unusual . MR.

SMALLWOOD: Who did it? Did the hon. gentleman do it or did the Canadian Government do it or did the Newfoundland Government do it? MR. WELLS: I did not do it. I have had nothing to do with Mr. Shaheen since May of 196R. 7797

July 17th, 1970 Tape 1310 JM - 2 MR. SMALLWOOD: Just a coincidence. MR. ROBERTS: That is obvious, perfectly obvious. MR. SMALL\-IOOD: Just a coincidence. - - ----- MR. WELLS: Just a pure coincidence is it not? Mr. Laing hns made his position clear. It has been reported and he has been quoted in the papers here in St. John's, he has made his position clear. MR. ROBERTS: I have read Arthur Laing's statements, so what. MR. WELLS: We all read it, we know what he says. He had no faith in - MR. ROBERTS: Arthur Laing also said the Government of Canada would not build a wharf.

That shows how much Arthur Laing knows what is happening. MR. HICKMAN: He just happens to be the Minister of Public Works. MR. ROBERTS: So that is only a temporary thing too. MR. SMALLWOOD: Yes, it just happens. MR. ROBERTS: But Arthur Laing said they would not build the wharf, they are building the wharf. MR. CROSBIE: You are fretting after Laing now. MR. ROBERTS: I am not fretting after Laing. MR. CROSBIE: You are afraid he is only going to have a temporary job as Minister. MR. ROBERTS: Any Minister who is temporary let the hon. gentleman- the hon. gentleman found out how temporary it is. MR.

CROSBIE: How temporary what is? MR. ROBERTS: Being a Hinister. MR. CROSBIE: Tough, he made his own choice. MR. ROBERTS: The hon. gentleman thinks he should have life tenure on it, no way. MR. CROSBIE: (Inaudible). MR. ROBERTS: Let the hon. member go on, let him go on a few days. MR. WELLS: I would like to thank the hon. ~finister for that, Mr. Speaker, he needs all the help he can get. •·There _. is no question about it, Mr. Speaker, as everythings poin~s to that. When you put together Mr. Laing's statement that it would not be built, something had to chan~e the mind of the Government of 7798

·,, July 17th, 1970 Tape 1310 JM - 3 MR. !.fELLS: - - Canada. Mr. Laing is a Minister of the Government of Canada and he was speaking for the Government when he made that - MR. ROBERTS: He was not, he was not. MR. CROSBIE: Well, who was he speaking for? MR. HICKMAN: I know what, he was a Minister - MR. ROBERTS: I do not know what parliamentary rules the hon. Minister has followed but MR.

HELLS: When a Minister of Public Works speaks about a matter of building a wharf, which is in the Pub lie ~olorks field,. it is not entirely an unreasonable or ridiculous assumption that he is speaking for the Government of Canada. MR. SMALLWOOD: He only builds a wharf when he is told to build it, he does not make the decision to build it. MR. WELLS: It is not an unreasonable assumptio!l that he is speaking for the Government of Canada. Then suddenly there is a change and suddenly Mr. Jamieson - MR. SMALLWOOD: Did the hon. gentleman ever meet Arthur Laing? MR. WELLS: No, I do not know Mr. Laing. MR.

ROBERTS: Does he know what a friend Arthur Laing is to Newfoundland? MR. WELLS: I do not recall that I have met him or not but I do not know him. MR. SMALLWOOD: Does _. be know what a devoted friend he is to this Prcovincel HR. 1-IEI.LS: I have no idea. MR. SMALLWOOD: Well, I have, I have. MR. WELLS: Then suddenly the whole thing is changed and the Government of Canada are now going to build the wharf and Mr. Jamieson is referred or a story is printed where Mr. Jamieson is purported to have said this to the interviewers . MR. SMALLlolOOD: Is Jamieson quoted? MR. WELLS: No, it is not in quotation marks.

It is an interview and he has never denied it. MR. SMALLWOOD: So what! I have not denied any more than one-half of one per- cent of all the things I am accused of. I have not got time4 life is too short. MR. CROSBIE: lie is in the driver's seat now. ------ MR. WELLS: It is a mere coincidence. MR. ROBERTS: The hon. gentleman certainly is not, Mr. Speaker. 77 !}!)

July 17th, 1970 Tape 1310 JM - 4 MR. WELLS: The people of this Province can take from it what they will. Mr. Speaker, to get back to the Bill that is before the House. This is not just a simple amendment to amend a few clauses of the original agreement or to allow us to advance directly $30. million or relieve Shaheen of the obligation to put $30. million,which is more correct because technically, I believe, on the wording we could have advanced it on the legislation as it was hefore,8ut the agreement required ,;~nd it was one of the conditions,that Hr. Shaheen would raise that $30.~illion.

It is not just that, it is not just a simple thing, as the Premier when he finished up speaking said, "The Legislation is on the books and all we are asking to do is improve it." Well, that is not correct. That is not the correct position, That is wrong. As of the Z3rd day of May 1970,Shaheen had no more rights under that agreement and the Government could have said, "That is it, you are out'; under two particular clauses of the agree­ ment, Clause S(

a) which sets up and sets forth quite clearly the obligation: '~ithin two years of the date of ratification refining shall for the purpose of providing the amount of the Government loan sell and distrHute." As Your Honour knows that is mandatory in the legal documents and - MR. SMALLHOOD: good. MR. WELJ.S: Also mandatory 1 in the same Act is our right to stop them for Yes, that is quite a fiction too. Clause lO(M): "If within two years of the date of ratification of this agreement refining has not complied with its covenant set forth in paragraph (

a) of Clause 5 or if within four years of date of ratification of this agreement the plant is not substantially under construction the Government may upon notice in writing to refinery terminate the agreement." On the 24th day of May the Government had the right to terminate this and renegotiate the whole thing from the beginning,so it is not just a simple little amendment - MR. ROBERTS: We still have the right to move it, we still have that right. MR. WELLS: The right is being amended, it is not the same at . all. It is a substantial change. MR. ROBERTS: The right is being preserved. MR HICK}~N: (Inaudible) 7800

July 17th, 1970 Tape 1310 JM - 5 MR. ~!ELLS: Yes, terrible was it not? Something wrong with that hon. member for Burin calling for renegotiation, terrible. MR. CROSBIE: He was told the loan was arranged. MR. WELLS: Yes, we were told in May of this year that the loan had been arranged. On two occasions in this House the Premier made that statement and now we find out that it was not arranged. We were aware of this requirement and that is why the questions were asked.

Has that loan been arranged and the definite statement was made, I do not know what the date was, it was around the middle of May and I believe again sometime subsequent to the 23rd of May. The Premier was asked if Shaheen had lived up to his obligation and raised that money and he gave an unequivocal answer, "Yes" and that turns out to he totally wrong. MR. SMALLWOOD: It is not wrong. MR. WELLS: It is totally wrong. MR. SMALL\\TOOD: It is totally right. MR. WELLS: It is totally wrong. If this Legislation is true ~hat is before us,if there is any truth in that it is totally wrong. He has not raised the money. MR.

SMALLWOOD: He raised the money, he raised it twice and we stopped him. MR. WELLS: It makes a nice story . MR. SMALLWOOD: It is true. MR. WELLS: On the 23rd, 24th or 25th of May whenever the question was asked in this House, when the time limit had run out, "had the money been raised(• it was answered, "Definitely, yes, it had been raised.'' That was not correct at that time. MR. SMALLWOOD: It was correct. MR. ~~LLS: A queer coincidence too, Mr.

Speaker, in the Bill presently before us, the date of the agreement that is attached to the Bill, the 22nd day of May, one day before it was due to run out, the agreement is deemed to be made as at the 22nd day of May. MR. SMALLHOOD: Is that not normal and sensible? MR. HICKMAN: What did you say about that? 7801

July 17th, 1970 Tape 1310 JM - 6 MR. WELLS: The date that this agree•ent is attached to this Bill before us al the moment is made as at the 22nd day of Ma:r, one day before. MR. ROBERTS: We want to be sure that what we undertake to do is in fact legally done and that is why that clause is there- MR. l.ffiLLS: But Mr. Shaheen undertook to do what he did. MR. ROBERTS: .......... . ... . . as of some day in January and the Bill was passed in Hay. MR. HELLS: A peculiar coincidence. The Government, Mr.

Speaker, once the 23rd of May came,with the criticism that has been made, with the way the situation has gone,should then have gone to the Shaheen interest and said; '"Now, look let us be fair about this. Your legal rights have run out, We hnvc terminated the agreement, We are prepared to enter.into an essentially similar agreement but here are the conditions." HR. SM.ALLWOOD: We did it long before the 23rd of Hay. MR. t.JELLS: You had no right to do it before the 23rd of May. MR. ROBERTS: I know we had no right to but we did. MR. SMALLWOOD: Why did we not have a right? MR. HELLS: You had no right to say to Mr.

Shaheen that he had defaulterl and these are now our minimum conditions. we MR. SMALLWOOD: Either before or after what~did do was negotiate a better deal and we did not wait until the 23rd of May. MR. WELLS: Quite a coincidence, Mr. Speaker. That is what they should then have done and said, ''No, we are not going to pay a power subsidy. '1 BY the way, Mr. Speaker, we are still obliged to pay the power subsid~as that Clause has not been elimated as has been suggested. Now the Premier did not indicate the deal but I heard from other sources. If I am wrong I hope somebody will correct me.

I have heard from the Minister of Health and he does not mind me quoting what he said to me. MR. ROBERTS: We will table the letter under which the money- MR. WELLS: Can it be done right .after we come back after lunch. ~m. ROBERTS: Yes, we will table it in the House. MR. WELLS: Would the Minister mind me quoting what he said to me on this? 7802

July 17th, 1970 Tape 1310 JM - 7 f-IR. ROBERTS : Of course not as long as it Ls accurate,and I believe the hon. gentleman will try. f-IR. l·lELLS: I will endeavour to • The Minister had indicated to me that the arrangement was some kind of an arrangement with a company called Can-Carib or Canadian Caribbean Oil, Can-Carib was the reference he used to me. The arrange- ment is that Can-Carib will supply to the Power Commission oil to an equivalent value of the differential between two and a.half mills and the economic rate of power. f-IR. ROBERTS: If they do not supply enough oil - f-IR.

SHALL HOOD: They will do it in cash. MR. ROBERTS: It will have to be in cash and we have to be - MR. lmLLS: The Power Commission does not need enough oil or does not take enough oil or they do not supply enough, ·the differential is in cash. MR. SMALLWOOD: That is right. MR. ROBERTS: In addition we have to be satisfied before the agreement is binding as to the financial - MR. WELLS: But we are still legally liable and it still remains in the agree- ment. It has not been taken out - MR. SMALLWOOD: They are back to back. MR. WELLS: It has not been taken out, we are still legally liable to pay the differential. MR.

SMALLWOOD: The two are back to back. MR. ROBERTS: That is right but we are not going to pay it. MR. WELLS: Who or what is Can-Carib? ----- MR. ROBERTS: We will answer that. Can-Carib is a wholly owned Shaheen Company offshore based on the Bahamas. MR. WELLS: Harvard Business School answered it sometime ago. AccordinP, to the report that they did - MR. ROBERTS; 1-lho is this again? HR. i·lF.l.LS: The Harvard Business School, the report they did on this refinerv proposal. It is a holding company, an investment holding company of Shaheen's .that holds some real estate and has an investment portfolio - 7803

July 17th, 1970 Tape 1110 JM - R MR. ROBERTS: Based on the Bahamas, MR. WELLS: Borrows, does some borrowing for Shaheen Natural Resources. MR. RORERTS: It is an offshore company based on the Bahamas, that is all. I do not think it does very much. MR. WELLS: It sounds very substantial to me. I am not sure that I am prepared to rely for ~1. million a year on a letter from Can-Carib. I have not scl'n the letter yet. MR. ROBERTS: You will. MR. \-.'ELLS: But on this scanty information, and I am the first to admit, Mr.

Speaker, that it is scanty that I do have ahout this Can-Carih, it is not exactly Gulf Oil or that dreaded creature Imperial Oil or even Golden Eagle. I never heard of it until it was mentioned by the hon. Minister. Now I do not hear everything that goes on in the world but I have heard of most of the major oil companies, I have heard the name Getty and what not. I have heard of Shell Oil. How then are they going to supply oil if they are not even an oJl company? Presumably they will buy from the refinery at Come By Corne and supply to the Power Collliiiission at Holyrood, presumably.

I do not know, we do not have any information on this. But why do it through Can-Carib? Why cannot Shaheen Natural Resources undertake responsibility? I believe,and the Minister can confirm this,that when he told me this my immediate reaction to him was, "HJll Shaheen Natural Resources guarantee the performance of Can-Carib?" His response was, "They- have intervened, there is an intervention by Shaheen Natural Res("lurces to the agreement but I do not think it includes that, I am not certainly at the moment what it includes, I do not think it includes that." MR. ROBERTS: It is not a guarantee.

It is an undertaking to cause Can-Carih to do everything they undertake to do 1and that is not quite- MR. \-.'ELLS: No, no, they do not have in ' this agreement. MR. ROBERTS: No, no, I tell you there is an intervention in the letter as well and it is not the same as a guarantee, it is tantamount to one but it is not a guarantee. ~ffi. WELLS: In other words it undertakes to cause it to vote the shares to do this. If they ~o financially in trouble there is no backin~. 7804

July 17th, 1970 Tape 1310 JM - 9 MR. ROBERTS: That is what I say, it is not a guarantee. MR. WELLS: It is a funny thing that Shaheen Natural Resources will not take responsibility for anything. Does that not, Mr. Speaker, leave one to the conclusion that they have very little faith in this over-all thing. Are they afraid of it for some reason or other. They will not put their name on the line for anything and they have refused consistently to do so. Does anybody wonder why we have some doubts about their sincerity, about their ability? MR. CROSBIE: They agreed in 67. MR.

HELLS: They agreed then but they had it wiped out again, This was in our negotiating stages, one of the things that we ask to have done. We were dealing with a company with a paid up capital of ~20.00, Newfoundland Refininr,. We said we do not want to deal with a paper company, worthless company. We would like to have the name of Shaheen Natural Resources to show some evidence of good faith in this thing and some evidence of faith in the project. For a while 1t looked like they might agree to it, I think they had agreed but subs('quently they were able to get out of it• As I recall 1 they had agreed. MR.

CROSBIE: They guaranteed the payments for two years. MR. HELLS: That is right. They had agreed to guarantee the payments for two years but that went by the way too, ultimately. The Government, Mr. Speaker, after the 23rd of May,should have set forth a minimum deal. He realize the contribution, the prime contribution and perhaps the only one that Shaheen is making is knowledge,whether it be great or small,of the oil markets of the world. He knows where to buy, he knows where to sell and that is pretty fundamental to any business, Uithout it you are in pretty serious trouble. That is pretty fundamental. MR.

SMALLHOOD: You also have to know hm~ to make the profit. MR. \-!ELLS : Right. You do not have to know how to make you have to know where to get the people. You could hire the people who know how to make. MR. S~~LLWOOD: Hire the people to sell and hire the people to buy it, that is what businessmen do. MR. t-lF.LLS: That is right. That is where a man like Mr. Homer lfui te comes in. HR. SMALLimOD: I do a lot of things that I do not do personally with these hands. 7805 , . I

July 17th, 1970 Tape 1310 JM - 10 MR. WELLS: That is where a man like Hr. Homer \Vhite comes in. HR. SMALLimOD: That is where a Premier comes in too. MR. HELLS: Get men like this, what in the operation of the refinery? MR. SHALLWOOD: No, in all kinds of other operations. The hon. gentleman would be surprised if he knew how many things I do not do but I get done.

MR. \mLLS: We should have looked at it and said, "This is Shaheen's contribution, ours is a $30. million guaranteed loan,Jecured by a second mortgage,causing a Crown Corporation to borrow another $120. odd million." That is another of our obligations and do not ever overlook it. If you have any doubts ahout those Crown Corporations not connected with the Government, they are separate things. Look at who.signed on behalf of the Crown Corporation, on behalf of Provincial Refining. This is in the Bill before us, Mr.

Speaker, ··on behalf of Provincial Refining Company the Premier and the Minister of Health, on behalf of Provincial Holding Company Limited,the Premier and the Minister of Health, on behalf of Provincial .Building Limited - MR. SMALUlOOD: Well, we did not sign it - MR. WELLS: Well their individual names are there, their names. MR . SMALLWOOD: We did not sign it as Premier and Minister of Health, we signed it as directors of the company. MR. WELLS: Right. A queer coincidence that they are, a queer coincidence that they happen as well, those directors happen as well to MR.

ROBERTS: No coincidence, it would be improper to- MR. WELLS: The common seal of Provincial Buildi~g Company Limited was applied by the Minister of Community and Social Development and the Minister of Health. MR. ROBERTS: Of course, what is odd about that? XR. WELLS: This Crown Corporation make no mistake about it. MR. SMALLWOOD: It looks very suspicious. MR. !-'ELLS: So, no, that does not make anything look suspicious but I have some .. ·· HR. SHALLI-.'OOD: It maybe something crooked. MR. WELLS: No I am not suggesting anything crooked on the part of any one of those hon. gentlemen who signed those agreements.

If it is not some serious ·coincidence what is it? 7806

July 17th, 1970 Tape 1310 JM - 11 MR. WELLS: Do not suggest it. If the Hinister would keep quiet f•.Jr a few minutes and let me I will tell him what it is. lie will stand up here in the House and say, "Oh, this has nothing to do with the Crown. He are not borrowing anything, we are not guaranteeing autt~•iug, only t:ne ~JU million of the British Covernment is guaranteeing the rest. He have no liability." The Premier said that just a few m1nutes ago and went on and elaborated on it, "We have no liability." That is true, no legal, technical, legal liability.

The Act it- self states that the liability of these Crown Companies is limited to its uncalled and due capital. In other words if a hundred shares have been issued,subject to call,that have not been paid for,at $10.00 each then ~1,000. is due from the shareholder. That is all that can be claimed. If that company owes ~~0. million that is all that can be claimed from the shareholder.

That is the basic principle of limiting the liability of business ventures to incorporating them into a corporate body and setting forth the limitations and the liability under the terms of their articles of association or a statute law or whatever, It is a pretty basic thing. MR. ROBERTS: That is why we put 'limited" in the name of the company, is it not? HR. WELLS: The name of the company indicates it. MR. ROBERTS: That is why~limited' is in there. MR. WELLS: That is the purpose of it, there is no question about it. MR. ROBERTS: Some jurisdictions (no personal liability). MR. WELLS: ----- But, Mr.

Speaker, they are Crown Corporations, arms of the Govern-- ment of this Province,as we have heard the Premier say time and time and time again,when it was convenient to say it about Hotel Buildings Limited,"An arm of the Government, we own it, it is ours, it is us, we are doing our work." ~. CROSBIE: It must not pay taxes. MR. WELLS: Must not pay taxes. MR. CROSBIE: No municipality can tax it. MR. WELLS: Right. It is us, a Crown Corporation. Who is going to tax the Queen? Convenient', He will say it when it is convenient. It is not quite so convenient this time and that is all that I have ever said.

I realize the liability is stated to he 1 limited"and the thing can be let go bankrupt and there 7807

July 17th, 1970 Tape 1310 JM- 12 MR. HELLS: - --- - is no guarantee for the $120. million by the Government of this Province, I realize that but their Crown Corporation. MR. ROBF.RTS: Nobody will ever lend us money again. MR. WELLS: Who is going to let the Queen go bankrupt? What Government in its right mind, in its right mind,will allow a Crown Corporation,where the notes and the documents, borrm-1ing the money and everything else, are signed by the Premier and the Minister of Economic Development and Ministers appointed to tl1e Board of Directors?

You want to know why and that is surely one of the fundamental reasons why the ECGD is loaning this money, It is the Government of Newfoundland that is involved.

They recognize that perhaps there is no le~al, techincdl lecal liability but they say the Government of Newfoundland could never let this happen and perhaps even the Government of Canada could never allow the Govern - ment of Newfoundland to allow this to happen, the Queen in the dr,ht of New- foundland being the benefical owner of these shares allowinr, it to go bankrupt~ If that is not so~why continue them as Crown Corporations, the tax benefit is gone? Accelerated d