V0 L. 2 PRELIMINARY UNEDITED TRANSCRIPT HOUSE OF ASSEMBLY FOR THE PERIOD: 10:00 a.m. - 1:00 p.m. TUESDAY, MAY 31, 1977 ~H). 100

May 31,1977 Tape 3t~96-Horning Ali-1 The House met at 10:00 a.m • • }~. Speaker in the Chair. MR. SPEAKER: Order,please! ORAL QUESTIONS HR. SPEAKER: Hon.member for LaPoile. HR. NEARY: Mr. Speaker, yesterday down at the hearings .of the Standing Committee of the House of Common~ on Transportation and Communications,the provincial Minister of Transportation was accused of .stalling in connection with the provincial takeover of ferries that oper_ate within provincial boundaries 'in other words, the intra-provincial ferry service - the minister was accused of stalling with the negotiations with Ottawa.

Would the minister care to make a comment on this accusation? MR.. SPEAKER: The hon.minister. MR. MORGAN: Mr. Speaker, I refuted the statement at the hearings yesterday morning which was made by the MP for Gander- Twillingate, George ~~~er,in which he indicated that we were stalling the improvements for the services of five ferry services in his riding because of the fact that we were procrastinating on negotiations with Ottawa.

P~d it was clearly pointed out to t~e committee yesterday that we are commencing negotiations with Ottawa with a sledge hammer over our head based on the fact that we have no choice but to commence and open negotiations based on the fact that the federal Ministry of Transport has told this administration that as of the end of 1977 they will not continue to subsidize these ferry services- there are seven in total, "tvhich they have subsidized over the years since Confederatior. - they ~vill not continue to subsidize these operations unless there is some ~inancial input from the provinces.

And only on these lines, along rhe lines that we would open negotiations,would the - extension have been .. given - and it was given the end of March- to extend the subsidies of five of these services whereby the contracts 9790

Hay 31,1977 Tape 3496 - ~- forning }ffi.. ~!ORGAN: bet\veen the ~fOT and the operators were to expire at the end of March 1977,they would only continue to extend these contracts for one more year based on the statement from us that we ~11ould commence negotiations. :HR. NEARY: A sunplementary question, Mr. Speaker. I!R. SPEAKER: A SU?Plementary, the ori~inal questioner.

I presume what the minister is implyin~ is that the ~overnment of Canada is attempting to buy its way out of these ferry services and place them back under the jurisdiction of the Province ~ b~ca~s~ ~~~e~the British North America Act,or under the ~onstitution,really it is a provincial matter. Now would the minister indicate to the House what kind of- an offer the government _____ af_Canada has made IO _the ~rovincial government? And will the minister table any correspondence in connection ~--ith this matter of the takeover of the intr_~ -provincial ferry services? HR. SPEAKER: The hon.minister. HR.

MORGAN: t.Jell, Mt. Speaker, we cannot ·table any correspondence because now it is the topic for some very serious negotiation and discussion with Ottawa.But we maintain that despite the fact there may ~e no consititutional right · or responsibility for the federal government to keep these various services subsidized, in many parts of the Provinces these ferry services in actual fact are replacing the coastal boat services which were in fact the responsibility,under the terms of union with Canada,the 9791.

!fay 31, 1977 Tape Xo. 3497 1 '1R • ~ORGA.~'1 : res~onsibility of the federal level of government. So tve re.'ltained ada.I!lant until the end of Harch Hhen we had no choice,and we are gain~ to open negotiations but ! cannot table in the Rouse of Assembly or outline to the Rouse of Assembly any of the matters t·le ~'lill be discussinr:.- or in f2ct any suggestions put fon.ra.rd by the .federal level of govermnent. The officials of the ~OT and'the officials of the Departmeht of T and C and Intergovernmental Affairs will be discussing this matter in the next number of weeks. ~. NEARY: A final supplementary, Mr.

Speaker. A final sun~lementarv from the hon. ~entlenan, then the hon. !!l.emher for Letrl.snorte. '-fP . • NEARY: ~·!r. ~Pe.?..ker, would the !!!inis ter assure this House,and in so doing assure the ~eonle wb~ li~Te in these isolated communities that are serviced by these ferries, t.;ould the ~inister assure these peonl~ that as a result of these negotiations,tvhether the Government of Canada continues to operate the ferries or subsidize the ferry service or the Province takes over the jurisdiction, that the services will be !!!aintained at the Present level and that there ~nll he no increase it'. rates?

Also tvould the :ainister indicate to the House if any acti~n is being taken on a nromise that was made by the Premier in t"Ho provincial elections ' that the pecple who travel on these ferries ~.;auld be able to travel free, that they would be made a part of the highway system of this Province? MR. SPE~fa:p_ : The han. Minister of Trans?ortation and. Communications. ~!r. Sneaker, at this tirne I cannot ?'ive any assurances to any of these areas.

I will ~ay that ,.,e are very, ve~-~ concerned _over the n~tter hecause t•!e saw what hanpened in British ColtWl::-ia; because of the fact that the federal govern~ent said to the government of that province, We are not going to subsidize any further the operations of these ferry services and if the ferry services are 9792

~~ay 31, 1977 '1R. ~ORGA.t'1: continued, the provincial government must take .. over financial resPonsibility. As a result of thati think there vras a,nraximately fifty or sixty of the services folded un because the operators could not onerate ~·Tithout subsicy ~- nd the ~overrn1ent of the day felt th?.t they could not afford to subsidize the operations. So I cannot assure any of these.residents concerned and the onerators that their level of service ~v-ill not 'he reduced.

He will make every attemnt to negotiate a successful agreement __£; arrangement bet"t.;een the Province and Ottawa to the satisfaction of all the residents in these isl~nd coTinunities. The hon. Tember for Lewisnorte. ~~ r. S!1eaker, cny question is to the minister anri it is a SU?,lementary.

Could the minister inform the House how lon£t it has been si'!"ce the federal government asked the l?rovincial govern~ent to carry on negoti~tions,and at the s~~e time could he indicate to the House whether he has been informed by Otta-v;a that they have millions of dollars to spend on neH ferry termin;:~. ls, narticularly at Chan~e Islands,nrovidin g certain stiPulations are met by the Province? '·r::'.. SPE ~ Y:E? : The hon. ?'inister of Trans~oct::1tion anc1 rof'1T!unic::>.tior;s. r~ell, J~r.

Speaker, as a result of the conditional extension on the subsidies which was outlined to the administration here by ~.fr.

Lang, the federal minister, the 28th. day of ~-~arch, the conditior of the extension was that the extension would be ~iven for one more year only on the condition that the Province would commence negotiations with Otta"tv.a for some financial involvement in the oneration of these ferries. ~ith re~ards to the allocation of funrls for the upgradin~ of these facilities, I kno-v1 thf"re is I thinl· S3.6 million allocated in the esti!T1at'es for the federal government for marine facilities in this Province.

We have not been given the det:iils ~-There the funds are to be s-pend; ho-v1ever, I understand frorn at least one of the o-perators ~- or one of the communities involved 9793

Yay 31, 1977 TC"ct'e ~~o, 3497 T ·" - 3 :o-m.. MORGAN: rather, the Chairnan of the Council on the Islan _d of St. Brendan's in_fo~ed - ~e that _ ~ey _ _!lave received confirnation there ~rill be a ne't·7 ferry ter!'l .inal built at , St. Brendan's. In checking also 1-rlth the :fayor of C':J.an~e Islands, they have not received any confirmation in that community, so St. Brendan's anparently r..;ill get a neH terminal but there is no indication that Change Islands will at this time. MR. SPEAKER: The hon. member for Eagle River. ~R. STRACHAN: A question for the Hinister of Public r-rorks.

Could the minister tell us if the Bartlett enquiry has been completed and vthen ~ve could exoect any results frolT! the Bartlett enmtir y ? ~~. SPEft_KEP.: The hon. ~-f inister of Pul'-lic ~ ·i or~~s and Services. '-!R. ROUSSEAU: No, !-!r. Spe~ker, the Bartl~tt enquiry has not been ·completed. I think that Judge Bartlett held hearings during . the "?ast 'tveek. I know that he will prol:.ably be researching ;soMe auestions of,in his mind,constitutionality, the constitutionality of the work pen:-.it and so on and so forth.

I do not know how long that will take him but I am hoping to h~ve somethinP- someti~e durin~ this Slimmer and I have no date, I have not met wit~ Jud~e B2rtlett since • 9794

~ · 1 ay 31, 1977 Tane ~r o. 3498 ~. ROUSSEAU: before he \'vas appointed to the enouiry. So I ~.;ould anticipate in the normal course of events, some time during the Summer we ivi.ll get a re?ort. ~!?.. ST~AC1Il0T: '·rr> SPE.PXER: A sunple!'l.entary, :'-!r. Speaker. A sun~leMentary. Could the minister indicate ~.;rhether he believes there ~~11 be strong reco~endations by Judge Bartlett in trying to relo ·cate businesses from Seven Islands into Labrador City and 'Habush? ~-rp • SPEAKER: The hon.

Minister of Public Horks and Services. '~. 1?/)lJSSEAtr: There is no ~r;:ty that I COP.lc >Jrei u~~e r,rh.?.t Juc1 Q:e ~artlett is goirl? to .say. ~~e only t~ir.g I can ~.?..v is \vhen he ~~s annointed I indica ted th.a t he Has a Ye·pfoundlande:-, \vhich i.Jas a very ii!'nortant thing.,anc I thin!<: that any of t~e firtdin gs w:Lll result from his heritage and anything he think that h2s to t,e done riq~t to nrotect this Province he Hill do. 3ut I could not in any T;1ay prej udg:e Hhat he may recoT1'1!l.end. A suP!Jlementary, '-fr.

Speaken A sunul~entary, the original auestioner. \·1ould the nin.ister indicate Hl..et~er he l~elieves t:.le C?:overr.!T'ent >vould legislate this and whether the government ~re interested in taking sters,~ecause I understand that the management of the mines, and the ~ery tau of - the mines, have a vested interests ir Seven Islands - they are the ones who ovm the land, they are the ones who own the businesses - - and are i~e prepare d to get in and ruffle the top ~anagement of the mine in order to relocate within this Province th£' businesses and industries i.r~ic~ s~on~d he \.;rithin this Provine::>?

The hon. :rinister of Puhlic T-!orks .'lnrl SP.l'-rices. '·!R. ROUSSEAU: Hhether the renort is one ,-,.1hic'b. requi;:es partial government action and may require debate in the House of Assembly, ---you- kn~, __ ( . r~_aiiy-do , _ riot k:no't-T. I can otdy ::sa.y· this,that the companies involved in Labrador T,J'est, be t!ley the mining co~anies or any other comoanies,know of the government's 9795

~1ay 31, 1977 Tane ~To. 34'?8 :"-ffi. ROUSSEAU: feelings in respect to local emnloyment 9-nd local purchases. I >Ja.S very haopy to hear recently that a com-J?any on the Island nart of the Province had been asked to submit an ~stimate on a joh ~..rhich normally has not been a nrocedure befo!'e.

So maybe even without the Ba!'tlett Co!"'.!!!ission that so!!l.e "hairs are bei:1g ruffled" but I thini: the message is g'etting across that where practical, ~.;here feasible, ~-There econonically eaual at least that the people in this Province, in Labrador and on the Island part of the Province ,should be given preference by com.~anies 111ho consider the"!"selves to be !400d. corporate citizens. r.Je will nursue it. ~-Jhet:1er, like I say, it is bv action of the Fouse of -~sse..TTibly or ~Y gcverr~~nt action or by discussions ~th the nrovinces involved I really do not know yet. They make take all three avenues.

So when the report comes in of course government will hold it and at some point in the future it •·Till beco'1le nuhlic ar,d nossihly a oublic debate may be the best Hay to go on so1r..e parts of it. :m. SPEAKER:. The hon. me..tnber for Fogo. CAPTAIN WINSOR: ~-':r. Speaker, a cmestion for the hon. ~~inister of Fisheries. Undoubtedly the minister is a~·mre of the r:!isfortune again of nan)• fisherMen alan~ tlv~ 'Trrrth~·:est Coast having their ~~ar darna~ed by ice and storm, Is the minister .considering any compensation or any assistance to those unfortunate fishermen? MR. SPEA:KE"?..: The hen.

Hinister of Fisheries. ~m. W. CARTER: ~r. S~eaker, certainly we appreciate the proble..m :::hat is hein~ brought on 1-y that storm, Indeed I thin}: there has ~·een several storr.1s on the r.Jest CoA.st t~is year tJ-lrlt resulted in so~e severe d&~~~e to fishing ~ear. ~·rp. FOBEPTS: ~'fore ice. ~'11' • H. CARTER : Ice conditions and storms. The nrovince does not have an ongoing programme of assistance, }1r. Speaker, but certainly we will be having a look at the situation and having our field neople 9796

• 1<'l.y 31 , 1(}77 Ta e ~o. 349 " ',~. W. CARTER: visit the area.affected, and if·it is possible to render assistance we will. I should point out, ~. Speaker, to the House _that last_year_th~re was some talk of a lobster not insurance nro~ramme to 'T>Thich the Province ~-JOuld have contributed~ hut for some reason unkno>-m to r.ce the -nlan die not itO ahead and consequently there is no on~oin<? f_)ro~rc>.Ene of . hel'!). :3ut like I said, certainly if there is any r,ray lre can be of assistance we certainly will. ~m.

SPEAKER: The hon. member for Lewisporte, followed by the hon. me!llbe.r for LaPoile and Stephenville. ~t:P.. ~-JHIT'F:: ~~r. S'!) e:'l.ker, my oues tion is for th ~ Goverw.en t House Leader in the absence of ·the ~!iniste.r o-E l·h.:.nicirHtl ,~ffair:c; ~nd Eousing and it results from some .cOt!lr.ents made '!:>y Yr. O'Dea, the Chairr.'lE'.n of the St. John's ~fetropoli.tan Area Board. I ';-:render if the minister could tell the House whether or not legislation will he brought in or if lef,!islation is needJ;!d TN'ith res'!Ject to the establi"sbment of rezional government for St. John's1 • 9797

~· !ay 31, 1977 Tape ~:;a. 3499 'r·~ - 1 ~. SPEA.KER : The han. Minister of Justice. ~-!_R. RICIC-:fAN: ~fr. Sneaker, I suspect legislation is required but I e.m not in a position to indicate whether legisl~tion '>vill be · introduced at this session of t'be Eouse. A sn':lnle,..,entary. A _ s.uonlementary. ~8 .• HHITE: ~1r. Speaker, \vith only a ~.;eek or a counle of weeks to go before the House adjourns for the Summer and there is a lot of expectancy in the St.

John's area that regional government may come about by July, could the minister indicate 't-mctt the t!O~lerD!'lent' s intentions are \vith resnect to regional governnent and nroceedin!! ·~;ith th<tt? No, Mr. Sneaker. ~"'R. SPEAKER : The hon. member for ·LaPoile: ~lR. NEARY: Hr. Speaker, the whole Province,of course,has an eye, is \7atchin?' what is hanoening in Stephenville, in the whole Bay St. George area,Would the Premier give us an updating now on whether or not there is any nossibility of averting this disaster in Stephenville and indeed in the whole Bay St. George area by the Linerboard ~'!ill closing dmm?

Is there any T'ossihility no~.;, is there ~ny ray of hone, can the Prer.tier see any Hav to keen it open? ~'R. SPEd\.KER: The hen. Premier. PR~ER MOORES: ~fr. Speaker, we are having ongoing discu$sions I with various interested grouns and at such time as we can get something definitive put together we will be making a statement on it. But it is far too early yet to say what the prospects of that Pill be. }ffi.. J"EARY: ·A supnlementary question, ~ 1r. Sneaker. HR. SPEAKER: A sunnle!!!entary. HR.

NEARY: Hould the Premier indicate \mether these discussions are being held locally here in the Province or will the P~mier have to travel to other parts of Canada or indeed outside of Canada to meet with various groups who may be interested in taking: 9798

:!ay 31, 1977 T2.-oe ~{o. 3499 HR. NEARY: over the Linerboard mill? ~-!R. SPEAKER: The han. Premier. PRENIEP. ~OOP.ES: At the present ti!"le, ~r. S!Je2lcer, ~,re had discussior..s here in St. John's and ~.,e will also be goinp, to ot~er ryarts of Canada. There is no intention at the nresent ~oment to ~o . outside of Canada. ~!F.. ~TEftRY: A supplementary question, ~A'r. Speaker. · ~- · SPEAKER: A supplementary. HR. i'lEARY : Would the Premier indicate whether or not there had been nro~osals from countries outside of, and indeed other than North American?

Have there been · ryro!losals .. for instance~from the Korean Government or any other govel"!l!!lent or a~ency in European or Asiatic countries to tal':e nver the Linerbo.e .rd nill? PP.EXIEP. :'(OOP.ES: There have been no firm proposals to my knowled~e, Sir. The han. Me!"l.ber for Stenhenville follo"t>red by the hon. r1.ember for Trinity nay de Verde. ~fr. Sneaker, a question for the 'PreTI~ier. Could the ~remier state the ~osition of the p,overn~ent re~ardin~ the severance ;,A_y to the e:'tnloyees o~ Labrado-r Li-r.er!::-Cinrd'?

Is t~P.re si:: snnths severance pay ~oing to all emplovees or just a select few? ~ - !k'.. SPFAF'.E'R: The han. the Prenier. P~IE,. "'00RES : ~~r. Speaker, certainly not the select feH but I ~~11 get the exact details for the hon. menber and give him a co~y of it. '.fF.' • SPEJ.KE~ : The han. member for Trinitv 13a;t ~e Verde. ' .!1? P,(\r·'Tfo' : Hinister of ~1uniciJ?al Affa.irs -'tnrl. Housi!l .t>:. Could th~ ~in. ister tndicat~ to t~e House, Mr.

Sreaker, Hhether or not there ~vl'l.S ever an official policy Hith resnect to a freeze on the inco'L!'oration of connnunities who had requested such incornoration over the past three or four or f:fwe years? ME!. SPE.AKE~: The hon. ~-!inister of Municipal Affairs and Rousing. 9799

- 3 ~1R. DHIN: I am not sure if I understand the auestion, ~r. Speaker, Hhether there was a freeze? ~·fP .• ROUE: Tnether there ~vas an official nolicy on freezing the ir.cornoration of COT!l!"1unities >vho had reouested the incorpor.;o .tion of conmunities over the ~ ast three, four, or five vears? nr b ·:o years.,for that matter. ~ -LQ.. SPE.A.KE~: The han. ~!inister of ~-!unici-pal Affairs and Rousinf,?:. ~·!R. DINN: Mr. Speal~er, incorporations were deferred nending the ~fhelan Royal Commission Report and Henley.

We have lifted that ri~ht now to my knowledge,and I have answ·ered the auesi:ion nut on the Order Paper by _the han. mem~er for Lewisnorte, ~ -7ith resnect to about ti·Tenty-eight thet have reC!uested :i.nccr~oration - . - ~-fR. • ROT·iE : Has there an official policy to freeze? Tha t is what I am trying - · Certainly there has not been since Sentember outside of the deferment until th·e Henley. Before Septa~ber.. '·1R. DINN: ~·!ell ,I can find out for the han. member, ~Jr. Soeaker. ~. SPEAKER: A supplementary. The reason ~vhy I asked the ouestion, ~r.

SnP.aker, is because the minister is quoted in the Compass as saying that the freeze on the incorporation of communities in Ne~·Tfoundland has been lifted since February, Hhich seems to me to indicate that there must h~ve ~een an official freeze 2n~ - Continue. '"', . SPE/I.KER: The hon. ' ~inister of ~ funici~al Aff::lirs ?..ncl Pousinq. Hr .. Speaker, I do not knmv ~-That ~-i<ls s2i.: . in the Comoass or what was not said in the r:ot'!~"!.SS. The only thing I have said is that with respect to - MR. SMALLWOOD: - ) .. .-r:e.-·yau · bound by the Compass? l ffi. DINN: I certainly am not.

Certainly I have said that since the Henley Repo~t has come in, 98-DO

~Iay 31, 1977 Tape no. 3500 Page 1 - ms Mr. Dinn. the freeze with respect to St. John's~ there is no freeze with respect to St. John's now0 We were awaiting the Hhelan' s Royal Commission report and recommendations as a result of that report Hith res!)ect to incorporation. So I never said that the freeze was lifted. I said that there is no freeze as I understand it now on incorporations. MR. NEARY: A supplementary question, Mr. Speaker. MR.. SPEAKER: The hon.member ~or Burin - Placentia West and then the Leader of the Opposition. ~!R. CANNI~\G : Arising out of the previous question, ~r.

Speaker, I ,.;ould like to ask the Minis t e-r of Hunicipal Affairs if he is going to accede to the pe~ition of the people of Epworth in the district of Butin - Placentia \-lest to grant them the right to form a community council? HR.. SPEAKER : The han. minister. MR. DL.'m: Mr. Speaker, with respect to incorpora~ions, we have on file approximately twenty-eight requests for incorporations. HR. CANNING: What are you going to do about them? This is ~.rhat I want to know·. NR.

DI::ill: I sent a letter out to all those municipalities that requested incorporation somewhere around the ~nd of February . or the first of March indicating to them what the minimum service fee, etc. was and was it still the intention of the community to have incorporation. I have received since that time two replies~ One from the ho.n. member for LaPoile's district, Burnt Islands.,and that was acted upon with great speed;and one from the han. Minister of Forest~] and Agriculture's district, Bird Cove, they replied with a ninety-seven per cent in favour of incorporation, and they have received theirs.

So I am still awaiting answers to that letter from the remainder of thos~ municipalities requesting incorporation_. MR. NEARY: A supplementary, Mr. Speaker. MR. STRACHAN: A supplementary, Mr. Speaker. 9801.

}fay 31, 1977 Tape no. 3500 :Page 2 HR. SPEAKER: I have indicated that I recognize the hen. Leader of the Opposition, but that does not preclude hon. members from coming back to this subject later on. 2'-!R. ROBERTS: Thank yo"u, Sir. A question for the Premier.

Yesterday in the House, in his absence, I asked the Min~ster of Finance in his capacity as Chairman of Linerboard whether the government would give an undertaking that they would come back to the House before they made any arrangement to dispose of either in a short-term or in a longer-term or a management arrangement in respect of Labrador Linerboard Limited. The minister said that that was a matter of policy on which he could not speak and he said that it ~vas a matter with which the Premier "tvould have to deal. Could the Premier please give us that assurance? MR.. SPEAKER: The hen. Premier.

PREMIER MOORES: Mr. Speaker, if the House is in session certainly that will be the case. But I would not want to see a delay if such a thing could be arranged, and it is government's prerogative, as the Leader of the Opposition knows, to make decisions such as that. And as I undertook in this House, we would like very much to have the member for Stephenville (Hr. McNeil) and the member for Port au Port (}1r. J. Hodder) to serve on the committee that does make that decision. MR. ROBERTS: Mr. Speaker, a supplementary. MR.. SPEAKER: A sup~lementary. MR.

ROBERTS: I appreciate the Premier's answer,but given the fact that it is not difficult to bring together the House - it can be brought together for a session on a day or two's notice- and given the fact that this is surely as large a decision as this government or any gove~~ent will ever take, can we not have an assurance that the House will come together? Nothing will have to be de~ided in a day or two. The government will have ample notice, adequate • notice. The eovernment of Canada are preparing to bring together the House of ·Commons at Ottawa to discuss the decision on the pipeline 9802

~ay 31, 1977 Tape no. 3500 Page 3 - ns Mr. Roberts. before it is taken. Could we not have a similar commitment here that the House will come together . no matter what the occasion, will come together to ~iscuss what after all is as big a decision as this government or any government \vill ever take ? i:-'!R • SP EA..i{ER : The hon. Premier. PRENIER MOORES: Undoubtedly such a decision if taken when the House is not in session, Mr. Speaker, will be open for debate when the House is in session. And certainly if the Leader of the Opposition does not have confidence in two colleagues, I do. ~±R.

SPEAKER: The han. member for Le!·7isporte. ~· ~ ... RO:BEP~TS: That is just locking the door after the horse has gone 'Frank'. MR. WHITE: Mr. Speaker, my question is for the }linister of Municipal Affairs and Housing, and I am asking him the question since I did not get much of an answer from the Government House Leader. The question is: Does the government intend to bring in legislation with respect to regional government before this session of the House closes ? I am asking that in connection ~vith John R. O'I:ea's remarks in the ne~paper ... HR. SPEA..i<ER: The hon. minister. MR.

DINN: It is very difficult, M~. Speaker, to say what will be done between now and the closing of the House . with respect to St. John's, the St. John's Urban region. 9803

May 31, 1977 Tape 3501 EC - 1 MR. DINN: I would like to see a Bill for regional government in St. John's. ~flhether it is possible to do that~to get it done in time 1 or whether indeed it will ~e, you know, the total thing will be put in the package before the Ho.use closes I do not know at this time. MR. F. WHITEi MR. SPEAKER: HR. F. WHITE: A supplementary. A supplementary. Mr. Speaker, could the minister tell the House whether or not legislation ·is needed for the imple­ mentation of regional government in St.

John's,and if legislation is needed does it mean that there would be no regional government until the House reconvenes probably in six or seven months? MR. SPEAKER: The hon. minister. MR. DINN: Yes, Mr. Sp~aker, legislation is . required for ~egional government. MR. SPEAKER: The hon. member for LaPoile followed by the hon. gentleman from Trinity - Bay de Verde. MR. NEARY: This is for the Minister of Public ~-lorks and Services, Sir, and I presume that the matter that I am going to refer to comes under the hon. gentleman's department.

Will the minister tell the House if it is the responsibility of this government - of the proVincial government - to purchase the land in connection with the golf course that is going to be constructed in and near the Terra Nova National Park? In other words,will this Province have to purchase the land out of provincial taxpayers' money and turn the land over to the Government of Canada? ~IR. ROUSSEAU: I have to take that · question as notice, ~Ir. Speaker. l'IR. NEARY: Hr. Speaker - MR. SPEAKER: A supplementary. MR. NEARY: Would the minister also take as notice that the minister cannot provide the answer?

The total cost of this golf course to 9804

May 31, 1917 MR. NEARY: MR. ROUSSEAU: Tape 3501 the provincial Treasury - - The land cost - EC - 2 }ffi. NEARY: - the land cost - what the government has allocated to purchase the land for the construction of this golf course down on the Eastport Peninsula~ would the minister get that information for the House? MR. ROUSSEAU: Yes, I will, Mr. Speaker. MR. NEARY: Mr. Speaker, I might say that I am not satisfied with the minister's answer at the present time and I am going to debate the matter on Thursday coming anyway. SOME HON. }ffi}ffiERS: Oh, oh! MR.

NEARY: And I will look forward, Sir, to getting the information from the minister before then, because it "does not make any difference-if they are going to spend one cent, it is too much on a golf course in this day .and age. }ffi.. SPEAKER: The bon. member for Trinity - Bay de Verde. MR. ROWE: Mr. Speaker, a question to the Minister of Municipal Affairs and Housing.

Could the minister indicate whether or not he has made a ministerial statement or an official public statemen~ stating or saying to the House of Assembly and/or the people of Ne-.:vfoundland that the government has lifted the freeze on the incorporation of unincorporated communities in this Province? MR.. SPEAKER: The hon. minister. MR. DINN: It is very difficult, Mr. Speaker, you know, going back through my memory as to whether I have said the government has lifted the freeze. Last year when there was a freeze or a slow-down or a wait-until, there was one incorporation.

So you know, there was not a definite policy,I do not think,in government to say that there was a freeze, but there was in the St. John's urban region and in other areas - MR. CANNING: MR. DINN: MR. ROWE: You would not incorporate them. - a definition, you know. What do you call them when you do not 9805

May 31, 1977 Tape 3501 EC- 3 MR. RO'toffi: incorporate them? ·MR. DINN: A deferment. HR. RO't.JE: A deferment for two years. Mr. Speaker - }fR. SPEAKER: A supplementary. MR. ROloffi: - this is terribly confusing and somewhat embarrassing in view of an

article in The Compass. But the minister is now saying it was not a freeze - AN RON. MEMBER: The Comoass. MR. ROWE: - or there was a deferment. He was not quite sure whether there was a freeze or not. Now he is not quite sure whether the freeze has been lifted. I want to know specifically and directly whether or not there was a freeze for any period of time on the incorporation of communities and now whether or not that freeze has been lifted. You know, a simple yes or no. I mean, the people of - MR. SPEAKER: Order; please ·! The hon. gentleman is presuming to debate the issue.

I think the question is quite clear. MR. ROWE: Can I just carry on with the supplementary and say, does the minister realize that the people of this Province are utterly and completely confused over this issue? MR. SPEAKER: .The hon. minister. MR. ROWE: And so is the minister , obviously! MR. DINN: Mr. Speaker, I do not know how confused • the people in the hon. member's district are, but certainly · I have not had any indication from any of the people that they are confused. And I do not know if there is anything I could do about that if I did, Hr. Speaker. HR. ROl-lE: I would agree with that. MR.

DL.'m: But I will say to the han. member that there are twenty-eight applications for incorporations, or thereabouts - there might be thirty o~ might be twenty-seven. Of those twenty-eight I have indicated to them if they still wish to be incorporated to notify me and let me know, and the two that have, I have incorporated them - 9806

¥.ay 31' 19 77 Tape 3501 c - 4 MR. DINN: Okay? N·ow if the hon. member has communities in his area that he would like ·to see incorporated then I would suggest that he do his homework and. get out in his district and get to those communities and assist them. smm HON. 1-liDlBERS: A supplementary. MR. SPEAKER: A supplementary, original · questioner. 9807

i1ay 31, 1977, Tape 3502, Page 1 -- apJ MR. ROWE: AN HON. MEMBER: SOME HON. MEMBERS: t~ R. R Ol~E: Am I recognized? Yes, boy. Oh, oh! What is all this malarkey, Mr. Speaker? Get o~t! Represent them! Do your homework! Has the minister received any reoresentation from me f o r i n co r p o r a t i o n · o f com m u n i t i ·e s ? · H a s h e r~ceived any petitions from the people of Green's Harbour and New Harbour asking for incorporation of communities?

Has the ·minister in his files down there far the 1 as t four or five years, passed along by any other Ministers of Municipal Affairs in the House - thatis the problem. There have been so darn many Mihisters of ~ unicipal Affairs and Housing they do not know what is going on down there. ·oa not petitions presented before this han . . House count as an application and a request for incorporation? If that does not, what does? r~1 R • S P E A K E R : The hon. the Minister of Municipal Affairs and Housing. MR. DINN: Mr.

Speaker, whether the han. membe~ knows or not I do not know, but there are ways to become incorporated in Newfoundland today. r·~R. ROHE: Yes. MR. DINN: With respect to local government, town councils etc., petition is the thing to do and to get a majority on that petition requesting incorporation. For community councils, Mr. Speaker, the procedure is that you get a majority of the people out to a meeting and have a majority of the people in the community vote for incorporation. r~R. R OHE: MR. D IrJN: Right! I understand that!

Then notify the minister and the minister will do whatever he can to assist that community to become incorporated when that happens. I have sent out a letter, I have said I received two 9808

~ay 31, 1977, Taoe 3502, Paae 2 - - aob MR. DINN: replies back, these two have been incorporated and I .am waiting. MR. STRACHAN: A supplementary. r·1R. ROHE: A supplementary. M R • S P EA K E R : A f i n a 1 s u p p 1 em e n t a r y • T :-, e hon. the member for Eagle Riv~r. nR. STR.L\CHAN: The community that·I am referring to, the community has done everything the m i n i s t e r h as g a i d , i n c 1 u d i_ n g a 9 3 per ·cent vote i n t h e community for council.

The minister is now stating they cannot be incorporated unless they go back and have another meeting and have another vote and the community will just not believe it, ~hey will not do it. That is what the minister is _indicating. r1R. SPEAKER: The hen. 'the t~1inister of Municipal Affairs and ~ousing. t·l R • D I N N : t~ r .

S p e a k e r , w i t h a l 1 d u e re~pect to the hor. member, what I am really ~aying is that if a community got together, got all the residents in and they voted for . a community couricil, and they ele~ted a committee to represent them, would that committee indicate to the minister that they still want incorporation - MR. ROHE: ~1R. DINN: Why do they have to do that again? - based on the fact that service fees have gone up, the minimum service fee, etc.

The criteria has changed since these people requested incorporation and it is not the intention of this administration to force local government down anyone's throat. ORDERS OF TilE Dt-,Y i-1o t ion 8. Motion, the han ; the Minister of Forestry and Agriculture · to ~ntroduce a bill, 11

An Act To Amend The Forest Land (r1anagement and Taxation) Act, 1974 ·And To M~ke O~her Stat~torj - Amendments In Resoect Thereto." carried. (Bill NcL 67).

i' ay 31, 197 7. Taoe 35!'12. D~ :: e 3 -- c.ob On motion, a bill, 11

An Act To Amend The Forest Land (Management And Taxation) Act~ 1974 And To Make Other Statutory Amendments In Respect T h e r e to , II r e a d a f i r-s t t i me , or d e red r e a d a s e co n d t i me on tomorrow. ~!R . HIC KI!AN : Co mm ittee of Su pn l y . On motion t hat th e Hou se resolve itself into Committee of Supply, Mr. Speaker left the Chair. MR. CHAIRMAN: Energy. f,1 R • R 0 BERT S : MR. CHA I Rr~AN: Opposition. rm . R 0 B E R T S : COMMITTEE OF SUPPLY Orde.r, please! Headinq 1101 - Mines and H r . C h a i rm an . The hon. the leader of the Thank you, Mr._Chair~an.

I would like to say a few words on the - about t w ent~ minutes worth, -to be honest- minister's salar y , the general heading of the department, and I would like to 9810

:'-fa7 31, 1977 Taue No. 3503 -::.!R. ROBERTS: deal with the same subject which I understand my friend -and colleague, the member for Eagle River, ~- 1 ('1r. Strachan) dealt 'tvith last night and that is this ouestion of a tax on the energy produced at Churchill Falls, or for that matte!:' it !'lay be necessary to levy a tax upcn all ener~yJor at least all electrical energy-generated in this Province and couple that with a series of rebates. I note that in passing. It is not central to the - ~1R. CHAIRl"!.A..!.'l: Would the bon. member yield? MR. ROBERTS: Yes, of. course, Sir.

I 'tvould like to r..relcome to the galleries on _ ___ ___.:::'h"ehalF of aJ ]" n: embe.rs~t}l.e-llouse--of Assembly tHenty-si:~ grade nine students from Gill ~-~e.TTl.orial High School in Musgrave Harbour, accompanied hy their teacher, ~r. Hayne Reid, and ~rs. Reid. SO''!E HON. ~:!E'1BERS: ~!R.. CH...<\IP11AN: 'fR. ROBERTS: Hear! Hear! The hon. Leader of the Opposition. Thank you, }fr. Chairman.

As I 't•ras sayinz., I think this is a very important tonic and it is one upon Hhich I 't·:ould hone both the Attorney General, in his legal capaci tv J ;md the Minister of ~fines and Energy Fill sreak because it 8ay very >:v-ell nresent a 't'lay out of a dilemma. But before I get into that, }1r. Chairman, I would like to dispose of a matter to 't'lhich I just briefly referred before Your Honour asked me to yield and that is this question of applying it to other electrical energy generation in the Province.

It may be necessary in law to have a tax levied on all electrical energy generated in this Province and if that is so then it is a simole r.1atter to structure as :Jart and parcel of that, oerhaps by senarate le~islation, a series of rebates so that the cost to the consUMer in this Province, or at least the domestic consUJ'Iler ~rlll be no greater than it is now. I make this point simply to put aside, because I believe · it is peripheral to tre central argument, this whole question of --- -·-- ··- 981.1.

31' 1977 Tape No. 3503 :N~1 - 2 ~'1',. ROBERTS : whether we would have to levy a tax on everybody or not. If we had to, if that were required by the reauirements of the constitution, then ~7e could solve the dilennna very easily.

Now, Sir, let us look at the situation Mith resPect to Churchill Falls pov1er and let "ne begin by saying that nothing is less productive at t~1is _p_oint in t _b._e t~an to conC:e~ the contract into which Churchill Falls Labrador Cornoration entered ten or twelve'years ago; ' equally nothing is less -productive at this [)Oint in time than to condemn,or to nra:tse for that matter,the arrangment by which the government of this Province acauired a to:-ro-thirds interest in the CFLCo company. ~.J e novT :1old a total of 65.8 per cent of the issued shares of Churchill Falls Limited. (To more shares rNill be. issued so Y7e h~d effectively t"t-ro-thirds of that c·ompany.

The remaining one-third is owned by Hydro Quebec. And as far as I am concerned- o;ve have had a lot of debates in this House about it, Sir - and as far as I am concerned there is little [)Oint at this stage in going hack over the decision by the government to acquire CFLCo. Hhether it was good or bad is 8. matter that is certainly of irn~ortance and interest but is essentially irrelevant at this :;oi.nt in ti!"''e. ~·!e O~·rn it c:t~.d nobcviy else is f.!:Oii"_'!. to bu? fro'"'1 us and ~·rhat r.ve can do H'ith it is something ~ve ought to talk about, but the fac;t is that .t,•e mvn it, it is there.

Equally it is nrofitless in my view to talk about the contract- not to talk about it, I intend to talk about it, -but to -·go into- any- -detaii ·on the wisdom of CFLCo entering into a contract ~vith Hydro 0uebec in 1965. I think it ~-ras 1%5. It may have been 1966. In any event the contract het~.reen r:.r,co at".d t!1e Fyrlro 'luecec, the contract under ~-mich Hyc"ro 0ue~ec ~~rees to buy ~nc CFLCo agrees to sell almost all of the ~reduction of the U!)per Churchill.

Just so ~ve ~vill 1Jave t"be figures t~ere are the canaci ty of the Unner Churchill is 5, 225 megawatts, that is an estimated annual energy capability of 34.5 billion kilowatt hours, almost all of that goes to Hydro Quebec. 9812

\~;w 31, 1977 Tane ~;o. 3503 "!'R. ROBERTS: The figures for _tf:le ~o_s~ re~ ~m ~ year are that CFLCo, Churchill Falls, sold 32 biilion kilowatt hours of power to 0uebec, 32 billion kilowatt hours out of a nossible 9813

•_,.Jo ~·fay 31,19 77 AH-1 HR. ROBERTS: production of 34.5 billion kilowatt hours. The remainder is consumed within Lab~ador,rnainly in the iron ore mines in Western Labrador. Now whether the deal was a good one or a bad one at the ti~e is something that cannot really be settled. Both sides thougot it was a good deal, both CFLCo on one hand - the government were not party to it, they may or nay not have been aware of it, I assume they were,but MR. SMALLWOOD: No. MR. ROBERTS: Welltmy friend from Twillingate was Premier and I believe the hon.- no,the Minister of Justice was not ~linister of Justice at that point.

The government were certainly not aware of it in any legal sense. They may ~ave been told about it or t~ey may not, but they were not party to it but they were not party to it. The deal was between a private corporation?as it was . at that time, Churchill Falls(Labrador)Corporation on one hand,and on the ather hand a Crown corporation owned by the govern~nt of Quebec, Hydro Quebec. Both sides believed"it was a good· deal or they would not have made it. It has turned out,of course,to · be an incredible bonanza, an incredible bonanza for Hydro Quebec.

Energy which they are now buying at between two and three mils has turned out to be ~.rorth bett.;een t"t.renty and thirty !!lils. It is an astonishing bonanza, It is producing for Quebec an incredibly affluent state of affairs and I think that our position, our · approach to it should be founded on that. But I would like to talk about three aspects of it, Mr. Chairman. I would like to talk about just what is involved,and I would like to talk about a possible legal .approach to it , - I do not think either the Hinister of Justice or myself ~.rould particularly like to get into a detailed constitutional argument.

I think there are very real constitutional considerations but I think the matter~ for reaso~s I will outline,goes beyond that - and then I also want to talk about a strategy which I suggest we could follow. 981.4

Hay 31,1977 Tape 3504 - Horning AH-2 MR. ROBERTS: But let us just; talk first of all , Sir, about some of the quantities, the numbers involved. As I have said, Churchill Falls produces or has a capacity to produce and in a normal year will produce about 34 billion kilowatt hours. The · contract between CFLCo let us just call it the contract, the contract is for forty years 1:11ith a renewal option, and ·the option 'is at the option of Hydro Quebec) for a further o..renty-five • years. The contr~ct specifies the price to be paid. It--startes at just under three mils"' in 1977.

It will be reduced somewhat; it will be_ about 2 ~5 milS ., I am told,at the end of the first twenty-five years of the contract. That rate will be maintained until year· forty and then the contract provides for a fixed price,assuming Hydro Quebec decides to renew it and I think \ve can grant that assumption, two mils per kilowatt hour for ·the rest. Hydro Quebec have assumed some other undertakings. They have an obl,igation to pay some of the interest charges. I ·ail\ told that amounts to about one half mil per kilowatt hour at the present state of affairs. That will vary.

So essentially, Sir, Hydro Quebec for a figure that will vary between two and one half mils and three and one half mils,with the higher figure being incurred now and the lower figure comlng into the future 1 Hydro Quebec has the right to about 32 billion kilowatt hours of power for about the next fifty years, fifty to fifty-five years depending on the effective date of the contract. Now, Sir, is that a lot of power? It is a lot of power but where does it fit into the Quebec context?

Well, Sir, the total consumption in Quebec Province in the most recent year I have, I am told they are the 1976 figures, was 94 billion kilowatt hours. so- let us put those into perspective and let us forget all those zeroes because we are comparing apples and ap?les. Hydro Quebec produces two-thirds of the power consumed in Quebec, 94 billion kilowatt hours,and we produce one-third of it in this Province. ~-·--- --· - 9815

:-fay 31 , 1977 Tape 3504 - Morning ..t..R- 3 MR. ROBERTS: -- So in other ~ro't'ds we a-re not -ealkirrg ·abO'ut so~e marginal part of the Quebec Hydro grid. He are talking ab.out one-third of Hydro Quebec's entire production. So it is quite true to say, as my friend from Eagle River (Hr. Strachan) · said to the Premier of Quebec in the Premier's Office in Hontreal one day this ~vinter, that you know if :tore ever pulled the plu~ the at Churchill Falls the elev<ltors in this bu~ldi~g· will not work. And Mr.

Levesque sort of grinned acknowledgement and proceeded, with that charm of his, to talk about something else. But let us remember the one simple fact, because I think it is basic to the argument; ~ne ~third of the power that is consumed in the Province of Quebec is produced 9816

May 31, 1977 Tape 3505 EC - 1 MR. ROBERTS: in this Province. We are an essential part. They cannot get along without us. They do not have any alternate source of that power. _ That is worth remembering. MR. SMALLWOOD: Except the potential. XR. ROBERTS: Potentially, ~y friend from Twillingate says. Potentially they may •. MR. SMALLWOOD: At a cost of how many b~lJions? MR. ROBERTS: The James Bay is a potential. It is being realized, but the cost of James Bay power - I have not seen any firm figures. I do not think they know what James Bay is going to cost, but twenty-five, thirty, thirty-five mils. MR..

STRACHAN: No! Higher than th?t. Close to - MR. SMALLWOOD: Anything up to twelve or fifteen in the billions of dollars. MR. ROBERTS : Yes. The James Bay project threatens in . a sense to come close to bankrupting the government of Quebec. But besides that,th~ fact remains that this power in any real sense is irreplaceable. So we are talking a large quantity of power, one-third of their total consumption, and we are also talking, Mr. Chairman, a quantity of power which cannot be released or obtained from any o'ther place. ~ow I think those two figures taken together give us some pretty major bargaining weapons.

I think they give us some advantages that if we choose to use them wisely and with courage can help us to reverse the incredible state of affairs in which we find ourselves today with power. Now I only have a few minutes, I do not want to go o.ver it in any detail, but let me say simply the present state is this, that we are scrapped for power in this Province. We are paying the highest domestic rates in Canada, I am told. It is significantly higher than, for example, in Quebec.

The average for ten cities across Canada for five - I a~ sorry - a comparison of the monthly domestic electric bill, 500 kilowatt hours excluding provincial taxes - and remember, we pay 10 per cent tax on electricity in this Province - take 500 kilowatt hours:For ten average cities across Canada, Mr. Chairman, the price was 9817

Hay 31, 1977 Tape 3505 EC - 2 MR. ROBERTS: $14.89. _Fo-r: St •. John's . it was $16.35 and that is before the most recent increases that are now before the Board of Commisicners of Public Utilities, which presumably will be approved in whole or in part. Hhat about Quebec? - $10.60 in the P~ovince of Quebec. So we are paying the highest prices - I think P.E.I ~ may be a little higher; I will amend that .; ~~t we are paying just about the highest prices in Canada. All of our marginal and incremental power apparently is going to be thermal fue!led, mostly o~l . fuelled.

We do have some hydro capability left on the Island and hopefully that will be developed, but that will not take ·us very far. There is not enough hydro capacity left on the Island to meet our needs. So we are going to be faced increasingly with ever larger power bills and here is Quebec, a third of whose power comes from us under · a very advantageous contract, here is Quebec Hydro offering its power for 60 per cent less - 60 per cent less for a domestic consumer. Now, Sir, I think that in equity and justice we are entitled to act, and I think we are entitled to act by all means within our power.

I will not go into the legal case. I think that is sub judice and so I will not go into it except to say in my view the government ought not to pursue that. I think there is a better strategy. And I think the one which my colleague outlined yesterday,which I am going to touch upon now, I think that is a better strategy. -- Sir, we have the power as a government - or as a House of Assembly,! should say, to levy direct taxes. It is in the British North America Act,

Section 92 _ ~ 92(1) I believe it is, but it is 92(1) or 92(2) - to levy direct taxes. A tax upon resources is a direct tax. We do not have the power as a Province,nor ought we to have the power within Confederation>to levy an export tax. 1-le cannot levy any tax~further , of an inter-provincial basis. We cannot tax power going to Quebec or we · cannot tax_fish going to Nova Scotia. We can only levy direct taxes and - -- - . - - - all of the taxes levied_by this House and collected by the government are • direct taxes. MR. SMALLWOOD: Direct taxes within the Province. MR. ROBERTS : My friend from Twillingate,of course, 981 .8

May 31, 1977 Tai>e 3505 EC - 3 MR. ROBERTS: is right - within the Province. I mean, this government or this House has no jurisdiction with outside the territorial boundaries of thi·s Pre-vince. Our writ runs to the Cabot Strait and to the height of land and the 49th degree of l~titude. That is as far as the writ of this House,and the goyernment which answers to it,runs. I think, Sir, we could -·~ .. 981.9

J·! a y 3 l , ~- 9 7 7 , T 2 c ~ 3 50 5 , ~:: g ~ 1 c. p b 1'1 R • R 0 B E R T S : levy a tax. I am going to suggest others have. I have made the suggestion before publicly. r1y friend from Eagle River (Mr. "Strachan) and my friend from Burgee - Bay d~Espoir and my friend from Port au Port (Mr. Hodd~r), I believe, were the first people to raise the question publicly. My friend from LaPoile (tlr. :--leary) - MR. NEARY: t~ R . R 0 B E R T S : that. I acknowledge it. A N H 0 N • ~1 EM B E R : you embarrassed him. i"IR.

ROBERTS: I was the first to raise it. i~ell, then,! had overlooked You not only overlooked it, But my friends from · Eagre ________ _ _ River and Burgee~ Bay d•Espoir and Port au Port, made the suggestion publicly some months ago. I must admit at that time I lo~ked askance at it, not from the policy point of view, but I said,It will not wo~k in constitutional law. Well, it will not work if it were a tax on exports. But we are not talking a·tax on exports, we are talking a tax ~n energy, on resources.

We are talking a tax that is no different from the taxes, no different conceptually, from the taxes which the Government of Alberta levies on the oil. And, I might add, in levying those taxes the Government of Alberta altered unilaterally contracts and agreements which they had with oil companies. ~le are· talking a tax that is no different conceptually, . no· d i f fer en t i n theory or i n 1 a w, from the tax \'' h i c h t h e Government of Saskatchewan has levied on the potash industry. !~e are talking a tax that is no different from the mining tax. ~1 R • H I C K t•!

A N : That is on its way to the Supreme Court now. ~1 R • R 0 8 E R T S : Yes, of course, it is on its way to the Supreme Court and the Supreme Court of Canada will uphold it. But the fact remains the tax is in 9820

May 31, 1977, Tace 3506, Page 2 - - aob ~1R. ROBERTS: effect until and unless a court rules it out. The Alberta taxes are perfectly in effect, our mining taxes are in effect, and the ~ax on energy could be in effect and could be lawful. 11 R • F L I G H T : Hear, hear! H R • S I n r·1 0 N S : That potash tax was upheld by both courts in Saskatchewan. t·1R. ROBERTS: The potash tax has been upheld at trial and on appeal, as ·my friend from Burgee-~ Bay d' Espoir says. I believe the Supreme Court of Canada will uphold it. I think it is a d -irect tax. 1·1R. HICKr1AN: That is not so.

Just for the - . . .. . - .. . - - -- . ---- ~ e·corcr,-t-hat-Ts inc or t' e ct -.------ r~ R . R 0 BERT S : I am to 1 d i t i s . M R . HICKMAN : No. The trial judge decided in favour of the potash company and the Court of Appeal overruled the decision of the trial judge. ~·1R. · ROBERTS: Well then I amend it. The higher court, the Court of Appeal, the higher court to hear it to date has upheld the validity of the statute and the tax - remember there is also, I say to the Attorney General, a series of actions underway arising out of the expropriation legislation which is a different kettle of fish altogether.

MR. HICKMAN: Also, as a matter of interest, it is, I believe, the first time that the Government of Canada intervened in that kind of a case, at the trial division, without being invited. !'--1R. ROBERTS: The Government of Canada has a · right to intervene in any constitutional case, as does the Attorney General of the Province. t-1R. HICKMAN: MR. ROBERTS: MR. HICKMAN: MR. ROBERTS: Yes. The requirement is - But it is without precedent. The requirement is that 982:1

May 31, 1977, Tape 3506, Page 3 -- apb ~1R. ROBERTS: in any constitutional matter the court, as I understand it, must advise the Attorney General and give him the opportunity to appear. Not the parties, the court,if it deems the matter to be tonstitutional in nature,must advise the Crown so that the Attorney General has the right to appear, to intervene. But in any event, the fact remains, Sir, the tax is in effect in some province~ in Canada and I believe it is a proper tax. The Supreme Court of Canada will r~le on it in the case of Saskatchewan. In Alberta it has been in effect for year~.

We have done it here in this Province for year.s. Other provinces have. It is not a new tax. It is not a tax on exports, it is a tax on resources, a tax on resources within the Province. Now, Sir, what could that tax amount to? Hell,supposing ·we were. to levy a 10 mil tax, a 10 mil tax, Mr. Chairman? I have some figures here. A 10. mil tax,that would bring the power ·in the hands of Quebec, or the hands of any other purchaser, we do not care who the purchaser is -and by the way, Hydro-Quebec buy this power within our Province.

Point A, the point at which the transfer -the point of sale 1 point A,is within the Province of Newfoundland and Labrador. A point,I might add,which my 1riend from Twillingate (Mr. Smallwood) insisted upon is within this Province. The transaction takes place physically within this Province, we can control it. r1 R • S r·1 A ll\~ 0 0 0 : It would be very hard to have the sale take place in Quebec. MR. ROBERTS: That is right! But my friend from Twillingate who was then Premier insisted, arid it is written in the documents, that point A is within the Province. Now why did they call it point A?

It is to cater a little to the sensibilities of the ultra­ nationalists, the ultra-montane crowd in Quebec who did

., 1 " - ' 1077 .:.. ... J J J ~::: :""\~ -...1- - ._ :: ?'""h - -...J • ...J MR. ROBERTS: not want to refer to the border. Hell, that is nonsense and garbage. The fact remains that it is within the Province and the ' documents, I am told, make it very, very clear. Now, Sir, ':le can levy that tax. I am out of time, am I? ~!ith leave? ~1R. ROBERTS: May I have leave to proceed? Twenty minutes is not long enough to develop an argument. If I do not get leave I have to yield and somebody else can speak. Will you be very long? r·1 R • R 0 B E R T S : I will be another ten or fifteen minutes only,I hope. MR.

HODDER: The han. minister, last night, went forty minutes , I t_h ink .. A N H 0 N • r1 E r~ B E R : That is right. M R • S r~ A L l ~J 0 0 D : That was a fine speech. NR. ROBERTS: .. I would like to finish this if it is in order. For the benefit of the hon. Leaders of the House, we have t·1R. HODDER: We gave the minister leave for forty minutes. t~ R • CHAIRMAN : Order, please! I know this is a serious discussion,so for your benefit a~ of one o•clock we will have t~o hours and twenty-five minutes, which means to say that we will finish debate, the seventy-five hours will be up,at five twenty-five.

So probably you can sclit t 11 e time.' i·1 R • R 0 B E R T S : \~ell,thank you. If I could have leave for perhaps another ten of fi.fteen minutes I \•lould- like to develop th.e argument.

:· dj' " . .j - ' .. ""' -- - .... I I , ,c ::: ""'-"' -_ _,.., ...... , t~R. PECKFORD: It is all right here. The ~nly pro blem is with the Minister of Justice who wants to participate in the debate and has leave to and therefore - t1R. ROBERTS: I think he should particinat.e. - is unde r ti me constraints . But the hon . ministe r h~s given you leave · and that . ... 9824

~-!ay 31, 1~77 TaPe No. 35()7 l'lM - 1 MR. PECKFORD: is quite acceptable to me. ~m. }'R. ROBERTS: HICIC-f.AJ.'l: When is the minister Cptching the plane to Ottawa? I ~.;ill be here for the rest of the morning. ~~~· PIJBERTS: Oh well,all right. Another ten or fifteen minutes,! think. MR. CHAIR.~...i.'l _ C·1R. YOUNG): Bv l~nve? By leave,tP-n minutes. }ffi.. ROBERTS: Thank you, ~1r. Chairman, and I thank the gentleman and the members of the House.

A 10 mil tax, which would mean that the pm·7er in the hands of the constli!ler 't>Tould be 10 nils more costly, that 10 mil tax would r.1ean the no~.;er lmuld cost bet\·7een 12.5 and 15 mils, still a bargain, a bargain by any standards, a ~argain by comparison ... ~th Janes Bay !'m:.;rer ~-1hich is 25 or 30 or 40 mils, a bargain by comparison ~vi th what "1e are paying domestically, Hhere I think the basic rate .is 20 mi.~s nmJ for the first 200 or 300 kilowatt hours, whatc1;er the rate structure of Light and Power is.

That tax \oTOuld produce in the hands of the ~overmnent of this Province about $300 million a year, a staggering sum of money, at 10 mils, and that is on 32 billion kilo"mtt hours. I think I have g~t the zeroes ri~ht. But about, you know a mil is bein~ a thousandtJ of a cent, that is one-tenth of a cent, a tenth of a cent of kilowatt hours. $300 million a year. Now the Minister of Finance would give almost anything he has,I would wager, for $300 million a year. True it would effect our equalization. It would effect equalization but so it should. Equalization is like "relfare.

We get equalization ~ecause we do not earn enough or do not Produce enough or ~enerate enou~h 7 and it is a form of guaranteed minimUM inco~e, enualization is~on a federal-nrovincial scale. l.!R.· DOODY: ·we would be proud and delighted to give it up. ::::;;;.:....,;;;,;,;;..;;.;~_...:..:...=~ ~1R.. ROBERTS : Well,I agree with the ~nister. We would be proud as a Province to give up equalization, proud and happy if the day came when we did not need equalization. 9825

Hay 31, 1977 Tape ~ro. 350i :'-fR.. ~OBERTS: · We · could get $300 million a year, a staggering, staggering sum of money. He could get it by a tax that is lavTful, by a tax to be levied within the bounds of this Province. Nmv let us look at ~·rhat would hen!:len if ~·re ~vere to uass

an act to levy this tax, and I thinY: ~·7e are getting nm.;r to the nu'!J of the situation. Sunposinp, the ~overr~ent brou8ht in a bill - it would get unanimous sunport ~ a~4_we.levied an energy tax 10 mils a kilowatt hour on all power,if need be,in the Province. \le might have to have a series of rebates to domestic consumers. There are precedents for that. A number of provinces have a fe~·T dollars to snare' have home m.mers 1 rebates on tCl.XeS. . Tn :3C ~·men Packy 'Bennett Has Pre!nie~, 'fr. r.c.airmc.r.; he used to ~ive out $50 or SlnO to home ovmers. I thin~ in Ontario the ante goes up every election.

It is going up again nov7 as they are coming close to polling day there. You know, there are precedents for it and it could be worked l;l'ere. But what would Quebec do? ~~That ~.;rould Hydro-Quebec do? They would not be very happy. I mean,that $300 million comes directly out of their pockets. They are the consumers. They have to pay it. It is a sales tax, the same as when I '?;O in to ruy n car and if it is $1,000 I have to ~ay Sl~n sPles tax. Tte garage owner' does not pay it. It comes out of my ~ocket~ They have to ~ay it. But can they afford it? ~vell they have done rather well, you know.

They have done rather ~.rell. Hydro-Quebec is a very profitable cot'T'oration. Its I most recent annual report tabled in ~he Assembly in Quebec the other day reports continued financial strength. They borrm.;red $1.267 'billion last yeA-r, Sl,2f.7 TT"illion. They financed twenty-f:ive ner C'.ent of t11at internally. Fro~ their mvn revenues 9826

May 31, 1977 Tape 3508 EC - 1 MR. ROBERTS: __ they _generated $300 million last year. The Minister of Finance can only be generating - what? $8 millions- or $9 millions thi~ year internally. Their expenditure this year is $1,800 millions, $1.8 billion. Their net income last year - their-net income - was $311 million. MR.. DOODY: MR. ROBERTS: Down from $400 million the ureviou~ Y~~~· Their revenue from sales of .. - - -electricity was $1.05 billion - $l,Q05_ million. And.by way of example, this is the general manager noting that Quebecers continue to enjoy low energy costs.

He said, and this is a quotation, - "By the way of an example, a residential customer in Montreal today using 1,000 kilowatt hours - my earlier examples were 500 - using 1,000 kilowatt hours a month pays $19.05 compared with $21.87 in Toronto, $28.65 in Vanc~uver, $27.24 in Halifax and $81.07 in New York City. There is every indication that Hydro-Quebec will continue to have low rates." And so there is unless and until we act.

And they are getting their low rates beaten out of us, beaten out of the poorest province in Canada, the most highly taxed province in Canada, the province whose people have the lowest income in all. Canada and the province that is being forced to turn to thermal power without getting any benefits from our hydro power. Now, Sir, can we do it? I think we can legally. The Minister of Justice may take issue with me, but I will let him make his case and then I will · deal with that on the legal grounds. But can we do it in policy? Well, first of all, Sir, we arejustified in equity.

It is a terr~bly one-sided contract . .!__know in law that a contract is a contract is a contract, I am not talking contract law, I am talking constitutional law. A contract that is so one-sided and inequitable we are justified in using our legal rights to redress it. Well then now, could Quebec say, 'We will do without the power'? Not likely~ Not likely! The elevators in the Hydro-Quebec Building would s'top running and the premier would be stuck on the eighteenth floor,as my friend from Eagle River (Mr. Str~an) told them. Hydro-Quebec has no alternate source of power. We hold the whip- hand in that sense. 9827

Hay 31, 19 77 Tape 3508 EC - 2 HR. STRACHAN: New York State? MR. ROBERTS: Now what about the bond marketZ And I am very concerned about the bond market. I think our credit is something we must protect. It is being stretched very much. lve have to be very careful of it. The bond market, how would they look at this? The contract between Hydro-Quebec and CFLCo, Mr. Chairman, is assigned as the security und'E!r-the trust de;d the deed of trust under - ---- - ----- - l which the main financing was borrowed.

The first mortgage bonds were $500 millio~s and there is an extra $50 millions here in general mortgage bonds in Canada and Hydro-Quebec have $100 million worth of bonds as well. The rest of the capital, the $930 millions that the project cost, was either equity or funds generated during construction. The contract is the real security. The hole in the ground which is Churchill Falls - the underground power- house and the penstocks and the exits for the water - that, M~. Chairman, is not the real security.

The real security is the contract, the take _or pay contract with Hydro-Quebec~ the contract without which the project would not have gone ahead. Am I trespassing on my time by leave? How quickly the time goes. MR. CHAIRMAN: Three - more minutes. MR. ROBERTS: All right, -I will try to draw it to a close, Sir. It is a complicated and,I think, very important argument. I will try to be ·brie£. What happens if that contract, the contract between CFLCo and Hydro-Quebec, in effect is defaulted upon? What happens?

Well, I guess it ~•auld do irretrievable damage to the credit of this Province,because we own CFLCo - t~o - thirds, but we control it. The bond market would have no hesitation~ the 200 men who sit in ~ew York who control our destiny, _who _ made us close Stephenville - you know, they have got us now., not much we can do about it. Maybe if we can get $300 millions a year we will do something about it. Maybe they will respect a group of men who stand up and use 9828

Hay 31, 1977 r~pe 3508 EC - 3 MR. ROBERTS: their legal rights.· But we must be v.ery, very conscious of their reaction. So I have a suggestion. You know what it costs each year to service the debt, the .$500 millions? . I It is about $16.2 mil.lions,I am told - $16.2 millions last year. And I am told the figures for _the next few years, and these are from CFLCo's report - $23 millions, $19 millions, $21 million$ - large sums of money, but very small ~hen ~ 9829

'-fay 31, 1977 ~- i '{R. ~OBERTS: · compared to the possible gain, so I would suggest that we should go to the bond market, to the trustees ,.,.ho hold this issue, the· trustees who act for the peonle •..:rho lent $500 millions to CFLCo and say, "Gentlemen, vie are going to tak e on Hydro Quebec. They ~ay stan paying under the contract. '!'hey may say the contract is breached. They may sav c.ll sorts of thin~s. They may try to move in.

Gentlemen. we ~;11 pay those -bond issues~ We will make sure that every nickel and every red cent due in respect of the payment of interest or the repayment of py:Incipa_i _· goes to th~ trustee on the dot'~ I v70uld say we would be better ahead in this Province to do that. So Hydro /')ue~ec do not have that ~-!eanor.. Pulling the nlug - has alFays been an easy thing to talk about hut difficult to do because of the bond market. Supposin~ vTe .ius t say to the bond market; '~'t~will make you whole. 1ile will endemnify you.

He vTill make sure of that. · ~ve wi 11 find the money. n It is no larger than the money ~.;re have been nutting into Stephenville. It is no larger than the interest payment on the Upper Churchill and Lm.rer Churchill share pur~~ase. It is no larger than we are findin~ nm.Y. The interest alone on the $80 million a year that the 'finister of Finance had to lend the P.ydro Corporation is S8 ~illion a year. That is a third of it. You know,it is not a sum of money beyond our reach. The $500 million bond issue will not fall due at once. We can make it as it goes, meet it as it goes.

And so we can say to Hydro Quebec . 'that you pay the 10 mil tax, and they say,"He will not pay it.11 • They will say, 11 Darnn your eyes,we will not nayit. 11 He will say,"Fine, _ ~-1e will ryuJ.l the plu f; . l-Te ~-!ill l:eep our !'IO~ver ancl you ~et by with tivo- t!'lirc!s of your noiver~' And they cannot do it. T~ev vlill not 'be able to do it. They will have to come to tern~s "-'Tith us. The y will have to come to terms with us. And they cannot say, ''You are in breach of the contract. We will move in.," because I think we can cure that. We can cure it honourabl~ and legally and pronerly. 9830

'·fay 31, 1977 Ta~e No. 3509 ''?-f - 2 The bond market know the situation. \..~e have a good case. They are sensible men, and if we act honourably and honestly and 'l')rope.~ly I believe they >vill go along Hi th us. So nuebec ~-Till t~en attack the le,:dsl.:1tion in t:Ce courts. Let them. And instead of us havin~ to Sl!end the next fot!r or five years as the nlaintiffs in a case th~t ~ay or may net ever be resolved in our favour- · the case that is nmv before the courts, ~-1hich will be four or five years to get solved and even then what have we solved?- we will hold the vmin handle.

We will be collecting ~he tax and let Quebec attack it. I do not believe their claim is valid. I do not think it is and I flredicted l:-efore that claim Has settled in the courts, Sir, t--efore it >vas resolved in the courts, Hydro- Qu~bec would make accommodations, would come to terms because even nm·7er at 10 mils more·, 12.5 mils pmver is still cheap ~ower by any standards in this world today. alternate source of power. And Hvdro-0ue~ec has no So, Mr. Chairman, I could go on but the House has been more than kind in allowing me to develon the argument to this ~oint.

J may come back later in the debate and allow the ministers to snea.Y. and others who -.;dsh to ret into it. Eut let me try to sum it up by saying with one step I believe Tve could change the w·hole future of this Province and redress the whole balance of Confederation. And I think it is a legal step. I think it is a proper step. And I think what it takes is the coura~e. Rave we but the courage and the vision and the darin~ to do it, we can do it. Bring

an act into the Rouse. Levy that tax. Go to the bond cnd:et before ;.re· mo•.re and say, 11 !1ere is Hhat we are doin(':. Pere is our reasoning. Here is our case and ':·7e >vill make sure that Churchill Falls Litr..ited, CFLCo,pays ever last nickel thHt is due and ~.,e will put the money in if it is the last .cent we ~et~' And I ~rould think the peonle of this Province would. cheer that to a man and a woman and then say to Rydro-0ttebec, "If you do not pay it we 9831.

~- !ay 31 , 1977 ; -J - 3 MR. ROBERTS: will.H~t the water go to the .. sea--unharn.esse& •. -.-· .. :.':'~·>::. But you will have to come back to us because you must -have that po~ver. You car..not get it anywhere else. You 'trill get it from us at a fair price. We are not going to hold you u~ to ransom. He are not goin?, to do "t·ihat f!uebec h.::ts don~ to us. ~·!e are not going to do ~.;hat Quebec hc:'S done to the other provinces in federal-provincial negotiations." · I remember the pension plan in Quebec City. The hon. gentlemen from Twillingate (Mr.

Smallwood) will remember it, where Quebec held up the entire federal-provincial structure within-its constitutional ri~hts aDd Eorced Changes in a pension plan. --------- ----------------- - -~ ----- 9832

May 31, 1977 Tape 3510 EC - 1 MR. ROBERTS: We will use our rights as Canadians and as citizens of a province. ' So, Sir, I believe that if we have but the courage and the daring we can do it. It is a bold scheme, but I believe it to be legal, I believe it to be.lawful. I know it to be proper, I know it to be honourable. And I say, Sir, that in one move w~ could turn around the financial situation of a province that right now is headed for disaster financially, __ -because the picture looking forward, the Minister of Finance will have to confirm, is grim in every sense.

The budget he brought in this year was worse than last year,and next year it will be worse still the way we are going_now. I think we can ·do.it, S~r. And the question no~~- the question for this House and· this country today is have we the courage and the daring to do it? I say, l.et us do it., Sir! Let us act, let · "us act now, and let us turn this around. We can do it. Let us do it~ NR. SMALLWOOD: Mr. Chairman, as one who had some MR. CHAIRMAN: The han. member for Twillingate. MR.

SHALLWOOD: - a little something to do with getting Churchill Falls developed in the first place, I would like to have a ~,;rord to say on the subject that has been introduced by the leader of this party, the Leader of the Opposition.

First may I reiterate one statement that he made that he did not develop too closely and that is the fact that the . . . . contract between Brinco,or Churchill Falls (Labr~dor) Corporation, on the one hand and Hydro-Quebec on the other is a contract that was negotiated and signed exclusively between Churchill FallsCorporation and Hydro-Quebec, not by the Newfoundland government. tole did not sit in on the negotiations. We had nothing whatsoever to do with the negotiations. By 'we' I mean the government of the Province.

It was exclusively a matter between the corporation and the public corporation of Quebec, Hydro-Quebec. Now it has turned out to be an amazing bonanza for the Province of Quebec who own, of course, Hydro-Quebec - 9833

Hay 31, 1977 Tape 3510 EC - 2 - MR. SMALLWOOD: one of the greatest bonanzas, I suppose, in the history of industry and commerce in the world. Here they got for forty years renewable for quarter of a cent a kilowatt hour electricity that they can sell for now and get twenty, twenty-five, thirtY; mils - that is _two, two~and-one-half, three cents a kilm.;att hour though it costs them only a: quarter of one cent. And when you talk of billions of kilowatt hours, this is a fantastic bargain the.like of which the world has not very often seen.

But, Sir, when that contract was made the other great source of power, of electricity - an e~en greater source, I would think, a source of more than half of the electr~city developed in the world~ well over half~I would think - oil was ninety cents a barrel, and a dollar was considered to be high. And oil now is $14.00 a barrel and is headed for $25.00. It will go to $25.00 a barrel. That is why it was such a fantastic bargain for Hydro­ Quebec as it was also at the same moment for Churchill Falls power. Mr. Chairman, that was not a one-sided bargain. That was a bargain that was very pleasing (

a) to the shareholders of Churchill Falls ·(Labrador)· Corporation and (

b) to the shareholders of Brinco and (

c) to the government and people of Newfoundland. Mr. Chairman, do you not remember the chorus of praise and congratulation heaped on me who had not negotiated the thing at alll I had initiated the whole idea of develop­ in~ Churchill Falls. Indeed, I had brought the British in here, I had enlisted Sir Winston Churchill - the Queen of England had become a share­ holder in Brinco. I had initiated the thing, ~ut I had not ne~otiated the contract or signed it, nor did I even see it.

But the praise was heaped on me as the one who had initiated this greatest of all the world's hydro electric developments - all the world'st- that made Bounder Dam look like a back yard installation by comparison, that made even the great development in Egypt look small -the world's greatest hydro development. It was regarded as a mighty accomplishment. The Premier of the Province went down at the formal opening and he was generous enough, big enough when he 9834

May 31, 1977 Tape 3511 EC - 1 MR. SMALLWOOD: got up to praise me in his speech which was televised and broadcast. And the one outburst of applause there was from that great · crowd of people that day was when my name was mentioned because I was getting a lot of praise and credit. MR. F. 'WHITE: Hear, hear! MR. SMALtWOOD: And perhaps I deserved some of it. · Certainly my colleagues in Cabinet deserved a great part of it as well.

I But, Sir, that great deal - great for Newfoundland, great for Quebec, and it takes two to make a bargain - that great project, that great contract which was hailed as a great accomplishment serving both sides well, both sides happy about it, both sides boasting about it, both sides very proud of it, that has turned out since~thanks to Saudi Arabia and Kuwait and Iran and all the oil countries, · has tumed out to be a very one-sided thing. ~- 'bought a house, Mr. Chairman, on LeHarchant Road for $3,800. I paid $40o ~ or $500 down, which is all I had. I sold that hotise for $7,000.

The man who paid me $7,000 for it sold it for $12,000,and he in turn sold it for $14,000. Now I did not know when I sold that - I knew that I had paid $3,800 for it; I did not have it all paid off, but the title was in my name. And when I got $7,000 far · a $~,800 house I knew I had a great bargain; Qut little did I know the man that bought it from me was going to make a lot more than I had made~and also that the man who bought it from him, Surely the world is chock-a-block full of cases like that where prices go sky-high unexpectedly, unforeseen increases.

And that is what has happened in the case of Churchill Falls. Now, Mr. Chairman, I am very proud of the fact that when I introduced the legislation into the House giving Churchill Falls the authority to develop the power and to build transmission lines ~~d to export the power, when I brought that legislation in here there was a clause of which the government at present, the present administration are . taking full advantage.

There was a clause to the effect - it read like this, "Look, you can have the· right to build turbines and generators, you have the right to develop .the power, you have the right to build transmission 9835

May 31, 1977 Tape 3511 EC - 2 MR. SMALLWOOD: lines, you have the right to export that power to Quebec, but all subject to a condition. And the condition is that -Newfoundland, the government of Newfoundland,when it says, '1i7e ~o1ant so much of this back', shall get it:' And under that clause the government at present have a case before the Supreme Court of Newfoundland. MR. NEARY: But they are trying to get back more than was allocated urider that clause. MR. SMALLWOOD: No. MR. NEARY: Yes. MR. SMALLWOOD: Nol· Not so. MR. NEARY: It is so. HR. SHALLWOOD: Not so.

I introduced that thing and piloted it through the House here. I should know what - ~ says. The words are almost burned on my brain. Whatever the government needs - MR. PECKFORD: Right. HR. SMALLWOOD: Whatever the government needs - MR. NEARY: Hear, hear! HR. SMALLWOOD: - can be brought back. MR. NEARY: Hear, hear! HR. SNALU700D: That is what the latol of Newfoundland is. Now the Courts will decide whether that law stands. Maybe the Supreme Court of Canada in the end will have to make a pronouncem~nt.

But that is what the law of Newfoundland says, passed by this House, that we can get back whatever we want - all of it! . every last kilowatt of it! That is the law, and they are now fighting that out in the Courts.

Now I do not know with regards to this tax idea,which makes me shudder as a Newfoundlander, but as of this moment, just as I was the only public man in Newfoundland who came out flat-footedly and condemned and denounced the nationalizing of Churchill Falls, so now I say this: with the knowledge I have at this moment ~ unless there is a lot of knowledge I do not have . - with what I know now, if I am the last man in Newfoundland who would vote against this ... banana republic procedure of putting a post facto tax on power for ·export, I will be that man. Now there may be reasons but I have not heard them. 9836

t-f.ay 31, 1977 Tape 3511 EC - 3 MR. SMALLWOOD: There may be good solid · reas .o.ns :but . I do not know w'hat they are. All that I do know tells me th'a:t it ritould be madness on Newfoundland ' ·s part to try to take that sort of post facto action. MR. ROBERTS: Post facto? T~e tax only appl~es f rc ~ here on in. 9837

~y 31, 1977 Tape 3512 EC - 1 MR. SMALLWOOD: It is a post facto action on a contract that was made, and rnade when it was made in good faith, made honourably . . . and made to the pleasure of both sides. It turned out to be one-sided. We did not make it one-sided, Quebec did not make it one-sided - Saudi Arabia did. And now to remedy that we would try ~his pro~edure. I say '~o!' Let us not endanger cur credit as a people, as a province, as a government. Let us not put it in any peril. We can argue all we like that it wo·uld not put it in peril; I say it would. The government have done enough national- izing.

They nationalized Churchill Falls, they nationalized the big fish plant up in Burgee, they·nationalized the paper mill. Do not· go any fur.ther or every bond house and every bank and every insurance company in North America will be denouncing you as a semi-Communi,st Eart of Canada. Do not listen to this talk. First of all, get the case settled in Court, but do not hold out any threats that if we do not win that case then we will do this or do that. Do not say anything about that.· ~ust fight the case on its merits and try to .Win it. And there is the answer to it all.

That will answer it, that will solve the problem. We will get the power back. It will be our power. We ·know what it costs to produce it. It is not going to cost any more to produce it now that we own it and if we bought back what we are now exporting we know ~-1hat that will cost us. That is the answer to it. That is the answer to our problem. We have a problem, it is a very serious problem, but that is the answer to it. That is the lawful way. Now I do not know -my han. Leader may be right . - I do not know that constitutionally we could get away with it.

Maybe we could constitutionally, he may be right - I do not know. He may be right when he says it is lawful. Perhaps it is lawful - I do not know- but it is immoral and it would do us irreparable damage in the eyes of the industrial and commercial and financial world of North America. It would do us irreparable damage, and I say, let us not. Now I will say this: it would be enormously popular in Newfoundland; you could win a general election on it. -I · said '~en I met with the then Opposition about this Churchill Falls nationalization, I said, 'What I am saying is unpopular.

It is a popular thing the government are doing in Newfoundland. It is 9838

May 31, 1977 Tape 3512 EC - 2 MR. SMALLWOOD: popular. " It ~ popular to nationalize Churchill ·Falls. And to follow my hen. Leader's suggestion ~.;auld be popular in Newfoundland, but nowhere else. The people would like it; you could win a general election on it, I tell you. Dissolve this House today and have a general election three weeks from now with the Opposition, the Liberal Party,~aying, 'We are going to put a tax,' and the government saying, 'This is madness, '· -a~d_ th~ goyernmen~ ~auld be wiped out. The Liberals would sweep to power because it would be a popular thing with the people.

But do political parties live or die by what is momentarily popular? It was popular to nationalize Churchill Falls - I was the only public man who opposed it- but is it popular today'{ Were the Liberal Party right or wrong when they fell in line with it?- They were wrong. And they would be wron·g today to push. this idea. It is all right to put ~t __ up~ _as the Leader of the Opposition did, rather tentatively, as an idea, as a possibility. He is not burning his soul in the matter. He is not commiting the whole of the Party to the matter. He is expressing a strong opinion.

The same opinion has been ~xpressed by the gallant young member from Labrador there in whom I take such pride because I happened to be the one who brought him to Newfoundland. He has been advocating the same thing. He is wrong. The member for Trinity - Bay de Verde (Mr. Rowe) he has been advocating it. He is wrong. One of the contenders for the leadership of tlie Liberal Party, William Rowe, he advocates it. He is wrong. You might say they are all wrong but 'Joey' • Well, if you like. .

Thev were ·all wrong but 'Joey' when it came to nationalizing Churchill Falls,which was a horrible blunder -horrible!- one of the great blunders of all time in our 500 years 9839

:·ray 31, l 07 i Tane ·No. .1513 :·!P .• S:fPLLFQOD: of history. So I plead, Mr. Ch.?..irn.an, I nlead 1•7ith t~e members. of t11e Cor.1mittee ~ all patriotic Nevlfoundlanders, all disgusted with the way Quebec is gettin~ mvay •,rith tl->is r.::tar..rellous barC!ain, all grindin~ our teet!J.s c>.r..d \ vonderin~ ''~ Ul t ~-re can do- I nle::..d 1-ri.th all ·of us, do not go the wron~ "~•ay anc'~ the tax route _is the 1-rcong 'tvay, at least certainly until 1-re have settled the question in court. H~. CHAIR..~: The· hon. '!.1inister - of Justice. }ffi..

HIC!OfA..~: This debate which was initiated last evening is !'robably one of the more serious debates that hns co!!'.e before this Fouse :f.l"" a lOTI'-" t::i:m.e ~nd I h?_,re to sa~T ~-t the re~irmin : nf£icer of the Grm-"'Tl, I io r..ot have that sa1ne freedo!"! of debate -as the hen. gentleman ou.Jcsite. Ar..d I l-mnt it in the record very cleco.rly that ;:~_nythin!? I say in the next fe"~ minutes r,riJ.l 1-.e totally rvithout nrejudice to the rir.:hts of. t!:.is ?re>vince.

It is not l')OSsi'ble at this ti"ne in T"'-Y ouinion for anvone to 1::-e able to fo,-:-esee \vhat '!!'ay hapnen, ~-rh::..t may be necessco.ry, · -:-rhat !"!ay 'be our last desnerate chcmce sorneti~e dmm the road, and it would iJl behooves me as the Crown's first latv officer to S-?.y anythi!l?-: here to make. C'. debatin?-: T"Oint ~-Vhich very nro!'erl7 could be used in a court of ~aH at a later date.

Hence I re'!'leC1t that 't,7hat I have to say. - :--rR. 8'f.ALU10QD: If the han. gentlernC'.n "to70uld allaH me. 1·!hat is said here in the Rouse, could someone in Court demand the nroduction of H~_nsard and quote ~,1ords that are used here? Yes, '-fr. Chairman, indeed that has been done not too loi'.!?: <H!O 5.n a case ~-ch:i.ch is 'rlresentl y before the court ~-:here ~ state'!"'!ent mac.e in the heat o-£ debate 'by the hon. John Turner as Attorney General as to the right of a Provincial Attorney General to prosecute in narcotics cases. It has now- been used as evidence before the court.

This is ~vhy I vrant to '~R. RO~E~TS: Ii lias exactly the s~e value as a sneech outside the Rouse. 9840

Tape ~ r o. 3513 :·!R • HI Cia ~..J.'T : I ~·Ja.nt to 'Proceed with some caution but t!lere are matters that have not been brought to the attention of the public or to this Bouse. ~.nth the issues that he.ve heen raised by the han.

Leader of the Onposition. l~u this natter, this \vhole a:uestion of the cot".stitutional nm-1er of the Legislature of thi.s P't"ovince 'ris-~-vis Ouebec Eydro, vis-~-vis the contract, vis~a-vis the ~reduction of oower in Ne~rroundland has been ~efore government for quite some time, long, long before it HRS raised publicly by any hon. · gentleman - opoosite and we have had the benefit of a fair amount of research and the benefit of some good legal acvice. ~Tow, ~-1r.

Chairman, before I deal -.rith t~e le~alit7~ of the matter may I say that we should not, in my opinion, disregard in any way the statements that j ust eminated from the hen. the member for T~villingate (~~r.

Smallwood), That hon. gentleman has in excess of t~.;enty years in negotiating with the bond market on behalf of this Province. ·I v7ould say that he is in a better position to iudge the attitude of the bond markets than any hon. gentleman in this House ~. nd I thin!: that his contri'l--ution to this cebnte is one that should not be thrust to one side but rather again it is one that any responsible government has to give very serious consideration. But let me deal v7ith the ot;her matters no-tv, ~-rr. Chairman, as to what legislative rights we have. And again I concur with ~mat the hon.

Leader of the Ooposition says, that insofar as the case before the courts are concerned, very oroperly our rules -nreclurl .e .".r..y discussion of it. I si:7'-nly say that counsel for thE> Gov~?.!:'n-T"'er. t of ~ -Te,.rfoundland are tmder instruction to see to it that the matters are disposed of as auickl? as the courts are cauable of doing it \dthin the rules of court P~d the rights that other litigarts and parties to that action have. MR_. 'R..OBEPTS: Could the minister tell us what time frame he exoects "re might see a settlement in? 984:1

:~ay Tape ~:o. I canna~ give a time frame. A .notice of a~?eal has been filed in the Court of Ap~eal against the decision of "~r. Justice Goodridge. It is hoped that the an!'eal ~rill be heard in July. I l:hinS: that we can take 9842

~·[ay 31,13 77 )J-:-1 MR HICKI-f.o\:.'1' : a great deal of comfort out of the fact that that indicates that the courts are treating it as a matter of great urgency and will not countenance any unneces ·sary delay. I - - -· - - ·· -· -- - - - - MR. ROBERTS~ lve are still looking at t':vo or three years. }ffi.. HICKHA..'l': Now, }rr. Chairman, the issues to whicb we have to direct our attention in deciding ~v-hether we have any constitutional rights are t'tvO or three.

One is, does the. sovereign legislature of Newfoundland, sovereign within the provisions of the British North America Act,have the right,number ohe,to ~odify or revoke the ~4Y 12,1969 power contract between Hydro Quebec and CFLCo in whole or in part? That is one issue. Number two·, does the sovereign legislature of Newfoundland have the right to levy a tax of special application on CFLCo or of general application on all hydro power produced within the Province of Newfoundland?

Or three, are there any other courses of action that this legislature can take or anyone else can take or should take in this particular area? ~rr. Chairman, I do not think that 'it is a principle of constitutional law that is even arguable,or needs argument,that the legislature of this Province does h'a~·e the power to recind or alter a contract dealing with civil rights wholly located in the Province - ~m. ROBERTS: Property and civil rights. MR.

HIC!aA'.AN: - no question at all.:Sut if you examine the po'tver contract it is not that clear that the legislature in dealing with it is dealing with property and civil rights wholly within the Province,. bec_ause it may very well be held, and I emphasi7;e 11it may 1 ~ very well he held by the courts to constititute an undertaking extending beyond the limits of the Province. If it does T_.;e do not have the authority. ~ffi.. S~1ALLHOOD: The Rouse has not? MR. HICKMAN: Or two - MR. SMALLWOOD: This.House has not? - MR. HICIQof .. AN':' Right! The power contract may have established 9843

Hay 31,1977 Taoe 3514 - ~!orning AH.-2 a civil right existing ou~sicie the Pro'Tince. Again it would be beyond the c~m~etence _ of this legislature to legislate on it. · ~- - - Now, Mr. Chairman, it is rather difficult to deal with law ~-lithout policy being involved as well. I cannot think of any case in this Province where contracts between the Province and other persons or entities have been amended exce?t with the consent of the other parties to the contract.

But that ~s policy, wnetner we would be prepared to legislate·,whether it would be in the best interest of the Province to unilaterally revoke or amend a contract is something that is debatable. That is why,for instance,we did not nationalize Churchill Falls power but did it ty way .of negotiation • that is precisely why we did it,because of the respect that a~y sovereign legislature and any responsible government must have for its contracts. And, Mr. Chairman, I am not aware of any legislation that has ~een introduced into this legislature which revoked or altered a contract between t~ro parties.

And "to7hat tve are talking about nm.;r is the revokation or amendment of a contract between Quebec Hydro and CFLCo. Now, ~fr. Chairman, this is - AN RON. ~~ER: No, Sir! No, Sir! ·~. HIC'!Q-A'AN': I am still dealing with the first issue - SO~ RON. ~'ffiERS: Oh, oh! MR. HIC~N: No, it is not argument on the issue. It is a very oowerful issue and it is an issue, Mr. Chairman, that anyone with the slighest sense of res~onsibility would recognize. Now, Mr. Chairman, l~t me draw to the attention of the House certain provisions.

You know., there is the argument as to whether or not it is intra vires this legislature to nass that kind of le~islation. If it -.:.:as decided that it t.Jas intra vires this legislature, there is the second question : tvould it be in the best 9844

,,. ?_y ... ,.... ......... ~ -' ~ I -'· :ffi. RICFY/11!: interest of Newfoundl~d from a TJoli~y ooint Sam~ very powerful arguments .have been advanced "!:ly t"!">.e han. the :nember for T~rillin g ate ('-rr. Snalhmod) in tl::?.t r~spect. Tiut let us tal:e ~- loa !'- at the next t h in2 thAt floT· ~s fron it. The first mort~a~e trust deed provi?es that if the Tlm.rer co!".tract 1.;rere rescinded or amencled to decrease t he quantity of power supplied to Hydro -Quebec, or to diminish rights under it in other res p ects, this would constitute an event of default ·.

Upon the occurrence of an event of default t~.renty-five T~er cent of the holders of outstanding bonds may call t~e loA-n. _ Thereupon Hydro Quebec 'i·lOUld be required to T.a ~~e the annual pa ;~ents of pri~cipal ;me inter~?.st under the trust deed if the trustee so requested. The voting trust ag!eement ·.,(_ . provides that vhen :i.t should have ?~'.id -Sl24 ~illion, Hydro 0uebec T-rould be entitled to TJurchase from ~ewfoundland and Labrador l-lydro at Sl5 a share, sufficient share~ to increase its hcildin ~ s in CFLCo to 50.1 !"er cent of ·the issued and outstanding shares of that COT'l.!)<.my.

TI1e effect of this lel;islation, :'1r. Chairman, ohvio,Isl "• ~·~Ollld ~~e, ar'.d _<'!.SS11I"in,.. it is i!"tra \Tires, ~· 70Ulc: se tO initiA.te a course of action Hhich might deliver control of CFLCo to Rydro nuel:-ec.

May I remind the han. g~ntleman for THillingate of the very strong reservations that he had on that very clause and the very angry confrontations that he had with the ·late Donali Gordon concerninr same, And that is a very, very real danger that I hope no one in this HouRe 't.rould he preoared to c0untenc>.nce or to as s tt!'1e 'lor ;:;_ risk 'tre s);on l ri rwt run. ~ ~0'' if t~:e le?"islA.tion is not intra vires thP- Fr0vi.nce, \Tell t~en we do not have to deal "~o.ri th it. Now let me deal with the second issue, Hr. Chairman. :--rn.. SM~LLFOOD: Would the hon. minister permit?

I am ordinarily .. quick minced and I am listening 'tdth every fibre; would he just restate that again, that last argument? And the default, whgt is he emoting from, the contract or the bond deal or what? 9845

~·ay 31, 1977 MR. HICKMMi: ~m.. DOODY: The trust deed. The trust deed of the bond holders • . Th~ trust deed for the bond holders. Hould h.: eZPlain tr.at again~ Y~. HICF:'f.A.N: I 'rill just ~o hack to t~e event of default. ::!:f t~ere is a default under the trust deed, tHenty-five pP.r cent of the holders of the bonds may ~all the loan and thereupcn Hydro Quebec would be required to make the annual 'payments of principal and interest under the trust deed if the trustee so requested it.

Then the voting trust deed agreement provides that 'tvhen it should have· paid S124 million, Hydro Ouebec Hould be ~ntitled to nurcnase from Ne~·rfoundland and Labrador. lt,_,.dro :-==~--------- --- at Sl5 a share sufficient shares to increase its holdings in CFI.Co to 50.1 per cent of the issued and outstanding shares of the company. So that the effect of that kind of legislation, if it 't·7as intra vires . the Province, would be .to initi?..te a course of action that might l~ad to delivering control of CFLCo to Hydro Quebec. ~!R.

S~1ALL FOOD : That stands today even though the Province now m-ms over 'half the shares of the corporation. Yes, :rr. c::ai~::m, tl:e bonds are still outstandir.<;;. Sm'!E !ION. ~~'m-!EERS : :'-TR.- S~·'W.L\olOOD: Yes, the bonds and the trust deed. MR. HICK! !AN: Now let me deal 'tti.th the next one, Hr. Chairman, The second issue which is - ~fR. S~LHOOD: ~ fR.. HI CKr, f.AN : Yes. 'Yes. Let ~e deal 't·dth this, and thc:>.t ce~tainly ~-:ould C0nstitute ?.n 2.Ct cf de£aul t.

Let ,.~ c.e?..l T.Ti t1: t::e seconc' . issue' 'fr. r.hai!'T"l.?.T!, ir- n-t:V on inion "'- ~.S~fP-LLTt!OOn: - · Phat is it that T,;ould constitute

an act of default. HR. HICKt,f.A.J\1: Changing the contract,. bringing in le~islation to change the contractual relationship bet-.:veen the parties. HR. ROBER 'IS : Nonsense! CFLCo is not changing it, the House is. 9846

'~a~' 31, 1977q Tape \7o. 3515 N M ~-i let me deal ~nth the second J: ow. r. ~ rman~ issue and that is the issue of taxation. There is no question at all thnt t~e legislature of any p~ovince has the undouhted iurisdiction to imnose direct taxes of all kinds.

Let me drau to t'le :'!ttention of t1:e Legislature t:->.e nrovisions of the Prper· Churchill statutory lease, Under the provisions of the Unner Churchill lease, CFLCo has been exem~ted from any increase in existing taxes and from all new taxes, charges, dues, fees, rents, levies, royalties or other assessments of whatsoever nature C"r kind tNl.t are ,;rlthin the no~·rer of t~e ter-islature to inT"ose. T~~t is ~art of the le~islation. "fR.

H!CI0f ..A.N : Let ~e read this again because it is ryart of the legislation passed by this Legislature~ that under t~e ~~ner Churchill lease, CFLCo has been exe~oted from any increase in existing taxes and frC!'l all ne~.; taxes, char~es, dues, fees, rents, levies, royalties, or other assessments of 'tvhatsoever nature or kind that are 'tvithin the nm·rer of the Provincial le~islature to nass. In the fin:.:mcial agree~ent and in the trust deed t~is Province covenanted 9847

~1ay 31, 1977 Tape no. 3516 ?age l - I:ls Mr. l:Iicklli.an. that as long as the lease is subject to the lien of the trust deed the Province will not terminate, limit or restrict any of the rights and liberties of CFLCo thereunder. And these are the - :~.. S!-L.<\LL~·?OOD: By merely buying shares, we ~.;ere not violating any of these ~revisions. MR. HI CK}f..AN : MR. STRACHA..~: MR. SMALLWOOD: MR. ROBERTS: MR. SMALU700D: MR. ROBERTS: :IR. HICIOIA.~: }1R. DOODY: per cent? MR. HICKMAN: HR~ DOODY: opportunity. No! No, no. Right! You just simply buy - Yes, I know, you buy shares. You buy out the trust deed. No~·r, Mr.

Chairman, this Legislature - wnat were the bond~ 1 interest the~, four or five Five per cent. Five per cent money. They would. jump at the MR. HI CKMA.I.~ : Mr. Chairman, this lease, as I said, has been ratified by statute· Wellobviously the Legislature has the right to amend any statute. it can amend any law·, and the provisions of the lease and can amend the convenantsof the Province and the trust deed. But, Mr. Chairman, if this should be done in my opinion it would lead to certain rather disastrous results.

One, in view of the explicit provisions of the Province's convenants and the financial agreement and the trust deed, the credit of this Province would be impaired to such an extent that in my opinion it ~vould have great difficulty for many years to cone in the bond markets of Canada and the United States.where the institutions holding the bonds under the trust deed are presently located. MR. SMALLWOOD: Would the minister yield a moment? MR. HICKMAN: Yes. 9848

Y..ay 31, 1977 Tape no. 3516 Page ms - 2 MR. SMALLWOOD. Suppose ~e ~ere to do ~hat has been suggested, ~e put a tax on. The result-is that the po~er stays L~ ~e~foundland, and we get customers for that power • . You would have to have customers or howwould you pay the bondholders their interest on their bonds? So you r..;ould have to sell the power, We get customers to buy the power_- American companies come in here, European companies come in, and they buy the power, and they make a contract, twenty, thirty, forty years for the power at a price •.

Could this House then five or ten years afterwards amend the whole thing and raise their price? Could they make a firm price with us that this House could not change? ----------- ~~Ic~~~N~: -----~0~.--------------- MR. SMALLWOOD: And if the House could change it, who ·is going to be foolish enough to come in and make a contract with us at a certain rate for power? MR.. HICKMAN: There are two issue .s raised by the hon.· member for Twillingate (Mr. Smallwood).

Number one is obviously if you enter into a contract, a statutory contract or a contract .with statutory ratification, that this Legislature can at a subsequent date amend it even though it is a firm, fixed contract. It has never been done in the past. I would think that a Legislature exercising its responsible functions would be very reluctant to do it in the future; and secondly, there is very little doubt as to the severe impact in this case, in my opinion, this would have in the bond markets with which we deal.

And may I point out to this House that a very high percentage of the bonds of Quebec Hydro are held in the same markets and by the same institutions as hold the bonds of ~~e~-1foundl-and and Labrador Hydro and the Government of ~~e•.o1foundland. MR. ROBERTS: They get a better rating-than we do. 9849

}fay 31, 1977 Tape no, 3516 3 - ::!l.S MR.· HICKMAN: And, Mr. Chairman, the second point - and I do not t.rant to digress too much from this - is that a statutory amendment to the lease t.rould in my opinion~ and I think this would be obvious, that any anendment to the statutory lease 'rould unquestionably constitute an event of·default, and again could lead to the delivery of CFLCo to Hydro Quebec in precisely the same reasons and in precisely the same way that I set forth t.Tith respect to legislation amending or rescinding a contrac~. Now, Mr.

Chairman, you know, I hope that there is no one in this Province or in this Legislature who believes that if there was any legal, moral,responsible way to make changes in this existing arrangement that this government and this Legislature t.rould not do it. Of course, we would. B~t the question is, How dp t.re approach it? 9850

;~?..Y 31, 1977 \T'.f - l \.Je !lave chosen as. a first step to have t!'l.e cou~ts _adjudicate upon and we belie!e _ a~d hop~fully confirm \vh<01.t· ~-;e believe to be our leg-al ri~hts. No one i.-ould be foolish enou~h or ur..uise enough or imnrudent enou~!'l to thir..l: tha.t if tomorrmv- morning t!'J.is Let<islature nassed legislation rescindin~ or amending the contract or i~nosing a tax of ~eneral an~lication ~. PECKFORD: Or amending the lease. ~-.

HI CKY}J·T: - or amending the lease or any such type of legislation~ let us not think for one moment that Quebec - - - Hydro i-J'Ould not initiate in their courts, not in ours, in their courts, an action to cuestion - tte vires of that le~islatior, and tl-te delays ~-:ould be lonf and costly ?..nd in rw oninion ~-rould not lend itself tc any fruitful negotiation. \·le have seen very slight signs of concern on the part of the present Government of Ouebec. Whether t_hey are nrenared to tall: to the .Governreent ·of '1ei·Tfounc!land in good fait!-1 remains to be seen.

One thing though iY'e can be sure ., of, that no !:latter how tough, no matter hoi·r brutal, no matter hOiv unconscione.ble the o.resent administration in Ouebec is, seer. ~n si~~s of th~t in areas, t~ey r,d.ll never, bu. t never, be in the category of the Lesage Government or the Bourassa Gover~~ent vis-a-vig t~is Province. These i._Tere the two most heartless governments that ever held office in Quebec from the> point of view of the Province of Newfoundland.

And the best thin~ that ever - Hhat about Duplessis? certainly lookit'.~ at it iCJ. thc>t ti!"!e, :v-as the election of ·thP. late Daniel Johnston as Prim~ ~rinister of that Province. ~'R. CHAIRH.A.N: Order, please! 985:1.

~ray 31, 1977 Ta~e ~:o. 3517 , ..... , .· .. .., ,_ ~'lR. HICICJf..)l": T-rell, ~rr. Chair!'lan, if I may but one or t":m :ninutes. Bv lee.ve? Agreed. Fe, acting u11on good~sou:J.d.,leee.l advice thc>t th.<>_t the h.~st conrse of ?..ctin-r· in the }l:~st i-r.te.'!."~~t cf' t'le ~eon1. e o£ this Prr.:>vince is the cour:;e of A-ction th.:lt T7e ar-::: !10P follor· rin~·, not iust one, but all the way froJD.. Vancouver to St. John's, ~en with years of experience in the Supreme Court of Canada on constitutional issues.

And there are ~any issues · raised in that court case today, and I ~dsh I could discuss the~ rut I cannot, rne one the hen. me~her for ':'!:'T"illin5'ate referred to is t:le right t:o recall -oo~.;er. Anotlcer r-rhich is of ecual irr-nort;:~nce, if not even more · so, is

interpretation of t!le force majeure clause e.nd whether the enacment of le~islation t·1ould fall 'tvithin that cate~ory. And that second issue, in my oninion, ~.;hen resolved favourably tor-rard :·Tevfoundland, may then open up <01.11 sorts of -nossiblities in the legislative field. But, Hr.

Chairman, it tvould 1->e so e<01.sy to stand . he'!."e tod2y :tnd S!'tY Pe sho11ld he.ve the cour~ge to hrin<? in and say, "\The.t do you think?" Supnosin~ they say, "No." Hh~t do you think the peo11le in the bond market~ tv-hose life and very breath depends on contractual relations • that is hmr they ooerate, everything they do is in writ·ing, solemn, contractual relationships hett•7een oarties and govern.TUents - do you _ think their answer would be, 'Go to it.'? Not on your life! So they say. I -:'To! I So uh,'! t c_o ~-Te co then if they say no?

Come back and s C'.Y' Beys ue Pent ~ct·m ::!.nrl. ~·!e asl:ed them and they said, ~To. l:f t:~?.t ~ets renorted back to nuebec I ·t-rould su)!:zest then ?.nv bar'!ainin?- power ~.;e nay have is in very, very serious j eonardy. But as the hen. member for T':villingate (Hr. Smallwood) says you cculd nossibly win an election and you could nrobably remain in office as a government for six months until. the awesome truth sho~Ted through, 9852

31 , 2..9/ i ::o. 3317 ,..,, - 3 :--!R. P.IC1Ct~!: ~ntil the ?Overnment servi ces ~·rere in jeopa rdy and then you to1ould be boo ted ou t and pr operly . But , ~~r. :hairman, one of t3e oenalities - I do not kno~·7 if i t: is a penalty, but the .,rice t hat ~as to he :laid bv a ~overr..nent: is t~1at in c~ses snch as t!iis one has to act r esnonsi.!::lv, one b~. s to :o.ct in acco r dan ce ~ri t~1· our o~·l!l laHs oc.ssed by t~is Le~d slature and if there · is a t·nlY to ac3it:'le t~nt er..d -;.:it:, in t be la;.; then we have an ob l igation to do i t,an d we are dischar?.in g t ha t obligation . Now, Mr .

Chairman , let us not get carr ied awa~ by thP. cost of T3ay James and say that t hat cost is so ~o rrendcus t!1.::>..t it T>ut s t he "rovince cf 0ue'bec in a oosi tion o~ to tnl cr 9853

May 31, 1977 Tape 3518 EC - 1 MR. HICKMAN: partial dependence upon hydro from Labrador. So it does rate today. And Bay James power is - MR. STRACHAN: They ~~- not want to give you - MR. HICKHAL~: Bay James power is relatively expensive. But when you look at hydro pow·er you are lc;>oking at a renewable resource, you are looking at some_thing with a longevity that is almost indefinable. And, Mr. ~hair.m.an, the Pro~n~e of Quebec happens to be in a very fortunate position where any surplus power coming from Bay James, it will sell. It has the transmission lines to dispose of it.

And price is not going to be any obstacle. Sd, ~1r. Chairman, let us make sure that we not, you know, start moving from a position that is not quite as strong as we would suspect it to be. But, Mr. Chairman - I MR. ROBERTS: If Quebec can sell surplus power then they will buy twelve mil power rather than thirty mil power. HR.. HI CKMAL~: · But, Mr. Chairman, I go back to where I began.

I believe - and this is on the best advice we can find, and obviously that advice cannot and should not and would not be acceptable if it had any political overtones or ~olitical connotations - that the procedure that we are following" that the course of action that ;.;e have initiated is the one ·that if successful will be unquesti~nably in the best interests of this Province. AN HON. MEMBER: Oh, it is. MR..

HICKMAN: And it is cert~inly an over- simplification of the issues to say, 'Where is the courage to put on the tax?' If tha;t were the onlv answer we co.uld draft a bill this afternoon and have it through tonight~ if we ~.rere prepared to live with the consequences that would unquestionably flow therefrom. I do not know whether the Province of Quebec will soon start to indicate its ~llingness to talk to Newfoundland, but it has always been made very clear to them,without prejudice, very clearly without prejudice, that as in any other matter that is before our 9854

Hay 31, 1977 Tape 3518 EC - 2 MR.. HI CK}f..AN : Courts, if they come to the conclusion and if they read carefu~ly decisions of judges of the Supreme Court - the Court of Appeal of Newfoundland, the Supreme Court of Canada - that they had better sit down and talk to us. They will not find an unwilling- ness on our part to hold meaningful discussions with them.. But they will have to be meaningfUl. And they are not going to be in a position of 'You will take this or nothing'. And we do have assets to offer. We will have some surplus power from the Lower Churchill.

Quebec inevit~bly will wish to develop the rivers that empty into the Gulf of St. Lawrence through their province whose head waters are in our Province. · So it is not all a one-way street. And I ~v-ould think that very able ~tlnister of Finance .in Quebec, the· han. Jacques Parizeau, who was one of the negotiators, in fact I believe he wa.S the prime -negotiator for Quebec Hydro ~t that time - he was. I think, a deputy minister - will understand full well the significance of meaningful discussions with the Province of Newfoundland.

And if we want to get public opinion in Canada behind us on this issue~and I believe we can do that - I do not believe for the life of me that Canadians including Quebecers want to see us raped of our resources forever - if we want to get Canadians behind us,let us draw to their attention the surplus energy 9855

:-ray 31, 1977 Tape no. 351 9 Page 1 - ms Mr. Hickman. that they will so desperately need in the next twenty years that is presently in our Province and that we can supply to them at a market price if they can persuade their Government of Canada to take a very national leadership.position and use t~e same philosophy ~ith respect to the transmission of power as is used with respect to the transmission __ of oil·and gas or the transportation of g9ods by means of a national railway. And there is no doubt in my mind, Mr. Chairman,. that that has to come.

We have seen the occasional very guarded statement emanating from the Federal Minister of Mines and Energy, the hon. Allister Gillespie, which indicates that he sees the problem and is aware of the challenge. MR.. STRACHAI.~ : Quebec insists that it has nothing to do ~nth the federal government. MR. HICKMAN: The time will come, I believe, when some Minister of Mines and Energy , some Government of Canada, is going to accept that challenge, and when they do - MR. ROBERTS: You mean, 92(10}(c)? MR. HIC~~= - and the sooner they do the better.

The stronger the bargaining position of this Province and the greater the assurance we will have that there will bereturned to the peo~le of this Province what is their just re':.;ard from the development of this very strong renewable resource. MR. ROBERTS: Is the minister suggesting that the Parliament of Canada use the power under 92 UO} (

c) of the BNA Act? _MR. HICKMAN:· Yes, Mr. Chairman. - MR. ROBERTS: Do not hold your breath. MR. RIC~~: Well, the Ron. Allister Gillespie in a place called Chatham, l:<assachusetts.,anncunced it - HR. ROBERTS: HR.. HICKMA.l.'-1: He announced it to me privately, too, a year ago. - to the press that he was giving very serious consideration to it. He, I believe, had some difficulty. Obviously, he did not persuad~ his - MR. WHITE: Who won the November election? 9856

:~c..y 31, 1977 :~pe no. 3.519 no, no, it was after the election - he did not persuade his colleagues in Ottawa to do it but some day he may, some day he will. Some day ,Canadian public opinion, bot~ within and without Quebec, will force this to be done, because people ~vho are desperate for energy, who have to pay an exorbitant price for energy, whose industry depends on energy and ':..rhose way of life depends on energy, they will force governments to take the kind of action that is in their best interests, and it will come. · But, Mr.

Chairman, I close as I began;that my comments with respect to the legal position of ·this Province, as defined for us by very competent constituional lawyers, is completely ':Jithout prejudice and should not be interpreted as binding this Province or this Government dmvn the road as to ~.;hat action may or may not have to be taken. MR. CRAIR..."'1AN: The han. member for LaPoile. MR. NEARY: Mr. Chairman, it has been a very interesting legal debate ln the House so far, Sir. He really have not touched on the bread and butter issues ye·t as far as the minister's department is concerned.

We seem to have a little dissension, a little division in the ranks with the regular Liberals, with the Leader of the Opposition saying that an arbitrary tax should be i~posed by this Legislature on the export of power to the outside of the Province, outside of Newfoundland, and we have the former Premier, the member for Twillingate (Mr. Smallwood) denouncing that,saying that it would look like

an act of a South American dictator. And then we have the Minister of Justice giving us a lecture, preaching to us in legal jargon,·and actually saying nothing. The minister was so careful to say in the beginning that he hoped that he would not be quoted outside of this Legislature, that anything he says will not be construed, misinterpreted by the courts and be used as evidence. In actual fact the minister said nothing, Sir. He said nothing to the House. The hon. member for Twillingate (Mr. Smallwood) said more than the Minister of Justice. The Minister of Justice did not tell us; did not deal with the threat, the unthinkable threat of Quebec 9857

~-!ay 3 ' 1977 !ape no. 2519 Mr. Neary. separating from Confederat ,ion. What happens then?,, What happ~ns then? The minister gets up and says, Weil, we are hopi'ng, we ~re hoping, rubbing his hartds and hoping that Quebec will negotiate, there ~rill be some meaningful • 9858

~'c.y 31, 1°77 I Ta::1e ~To. 35~0 "1'-1:·' - 1 ~-· - ~:t.ARY: ne~otiations. Hhat foolish nonsense, the Province of Quebec negotiating ~vith Ne~.;foundland for _a bette_: deal on the Upper Churchill. TI1.e hon. gentleman oust be out of his tree to t!link that is ~wing to happen, ~.;hen you have a ?art of tice nlatforr.1, tl:e uolicy of :-'r. Levesque and t!:e '-finister of Finance in Ou~~ec is to tate over La~rador. That is their nolicv. ~:r. Chairm<".n, the minister shakes his head and sctys, ::o. It is a part of their platfonn 1 or the hon. gentlenan must be asleep.

They say they are going to separate from Confederation and one of the points in their nlatform is to take over Ouebec and the minister says, "~·7e Mifht hP.ve meaningful negotiations." ~-!h<!t we !".f'ed Pith that croT;d is some tou,:!h talking for a cl:anrre as far as Labrador is concerned. .~nd rlesnite the fact th~t ,,-e h2ve heard a lot of rumblin~s ·in this Rouse .;md outside of this Rouse about Labrador, the residents of Labrador wanting to separate from '!e~·rfoundlanq.,in the prelii"'-inary reuort t!lat I issued the other day from a survey that I am doing in Labrado~~ well over eighty per cent of the resnondents to a proportional random survey of the nonulation of Lahrador City and 1-J'abush, are unanimous in preferring t~at Labrador continue <>.s ct t:"~rt of the ?rovince of Ne~·rfo•mdl~n-:'. '·1'?.. ~IT." RY : Ei~hty ner cent of t~e resnondents. ''R • S? r.'\LI.

PnOD : ~-n1at ahout the othPr tl~enty? '!R • ''!'E..:\!1Y : one noint eight t?er cent. Other options ~-1ere sug~ested hy ei?ht noint ei<!ht uer cent. Th~t ~·:as probahlv by the French. ' "'() ~,r!""' !\ ":'V • • -· '· 0 •''.!.. 'ihbush and L?.br~dor r.ity is onlv about ten or t~·.relve T"er cent, less than fifteen oer cent of t!le nonulation is French, but the French lan~ua~e is being shoved doym the throats of the residents of Labrador City and ':vabush a.nd on the shelves of Domini~n Stores the labels on thP. bottles and the cans are all in French. 9853

~'av 31, 1.977 Tane 'io. 3520 '·!R. D00DY: French radio. '·~. NEARY: French r3.dio station practically do~m there. And the hon. minister has the stunicity, the audacity to ~et u~ an2 sug~est to this House tr.:•.t there '"!lay he '""P.2.ninr-;ful negotictions on the the Attorney ~ener2.l ar:.d the ~finister of Justice in this Province to take. And there are going to be no · meaningful negotiation~; if there is going to be meaningful negotiations it is going to be a takeover of Labrador. That is Hhat this crm-rd have in the back of their mind. And so let us get tough for a chan~e.

And 'if ~.,re hav~ to Pttt ~ tax on, if that is t~e thint;! to do, then let us do it. The u11ole thin?: nmv is goin3; to cle,,elon into a lon?:- drawn-out constitutional wranzle and the only ones who are )!oing to benefit by it, as I said right from the start vrhen the thinz uas done, are the la~,;yers. They are the only ones vrho are P:oin~ to "Make a bundle· out of this r.-7hole thin!!. And my hon. friend from T':o.'illine:ate (M:r. Small"t·.rood) says the _governl!lent is not trying to take back more ocHer th:=m to ~.;hich it is entitled., and I say they are.

And I will my hon. friend a good ar?.ument C'.S to HhY I sav tJ.,.ev c>.re. Fe are only entitled to take hac1~ at t~e mmr.ent 300,000 horsenovrer, but ':ole can take bad: aJ.l the nm-rer orovidin~ "tve have use fo·r it. T.."le trouble is "tole have no use for it. ~fR. SN..A.LV\I"OOD: ~~p. • ~"EARY : That is tre ;oh; to get customers. I.Jell which came first, the hen or the ezg? The Attorney ~eneral, representing this Province, went before the Energy Board of Cc>.nada to lay out a case to try and ston 0uehec I1ydro from exportinrr ~TeHfoundl.?.nd no~ver dor,.m in the United ~tates, P.P.C.

P~C:. t hannened? r.r:-:.at ~annened? ThP. "".inister 10ut un t::~ ,.,ost n~thetic case, the weakest cnse that you could i~agine,and t~en t-rhen the Chai!C!l~rr! of the Board sent for the minister and his officials to come hack to give further evidence they had taken off, they q.ew the c;op. They did not even think it T.o7orth their while to stay to continue the bearing. 98oo

:1ay 31, 1977 Tape .o . 3520 3 HICIC1AK: On a point of order! · I. ~iould like to · e'stablish · : :; :.· . . ',:-,:. ·. the fact, Hr. Chairman, that I never appear before the Energy Board. I have never been invited to appear before the Energy Board. MR. NEARY: I do not know 1;-1hat it is called. ~1R . HICK:.U..N: Or any other b9ard. ~-1R . NEARY : .·lell, the minister 9861

Yay 31,197 1 352l - '\in--,..;~ 7 •. w ____ ...... o -~U-1 HR. NEARY: . was supposed to be there representing the Province. Haybe the minister did not turn up. !1R. HIC'KMA.i.'l': No7he was not. HR. CHAIRNk'l' : I do not see it as a point of order but a point of exnlanation. The hon~member. ~P.. ~TEARY : Hell if the minister did not turn un then there was nobody, no minister re~resenting the Province in this. Well,I read the re~ort and I saw the minister's name; the minister was registered at the hotel. HR. HIC'KHAN: Mr.

Chairman, not only was I not re~istered at the hotel I do not even know .which city it ~.;as held in and I was not there, I had no intention of being there. The Province of Newfoundland ~.ras ably represented by able, legal counsel. And if people would only read what transpired at that was that we said that we would avail of every opportunity to publicly bring before any regulatory body or any other body in Canada the inequitable situation that exists between Newfoundland and Quebec with resnect to power. l.Je knew before we went up there that this was an exchange of power - Hit.

N'EARY: But I thought you were not up there. You toln us you Here not up there. -MR. HIC~IP .. N: I was not there. I said we knew, '~.;re', the government of Newfoundland . ~. ;"-lEARY: Well,the hon.gentleman·had a reservation made. Perhaps the hon.gentleman did not turn up. MR.. HICKMAN: I did not. :HR. NEARY: ~.Jell, Hr. Chairman, that even makes it worse.

There was not minister re~resenting this Province at a meeting, at a very imnortant hearing that ~vas being held to trv to block Ouebec Pydro from selling our power down South of the border, down in the Cnited States. l,Je sent up the lackeys, the flunkeys, Y7e sent up the high paid legal people that we have. And you know, Hr. Chairman, fortunately for Newfoundland,a stroke of luck for Ne~foundland, not 9862

Hay 31,:!.977 Tape 3521 - :-~orning .?.H-2 MR. NEARY: because of any presentation or any representation that was made because they had all left before the hearings were complete, fortunately for ~Tetvfoundland the Chairman of the Board said we ~vill allow the oo•.ver to go down on a one year basis only. . . . And that would be of surplus power only in the Summer time and not in the ~·!inter time. ~. HICKM.A..N: That is all in the aonlication. HR. NEARY: And so, Sir, we were saved by the Chairman of the Board and not by any representation that was made by this Province.

So here we are notv asking for 800 megawatts we are try~ng to get back. What for? ~r. Chairman, ~ut yourself in the olace of a judge or a jury of the supreme court and they say sure, okay ,fine ~you got a good argument l::lut ~,·hat are you going to use it for? Why we, got the Premier on the other hand try~ng to negotiate with