November

24, 1993

HOUSE OF ASSEMBLY PROCEEDINGS

Vol. XLII No. 21

The House met at 2:00 p.m.

MR. SPEAKER (Dicks): Order, please!

Statements by Ministers

MR. SPEAKER: The hon. the Minister of Health.

DR. KITCHEN: Thank you, Mr. Speaker.

Mr. Speaker, I wish to inform hon. members of the details of

government's decision concerning the reorganization of hospital boards in the

St. John's region. I would also like members' indulgence to do this because I

have had to speak first to the Chairs and CEOs of the boards on much the same

point. I know the normal procedure so that members of the House know about it

beforehand.

In the Budget Speech, Mr. Speaker, of March, 1992, I stated

that government would be looking at ways to reduce the number of hospital boards

in the Province. We subsequently appointed Mrs. Lucy Dobbin to hold

consultations throughout the Province and to make recommendations to government

on this matter.

Mrs. Dobbin presented her Report in early 1993 and on March

3, 1993, I made the Report public. At that time, I announced that we agreed with

the basic thrust of the Report but before implementing any recommendations, we

would be having broad consultations throughout the Province, especially with

those most affected by the proposed changes.

Since last March, there has been a great deal of

consultation, individually and collectively, with boards in the Province to

discuss the recommendations of the Dobbin Report for reductions in the numbers

of hospital boards. I found those consultations to be very beneficial, and I

appreciate very much that people made themselves available to me to review this

important issue.

Recently, I had further discussions with Cabinet colleagues

and, as a government, we have considered the issue in great detail. As a

consequence of our discussions and deliberations within government, we have made

certain decisions with respect to some of the recommendations in the Dobbin

Report. Recently, I announced our decision to appoint regional boards in Central

Newfoundland; one for the East Central area and one for the West Central area.

In recent months, I have been meeting with the board Chairs

of St. John's hospitals to discuss the board restructuring issue. Much thought

has been given to this matter by the boards, by the Department of Health, by me

and by government. I now wish to announce publicly that government has made a

decision to adopt the basic thrust of the Dobbin Report for the St. John's

region and will be taking the necessary steps to have all hospitals located in

this region governed by one Board. This board will be responsible for the

General Hospital; St. Clare's Mercy Hospital and the Dr. Walter Templeman

Hospital, Bell Island; the Grace General Hospital; the Waterford Hospital; the

Janeway Child Health Centre; and the Children's Rehabilitation Centre.

This announcement implies significant change in the

governance and delivery of health services by hospitals located in the St.

John's region. The new board will be involved with government in planning for

the location of acute care services in St. John's on two sites.

Mr. Speaker, this model is a major challenge for those

entrusted with the responsibility for the governance and delivery of health

services in the St. John's region. It will greatly improve planning,

coordination, and delivery of patient care services in the area. The new

structure will streamline administration, management, and support services and

will result in the elimination of unnecessary duplication of services among the

various sites. It will impact positively on teaching programs, such as medicine,

nursing and the allied health professions. As well, it will strengthen research

capacity and create a critical mass of services, allowing us to better assess

the quality of services and the outcome from various health interventions.

While the restructuring will have an impact upon staff, every

effort will be made to accommodate staff affected from this reorganization.

The new board structure will provide the opportunity to

enhance patient care services and will allow us to improve efficiencies in

resource utilization. In general, this approach will provide a climate for more

innovation and cost effective delivery of quality health care services.

While we look forward to working with the new board, I want

to pay tribute to our existing partners in health care in the St. John's region

who have individually made significant contributions to health care services in

this Province. In recognizing this significant contribution, however, the time

has now come to forge these individual efforts into one collective effort for

the benefit of the people of the Province. In moving forward to address the

challenges and new realities of the present and the future, there is much we can

learn from past experiences.

In conclusion, in the very near future I will be appointing

the new board. In doing so, I shall be having further consultation with existing

boards in the St. John's area for nominations to the new board. I would

anticipate that the new board will assume its official responsibility for

facilities in the St. John's region by April 1, if possible, certainly early in

the next fiscal year. This will allow a transition period, during which the new

board will work with existing boards in the St. John's region.

Thank you, Mr. Speaker.

MR. SPEAKER: The hon. the Member for Ferryland.

MR. SULLIVAN: Thank you, Mr. Speaker. Our Party can

certainly support any efficiencies that are going to occur in the health care

system. I think it's very important to look at the overall cost of delivering a

service. If there's any place in this Province where possibly boards could be

combined it would be in the St. John's area. It's a matter of really hauling out

of a hat a number of hospitals and putting them under a specific board.

If these savings in administration, or so-called savings in

administration, are going to be used in the system to improve the delivery and

improve the quality of health care services in the Province, I'd say well done.

If it's going to be used to reduce numbers and be gobbled up into the general

finances and not continue and be redirected in the health care, it's another

problem.

SOME HON. MEMBERS: Hear, hear!

MR. SULLIVAN: The Dobbin Report does not address two of

the basic conditions that should be addressed in restructuring a health care

system. One is in the improvement of the quality of health care service that

should be provided, and secondly in improving efficiencies in administration.

The Dobbin Report does not in any way address these two areas at all. In fact,

if the government has a report that addresses these I'd ask them to table it in

the House, the basis upon which they've reached this.

Now, overall, I certainly agree efficiencies in

administration could be achieved. It's important that we look overall at using

these dollars to reduce the waiting lists for people who can avail of service.

For people who are dying on the heart surgery waiting list. For hospital beds

that are closed. For the hospital, the health unit, in Forteau and Port Saunders

that have been built with $6 million and $8 million that can't hire staff to run

these facilities, that are standing there as tokens or symbols of a health care

system.

I ask this government to make sure that efficiencies are not

gobbled up in the general finances and they're put back into the health care

system, and it's not an avenue to be able to reduce the government's deficit on

the backs of the health of the people of this Province.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Does the hon. the Member for St. John's East

have leave of the House on this matter?

AN HON. MEMBER: No.

MR. SPEAKER: No leave?

Further Statements by Ministers.

The hon. the Leader of the Opposition.

MR. SIMMS: Mr. Speaker, yesterday I rose in the House to

pay tribute to a constituent of mine who had been well known in our area of

Grand Falls, Mr. Cater. I neglected to take the opportunity yesterday to -

MR. HARRIS: Point of order, Mr. Speaker.

MR. SIMMS: I'm paying tribute to a couple of people who

have passed away.

MR. SPEAKER: The hon. the Member for St. John's East.

MR. HARRIS: I understand that I was denied leave to speak

a moment ago. Does the hon. the Leader of the Opposition require leave to speak?

MR. ROBERTS: To that point of order, my suggestion, Mr.

Speaker, was yes, he does and, as far as I know, the Leader is not speaking on a

recognized order here.

MR. SPEAKER: Yes. Just in response to the point of order,

if I may, any departure from the normal procedure of the House requires

unanimous consent of all individual members of the House. Does the hon. member

object to the Leader of the Opposition making a statement in the form that he

intends?

MR. HARRIS: As a courtesy, both to the hon. member and to

the individuals to whom the hon. the Leader of the Opposition wishes to pay

tribute, I would not deny him leave to make his interjection.

MR. SPEAKER: The point is duly noted.

MR. SIMMS: Thank you very much.

Mr. Speaker, I neglected yesterday to pay tribute to a couple

of individuals who had, indeed, passed away since the House last sat in June,

and I was reminded today of those individuals. There was some connection with

our party in both cases but, in fact, I believe that in both cases there was

some connection with the party opposite, as well.

In any event, first of all I would like to ask Your Honour,

on behalf of the members of the House, to express our sympathies to the family

of the late Walter Hodder, who was the father of former MHA of this party, Jim

Hodder, and a former MHA for that party, Jim Hodder, the same individual.

MR. ROBERTS: The same Jim Hodder?

MR. SIMMS: Yes, the same Jim Hodder. Walter Hodder was

the Member for La Poile, elected in 1962 and re-elected in 1966, as I remember.

I am sure the Premier and the Minister of Justice would remember them

personally, having been around about the same time.

He was also former Deputy Speaker and I believe he served as

Whip for the Liberal Party in those days. He was the former Mayor, as I

understand it, for Channel - Port aux Basques, and I believe he was a former

Principal of St. James School in the Port aux Basques area. The Premier, no

doubt, knows him personally, because I believe he was there at the same time and

they sat in the House together.

Again, while I am on my feet, if I may, I would like to ask

Your Honour to express sympathies, on behalf of the members of the House, to the

family of the late Hughie Shea, also a former MHA of the House, who has

certainly earned a place in Newfoundland political history. He is well-known as

a colourful orator and certainly well-known for his political involvement, his

political interest as well as his business interest, in the city. I would ask

that Your Honour write a letter to the family expressing our condolences.

MR. SPEAKER: The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, I would, if I may, for those of

us on this side, associate us with the remarks made by my friend for Grand

Falls, the Leader of the Opposition. I served in the House, as did the Premier,

with Walter Hodder, I also served in the House with Hugh Shea, and I would be

happy to say a word in tribute to each and to ask, for those of us on this side,

that you instruct your Clerk to send the appropriate letter to their families.

Walter Hodder came into the House, as my hon. friend has

said, in 1962 as the member for what was then called Burgeo - LaPoile district,

and was re-elected in 1966. Before that he had a most distinguished career as an

educator and as a mayor, a municipal leader. He served with distinction in the

House. I am not sure that he would be at all approving of my friend associating

him, even jocularly, with the Progressive Conservative party, because Walter was

a dedicated, lifelong, committed believer in the doctrines of Liberalism and the

Liberal Party.

His son, Jim, as my hon. friend has reminded the House, came

into the House in 1975 as a Liberal, was re-elected as a Liberal in 1979 and in

1982, if memory serves me, and then took a turn for the worst, as it were, and I

believe crossed the House and then was re-elected in due course in 1985 and 1989

as a PC member, all for Port au Port.

Walter Hodder was a fine man, a dedicated Newfoundlander, a

fine servant of the people of this Province, and a worthy member of this House.

Hughie Shea - am I the only member left who served with him?

AN HON. MEMBER: The Premier?

MR. ROBERTS: No, the Premier didn't serve with Hugh Shea.

My friend for - he was then for Harbour Grace, now my friend for St. John's

Centre -

AN HON. MEMBER: For half-a-day.

MR. ROBERTS: No, Sir. Hugh Shea sat in this House during

the one-day session. That was the only day he ever sat in this House as a

member. He was elected as a Tory, a Progressive Conservative, in St. John's

South in 1971, in the election that fall, the near tie election, and when the

dust cleared, Mr. Frank Moores had become Premier. Shortly thereafter, I became

Leader of the Opposition and, in due course, the House met.

AN HON. MEMBER: A turn for the worse.

MR. ROBERTS: Exactly, it was a turn for the worse when

the House met, and then Mr. William Saunders performed his wondrous miracles,

which have never been really explained. Bill Saunders has gone to his other

worldly rewards, whatever they may be, and sobeit. But Hugh Shea sat in the

House for one day, as did my friend for St. John's Centre, who then sat as a

Liberal for Harbour Grace.

Hugh Shea sat as a Liberal. It was the most incredible period

in Newfoundland. Hugh Shea was not asked by Mr. Moores to join his Cabinet, and

promptly crossed the floor and joined the Liberal Party. I have heard of people

swimming away from sinking ships, but he swam towards one.

SOME HON. MEMBERS: Hear, hear!

MR. ROBERTS: In any event, Hugh Shea was a unique -

AN HON. MEMBER: (Inaudible) Dr. Kitchen?

MR. ROBERTS: Dr. Kitchen served in the House at that

stage for the same length of time as ten or twelve or fourteen other members who

were not kindly treated by the electorate. The hon. gentlemen opposite should

know about not being kindly treated by the electorate. It's been done to them

twice recently,. The third time, just stay tuned and they'll see.

Mr. Speaker, Hugh Shea has a unique and irreplaceable role in

the history of this House, and was a colourful and exciting and voluble and

vocal and very much a memorable man. His passing has left us all the lesser.

Finally, let me mention, and let me ask, if Your Honour would

also be good enough to send word to the family of another man who served this

House and this government and this Province with great distinction, and died

over the summer. Harold Starks. Harold was the Member for Lewisporte District.

Was thrice elected, in 1959, 1962 and 1966. I'm sorry, Lewisporte and Green Bay

District. He was elected in 1962 and 1966 in Lewisporte, Lewisporte District was

created in 1962 - and then in 1971 went to Green Bay and was elected. Harold and

I were great friends. I represented the government at his funeral, as did my

friend, the Member for Gander, the Deputy Premier, the Minister of Finance. My

friend for Lewisporte was there, as was my friend for Bellevue. It was a fitting

tribute.

Mr. Speaker, the thing about Harold, I used to kid him. If he

had worked just a little harder in Green Bay District in 1972 -

AN HON. MEMBER: What a disaster he could have prevented.

MR. ROBERTS: He could have prevented a great disaster.

Because Harold was not re-elected in 1972 in Green Bay District. There was a

matter of a hundred, or fifty, or 200 votes. And he used to say to me: you know,

Ed, if I'd worked just a little bit harder, Brian Peckford would never have got

into the House of Assembly.

In any event, Mr. Speaker -

MR. TOBIN: And do you know something, Ed? You might have

been premier!

SOME HON. MEMBERS: Hear, hear!

MR. ROBERTS: I agree with my hon. friend. That would have

prevented the disaster that occurred with Brian Peckford, and the other one with

Frank Moores.

SOME HON. MEMBERS: Hear, hear!

MR. ROBERTS: No, the man who kept me out of the House

also died, but a couple of years ago, the former premier, Mr. Smallwood.

Mr. Speaker, let me simply say that Harold Starks, in common

with these other -

MR. SIMMS: Was he elected in 1971, by the way?

MR. ROBERTS: No, he was elected twice in Lewisporte.

Lewisporte District was created in 1962. Before that it had been partially in

Twillingate, partially in Green Bay. There was a redistribution in 1962. So

thrice elected.

Harold Starks served this country and this Province well. The

fact that there's a causeway to Twillingate is Harold Starks' creation, in large

part. The late Walter Elliot had a lot to do with it, as did my friend, Les

Curtis, but, Mr. Speaker, Harold Starks had the pleasure of building the

causeway.

This is what you do when you get us on remembrances. I say to

my friend for Grand Falls that we're happy to be associated with him in these

matters.

MR. SPEAKER: The hon. the Member for St. John's East.

MR. HARRIS: Thank you, Mr. Speaker. I wish to join in the

tribute to former members of the House. Mr. Hodder was before my coming of age

as a Newfoundlander and knowledge of politics. I do remember Mr. Shea, although

I had to ask, because I hadn't remembered he was actually elected to the House.

I do remember him being quite a forceful speaker and debater in the leadership

race for the Liberal Party at one time, and as a candidate in St. John's East,

as a matter of fact, on a couple of occasions, in which he placed very low in

the polls. I do think that his contribution is deserving of tribute in this

House, as all hon. members.

I didn't know of Mr. Starks' great role in - by not working

hard, I guess, to not see Mr. Roberts in the premier's chair. I wouldn't agree

that we ought to trade the evil that we did know for the evil that we know not,

had Mr. Roberts become premier. So I guess Mr. Starks deserves some credit at

least for not putting us right over the brink totally into, as I say, the evil

that we know not.

On a serious note, Mr. Speaker, I would like to be associated

with the remarks in support and the tribute to the three former members of this

House.

MR. SPEAKER: On behalf of hon. members I would like to

welcome various groups to our visitors gallery today. First of all there are

fourteen ladies from the Females for Future Focus Program, sponsored by the

YMCA. They are accompanied by their instructors; Melinda Warford and Rosalind

Edison, Leading Tickle - Exploits District.

There is a further group of thirty Grade nine students from

St. Mark's Elementary School in Shearstown, Port de Grave and these students are

accompanied by their teachers; Clarence Mercer and Mr. Herman Tuttle.

I would also like to welcome six international faculty

members. Four from Malaysia and two from China who are here under a cooperation

agreement between their governments and our federal government and who are going

to be at the Cabot College for some time.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: They are accompanied by Ms. Elaine Hann of

Cabot College.

Oral Questions

MR. SIMMS: Mr. Speaker, I want to continue on the same

track we have been on for the last couple of days. I have some questions for the

Premier on this Hydro deal. In his efforts to hoodwink some of the people, at

least, in the Province into accepting this scheme to privatize Hydro, the

Premier has made much to do about the debt, Hydro's debt question. Now he would

have us believe that getting rid of Hydro's debt will somehow turn around the

Province's financial position overnight. That is the impression, that is the

perception. Now, Mr. Speaker, the fact of the matter is, what the Premier is

talking about is not the direct debt of the Province but the debt that

government has guaranteed. That is what he is talking about. Now government

guarantees a lot of borrowing as he knows for Crown Corporations and

municipalities, private businesses and so on, Hydro's debt is like that. Now

whether that debt stays or goes will in no way affect the amount of direct debt

which really is money borrowed by the Province for its own operations, unless

Hydro defaults, and that is, they are unable to pay the interest on the debt.

Now, Mr. Speaker, it is much more likely that the Province will go bankrupt on

its own debt before Hydro ever does.

Let me ask the Premier this specific question: Isn't it a

fact that whatever happens to Hydro, whether it is sold or whether it is kept,

the Province will never have to take over Hydro's debt and pay interest on it

because the cost of paying the interest is automatically built into the

electricity rates? Let me ask him specifically, has his government or any other

government, ever paid one cent in interest on Hydro's debt?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Let me deal with all of the points the

hon. member raised. First, the suggestion that I put forward the proposition

that getting rid of Hydro's debt from the Province's balance sheet is going to

solve all our problems. No, Mr. Speaker, that is the straw man that the

Opposition has put up so that they can knock him down. They cannot knock down

the real man so they need a straw man that they can knock down. So they had to

fabricate these straw men so that they can blow them over or push them over

because that taxes their intellectual strength beyond their capacity to do

anything more than that.

Now, Mr. Speaker, that is where these suggestions - and that

is where most of these faults and totally wrong statements have come from. They

have been fabricated for this purpose. So I just wanted to make that clear.

The amount of the Province's direct debt would be reduced as

a result of a merger. It would be reduced as a result of the Province not having

to borrow, or paying off, using the proceeds of the sale to pay off whichever

occurred. Using the proceeds of the sale they would either pay off a portion of

the existing direct debt of the Province or they would avoid borrowing more and

so reduce the direct debt of the Province. They may reduce it by $200 million,

$250 million, $300 million, $350 million, whatever we get from Hydro in the sale

will cause a direct reduction of the Province's debt by that amount. So yes,

there will be a direct reduction in the Province's direct debt by that amount.

In addition, Mr. Speaker, the Province will have its credit

pressure, its credit rating and its credit worthiness improved -

MR. SIMMS: Absolute garbage.

PREMIER WELLS: Now if you want to measure the

intelligence of that comment, just listen to this.

MR. SIMMS: You are misleading the House, again.

PREMIER WELLS: If that hon. member owed $1,000 his banker

would look at him and say: Yes, we can trust you for another $200. You only owe

$1,000; we think that is within your reasonable ability. But if that hon.

member, in addition to owing $1,000 had also guaranteed another $1,000 for his

son, or his daughter, or his wife, or somebody else, the bank would look at him

and say: Well, I am not so sure we should... You have enough to pay your own

debt, but if you ever have to be responsible for other debt that you have

guaranteed, that affects your credit rating. We are not so sure we should loan

you that money; or if we do, we think we should have a few basis points more on

our interest rate that we charge for that. That is a normal business principle.

I am surprised the hon. member does not understand it.

MR. SIMMS: (Inaudible).

PREMIER WELLS: I am surprised the hon. member does not

understand it.

MR. SPEAKER: Order, please!

One question at a time.

PREMIER WELLS: I am surprised the hon. member does not

understand it, and he has to keep shouting to prevent the issue from being

explained.

So, Mr. Speaker, those are the ways in which the

privatization of Hydro would impact favourably on the Province's balance sheet,

both by enabling it to reduce its debt by that amount - by the amount of the

proceeds that it gets - and by having its balance sheet cleaned up by having an

immediate reduction in its liability of a significant portion of it, and having

the rest phased out over maybe five or six years, as would be proposed.

MR. SPEAKER: A supplementary, the hon. Leader of the

Opposition.

MR. SIMMS: Mr. Speaker, is the Premier now trying to tell

us that he has not been telling the people of this Province for the last number

of weeks that one of the main benefits in privatizing Hydro is because of the

effect it will have on the Province's debt? That is what I said at the outset,

and he denied it now and says that it is a straw man that we throw up so we can

blow it down, and all that nonsense. It just goes to show the credibility of his

argument.

Mr. Speaker, the other thing, of course, is that he did not

answer my question. I asked him if his government or any other government has

ever paid one cent in interest on Hydro's debt. The answer, of course, is `no'.

That is why he did not answer it, I suppose.

Now let me ask him this: Instead of paying interest on

Hydro's debt, as I just said, the real truth is that government makes money off

Hydro's debt because it charges Hydro a 1 per cent guarantee fee which he and

his government introduced a couple of years ago. Now I want to know how much do

you make from the guarantee fee on Hydro's debt; and how much did you make last

year; and how much in the last two years since it has been in effect?

I want to ask the Premier: Does the government, by chance,

charge a guarantee fee to any other company or agency, either public or private,

in the Province, that holds a government guaranteed loan? There are hundreds of

them.

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Yes, Mr. Speaker, as a matter of policy we

charge the guarantee fee on all borrowers for whom we guarantee. All of the

borrowers we charge, except municipalities. We do not charge municipalities, but

when we guarantee money for a company, a fish plant or anything, we charge the 1

per cent guarantee fee. That is perfectly normal, and we have been doing it for

four years. We started it first when we came in, and it has helped control the

requests for the guarantee and has provided a level of revenue because on many

of these guarantees the government is frequently called and we have to pay up

the money, and this provides some revenue to enable government to do it. It is,

in effect, the kind of surcharge or tax charge on those who borrow with

government guarantees, that provides some remedy, some resources, to the

taxpayer to pay off any guarantees on which they are called.

So this is a perfectly normal thing. I am surprised the hon.

member was not aware of it.

MR. TOBIN: (Inaudible).

PREMIER WELLS: We charge it to everybody except

municipalities. Any public municipality, we would not do it.

MS. VERGE: How much do you get from Hydro?

PREMIER WELLS: Ten million, or just under $10 million, I

think it is, for Hydro.

Now, just stop and think. This is the income the government

gets.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: Just listen now. I will answer the

question. If the Leader of the Opposition wants the Member for Mount Pearl to

answer the question, I am sure he will ask him.

MR. SIMMS: We would get the truth then.

PREMIER WELLS: He would get a fabrication; that is what

he would get - utter nonsense.

That is the government's total return from Hydro. There is no

other return that the government gets from Hydro. It has equity invested in it

and I think the equity on the books is $227 million, something like that. We are

guaranteeing $1 billion and we get $1 million return. Is that a good investment

for the government? Is the government profiting by that? Are not the taxpayers

of this Province better off to privatize Hydro and let the private sector put up

this money, generate economic activity, cause more economic activity to take

place, get the use of the full value of Hydro's assets to the government? We

hope it will be a good deal more than the equity value on the books. We hope we

would get a great deal more from that, lower the government's borrowing and get

rid of $1 billion worth of indirect debt. Now, there is good management.

SOME HON. MEMBERS: Hear, hear!

MR. SIMMS: He is misleading the House again.

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: Mr. Speaker, I would like to know how the

Premier of this Province can stand in his place and try to justify with a

straight face giving away a corporation that has at least a couple of billion

dollars worth of assets, at least a couple of billion dollars worth of assets,

for $230 million as he said on television?

SOME HON. MEMBERS: Hear, Hear!

MR. SIMMS: Do not try to hoodwink and fool the people. I

am trying to ask the Premier a question about the debt.

AN HON. MEMBER: It is a good thing you are not in real

estate, Len.

MR. SIMMS: I say to the Minister of Finance that if I

were in real estate this privatization deal would remind me so much of the

Premier walking up to the front lawn, putting a For Sale sign on that front lawn

and then turning around, going in to me as the owner, and saying you have the

first chance to buy it, after getting rid of it. That is how silly it is.

The Premier has already said, I presume, I know he has said

publicly that he intends to continue to guarantee the existing Hydro debt after

Hydro has merged with Fortis, or privatized. He has already said that.

AN HON. MEMBER: (Inaudible)

MR. SIMMS: Oh, he has not said that. I see, so everybody

is wrong. We will show him where he said it, Mr. Speaker. The question is, will

he continue to get the 1 per cent government guarantee from that debt? That is

the question I want to ask him.

PREMIER WELLS: Let me correct as many of those wrong

statements as I can remember. He is obviously listening to Mr. Jamieson's Open

Line show too much. He should get his information from a reliable source. That

is not a reliable source for information. Assets worth over $2 billion, going to

sell them for $230 million?... all utterly false, totally incorrect, totally and

completely incorrect. For those assets we will get more than are on the books,

by we hope a very significant margin more, more than they are on the books for.

MR. ROBERTS: He does not know the difference between

assets and net worth.

PREMIER WELLS: As the Attorney General points out the

hon. member really does not know the difference between asset value and net

worth. Mr. Speaker, the assets of Hydro are all available in the consolidated

balance sheet. The assets are published. The value of the assets are there.

Everybody knows what they are worth. The value of the government's equity, the

book value of the government's equity is well known, it is on the books. It is,

I think, $225 million. I cannot pick it out right now but it is in the vicinity

of $225 million. We have no intention of selling it for $225 million. We would

expect that we would get a significant premium on the book value as did Nova

Scotia in the sale of Nova Scotia Power. We would expect to get a good sizable

premium, as much as we can, and all hon. members are doing is making it more

difficult for the taxpayers of this Province to really get the true value out of

this. That is all they are doing, and when this whole debate is over, whether it

is merged and then privatized or, privatized on a stand-alone, or nothing at all

happens, I will make public all of the figures, and then the people of this

Province will be able to see just how much harm - just how much harm - the

irresponsible misrepresentations of the Opposition now have done to them and how

irresponsible the Opposition have been.

Now, on the question as to whether or not the government - or

whether I said, at any time, the government is going to continue to privatize

Hydro's debt, let me say again what is proposed. Of the total debt of something

under a billion dollars, of Hydro, here is what is going to happen to it; here

is what is proposed would happen to it, assuming everything is worked out. Here

is the general thinking at this stage:

A portion of it, maybe 1/3 of it, would be paid virtually

immediately; the cash would be there and it would be paid immediately. Now, as

much of it as we can cause to be paid immediately would be caused to be paid

immediately, otherwise, of the total proceeds of the sale, we would have to take

a portion of it in cash and set it aside, because we couldn't risk taking more

cash out of it to get a bigger return. We could get a bigger return for the

taxpayer if we wanted to, but we have to act responsibly for the taxpayer and

for the rate payer, so we would foresee one-third of it either being paid

immediately or the equivalent in cash being put aside to pay it, so there is no

possibility of any future liability, it is there - the cash is there to pay it.

Another one-third of it would be repaid as it would fall due

in the next five to six years, so, I said it would be eliminated within five to

six years. The remaining one-third, we would propose, would be treated with the

same process as Nova Scotia treated it. The phrase the investment bankers use to

describe the action is, it would be defeased. In other words, the funding

necessary for it, financial resources sufficient to discharge it totally, would

be put in place, so that the financial community could look at the government's

debt and say: Here is the money to pay it; it is no longer an obligation that

the Province need worry about on its balance sheet. So, effectively, within five

to six years, it would take care of the problem totally.

AN HON. MEMBER: You are deferring the plan four to six

years for the people of the Province?

PREMIER WELLS: It is proposed that there would be a -

well, let me go back and restate that. Nova Scotia, put in place a deferred

purchase plan that would enable residents of the Province to purchase shares

over a twelve-month period.

AN HON. MEMBER: Two years.

PREMIER WELLS: My recollection is, it was a twelve-month

period, not two years.

AN HON. MEMBER: Half up front and half (inaudible).

PREMIER WELLS: No, no. It was -

MR. ROBERTS: It made the full payment in twelve months.

AN HON. MEMBER: Yes.

PREMIER WELLS: It made the total payment, but I thought

it was one-twelfth each month. There may have been half up front, I don't

remember. In any event, the total amount was paid over a period of twelve

months. There may have been half of it up front - I have forgotten, now, the

detail of it.

There is a strong suggestion that this Province should do the

same and the purpose for doing that, is to ensure that the people of the

Province would have preferred opportunity or preferred access to purchase the

financial - have a preferred position to enable them to purchase the shares in

Newfoundland Power.

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: A final supplementary, Mr. Speaker.

We will get to the other points that the Premier has been

flicking across the House in response to some questions from my colleague here,

particularly the question of Newfoundlanders having the opportunity in being

encouraged to buy the shares. I mean, that is nothing short of a joke, but we

will get into that on another day. I want to ask the Premier this: In response

to my last question, he said that one of these days, or when this thing is

finalized, and all that kind of thing, he is going to lay all the information on

the Table, make it public, so that the people will be able to see how wrong we

have been and how inaccurate and all this kind of nonsense. I want to ask him

one simple question: Why doesn't he make that information available to the

people today?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

The hon. the Premier.

PREMIER WELLS: I am delighted he asked. Because if the

hon. member were running the Province, if he had my responsibility, and if he

were directing the officers of Hydro or giving them the Province's policy

position and saying: Here is what you have to do to protect the Province's

position, he would say to the chief executive officer of Hydro: Make sure you

negotiate in such a manner that you don't impair the government's ability to get

the maximum possible return on the sale. Don't tell the other side what your

position is. Don't give away your negotiating position. Don't disclose to the

other side confidential information that could adversely affect your position.

Now that is what the director of Hydro would do, and that is

what the hon. member, as Premier, would authorize him to do if he were standing

where I am standing at this moment. That is what he would do.

Now, sitting as Opposition, he stands and makes these

irresponsible statements suggesting that the government is doing this in secrecy

for some clandestine motive. I did not say, when this all comes out we would see

how wrong they are - what I said was, we would see how much harm they are doing

this Province by the position they are taking. That is what I said. And the

people of this Province will hold them responsible for it.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Waterford -

Kenmount.

MR. HODDER: Mr. Speaker, one of the other secret sets of

negotiations that this government have been involved in is negotiations which

have been going on between the church leaders and the government relative to

changes in the education system. I have seen, as have members of the press, and

some members of the government, the reorganization model that church leaders

presented to the government on Monday evening. Under that model, church leaders

would have more direct control over school boards and over schools than they

have exercised since 1927 when the Department of Education was first created.

After months of negotiation, Mr, Speaker, I ask the minister:

Is that where we are, back to the early days of the Department of Education in

this Province? We are not, I see in this document, being very progressive. I ask

the minister if he could comment on the status of the negotiations and also

comment on the report which we all have seen in the last several days.

MR. SPEAKER: The hon. the Minister of Education.

MR. DECKER: Mr. Speaker, last March, the heads of

churches advised government that they had a model which would deal with the

governance part of education in this Province and they wanted to present this

model to government. Early this week, as hon. members know, that model was

presented to government. I tell the hon. member that government has some

reservations with the model. We will be meeting with the churches next week -

next Monday, actually - and we will be making known to them and to the people of

this Province what our position is on their model and the way we think we should

go with the governance.

MR. SPEAKER: A supplementary, the hon. the Member for

Waterford - Kenmount.

MR. HODDER: Mr. Speaker, I do believe, the mistake that

the Province has made, that the government has made, is that they have been

negotiating only with church leaders. Government's motivation is obviously to

save money. The churches want to hang on to their constitutional controls and

perhaps, as we have seen, even to enlarge those controls. These negotiations are

not focused, in my opinion, on improvements to the quality of education that we

want to offer our children in getting them prepared for the 21st century.

I want to ask the minister: When will he enlarge the

negotiations to include representatives of all groups that have an interest in

education - the parents, the school boards, and the teachers of this Province?

MR. SPEAKER: The hon. the Minister of Education.

MR. DECKER: Mr. Speaker, the hon. gentleman raises some

interesting points. The constitution refers to rights held by classes of

persons, classes of people. Now, we have gone on the assumption, and certainly

the church leaders go under the assumption, that they are the leaders, the

persons, who hold those rights. That is the assumption we have been going under.

Now, maybe the hon. member is correct. Maybe we should not be dealing with the

leaders of churches. We only have to go on the basis that we have been going on,

and if the hon. member can put forward some argument, maybe we should be talking

with someone else. I don't know that.

As for the secrecy of the debate, nothing has been secret,

Mr. Speaker. As a matter of fact, I announced in this House, or I announced

publicly - the House was not open - that I was going to put in place a committee

made up of representation from various stakeholders throughout the Province. I

asked the Home and School Association if they would give me three names, and

from these three names I picked a person, Mrs. Marie Rowe - as a matter of fact,

she was on television last night. We asked the DECs if they would give a

representation. They gave three names, we picked one, and I went throughout the

Province, so we have a committee of about fifteen or twenty people who discuss

the various points which are raised by church leaders and by government and what

have you.

Now, it is extremely difficult - all too often we hear about

consulting with the people. It sounds good, but it is just not practical to sit

down and talk to every single person in this Province and say, "Now what are

your ideas about the governance of the system?" So I talk to Jimmy Toe up in

Roddickton and he says, "I think this." I talk to Mary Toe and she says that. It

is just not practical; but I agree with the hon. member that we have to keep the

public made perfectly aware as to what is going on.

The model which the churches presented to government on

Monday of this week was indeed made public, and all the people of the Province

have had an opportunity to see it. The discussions which we will have with the

churches on Monday, shortly thereafter we will make these discussion public to

the people of this Province; and who knows, maybe at the end of the day we will

have to find some way to get more input from all of the classes of people. That

I can only speculate - I don't know where it will lead us.

MR. SPEAKER: A final supplementary, the hon. the Member

for Waterford Kenmount.

MR. HODDER: Mr. Speaker, the minister has indicated that

he wishes to have the changes implemented by September of 1994. That is nine

months from now. In my discussions with the superintendents and with other

stakeholders in the education system, they are increasingly having doubt as to

whether or not this can be achieved.

I want to ask the minister: What steps will he take

immediately to ensure that the implementation of the changes to the structure of

education in this Province will be ready for September of 1994?

MR. SPEAKER: The hon. the Minister of Education.

MR. DECKER: Mr. Speaker, I believe it is important that

we be ready to make these changes in 1994. There are many reasons. The system is

badly in need of reform, and every day which we lose, I believe, is to the

detriment of our children.

Another reason, I believe, that we have to make those changes

by September of 1994 is, as hon. members will know, we have deferred school

board elections, but government does not intend to defer school board elections

indefinitely. We are hoping to be in a position to have the new school boards,

whichever form they take, in place by next September.

We do have various benchmarks in place which, to date, have

not been passed. The churches want to present their model. We asked them if they

could have a model to us by this fall. We had hoped to get it before the end of

November. We have received their model. We have expressed some reservations

about it. We are hoping by the end of this year, or early in the new year, to

have a model in place, by consensus, hopefully, which will be acceptable to the

people of the Province.

If we can reach these benchmarks, I can assure the people

that by September we will have the governance issue all in place; but I should

also say, Mr. Speaker, that the governance issue only refers to twenty-odd

recommendations in the Royal Commission Report. There are a whole lot of other

recommendations which are being worked on daily. There is a process in place,

like with talks with the university about teacher training, the lengthening of

the school year, or better utilization of the school year. Work is being done on

that, and the whole other 180-odd recommendations are being dealt with by a very

orderly process.

Any time the hon. member would want to discuss that further,

I will be quite pleased to match him up with the officials in the department who

are doing it.

MR. SPEAKER: The hon. the Member for St. John's East.

MR. HARRIS: Thank you, Mr. Speaker.

My question is to the Premier, concerning Newfoundland and

Labrador Hydro, our single most valuable revenue producing asset, and a resource

which could be the engine of government policy in our future economy.

Will the Premier acknowledge that he, personally, has lost

his own objectivity on the issue of dealing with Fortis on the proposed sale of

Hydro? And will he acknowledge, as a former Chair of Newfoundland Light and

Power, that he cannot act impartially in the public interest in this matter?

Will he step aside from these discussions and will he remove himself from this

debate?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: No, Mr. Speaker, I will make no such

acknowledgement, any more than I would ask the hon. member to acknowledge that

he can't vote in any manner, in this matter, in this House that would affect a

client for whom he presently works or has worked. He can't express in this House

opinions relating to people affected by the Mount Cashel affair, clients of his.

I wouldn't ask him to do that and I see no more basis for his asking me to do

it. The day that I announced - or I believe it may well have been the day before

I announced that I intended to seek the leadership of the Liberal Party, my

first step was to resign as Chairman and Director of Newfoundland Light and

Power; that I did. That was the day I announced I was going to seek it, long

before anything else. I haven't seen anybody on that side apply that same

standard - nobody, and I will go back and examine it and you won't find that

standard!

SOME HON. MEMBERS: Hear, hear!

PREMIER WELLS: That is right! You won't find that

standard. I disposed immediately of any shares that I had in Newfoundland Light

- I have not had any interest in it for six or seven years or however long it is

since I decided to get involved in public life. Now, I have divested myself of

it and I intend to continue to maintain that same high standard. I also intend

to bring to bear whatever judgement I have or whatever judgement the people of

this Province think I have, because they put me here. It was with their support

that I am here and with their full endorsement.

MS. VERGE: They didn't know you were planning to sell

Hydro, though.

PREMIER WELLS: They knew exactly in the last election

that we were going to sell Hydro.

SOME HON. MEMBERS: Oh, oh!

PREMIER WELLS: They were told.

MR. SPEAKER: Order, please!

PREMIER WELLS: Only the people opposite don't know. If

they didn't know it, they are the only ones in the Province who didn't know that

the government had stated and had adopted, in a Strategic Economic Plan, the

approach to sell commercial-type assets. If they didn't know that, it is there

in the plan - read it. I will get it for them. The government's position on sale

and privatization of commercial assets is there.

MS. VERGE: What a tangled web we weave!

PREMIER WELLS: The hon. member is quite familiar with

weaving tangled webs, I have no doubt about it, so she can speak authoritatively

on it.

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: So, no, Mr. Speaker, I do not intend - I

think the hon. member is quite wrong. My objectivity is probably far greater

than his because he, too, you see, has a concrete mind-set on it. His political

position is, `no matter what, don't ever sell an asset, that government own

virtually everything.'

MR. SPEAKER: The time for Oral Questions has elapsed.

Private Members' Day

MR. SPEAKER: I recognize the hon. the Member for Burin -

Placentia West.

MR. TOBIN: Mr. Speaker, I stand in this House today to

present a resolution on behalf of all the taxpayers of Newfoundland and

Labrador, I would suggest to the Premier. The resolution says:

WHEREAS the privatization of Newfoundland and Labrador Hydro

will burden the people of the Province with higher costs for electricity, more

unemployment, the alienation of water rights, and the transfer of tens of

millions of dollars every year out of the Province in dividends to shareholders;

BE IT THEREFORE RESOLVED that the government retain

Newfoundland and Labrador Hydro as a Crown-owned Corporation.

Mr. Speaker, I find it necessary today to present that

resolution, because of the decision by the Premier and his government to give

away a profitable Crown corporation that, to some extent, has been regarded as

the birthright of every man, woman, and child in this Province.

I listened with interest today to what the Premier had to

say. Mr. Speaker, I find that almost on a daily basis, the Premier of this

Province shifts his position on this very important issue.

MR. GRIMES: (Inaudible).

MR. TOBIN: The Member for Exploits is speaking again. I

don't know if one of the reasons why the Premier is moving with such haste on

this is because of the political ambitions and the campaign that is presently

underway for the leadership of the party by the Member for Exploits. I don't

know if that has anything to do with it. But I, like everyone else, listened to

CBC radio the other morning when they talked about the Liberal Convention and

all they talked about was the Member for Exploits being introduced to everyone

as the Premier. Now, I don't know if that has anything to do with the haste as

to why the Premier is trying to move so quickly on this matter. I do not know if

he has been threatened or not.

I would just like basically to touch on where Newfoundland

Hydro came from and why it came. It started in the early 1950s and it had,

basically, three objectives.

MR. DUMARESQUE: (Inaudible).

MR. TOBIN: Mr. Speaker, I tell the member, the time for

him to stand up and be a man for his constituents in Labrador who depend on

Hydro will come later this evening. But I say to the Member for Eagle River, he

will be like most of them over there, he will lack the courage to stand up for

his constituents, and instead, bow to the whims and the wishes of one, Clyde

Wells. That is what the Member for Eagle River will do, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. TOBIN: There are more guts in a jellyfish than there

are in the hon. member.

Now, I want to get back to the real issue, and that is that

Hydro was started with three basic objectives: one, to harness the undeveloped

water resources of our Province, two, to create a provincial power grid, and

three, to provide electricity to all communities in this Province. Mr. Speaker,

they have done that. I represent some rural parts of this Province. I represent

rural, isolated communities in Newfoundland and Labrador that were given the

opportunity to have electricity because of the efforts of Newfoundland and

Labrador Hydro. That is why they got it.

MR. DUMARESQUE: (Inaudible).

MR. TOBIN: Yes, and to some extent because of the efforts

of Cyril Abery, I say to the Member for Eagle River.

Mr. Speaker, Hydro has achieved these objectives. We all know

they have built major plants throughout this Province, such as in Bay d'Espoir,

Hinds Lake, Paradise River, my own district, and other parts of Newfoundland. As

I said, they have provided electricity throughout this Province, from one end of

the Province to the other, when Fortis and their shareholders would not dare get

into it, Mr. Speaker. It has been able to borrow money on the markets much more

cheaply than a privately-owned company could do.

The other thing that the Premier hasn't mentioned yet, that I

will mention, is that it doesn't have to pay corporate income tax because there

is an exemption in that regard. Mr. Speaker, when all of this came about, when

Hydro was doing all of this in this Province, serving a function, the Premier of

this Province - I would suggest, the request, the begging, the tapping on the

shoulders of some of his friends to sell it, played a major role. I would

suggest that there were shareholders in Fortis Inc. who asked the Premier of

this Province to sell Hydro. I strongly believe that the Premier was encouraged,

by some distinguished shareholders, to sell Hydro.

Now, what has happened, Mr. Speaker? He went out together

with Hydro and asked some of the most reputable financial institutions in this

Province, such as RBC Dominion Securities and ScotiaMcLeod to come in and do an

assessment. And they did the assessment but would not recommend to this Premier

and to this government - they did not recommend to this Premier and to this

government to privatize Newfoundland and Labrador Hydro. They did not recommend

that. So, what happened? The Premier said it. The Premier didn't get the answer

that he wanted from the best and most reputable groups in the company.

MR. W. MATTHEWS: `Glenn', they are government's own

financial advisers, by the way.

MR. TOBIN: Yes, they are government's own financial

advisers, as well, no doubt about that, and Hydro had them. And to make it look

good, the Premier had Hydro pay the bill for the financial advice, as I

understand it, but they did not and would not recommend the privatization of

Newfoundland and Labrador Hydro. So what happened then? The Premier of this

Province, who has committed - and I don't know to whom he had made the

commitment, but he obviously had a commitment, because he was hell-bent on

privatizing Newfoundland and Labrador Hydro. So he went out and picked five wise

men - he said, the brightest, most articulate -

AN HON. MEMBER: All-star.

MR. TOBIN: Yes, five all-star.

MR. WOODFORD: They saw a star.

MR. TOBIN: Yes, they were drawn to the star. So he

brought in the five wise men. Now, he never asked: Do any of you hold shares in

Fortis Trust? Are any of you in a position to benefit from the sale of Hydro to

Fortis Trust? The Premier never asked those questions, Mr. Speaker.

MR. SIMMS: It never dawned on him, he said. It never

dawned on him to ask that question.

MR. TOBIN: No, he said it never dawned on him to ask that

question. Now, Mr. Speaker, they can try to distract all they like, you will

have to respond to your constituents for this, I say to the members opposite.

What happened then? The Minister of Energy got up in this

House the other day on two occasions, and didn't think it was going to be picked

up. He tried to gloss it over. How did he refer to it?

AN HON. MEMBER: Task force.

MR. TOBIN: A task force.

AN HON. MEMBER: (Inaudible).

MR. TOBIN: Oh yes, Mr. Speaker, if we hadn't picked it up

it would be no mistake and it would not be changed either. That was an

intentional prompting, I would suggest, by the Premier to the Minister of

Energy, because the Premier is good at weaselly words. It was a cover-up, that's

what it was, and now, I am hearing - and I would like to ask the question as to

whether or not they actually did say to the Premier that Hydro should be sold. I

would ask now what they did say and I think, Mr. Speaker, they should be brought

before this House and be made to state their position as to what is going on and

if they own shares in Fortis Trust, because whoever owns shares in Fortis Trust,

in my opinion, is not in a position to be involved in the negotiations or the

discussions or to give advice. That is my opinion, Mr. Speaker.

So, the Premier, when he decided to sell Newfoundland and

Labrador Hydro, said it must meet three objectives: to create a more efficient

electrical industry, to maximize the proceeds from privatization of Newfoundland

and Labrador Hydro to the Province, and to be fair to Fortis shareholders.

MR. W. MATTHEWS: That's the big one.

MR. TOBIN: That is the big one - to be fair to Fortis

shareholders. Mr. Speaker, this decision to sell Hydro is one of the most

important decisions ever to be made by a government in this Province. What the

Premier also said, and what he confirmed, was that it was the consumers of

electricity, not Fortis shareholders, who will pay the costs of privatizing

Hydro.

If one wants to know why that is, it is set out quite clearly

Section 81 of the Public Utilities Act, which deals with how much Public

Utilities can charge each company. In the case of a private company, the act

states, the rates to be charged should provide sufficient revenue to the

supplier of power to enable, in the case of a private company, to earn a just

and reasonable return as construed under the Public Utilities Act; number two,

in the case of Hydro Corporation, to recover the cost of services provided by it

and a marginal profit sufficient to achieve and maintain a sound financial

position, so that it is able to achieve and maintain a sound credit rating in

the financial markets of the world.

Now, Mr. Speaker, that is very interesting. What people

should remember and not lose sight of is that Fortis Trust have bondholders whom

they have to please, but they also have shareholders whom they must please,

whereas Newfoundland and Labrador Hydro only has the bondholder, not the

bondholder and the shareholder, as Fortis Trust has.

What does that mean? That means they go to the Public

Utilities -

AN HON. MEMBER: (Inaudible).

MR. TOBIN: The Member for Fogo had a vacation after the

last election, and if he isn't careful, he will have another after the next one.

Mr. Speaker, I would say, what is important is that over the past four or five

years, in the period from 1989 to 1992, Fortis earned an average rate of return

on common equity of 13.74 per cent.

MR. W. MATTHEWS: Thirteen point seven - not bad returns.

MR. TOBIN: Mr. Speaker, the backbencher over there should

be quiet. He will never be in Cabinet because - I won't get into that. Now,

during that period of time, of 13.74 per cent, Hydro, on the other hand, had an

average annual rate of income of 5 per cent and that was a direct result of

having to satisfy bondholders and shareholders. That is the difference between

13.74 and 5 per cent - because there have to be bondholders and shareholders

satisfied in that regard.

Now, Mr. Speaker, another interesting thing -

MR. TULK: (Inaudible) social services in Marystown?

MR. TOBIN: Yes, and I never got fired out of it, either.

SOME HON. MEMBERS: Hear, hear!

MR. W. MATTHEWS: Talk about walking into it, `Beaton'!

MR. TOBIN: Another interesting thing, Mr. Speaker, is

that Hydro, as a Crown corporation, and its subsidiary companies are exempted

from paying corporate income tax under

Section 149(1)(

d) of the Income Tax Act.

What does that mean, Mr. Speaker?

AN HON. MEMBER: What are you reading from there?

MR. ROBERTS: Cyril Avery's life story.

MR. TOBIN: No, Mr. Speaker, I am not reading Cy Avery's

life story, I am reading the research we have done in our office - that's what

I'm reading. I may have something to say about the member's life story in due

course, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

SOME HON. MEMBERS: Oh, oh!

MR. W. MATTHEWS: What is more important is what his

future life story is going to be.

MR. TOBIN: Yes, and his future.

MR. ROBERTS: I would rather have my future than the hon.

gentleman's past.

MR. W. MATTHEWS: Well, we will see about that.

MR. TOBIN: Mr. Speaker, what does that mean in terms of

being exempt from corporate income tax? It means that this government

have been exempt from the corporative income tax, it means

that this government will, right now, the Hydro figure, exempt by around $15

million to $20 million, Mr. Speaker, that they do not have to pay in provincial

income tax. That is what it means; and in addition to this, the Premier

confirmed again today, there is a 1 per cent surcharge on all debts - on all

Hydro debts - and as the Premier said today, it goes beyond that.

Well our research shows us that 1 per cent debt was somewhere

in the area of $11 million, I say to members opposite, so when you put all of

that together, when you talk about the corporative income tax exemption that is

there that will have to be paid, when you look at that, when you look at the 1

per cent surcharge, that alone adds up to around $20 million - roughly in the

area of $20 million a year.

Now, Mr. Speaker, what has to happen - I only have four

minutes left; I will have time later on this evening to get into it again -is

that there is another $20 million that will be needed. In order for Hydro to

sell to Fortis, or to merge, Hydro shareholders will need an additional $20

million, I say to members opposite, in order to pick up the shares that are

needed to (inaudible) of Hydro. That is $40 million. Then, if you want to look

at the 20/80 debt equity ratio that Hydro presently has versus, I believe, 51/49

per cent debt ratio, or equity debt, I think it is - 51 per cent it is, equity

debt there, and it is 80/20 debt equity.

AN HON. MEMBER: Debt to equity.

MR. TOBIN: Yes, Mr. Speaker, and if you were to put that

in place, do you know how much it is going to cost in order for Fortis to bring

it in line?

AN HON. MEMBER: (Inaudible).

MR. TOBIN: What I said? Sure I will. I said right now

Hydro has an 80 per cent debt and a 20 per cent equity,

whereas Fortis has a 51

per cent equity and a 49 per cent debt.

AN HON. MEMBER: Ratio.

MR. TOBIN: Ratio, yes, debt ratio. In order to bring

Hydro's debt equity ratio in line with what Fortis Trust is, it will cost an

additional $20 million.

So, Mr. Speaker, what that means is that the consumer of

electricity in this Province will have to pay approximately $60 million a year

more if this deal goes through. That is exactly what it means - $60 million a

year.

AN HON. MEMBER: Those are Neil Windsor's figures.

MR. TOBIN: No, Mr. Speaker, they are not Neil Windsor's

figures.

The other interesting thing the Premier got on with today,

and has never said it before, is in terms of what government is on the hook for

afterwards. What government is trying to do -

AN HON. MEMBER: (Inaudible).

MR. TOBIN: Listen, Graham, you wouldn't understand it, so

I wouldn't even bother to try and tell you.

What government is on the hook for, Mr. Speaker - what

government is saying here - if you look at the 20 per cent, 80 per cent debt

equity ratio, is that if you have a house today - I will simplify it for the

member, okay - if you have a house today that is valued at $100,000 and you own

$20,000 of it, what government is saying is: We will give you the $20,000 for

it. Not only that, we will guarantee the rest of your mortgage for the next

twenty years. That is exactly what is in this, Mr. Speaker. The remaining

$80,000 will be guaranteed for the next twenty years.

MR. W. MATTHEWS: By the taxpayers of this Province.

MR. TOBIN: By the taxpayers of this Province.

AN HON. MEMBER: (Inaudible).

MR. TOBIN: Yes, are you going to get involved in this

debate?

Mr. Speaker, one thing that is obvious here is that when this

is sold, Mr. Speaker - now, Mr. Speaker, the $6 million leadership candidate

going around this Province being introduced as the next leader of the party -

the minister would be better off staying quiet than trying to take the Premier's

job before he has even decided to resign.

AN HON. MEMBER: Don't chase rabbit tracks.

MR. TOBIN: Okay. Now, Mr. Speaker, when this is said and

done the questions that have been asked, the answers to most of them is that

there will be definitely losses of jobs in this Province. Definitely be losses

of jobs in this Province as confirmed by the Premier and the Member for Fogo,

Mr. Speaker, should know what that is like. There will not be a reduction in

energy costs.

MR. SPEAKER: Order, please!

The hon. member's time is up.

MR. TOBIN: Mr. Speaker, I will come up this evening.

MR. SPEAKER: The hon. the Minister of Mines and Energy.

SOME HON. MEMBERS: Hear, hear!

DR. GIBBONS: Thank you, Mr. Speaker.

Mr. Speaker, it is a pleasure to stand today and speak

against this resolution. There is not a country in the world today, not a

country anywhere on the globe, that does not have a major privatization

initiative to get out of doing the work that should be done by business. Reduce

government, let government do what government should do, let business do what

business should do. In our view there is no longer a need for government to be

in the business of producing and distributing electricity. It is from that

perspective that we are moving forward with what we are doing relative to

Newfoundland and Labrador Hydro.

The hon. member who has just spoken said that we have been

shifting, that the Premier has been shifting daily, nothing could be further

from the truth. We have not shifted one millimetre, one inch, since we started

in this process. We are moving forward with this since we made the decision in

August to do so. He talked about the haste in the negotiations, there is no

haste, Mr. Speaker. We are going to move forward at a pace to do what needs to

be done properly. To do what needs to be done in the best interest of the people

of Newfoundland and Labrador to make sure that we get the maximum benefits from

this privatization that we are talking about.

He gave a little bit of history on Hydro and that history was

correct. Sure, Hydro was started thirty or forty years ago to help develop the

water resources when our private sector was not capable of doing it. It was too

small, it could not do the Bay d'Espoir's of the world. It did not have the

financial wherewithal to do it. There was no one in the private sector that had

the capability at that time to do the provincial grid. No one had the capability

to do it and Hydro was put in place with that mandate and Hydro has done it.

Since the time Hydro started it has done what it was put in place to do. It has

electrified Newfoundland. The public policy reason was there many years ago,

today it is no longer there. The rural communities throughout this Province have

for the most part now been connected to the grid. There are some places where

they have not been connected because the expenses would be too high to connect

them and we are addressing them in a different way but for the most part the

public policy reason for Hydro's existence is no longer there. We can therefore

move forward and let the private sector continue with the business.

The member mentioned corporate income tax. Sure a private

sector company pays corporate income tax but from coast to coast in Canada

corporate income taxes that are paid to the federal government are returned to

the provinces, for the most part, not 100 per cent but for the most part they

are returned to the provinces. I think right now it is 85 per cent that gets

returned to the provinces and then it is up to us what we do with these

corporate income taxes. We do not have to keep them.

MR. TOBIN: (Inaudible).

DR. GIBBONS: No, let me finish. In Nova Scotia's case

when the federal government sent that corporate income tax back to the province

the company was given the corporate income tax.

AN HON. MEMBER: The company?

DR. GIBBONS: For the rate payer. To keep the rates down.

The provincial government gave that corporate income tax back for the rate

payer. We're not sure exactly what we're going to do yet but we're looking at

that same issue.

MR. TOBIN: Will you make a commitment now to do that for

us?

DR. GIBBONS: I'm not making a commitment now but we are

looking at that same issue. So corporate income tax is a factor in all this and

we're still working on it. We haven't concluded yet.

The member said that someone in Fortis asked us to sell them

Hydro. Nobody in Fortis asked us to sell them Hydro. We're not selling Hydro to

Fortis. We're talking about a merger here, and if we can negotiate a merger, a

true merger, that will reflect the 70 per cent of the industry that we own,

approximately, and the 30 per cent that they own, approximately, then we will

have a public share offering, an equity offering, to get the maximum price that

the public will pay. We're selling to the people at large.

I want to carry on and say a little bit more there about what

Fortis did ask for at one time, what Fortis did propose at one time. Back in

1989 when we were looking at the power distribution districts, the rural areas

that are on diesel right now, and some of the associated interconnected areas

that are now serviced by Hydro. Primarily the Northern Peninsula, but mostly

these rural remote areas that had not been previously transferred over to Light

and Power. They put in a proposal to us at that time to purchase these rural

assets that were primarily power distribution assets. The rural diesel areas,

the interconnected areas as well that Hydro has, the 15 per cent that Hydro has.

That's what they were looking for.

We assessed that back in 1989 and the committee recommended

against this and we told them: no. That's the proposal that came back again just

a few months ago. It was in January. In January after I had told Hydro about it

late in 1992, they came back to me in January and said: yes, we think this

should be thoroughly assessed right now, but in addition to thoroughly assessing

this we believe we should look at various alternatives. Variations on it.

Included in those variations were the other three alternatives that the Premier

has already talked about in the last couple of days. We will assess Hydro on its

own. Is it viable on its own? This is what the Hydro board said. We will do

this, and we will also look at the other options. Whether really it's feasible

to have a privatized Hydro on its own, or privatize Hydro through a merger. We

said: go forward, do that assessment, but give us an answer. We want an answer

from you on the proposal from Newfoundland Power to buy these rural assets, the

rural remote assets.

A few months later they gave us their answer. As they did in

1989 they did again in 1993. They recommended that we not sell that little bit,

the rural remote assets, to Fortis. It was after that that the committee was put

in place in June that we have talked about and heard so much about in the last

couple of days. The committee was put in place to address the `if'. We have

talked about privatization as a policy, now let's look at it and see whether or

not we should be privatizing Hydro. So that special committee that was put in

place looked at the `if'. Should we privatize or should we stay with the status

quo?

The committee first reported to me and the Premier on June

29. It later reported to the Cabinet in August. It was out of a Cabinet

discussion at that time that Cabinet said: we believe we will now proceed

forward. We will go forward with a privatization. What the committee told us,

and what Hydro had told us before, was that if we did consider privatization,

the best, most efficient industry, would be through a merger first, and then

privatize at that time, because we would take care of the redundancies that are

there now between the two companies.

On August 30 we decided we would go forward and talk to the

people at Fortis to see if they were interested in a merger. So on August 30 the

Premier and I and the president of Hydro met with the chairman of Fortis, and

the president of Light and Power, and said: here is what we're now thinking. We

have assessed the `if' of privatization, we have assessed whether or not we

should proceed with a privatization, and under these conditions - and we gave

them the page of conditions - we believe we can go forward with privatization.

We said: are you interested in participating with us along these lines?

A few days later we received the response: yes. A few days

later than that we made it public on October 1. Because as soon as we knew for

sure that we were going to go forward and consider a merger, and consider a

privatization, we said we're going to tell the people that we're planning to do

this. We're going to tell the public that this is what we're planning to do.

We're a long way from having anything done, but we're going to tell them now so

they know what's going on.

Since that time we have been really in Phase 1. Phase 1 of

the process has been to just discuss merger. Can we get a merger? We are not

buying Newfoundland Power from Fortis. Fortis is not buying Hydro from us. If we

can work out a merger of the two companies, a true merger, and in working out

that true merger, reflecting our 70 per cent ownership and their 30 per cent

ownership, then we go to Phase 2, and Phase 2 will be the public share offering,

and it is through the public share offering that we will get the maximum price,

the maximum value. That is where we will get the bonus on the sale of shares. We

are not to that stage yet and we do not know when we might get there. On October

1 we said maybe by March 31. It would be nice if it is done by March 31 because

that is the end of the fiscal year and we are into Budget preparation and Budget

planning, so it would be nice if it is done by March 31. There is no certainty

that it will be done by March 31 but we are sort of working towards that target.

Now, I would like to come back and see some of the other

comments that the hon. member made a few minutes ago. He said that we asked for

advice from reputable financial institutions, RBC Dominion Securities and

ScotiaMcLeod. Well, Hydro did ask for that advice on the first question and we

are still using them right now. Hydro is still using them right now in the

negotiation process. We are satisfied that these are the best people we can find

in Canada to work with us on this issue and move on from there.

The special committee we put in place, the people to look at

the `if' question, whether or not we should be looking at privatization, there

are no better people anywhere in Canada that could advise us on the `if'

question. There are no people with any more expertise anywhere in this country.

We talked to these people, people who have been involved with the industry

almost dating back to the beginning of Hydro for some of them. We have, as we

said earlier, and as the hon. member said, set objectives for anything that will

happen. In working out a merger we want a merger that is going to give us the

most efficient industry for the people of Newfoundland and Labrador, the least

redundancy. We want a merger that is going to give us the maximum return. Sure,

if we are going to get a merger we have to be fair to the other side, otherwise

we will never get a merger. We have to be fair there as well.

The hon. member talked about the return on equity that

Newfoundland Light and Power would earn and what Hydro would earn. Well, you

cannot compare a return on equity on the one hand and an interest cover on the

other. They are different things. They are not the same. You cannot say 5 per

cent in Hydro and 13 per cent in Light and Power. They are different things. In

Hydro's case Hydro gets an interest cover approved by the Public Utilities

Board. Hydro is the one with the $1 billion debt and we get an interest cover to

ensure that we can pay the interest on that debt, and a little bit more, so that

the market will say, yes, Hydro is a good investment.

Hydro is exempt from corporate income tax. The hon. member

repeated that. Hydro is exempt, a private company would pay, but in the paying

the federal government refunds to us most of what is paid and we have the

choice, and we will be making that decision later, as to how much we would

return to the company, if any, and how that would effect the taxpayer and the

rate payer.

The hon. member talked about debt equity. In Hydro it is

83/17 - 83 per cent of the total value, the $1.25 billion is debt and only 17

per cent is equity.

AN HON. MEMBER: Of the $1.25 billion?

DR. GIBBONS: Of the $1.25 billion asset we are talking

about here for privatization.

AN HON. MEMBER: (Inaudible) Fortis.

DR. GIBBONS: Newfoundland Power/Fortis, my most recent

figure is that the ratio there is 57/43. In any merged company in the merger we

would have to work towards a similar number, and we would work towards a similar

number to make it the most viable company possible on the market to give us the

maximum return and the maximum price for what we own. The new company will not

be Fortis. We are not selling to them and we are not buying them. There will be

a new company with a new name if a merger is agreed to.

The hon. member said we are going to guarantee the debt for

twenty years. That is wrong. We are not guaranteeing any debt for twenty years.

We said we would do what needs to be done until we can get it off our books

through a defeasance process.

Some of the debt would be paid down immediately at the time

of a sale and in about five years or so, five or six years, most of the others

would be gone, but through that defeasance process, we would within, about five

years, be rid of a billion dollars in debt.

He mentioned the losses on jobs. Sure, there would be some

losses on jobs if there is a merger, but we would be very sensitive to the

people involved. There would be an appropriate package for retirement, an

appropriate package for severance and we will handle that in a sensitive way, a

very sensitive way.

That covers the point that the hon. member made, but before I

finish I want to address some of the other points that were made by the

Opposition in the last few days, particularly, I want to go back to the October

6 statement by the Leader of the Opposition, in which he made many, many

erroneous statements.

Premier Wells announced government had begun talks in August

to sell the publicly owned Newfoundland and Labrador Hydro to privately owned

Fortis. That is what the hon. Leader of the Opposition said on October 6. Wrong,

it is totally wrong, it has never been our message, it has never been what we

intended to do, it is not what we said on October 1 and it is never going to be

what we are going to do.

Newfoundland Power and Hydro are not competitors was said.

Well, in most ways they are not but in some places they are; there is some

overlap. There is some overlap in the distribution area, there is a lot of

overlap in administration and management. When you go around the Province, you

will note that Newfoundland Power has most of the Eastern part of the Province

and around Notre Dame Bay but you get little pockets of Hydro. Go down on the

Burin Peninsula, Hydro does the Paradise River area but Light and Power does the

rest. Go out to Fogo Island, Hydro does Fogo Island, but Light and Power does

all the rest of Notre Dame Bay. Go out to St. Brendans, Hydro does that island

but Light and Power does everything else. There are other examples where there

is duplication. Light and Power does the Corner Brook area, Hydro does the

Northern Peninsula and some others in that particular Western area. We believe a

rationalization will result in some savings to the rate payer and some savings

to the taxpayer if the two companies can be brought together.

Now, let us say: why now? The question was raised why now,

and I think I have already addressed this part where the hon. member said that:

The Minister of Energy, Rex Gibbons said that government had assessed the idea

of privatizing Hydro shortly after the 1989 election and decided the transfer

would be of no benefit. We did not assess the possibility of privatizing Hydro

in 1989. The only thing that we assessed in 1989 was whether or not we should

sell to Newfoundland Light and Power, to Fortis, these rural assets that were

previously, primarily, part of the power distribution districts. We decided 'no'

at the time, but it had nothing to do with privatization; and the same thing is

related to my response last spring, in the House.

People have a right to know what has changed over that

three-month period from the end of May to the end of August. There has been a

big change. We had said 'no' again, to Newfoundland Light and Power on selling

them a bit of Hydro, but we had asked a special committee to come in and address

for us the 'if' of privatization; should we privatize or not, and it is through

the advice that we received over the summer, that we decided, 'yes' we would

move forward. We would move forward, we did that on August 30 and again, October

1, we told the people as soon as we knew that the other side was interested in

moving forward. I want to get through some more of these things here before my

final one minute runs out.

What's on the Block? Newfoundland Power has never been

interested in Hydro's high cost, rural distribution districts; one of the

questions in this release, What's On The Block. That is false. That is what they

were interested in, that is what they proposed to us twice in the last four

years. They said in this statement that the real attraction for Newfoundland

Power is Hydro's assets at Bay d'Espoir; they never ever gave me a proposal

saying we want to buy Bay d'Espoir, never ever.

AN HON. MEMBER: Is anything in there right?

DR. GIBBONS: I have never seen anything right yet.

Churchill Falls - Churchill Falls, has never from day one, been part of this

deal. The water rights in Churchill Falls and in the rest of Labrador have never

been part of this deal. The water rights in the rest of the Province that are

not already developed are not part of this deal. The only water rights that will

be included in the deal are those that are developed and there will be an

appropriate agreement in place. Right now we could look at an example of water

rights.

In Labrador there is an appropriate lease in place on water

rights and we get rentals and royalties on it. I do not know what the

arrangement will be on the Island for the rights that are being sold but there

will be an arrangement. What else is there? Will Fortis get control of power

generation on the Lower Churchill? No. It is not even part of our merger

discussions.

AN HON. MEMBER: (Inaudible).

DR. GIBBONS: Is government seeking the best deal? We are

going to get the best deal because it is only through a public equity offering

where the people who buy shares will give the maximum price.

There will be controls on the sale of shares. We are not

going to say: You can buy all you want. There will be, I believe the Premier

said, probably a 15 per cent limit - that is what Nova Scotia had - on how much

anyone could buy. There will be a limit on how much anyone outside the Province

can buy. We will be doing something for people inside the Province to encourage

them to buy.

In Nova Scotia's case they went forward expecting to sell 10

per cent of the shares -

MR. SPEAKER: Order, please!

The hon. member's time is up.

The hon. the Opposition House Leader.

MR. W. MATTHEWS: Thank you very much, Mr. Speaker.

If there was another day, with a topic that was not quite as

interesting, yes, we would give leave to members to go on, but there are a

number of speakers who want to have a few words on this important resolution

today which was introduced by the Member for Burin - Placentia West.

I have listened with great interest to both the mover of the

resolution and to the minister, and I can say to the minister that it was a good

try, but only that. He is reading someone else's notes, something that has been

prepared for him so that they all sing the same line, but regardless of whatever

way you sing the same song, it is still a bad deal for the people of this

Province, I say to the minister, and he knows that; and for a minister who did

not know that the advisors, the five advisors, the five wise men, as the Member

for Burin - Placentia West calls them, he did not know whether or not they were

a task force, whether they were a committee, or whether they were the tea party

brigade. He did not know that, as the minister responsible in this Province for

this deal that is now being negotiated. So I say to the minister, with all due

respect, that the song you are singing today is not your song, but that of your

leader.

Mr. Speaker, if there is going to be a deal, it must be a

deal that is definitely in the best interest of the people of this Province, and

I say to the minister and the members opposite -

SOME HON. MEMBERS: Hear, hear!

MR. W. MATTHEWS: - that the people of this Province are

not buying it. The people of this Province are not buying the spin the Premier

is putting on this one, and the Member for St. John's East alluded to a very

important point today because the Premier is not perceived by the people of this

Province as being at arm's length from this whole smelly deal, because he is a

former Chairman of Newfoundland Light and Power, Mr. Chairman. He is a former

Chairman. His right-hand man or his left-hand man, who is sitting there next to

him, we all know his connections with Fortis. We all know that, and any way you

try to cut the cake or slice the pie, the people of Newfoundland and Labrador

are not buying what the Premier is trying to sell us here, because they know he

is selling them out, and they suspect the reasons why he is selling them out.

I see members opposite shaking their heads, but I will say to

them: There are those amongst you over there who do not support what your own

government is doing. There are those amongst you.

Now the conflict of interest - this is a bad deal, period,

but this whole conflict of interest flavour that is put on this has made it less

palatable for the people of the Province, when you have people sitting in a

direct conflict of interest at the Cabinet table, that has been admitted within

the last two or three days, that are all part and parcel of this.

Besides that, the Premier did not even take the time - he

said he did not think about it - to ask the five people who he wanted to advise

him - really that he begged to say to me, `please privatize', because that is

what he did. He did not even take the time to check to see if they were

shareholders in Fortis and that they, by privatizing Newfoundland and Labrador

Hydro, would benefit directly from the merger. He did not have the time. He did

not think about it. Well, I don't suppose he would because he is too close to

the situation himself, Mr. Speaker. That is the truth of the matter. He is too

close to the situation himself.

Mr. Speaker, we have had a number of, I would say numerous,

calls coming into our offices over the last -

AN HON. MEMBER: Was that one or two?

MR. W. MATTHEWS: Well, one or two, I say to the Minister

of Finance, but there have been many calls. As a matter of fact, in the twelve

years that I have been here I have never seen another issue that has generated

so many calls. When I was a member of government and for the last - too many

years, I don't want to remember, as a member of the Opposition but -

MR. BAKER: (Inaudible).

MR. W. MATTHEWS: No not even Sprung, I say to the

minister, not even Sprung. It is strange what triggers in people's minds when

they see something going on they don't like and they don't trust. They know it

is bad for them, particularly when it is something that they own, like

Newfoundland and Labrador Hydro - that is owned by the people of this Province,

a profitable corporation, a very positive asset for the people of this Province,

a very positive asset for the Minister of Finance and something that impacts and

reflects very positively, by the way, on the bottom line of Newfoundland and

Labrador, on the bottom line of this Province. I have talked to two people

myself - more than that but two people who I have talked to on this issue have

raised a question to me and they wondered if it is payback time, Mr. Speaker,

that is what they have asked me on the telephone. We always wondered, we have

been wondering since 1987, who paid the $50,000 supplement. We think we know now

they said.

MR. BAKER: (Inaudible).

MR. W. MATTHEWS: I am telling you what they said on the

phone, I say to the minister. I said to them: we have had our own suspicions

over the years, we asked the questions over the years but we could never prove

anything over the years and they said: we now know, it is payback time. That is

what is happening in the minds of Newfoundlanders and Labradorians because this

is a bad deal. This is a bad deal, I say to members opposite.

Mr. Speaker, the other thing that people have not liked about

this, is that for so long the Minister of Mines and Energy - I think it was on

three different occasions, at least two - was asked in this House about what was

going on with Newfoundland and Labrador Hydro and the denials came and came,

there was nothing, there was nothing, and then all of a sudden this great cloud

of secrecy had covered all of this and then suddenly we found out what was up.

Speaking to only one group behind closed doors.

AN HON. MEMBER: What group would that be?

MR. W. MATTHEWS: Fortis.

AN HON. MEMBER: Who else.

MR. W. MATTHEWS: Who else. There is no one else in the

country I suppose - there is no one else in the country I say to the financial

wizard who bankrupted the Mariners to such a point and degree that they will

never get out of the hole, I say to him. The only job he ever had before he came

in here was manager of the Port aux Basques Mariners and they will be in the

hole for the next twenty years, I say to the financial wizard. Now that is the

truth of it and that is over there trying to tell me and tell the government the

way they should be going with getting rid of Newfoundland and Labrador Hydro,

Mr. Speaker. You ask what is wrong with government members and members

opposite?... that is it in a nutshell because the Premier says it is best, Mr.

Speaker. I say to members opposite that what I have just told you is true, it is

the truth. The truth always hurts members opposite. It is the truth and the

member knows it himself. He knows how much the Mariners are in the hole since he

was their manager, I say to him.

AN HON. MEMBER: They never got it back.

MR. W. MATTHEWS: No he could not get it back.

Now, Mr. Speaker, the last couple of days the Premier has

been trying to put the spin on the story that Newfoundlanders and Labradorians

were aware of this because it was covered off in the Strategic Economic Plan

because it has been brought up about the mandate, they did not have a mandate.

Since he brought that up I had a look at the Strategic Economic Plan,

specifically under the

section dealing with energy, I say to the minister, and

from every indication you look at, from the strategic statement to the actions

the Province will - and so on, that the Strategic Economic Plan makes no

reference whatsoever to what government is attempting to do now with

Newfoundland and Labrador Hydro. As a matter of fact, Mr. Speaker, the Strategic

Economic Plan in the

section dealing with energy and actions would give anyone

who reads it the strong impression that Newfoundland and Labrador Hydro was

going to remain a crown corporation and carry on with its good work. Now that is

what you would glean from the Strategic Economic Plan, Mr. Speaker, nothing

else. Yes, read the budget. I tell the Minister of Finance that I am frightened

to death to read the budget.

AN HON. MEMBER: More tricks.

MR. W. MATTHEWS: I am frightened to death to read every

budget that the minister has brought in because each year they get more and more

depressing and each year his figures are more and more off base. His

projections, to this Minister of Finance, are even worst than the former

Minister of Finance's were. I stood in this House and I said that I figured that

the former Minister of Finance will go down on record as the worst Minister of

Finance ever the Province has seen. I'm very sorry to say - because he's my good

friend, he's my really good friend - that he is a worse Minister of Finance, and

his projections are far less accurate than the former minister.

So that puts the Premier's Strategic Economic Plan

insinuation aside, Mr. Speaker. Now there's not too much else they've got left.

They haven't got too much else left, have they?

MS. VERGE: The five wise men.

MR. W. MATTHEWS: Well, the five wise men. Well you see,

what you have to remember is that amongst the five wise men there was at least

one who was wiser than the rest. There's at least one who was wiser than the

rest. Because we now know that there are two former chairmen of Hydro who are

opposed to what the government is doing.

AN HON. MEMBER: Who are they, Mr. Abery and -

MR. W. MATTHEWS: You know the other one, don't you?

AN HON. MEMBER: (Inaudible).

MR. W. MATTHEWS: I see. Think for a change.

MR. ROBERTS: How can I think? I am trying to listen to

the hon. gentleman.

MR. W. MATTHEWS: It's hard for you to think. I can

understand. You've got so much on your mind these days I can understand you

being pre-occupied, I assure you. I can understand you being pre-occupied. All I

say to the Government House Leader and the Minister of Justice is, stay tuned

over the next four or five days and you'll be even more pre-occupied, I assure

you.

Mr. Speaker, the other thing the Premier's tried to do, of

course, is he's tried to say that it was the board of directors of Hydro, it was

the recommendation. Because you see he's been caught in the lie again. Because

the recommendation was not to privatize Hydro. The real recommendation to

government was: leave Hydro alone, it's most viable. Leave it as it is. Of

course, Hydro got permission. They went to the government and they asked for

permission to use government's own financial advisors, ScotiaMcLeod and RBC

Dominion Securities. That's who the recommendation came from. It wasn't the

board of directors of Hydro. The Premier said he couldn't accept what the

directors of Hydro told him because their judgement was coloured, was the

Premier's exact words. I read it at lunchtime. He said their judgement was

coloured. Their judgement was coloured because they're directors of Newfoundland

and Labrador Hydro. He couldn't accept that.

It wasn't the recommendation of the directors of Hydro. It

was a recommendation of the government's own financial advisors, namely

ScotiaMcLeod and RBC Dominion Securities. That's who made the recommendation.

Because Hydro had to ask government, by the way, could they use those advisors,

and government very wisely and correctly said yes. So it was government's own

advisors who advised them not to privatize. That's what happened.

What did the Premier have to do? He had to find someone else

who he could go out and court and said: come in and tell us to privatize.

Because I have to have someone to tell me to privatize because I don't really

want to tell the people that this is my pipe dream, which in essence it is.

AN HON. MEMBER: You've got it wrong.

MR. W. MATTHEWS: No, I haven't got it wrong, I say to the

Minister of Forestry and Agriculture. That is the truth. That's what happened.

MS. VERGE: But he couldn't even have persuaded all of

them.

MR. W. MATTHEWS: No, he couldn't. Not all of them agreed

with the Premier. He said it was a majority, and that could leave two to object.

We know there's one who objected, one has had a great deal of involvement with

Hydro in this Province. Very much so.

Mr. Speaker, this is what's happened.

MR. SIMMS: (Inaudible) know who?

MR. W. MATTHEWS: Yes, we know who. They know we know. I

said at the outset there are two former chairmen of Hydro that do not agree with

the privatization of Newfoundland and Labrador Hydro. We know Mr. Abery is one.

Everyone in the Province knows that. So you don't have to be too bright to know

who the other one is.

MR. SIMMS: Even the Member for St. John's South should

have been able to get that one.

MR. W. MATTHEWS: Well, yes, his former boss, he knows.

Former boss of the Member for St. John's South, he knows.

MR. SIMMS: One of the remaining four is waffling.

MR. W. MATTHEWS: Yes, waffling. So that's what went on

here. So every way the Premier has tried to turn on this issue, Mr. Speaker,

because he - if you follow him over the last two to three weeks, he makes

statements either at the Board of Trade, or in the House, or with the media one

day, and we have it in print. He will come on the floor of this Legislature the

next day and he will say he didn't say it. He has to correct misstatements. His

own words that are read to him, that Hansard is recording.

MR. SIMMS: Verbal trickery.

MR. W. MATTHEWS: Every time he stands to his feet - and

you know when you have the Premier, because the first thing he says is: I have

to correct the misstatements, the misinformation, that is put forward by the

hon. member. Everything he has been doing for the last three weeks -

MR. SIMMS: The last three years.

MR. W. MATTHEWS: But on this issue, the last three weeks.

That is what has gone on with this issue. The Premier has

been caught in a bad light on this issue.

MR. SIMMS: Rex hasn't helped.

MR. W. MATTHEWS: I feel sorry for the Minister of Mines

and Energy. I don't feel sorry for the Premier, but I feel sorry for the

Minister of Mines and Energy, because I believe he is a very decent, honourable

person, and he has not had any say in this. That is obvious.

MR. SULLIVAN: Lose his credibility.

MR. W. MATTHEWS: That is right. He is losing his

credibility on the issue, and it is too bad, but that happens. That happens when

you don't have the gumption to stand up and speak up for what you believe, I say

to members opposite. That is what is happening to all of you over there on this

issue, because it is a bad deal for Newfoundlanders and Labradorians, and every

one of you, whether in your offices in St. John's or out and about your

districts, are picking it up in spades. You are picking it up in spades that

this is a bad deal for Newfoundland and Labrador, and the people of this

Province are not going to accept it.

AN HON. MEMBER: (Inaudible) Sprung.

MR. W. MATTHEWS: Yes, they did not accept that either, I

say to the Member for Fogo, and they are not going to accept this.

MR. TOBIN: It didn't matter to the Fogo district in 1989,

Sprung didn't.

MR. W. MATTHEWS: No, Sprung did not make any difference

in 1989 to Fogo. You went out with a flick. You didn't win your seat because of

what happened to Sprung, I say to the member.

Put things in perspective. At least I am man enough to admit

that the people of this Province thought that the Sprung deal was a bad deal, I

say to the member, and the people of this Province think that what you are up to

now, as a government, is a worse deal, and they are not going to accept it. The

government knows that. The government is monitoring what is going on in the

Province. They are monitoring the press, the open lines, the television. They

know, and what they are at now is trying to turn it around, but it is too late.

It is too late. He cannot do it.

MR. SIMMS: The Member for Pleasantville is the only man

over there who might have some reservations. I understand (inaudible).

MR. W. MATTHEWS: Yes, I understand the Member for

Pleasantville might have some reservations about it, too, and knowing the Member

for Pleasantville, he will probably, one of these days, stand in his place and

speak his mind, and he will probably vote according to the way he feels, and not

the way someone else wants him to vote. That is what I say about the Member for

Pleasantville; and there are others over there, too, who are not too comfortable

with this.

Mr. Speaker, that is the bottom line on it. It is a bad deal.

It is not going to wash with the people. The Member for St. John's East, I

think, had a very valid point in Question Period today, that the Premier should

remove himself from the issue. The Minister of Justice should remove himself

from the issue.

MR. SULLIVAN: They should not have to remove them. They

should not be there.

MR. W. MATTHEWS: I know that, but they are there and they

have been there, and for this to go on for all those months, with people in a

direct conflict of interest sitting at the Cabinet table, it is absolutely - you

cannot describe words strong enough for it. It tells you just how rotten it all

is for this to go on.

Of course we saw the admission of it two or three days ago.

It was not people who were doing what they want to do with their shares. It is

too late to sell the shares now. You have been in conflict of interest for

months. It is too late to sell them now. It is too late to say you are sorry

once you have pulled the trigger. It is too late to put them in blind trust

thirty days ago and now three days ago say: I am going to get rid of them, when

you have been sitting there for five or six months participating. It is too

late, once you have pulled the trigger, to say: I am sorry for shooting you.

That is what has gone on with this issue.

AN HON. MEMBER: You are shooting the Chairman.

MR. W. MATTHEWS: No, I am not shooting the Chairman, but

that is the point, and I say to the Minister of Justice, how he can stand in his

place, and sit in this House, and sit at the Cabinet table -

MR. ROBERTS: (Inaudible).

MR. W. MATTHEWS: You can squirm all you like, because you

have been in a direct conflict of interest for months on this issue, and you

should get out of Cabinet.

SOME HON. MEMBERS: Hear, hear!

MR. W. MATTHEWS: If there was nothing wrong with it, why

did you put them in blind trust and why are you now selling your shares, I ask

the minister, if there's not a conflict of interest.

SOME HON. MEMBERS: Hear, hear!

SOME HON. MEMBERS: Oh, oh!

MR. W. MATTHEWS: A few days ago he told the media of this

Province that he was going to stay involved in discussions on this issue. Four

or five days ago. Two days ago he says: I'm now going to sell my shares.

MR. ROBERTS: (Inaudible)!

MR. W. MATTHEWS: Yes you did.

MR. SIMMS: You said Friday (inaudible), publicly!

MR. SPEAKER: Order, please! Order, please!

MR. W. MATTHEWS: (Inaudible)!

MR. SIMMS: I'm sitting around the table, I've never

traded them and I'm not going to, and all that stuff.

MR. ROBERTS: (Inaudible).

MR. SIMMS: Oh yes, squirm, squirm, squirm.

MR. W. MATTHEWS: Mr. Speaker, I will conclude by saying

this. That it's a bad deal anyway for an asset so valuable -

MR. SPEAKER: Order, please!

MR. W. MATTHEWS: - owned by the people of this Province -

MR. SPEAKER: Order, please!

The hon. member's time is up.

MR. W. MATTHEWS: - but to have it shrouded with such

conflict of interest, it would make you puke.

SOME HON. MEMBERS: Hear, hear!

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

The hon. the Member for Eagle River.

MR. DUMARESQUE: Thank you, Mr. Speaker. I'm pleased today

to rise in this debate and hopefully be able to take a different approach, and

indeed a different tenor than the previous speaker. Because I do believe that

the people of the Province are out there looking for the real answers on this

deal, and they know that the real answers are not coming from that side of the

House. They know that.

I want to talk about the role of government generally, and

obviously to talk about the role of this government in this particular deal.

We were elected not once, with a majority government, but

only a few short months ago again with a resounding majority government, because

the people had faith in us to do what was right for them. They put their

programme forward. They said: we are willing to do the best for you. They were

turned down, thumbs down. The people of this Province said: no, we do not want

the people who were there for the last seventeen years to do what they did to

this Province. The people of the Province said they want to put a government in

place that will challenge the status quo. They want to put a government in place

that will have the political courage to do what's right for the people of this

Province.

You would have us to believe today, if you were listening on

your radio most of the last couple of days, Mr. Speaker, that privatization is a

been talked about before. You would have us believe that it's certainly never

entered the minds of anybody opposite before. I must say that I think that it

was talked about before. As a matter of fact, back in 1986, March 24, I notice

one hon. member who came before the people of this Province and said: I'm

pleased to say that this action - on a move to privatize NORDCO Limited - he

said, I'm pleased to say that this action is part of government's ongoing

efforts to privatize government-owned companies wherever possible and feasible.

That wasn't the hon. Minister of Finance here today. That

wasn't the hon. Minister of Energy here today. That was the hon. Mr. Barrett of

the previous Tory government. Then again, in 1988, a member of the Crown, then

the Minister of Finance, comes before the cameras and says: we are going to do

what we have to do within government's policy of privatizing Crown corporations

and see that they are being constantly reviewed. That was the Member for Mount

Pearl, the Minister of Finance. That was nothing new. Neither is there anything

new today.

We are exercising our responsibility as a government to do

what is right to see that the people's money is spent wisely. We are willing to

have nobody to account to but the people for that. We have nothing to learn from

the members opposite, nothing at all. Here we have again in 1987 - a secret PC

Cabinet report advised privatization of government services -

AN HON. MEMBER: Who?

MR. DUMARESQUE: - advised, these are the people who were

working for the government of the day, the Senior Expenditure Review Committee,

the people who were the deputy ministers in that government, but they had to

admit at the end of the day, after pointing out that the government had

experienced windfall revenues from an improving provincial economy and increased

federal tax payments as well as declining interest rates and improved exchange

rates, the committee said the Province had failed to hold the line on

expenditures and that is the situation we are in today.

They bankrupted this Province, they borrowed the mortgages of

the people of this Province and told them that you are going to have to pay

forever and it took somebody with courage and conviction to come back into this

government to say: we are going to bring back the government of the day from the

depths, as far as the spending is concerned, we are going to rein it back to

where we know the people of tomorrow, my children and the other children of our

families out there, will have confidence that there will not be a day when the

knock comes on the door from the banker saying: sorry, the time is up, you have

overspent, you have overdone your limits and now you have to pay. That is not

what is going to happen as long as this administration is in power and you will

never see a secret document from this executive saying that we have failed to

exercise the political courage that we were given the responsibility to do by

the electorate and did what was in the best interest of the people.

I want to touch on some of the aspects that the hon. the

Leader of the Opposition touched on in his press statement awhile back, and I

want to talk about what the Premier has said on this issue. Mr. Speaker, we have

said clearly at the outset that what we are doing is reviewing the operation of

this corporation as we are many others, to see if we cannot make an effective

and more efficient use of the dollars that we are putting into these, either as

rate payers through the tax system, or as government directly, and nobody has

ever said that Hydro was not part of that review, nobody has ever said that we

would never ever have a look at Hydro or any other corporation of government.

As a matter of fact, Mr. Speaker, we have certainly taken on

the responsibility and exercised it to the point where we are now asking for the

merits of that proposal to be looked at, that is all we are doing, and the

Premier stood up in this House and he stood up in the Board of Trade and said

that if this deal is not the best deal for the people of this Province, it will

not be done, and that is our responsibility. The taxpayers of this Province

would expect no less when we have an opportunity to try and recover some revenue

so that we can have the kind of health care system that we want in this

Province, the best in the country, so that we can have the education system in

this Province, the best in the country. We want to be able to have that

flexibility, therefore we want to be able to get control of any revenues that

may be out there that we could use for those things that I mentioned.

Now I know that many people out in the public, many people in

my riding have expressed concern about what would happen if Hydro was just given

over to Fortis and allowed then to go on its merry way and if it had a million

dollars of expenses, it would go and charge the taxpayers and the consumers of

the Province a million dollars to recover. Obviously, in a diesel generated area

like on the coast of Labrador, many people would say, well, that would not be

fair. Surely then they would be making us pay another 30, 40, 50 per cent in

their rates and that fear - there is nothing wrong with people asking those

questions but it is because of the statements coming from members opposite, that

they are asking those questions, but there is absolutely nothing wrong with them

asking the questions but what I have said to them and when I have said it to

them, the people shook their heads in disbelief that they were getting such

misleading statements from members opposite, because they know that this

government is there to protect their interests as we did just a year or so ago

when we told the Public Utilities Board that there would no 10 per cent increase

in Hydro rates. The first time in history that was ever done and it was done by

this government, a Liberal government. It was never done over there, I can

submit to the people of this Province. That was the kind of direction that we

gave to the people, that was the signal that we have sent to them and the

Premier has already outlined that the Public Utilities Board will be there, it

will still be there to take the evidence.

It will still be there to protect the consumer. We know that

it has worked. We know that it has worked with the telephone company. We know

that the rates have been kept in line even though they are out there with a

private monopoly in that particular area. We know that these rates have been

reasonable, and we know that the rates will be reasonable when it comes to

having a new company offering the electrical services to this Province. We also

know that we have an obligation to reduce the debt of this Province. We also

know that it is imperative that we get a handle on the debt of this Province.

We have a situation today in many rural communities in this

Province where we are trying to get the education system in shape and up to the

standard of the rest of the Province, and indeed to the rest of the country, but

we know that it does not happen without money. We know what has happened to

other provinces. The great Ontario government have recently had their credit

rating reduced. The very powerful government of Quebec have had their credit

rating reduced. We have seen others who have had their credit ratings reduced

and we must uphold the right of every citizen in this Province to know that we

are out there trying to do our best and to make sure that the money we are

borrowing we are going to borrow at a rate that is reasonable and in the public

interest.

We have to do that, and for people to try and give the

impression that this will not benefit the credit rating policy of the Moody's of

the world, or the Standard and Poor's, that is absolutely wrong. Surely, one

does not need to have a PhD in economics, or anything else, to know that if you

go to a credit agency with $6 billion on your books as owing to somebody, and

you go to them with $4.8 billion on your books as owing to somebody, that they

are going to take a different view of your credit situation, your financial

situation, and therefore be able to make a decision obviously in your favour if

there are less debts on the books, Mr. Speaker. It is imperative that we put

this as a major priority. We have been leaders in this Province and leaders in

this country in this respect. We were the first government who went to the

people with the truth. We were the first government, and this Premier was the

first statesman in this country to stand up and say: if you elect us we will do

whatever has to be done to bring the finances of this Province back in order so

that we can protect the future of your children and the system of education and

health that we are so proud of in this Province. It was us.

The people opposite said: do not worry about the deficit. The

NDP, of course, went on their total socialist vent and said there was no need to

worry about the deficit. Bob Rae just did it up there and he is not having any

trouble - do not worry. Mr. Simms is saying the same thing. He went to the

people and said: Not to worry. We can borrow our way out of this. Well, the

people listened and the people considered the views of the NDP and the

socialists. The people considered the views of the Conservatives, but when it

came down to election day, when people had to decide who they were going to put

their trust in they turned to the party, they turned to the leader, they turned

to the administration that had done them good for the last four years, and gave

them good government, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. DUMARESQUE: I would say to the people of this

Province, if you believe we are going to take the trust that you have given us

only five short months ago and betray that so flagrantly in this particular

situation then obviously there is no good for us to talk to you. For the people

of Eagle River to come to me tomorrow and say to me that you are going to do

this to me because you fundamentally believe that somebody should be help out

financially, that will never happen, Mr. Speaker. That will never happen because

the people know they have given us their vote of confidence. They know that we

have a record that we can stand proudly on and show the people of this Province,

and indeed the people of the country, that we have made the best possible effort

with the financial ability that we have to do the things that are in the best

interest of them.

So, Mr. Speaker, I say to the people of this Province and to

the people opposite, that we are in trying financial times. We are in a

situation where health, education and government services are being pinched to

the limit because all economies of this country have been reduced, the

international economy has been the same and, Mr. Speaker, all governments are

using their heads to try and do what they can. But the people must know that

while we are confronted with the financial challenges we are not going to be the

dinosaurs of yesterday, put our heads in the sand and ignore the problem, we are

going to deal with it as they have entrusted us to do, Mr. Speaker. When they

want the dinosaurs back I am sure that they will ask for them, Mr. Speaker, but

it was only a few short days ago that they wrote the book on the Conservative

Party, it was only a few short days ago. I know that the Leader of the

Opposition would like to have a new button that he can pat on his chest, I know

that the pink and yellow button was not very good for the last few months. So he

needs a new button, Mr. Speaker, and that is what it is coming down to. The

Leader of the Opposition is trying to save his political neck, he is looking for

a new button and that is the only issue here today. He is looking for a

political issue, Mr. Speaker, so he can stay alive!

SOME HON. MEMBERS: Hear, hear!

MR. DUMARESQUE: That is right. He knows that the demise

of the Tory Party is but another election away and he needs that issue as much

as he needs anything else in this world. He knows that the Cy Abery's of the

world are out there looking down their nose at the job in the chair, Mr.

Speaker, he knows his time is due. In five or six months he will be gone. He

needs now to have the rallying cry. He does not care about the emotions of the

people, he does not care about the welfare of the people, Mr. Speaker, he is

concerned about his own political skin and that of his Tory cronies sitting next

to him, and let that not be lost on the people of this Province. This is nothing

more than a political sham, Mr. Speaker. The people of this Province know where

we are, they know what we have been giving, Mr. Speaker, and they know that in

the future they are going to be able to look again with pride at our record and

be able to say: they did the same thing, the did the right thing, they did the

best thing for the people of this Province, and we are going to give them a

resounding vote of confidence again at the next possible opportunity, Mr.

Speaker.

Thank you very much for you time, Mr. Speaker, and I look

forward to the rest of the debate.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Leader of the Opposition.

MR. SIMMS: Thank you, Mr. Speaker.

As always the Member for Eagle River gives an excellent

performance but he does not usually say very much of a substantive nature.

Having said that, I commend him on his performance. It was one of the better

ones.

Mr. Speaker, that is the second most significant contribution

today from the government side in the debate in this - what has now become known

as `Clyderow' as opposed to -

SOME HON. MEMBERS: Oh, oh!

MR. SIMMS: What has become really interesting, Mr.

Speaker, is that I see from members opposite, from their interruptions and their

gibes across the floor, it brings back memories, honest to God, it brings back

memories to me from the days when I was sitting in the dying days of a

government which had become so convinced in its own mind that nothing they could

do would turn off the public and turn off the voters. That is how we felt. We

got cocky and we started shouting across the floor: you are in demise, you are

going to lose, you are not