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1"\ay 271 1982 The ~ouse met at 3 :00 P.M. Mr . Speaker in the Chair. MR. SPEAKER (Rusr-;~.J-11....: '1\tpC 670 'I'll•• hnn . l'l'l'lllit•l . I'K - I Order, pleas<.'! PREMIER PECKFORD: M~. Speak~r, it is with a great deal of sadness thut I rise iP my· p r.••."l' and I know that the day is cne not relegated necel'::-<t d 1:; Lu me but to the t-hnister Gf l!'inance (Dr.

ColJ ins ) an<.! th• budgetary initiatives of the government for the yea - IJnt I think after consultation ,.,ith the Opl?osition there was unanimous agreement that I could rise in my pl.:~cc .';lr tla1r: time and express on behttlf or ull non 0 lll<:!lllbt•rs uur condolences and sympathy in the passing of Mr . Harvey Co1e last night and to propose that a message from this House go for\.,ard to his family . i guess there is nobody lvithin th<' reach of my voice who has not knmm or h<.wrd of Mr. co I<' in his involvcmt.~nL in [.>ubl.it: life lll Lhit; Pt,>vittt:\! f<)l' II'.JII Y · many years .

His last post was that of Chief Eloctoral Offtn~r for the Province in Hhich he distinguished himself as an obJeCtive, reasonabl e officer in that capacity. And b~forc th..tt into many, many capacities within the public life of the Province. So, P..r. Speaker, without d1.d..1y iny Lhc.! na LurO'.l 1, of fici.ll pn>cccdinys or l o<l,t )' I would like to go on record personally ana on behalf of members on this side and I am sure I speak for the members on the oppcsi te side in pas.sing along condolences and sympathy to the family of Mr .

Harvey Cole in this their h<)Ul" of bcrcovcmcnt nnd pil!~s on ()ur sint.;<'rl' r · ondnl•'llt:•''~ to a gentleman who has contributed much to the public life of this Province over the last number of decades . 1 4u :·~

~1.!y ')7 I I 1JA2 'P;1p c 670 PK - 2 ~m..:_§PEL\KER (Russell) : The hon. Leader of the Opposition . ~\H . N&~RY : -··--- r-t.r. Speaker, >vJ< ' support thC! motion so ubly put fon..rard by the Premier on the passing of an outstanding Newfoundlander in the person of Mr. Harvey Cole . I personally knew Mr . Cole fairly well , I 1·1ould say, and al\.-ays found him to be a ver y sincere , dedica te:l in dividual, an outstanding Ne~1foundlander, Hr. Speaker, and :.;e support the motion made by the Premier that an expression of sympathy go out from this House to the family and celiltives and friends of the late Mr .

Cole. MIL S[')·:{l !_{~:!( : Order, please! The hon . t-linister of finance . SOMC: HON . MEMBERS : Hear, hear ! DR . COLI.>IN§ : Hr . Speaker, I move that this !louse resolve itself into a Committee of l'lays and Means and ~~l the Speaker do now leave th~ Chair . • , 11 lj ""

May 27, 1982 Tape 671 TM - l MR. SPEAKER, It is with a great deal of pride in our People that I present to this Honourable House of Assembly the fourth Budget of the Peck ford Administration. It is the first Budget since the citizens of our Province so overwhelmingly endorsed the policies of this Government in the General Election of April 6th.

Considering the troubled economic times in which we live, the resounding victory at the polls must reflect a remarkable degree of trust by the Newfoundland People in an Administration which had laid no claim to magical short-term solutions to the economic issues confronting us, most not of our own making. The powerful mandate bestowed by the voters represents a strong vat~ of confidence for Government's unrelenting dr!ve to rectify the inequitable treatment of our Province within the Canadian Confederation. It said much for the character and enduring nature of our People, Mr.

Speaker, that they would rise so readily and wholeheartedly to the challenge which was placed before them in such unequivocal terms. The renewed mandate given the Peckford Government is not only _ a great opportunity but also a great responsibility. We must continue the struggle to provide and improve upon the level of services and the opportunities for development which our People unquestionably deserve. For we must never lose sight of the fact that our rightful advancement within Confederation will be accomplished only when we obtain a legitimate share of the benefit .~ from our resources . · Mr.

Speaker, the pace of economic progress in the short-term is not solely ours to determine. We know we must contend with the national and international economic environments and their influences on our Province. As my colleagues and I worked through the budgetary process, commencing last November, we saw the North American economies slip into recession. We watched interest rates soar to unprecedented levels stifling capital expansion.

We saw the strongest industrialized nation in the world, the United States, struggling to get its deficit under control, even at the cost of serious reductions in services to the American people. We witnessed the U.S. unemployment rate climb to its highest level since the Great Depression while some of the largest industrial enterprises in the world were forced to suspend production for periods of time and propose wage reductions in an effort to provide job security and sustain continued viability of their operations.

We have seen the consequences of the U.S. economy in recession overflow the international border and pull down the Canadian economy which is so intertwined with that of our great neighbour to the south. Exacerbating the Canadian condition have been stubborn inflationary influences, partly resulting from misdirected economic management. 14us

In Canada, Mr. Speaker, the moncrary lev ers which contribute in a significant way to the climate and direction or economic activity are controlled by 1 he Federal Clovcrnment. Provincial Government s are left to grapple with the fall-out for husincss, labour and other<; in their economics. Over the past yca1 we have wit11csscJ an ant i-inriationary policy ~.:haracteriz:cd by prolonged and largely <;inglc-mindcd relian~.:e on tight money supply and high interest rates being pursued without visible sensitivity to down-stream effects, even in regions of weaker economic base. Mr.

Speaker, it is now clearly apparent that the energy and industrial strategies followed by the Government of Canada arc effectively fueling recessionary forces without controlling inflation. The n"ews or the cancellation of the Alsands, Alaska pipeline and Cold Lake projects all stand out as stark examples of self-destructive Federal strategies. Mr. Speaker, it comes as no surprise that Newfoundland and Labrador L·annot insulate itself from these economic forces, nor can we, by ourselves, reverse them.

However, this Province does possess vast treasures of under­ developed natural resources which can significantly and beneficially impact upon them. All we ask is to be allowed, as good Canadians, to get on with the work that should be done. Rather than throw obstacles in our path, we ask the Federal (lovcrnment to extend the hand of understanding and co-operation as we reach lo altain the Canadian a\cragc in quality of life and contribute a fair share of mn natural endowments to the national well-being. We were led to believe that is what Confederation is all about. As well as economic conditions, Mr.

Speaker, our Budget must address I he pre~cnt financial realities of 1 he Province . While we wrestle with the ongoing pre.~'>lii"CS of inrlation on our expenditures, and the many legitimate needs to expand public services, we have to cope with rccessionary impacts of the national economy on our provincial revenue base and ~..:oncurrentl y deal wi th major revisions to the revenue base fwm federal o:;ources. We have had to be guided by fundamental principle~ of responsible financial management in reconciling conllicting budgetary pre.<;surcs.

The essential challenge was not so much to ma tch 1 he Canadian average as the standard for our public services, but to find the means of preserving tho.~e we currently supply. Mr. Speaker, (iovernmcnl had thus to confront the 1982 Budget with the firm resolve to arrive at an expenditure and revenue balance which best reflects hoth the genuine concerns of the People and the financial capacity of the Province. As I have already stated, a Provincial Budget in Newfoundland and l .abrador cannot be expected to counteract all of the economic forces of recession.

It can, however, establish a framework to ensure that available Government dollars converge upon areas which are likely to contribute most to the .~trcngthcning of economic activity. We have taken care to adopt that approach in this Budget, and are confident that the stimulus to be rjrovided by the public '14 0 6

May 27, 1982 Tape 671 TM - 2 sector capital inve stment program, which I will outline shortly, will play a critical role in accelerating the rate of economic recovery from the current recession. Before proceeding with the details of the Budget, I would like to review briefly the economic performance in 1981 and the outlook for the Province in 1982. ECONOMIC REVIEW Newfoundland entered 1981 with im upswing in economic activity . Employment in the Province expanded as the levels of industrial output picked up, and consumer spending showed signs of recovery from restraineu level s in 1980.

However 1 these encouraging economic signs were short-liveu. Canadian and American interest rates, which were falling in late 1980 and early 19R I, quickly reversed their trend and started to climb again in response to the tight monetary policies of the respective Governments.

The Canadian economy's initial resilience in the face of a 17o/o bank rate early last year dissipated by mid-year as the rate dim bed to over 21 %. ln Newfoundland, the high interest rates affected most severely the !"ish processing and residential construction industries as well as those busincssc~ involved in the sale and purchase of interest-sensitive goods and services. The fishing industry was troubled as well by depressed market~ and a poor inshore fishery.

There were, however, ~ome bright spots in the economy during tlu.: year and the Province did record a 2.2° /o expansion in real Gro~s LJomest ic Product for 1981. This was based in large measure on increases in newsprint production, partly due to the start-up of the new Stephenville mill; in creased mining output; and expansion in offshore oil and gas exploration activites. Employment grew during the first seven months in 1981 with strongest growth recorded in the primary, manufacturing, trade and public administration sectors.

Slight declines were experienced by our construction industry and by the transportation, communications and utilities sectors of our economy. After mid-year, the level of employment fell in both the fish processing and construction industries while the service industries still experienced modest growth rates. Overall, the yearly average number of employed persons increased by 3,tiOO; from 184,000 to 187,000; while the labour force grew hy 5,000 persons. As a result, the official unemployment rate averaged 14.1 OJu ror the year. ECONOMIC OUTLOOK Mr.

Speaker, as with the rest of North America, the recovery from the current recession in Newfoundland and Labrador is expected to begin during the latter part of 1982 . Throughout the earlier part of this year, markets for "1 :.~ Q 7

our major exports- iron ore, newsprint and fish 'producls- will remain soft, reflecting the dcpres.~ed state of the economics of the United States and our various other trading partners. While it will require several months to re-establish the momentum of economic growth, some encouraging developments have taken place on the international economic horizon. Inflation has begun to decline significantly in the United States and in Europe, and international oil prices have fallen and may now stabilize for a period of time.

Very soon there should be some room l'u1 l·orcign Government<, to begin t() case t~e economic restraints presently in j1lacc. This would have the crreet of improving the demand for Newfoundla.nd's exports and stimulating recovery in the resource sectors. Offshore cxrloration activity is continuing at abour the same level as in 19g1 with drilling going ahead on the Grand Banks and the northern offshore areas. The minerals sector, on land, will also benefit from a high level of explor<i.t ion activity in 1982.

In addition, representatives of the Provincial and Federal Covernments arc currently involved in negotiations with Transpacific Corporation wit.h rc~pcct to the asoestos mine ncar Baie Verte and it is hoped that these negotiations will result in the reactivation of the mine later in the year. Investment in comtruction activities is projected to grow <;omewhat in 1982, mainly on the strength of increased spending by Government on new public infrastruct urc, and by Crown agencies, particularly Newfoundland and Labrador Hydro.

The rate of inflation has begun to decline, and the overall level of personal income will begin to benefit from the increase in employmenJ later in the year. We believe that consumers may continue to hold off on major purchases until the recession is perceived to be ending and until interest rates begin to fall. At present, a larger than normal share of personu.! income is being directed into savings, partly as a hedge against economic uncertainty and partly a response to high returns paid on savings deposits. As the recession ends, pent-up consumer demand will be released, and this should aid the recovery.

It is expected that the Province's real Gross Domestic Product will remain constant for 1982 in comparison with 1981. This will be due to a substantial drop in production in the iron ore portion of the mining sector. Nevertheless, other sectors, including the fisheries, forestry and construction sectors, should show a modest improvement over last year leading to some growth in employment. With the expected strengthening in export markets toward the end of the year, the Province should be in the early ~tagcs of recovery as it enters 1983. FINANCIAL PERFORMANCE Mr.

Speaker, as Minister of Finance since March 1979, I have had the opportunity to report to this Honourable House on the results of our continuing efforts as an Administration to pursue sound financial management policies. This Government has been firmly determined to achie'. c a positive balance in ·t 4 DB

During the 1981-82 fi~cal year, the Province witnessed pressures on our budgetary position unprecedented in recent years. Expenditures were brought under pressure by inf1ation, wage settlements and high interest rates. Provincial revenues were depressed as consumers found their dispo~ablc incomes being squeezed by interest rates and by the impact of the economic slowdown. The private business sector also struggled under the burden of high interest rall:s, and deferred new investment decisions.

The slowdown of economic activity was most apparent in the level of Retail Sales Tax receipts which by year-end were nearly $29,000,000 below Budget. When evidence of these factors began to emerge and accelerate last htll, Government intensified its financial restraint dforts and imposed add it i~)nall:t lsl­ saving measures in order to minimize the influence ofthesc negative trends.

This effort, coupled with positive adjustments in transfer payments and favourable va~iances in Provincial Income Tax receipts, enabled us once again to accomplish o1,1r important financial objective of a balanced Current Account for 1981-X2. Mr. Speaker, Government looks back upon the financial results for 1 he 1981-82 fiscal year with a genuine sense of accomplishment and satisfaction particularly in view of the economic environme .nt in which we had to function. I will now turn to the hudgetary outlook for the 1982-83 fiscal year.

BUDGETARY POSITION 1982-XJ While unfavourable ec01wmic conditions have created financial difficulties for governments generally, for Canadian provinces in IIJR2 -H3 these difficulties have been aggravated by cutbacks in Fcderaltramfer payments. In n:cent wed.s, Mr. Speaker, sister provinces have been compelled to bring in hard line hudgl'ls, containing tight expenditure restraint, heavy tax increases and in some cases wage guidelines. Even in the face of these measures, Mr. Speaker, there exist:-, ~till a troublesome growth in the volurne of deficit financing by Governmcnh in Canada.

Newfoundland and Labrador is presently weathering many of the same economic difficulties as our neighbours. In some rc-.pccls, historically our economy might not be considered as strong as others because ours is 111orc narrowly based and heavily reliant upon three or four ma_lor indilstnes. However, we must be ever aware that we have not yet even begun to approach the rcalizat ion of the massive economic capacity inherent in our resource wealth .

This Government remains sharply focused on the need to develop this capacit y in a carefully planned manner and thereby broaden and solidify our financial base in order to secure the prosperity of the Province over the decades ahead. In the short run, however, we have committed ourselves to live within our means while we diligently work toward the attainment of these righl ful goals . "] 4 (; 9

May 27, 1982 Tape 671 TM- 3 our Current Account, and it has reinforced that determination in each successive Buuget. In point of fact, in the two fiscal years leading up to 1981-82, we achieved a greater degree of success than projected at the beginning of each blJ.dgetary period. In my first Budget on July 19. 1979, I forecasted a Current Account surplus or $10,800,000 for fiscal 1979-80. By year end, we actually had achieved a surplus of $41,600,000. In 1980, a surplus of $12,500,000 was budgeted but as the Public Accounts just released for the 1980-81 fiscal year show, a surplus of $49,200,000 was accumulated.

These very positive results effectively reduced our borrowing requirements during the two year period by over $67,500,000 from the level originally thought necessary. Mr. Speaker, today, in the midst of national and international economic turmoil, I am again happy to report to this Honourable House that revised estimates indicate Current Account for fiscal 1981-82 will maintain a positive halance which will result in a $4,500,000 contribution to our Capital Account.

By way of comparison, 1\"ewfoundland and Labrador was successful in achieving Lhis position in a year when many Canadian provinces reported high deficits. Table I summarizes the revised estimates for 1981-82 compared with the budgeted position. TABLE I

SUMMARY OF 1981-82 FINANCIAL PERFORMANCE 1981-82 1981-82 Budget Revised Variance ( 'urrcnt Accmmt: $ $ $ (;ross Expenditure 1.504,'}5l\.000 1,506.060.000 1.102,000 Relalcd Rcvcnue 161 .60J,OOO 144.965,000 ~.638,000) Net Expcnditurc I.J4J.J55.000 1.361,095.000 17.740,000 l·l·dcral and Provincial Revenues 1.35.~ . 758.000 1.365.619,000 II ,861,000 l'ontrihution to Capital Account 10.40.1.000 4,524.000 (5.879,000) Capital Account: (;ross Fxpcnditure 222.977.000 196.861.000 (26.116.000) Related Revenue 66.470.000 41,553.000 (24,917,000) Net Expenditure 156.507.000 155,308.000 ( 1,199,000) I css Contribution from Currcnt Account 10.403.000 4,524.000 (5,879.000) Total: Budgetary Requirement 146.1 04.000 150.784.000 4,680,000 Non-Budgetary Transactions Dcht Retirement 112.913,000 115,738.000 2,825,000 Tolal: Financial Requirement 259,017,000 266,522,000 7,505,000 .1 4 1 [l

May 27, 1982 Tape 672 TM - l Mr. Speaker, let me now deal in somewhat more specific terms with our budgetary plans for the 1982-83 fiscal year. I am most pleased to announce that the Peckford Government, for the fourth consecutive time, is again budgeting for a posilive balance on Current Account in the new fiscal year. At the same time, it is a matter of considerable satisfaction to report that the Budget also contains a carefully considered expansion on Capital Account in order to provide a resuscitative measure for the Newfoundland economy.

In actual figures, the 1982-83 Budget projects a Current Account surplus, or contribution to Capital Account, of $5,400,000. Net Current Account expenditures and revenues are forecast to grow by approximately 12. 90/o over the 1981-82 revised level. Gross expenditures on Capital Account will increase by 28.907o over last year's revised level to a total of $253,700,000. The net budgetary requirement to be financed by borrowings is $168,200,000. Table li provides a comparative

summary of 1982-83 budgetary position. TABLE II COMPARATIVE

SUMMARY OF BUDGETARY POSITION 1982-83 vs. 1981-82 Current Account: Gross Expenditure Related Revenue Net Expenditure Provincial and Federal Revenues Contribution to Capital Account Capital Account: Gross Expenditure Related Revenue Net Expenditure Total: Budgetary Requirement Debt Retirement: Redemptions Sinking Funds Total: Debt Retirement Total: Financial Requirement 1 4 ·1 ·1 Estimatt.•s 1982-83 $ I, 7 18.730,000 182,676,000 1,536 .054,000 I ,541 ,4.60,0<]_!) 5,406,000 253,670,000 80,016,000 ---- 173,654,000 168,248,000 135,383,000 32,814,000 168, 197,000 336,445,000 :-=..=....-=-:-- : Revisl•d 1981-82 $ I ,506,060,000 144,965,000 I ,361,095,000 1,365,619,000 4,524,000 196,861 ,000 41,553,000 155,308,000 150,784,000 87,096,000 _28,642,0~0 115,738,000 266,522,000 -===..;;:----

FISCAL ARRANGEMENTS Mr. Speaker, bcfon: commenting on the details contained in today's Budget, would like briefly to review the status of Federal/Provincial Fiscal Arrangements. As these arrangements, between the Province and the Government of Canada, govern approximately one-half of the revenue base of this Province, they occupy a po!->ition of critical significance in our fiscal framework. As Honourable Members are aware, the Federal Fiscal Arrangements Act cover., 1 ransfcrs from the lll>vcrnment of Canada under Equaliz~tion and Fstablishcd Programs Financing.

The purpose of the Equalization prograt~ is to ensure that each province in Canada hast he fiscal capacity to maintain levels i.>i· basic public services, comparable io the national average, without resorting to unduly burdensome lcvch of taxation: The Established Programs Financing .1\rrangelllcnts support expenditures on hospital insurance, medicare and post­ secondary education. The Fiscal Arrangements Act (1977), in effect for the past five years, expired on March 31, 19R2. A n~.:gotiat in g. process for a new five-year Act commenced, belatedly, last Fall, subsequent to the November 12th Federal Budget.

Honourable Member~ will recall that the Federal Budget initially proposed substantial cutbacks in both the Equali/ation and Established Programs entitlements from the levels which would follow from a continuation of previous arrangements.

Such proposals by the l·edcral Government raised deep concerns that the Government of Canada was seeking tn transfer its own budgetary deficit onto the provinces and moreover, raised the spectre or widening provincial and regional disparities -a direct contravention of the spirit and intent of the principles or Equalization which only last month were enshrined in the Canadian Constitution. Let us take a closer look at the major comp-.)nents of those proposed fiscal arr angemcnls. Equalization Fir~t. Equalization.

The Ciovernment of Canada proposed replacing the wdl-tcsted ten-province national average standard formula under which we had been operating, with a one-province, Ontario-based standard which would have substantially reduced the stability of future Equalization payments. In addition, various ceilings on Federal expenditures under the Equalization formula were to he imposed.

Moreover, the treatment of resource revenues under the new formula threatened to penali/L " unduly those provinces, ~uch as Newfoundland, which have large natural resource sectors but which do not gene;·ate proportionately large amounts of economic rent. After many months of intensive negotiations, the Government of Canada finally agreed to withdraw the unstable and inequitable 0ne-province standard 11-+ i ~

May 27, 1982 Tape 672 TM- 2 and replace it with a five-province '.tandard of Equalization. This formula, along with '>Ome other change'> of a more minor nature, has now been included in a new five-year Fiscal Arrangemcnh Act. During negotiations with the I·ederal Government, in company with other provincial Finance Ministers and Treasurers, we pOinted out anomalous features within the Equalization formula which create particular inequities for Newfoundland. The mo~t serious of these is the treatment of water power rentab.

By way or explanation let me state that a province's ~hare of Equalization from this revenue source i'i based upon the volume of hydro-electricity generated in that province. Thi'> hydro-electricity generation revenue ba\c in the ELJualit:\lion formula is designed to rcprcsen t the pro vi nee's capacity to rai.~c ccnnolllic rcn t frOlll this source. lJnlO!tttnatcly, it doc'> not mea\trre til._· rcVL'ntrc~ adu;rlly received.

Thi~ means that, not o11ly doc-. our Province fail to derive any meaningful revenues from the Upper Churchill because of the unconscionable power contract with ()ucbec, but, to add insult to injury, the relatively large volume of electricity which we produce reduces our Equalization entitlement-. by about $1 X,OOO,OOO per year. During the negotiations, we were successful in getting the Federal Finance Minister to recognize and acknowledge this anomaly and he has indicated a willingness to work with us towards an early remedy.

Other more technical modifications to the Equali;ation program arc also in the process of being negotiated with the (jovernrncnt of Canada, ~on1c of which hopefully will result in additional improvements in our Equalization entitlements. With these changes, the level of Equalization transfers for this Prmincc is now estimated to be $548,000,000 compared with the initial 1-"cderal Budget proposal of $5 n,ooo,ooo. Established Pro~rams Financing Mi·.

Speaker, in its November 12th Budget, the Federal Government proposed fundamental ~evisions to the financing dnd prograin attangcmcnts for health and post-secondary education. They eliniinated entirely the revenue guarantee C()mponcnt oi" Established Programs Financing which was negotiated as a vital part of the arrangements in 197'7. Also, they sought to implement during the next year or so, new, and as yet undefined, Federal/Provincial arrangements for the financing of post-secondary education.

Further, they wished to establish expanded national standards for health care along with criteria for enforcement before the end or the current fiscal year. As a result, provinces have now been put in the position of receiving reduced funding for health and post-secondary education without knowing the financial implications of upcoming negotiatiom. 'l ~~ ., j

I arn sad to ~ay, Mr. Speaker, that the Federal Government has '>0 far proven to he totally inflexible during negotiations aimed at effecting changes of a more rc;t.~onablc nature. In

summary, the Federal Government intends to reduce. its financial involvement in the Established Programs, and, at the same time, to increase its control over spending and program areas of Provincial jurisdiction. I want to assure Honourable Members that over the months ahead we will negotiate in a forthright rash ion with the Government of Canada regarding standards and prpgra!n conq!tion~ ror post-secondary education and health care, and that we wi'll exert c~e,:y effort possible to ensure that the People of this Province will not have to sacrifice any of the benefits they presently enjoy.

The level of cash payments to the Province expected in this fiscal year under the Established Programs is $155,000,000; an actual decrease of $9,000,000 from the 19RI-82 receipt~. It is worth noting that a continuation of previous arrangements would have yielded in 1982-83 a grant of $175,000,000; or $20,000,000 more than the level now expected. Mr. Speaker, the Government of Newfoundland is gravely concerned over the reduced level or funding for the Established Programs.

At a time when high inten:st rates and inllation. as well as low levels of economic activity, are seriously limiting growth in tax receipts from provincial sources, the lower-than-expected revenues under the Established Programs Financing arc especially distressing. The cut of $20,000,000 from the payments we would have been entitled to receive und1:r the program as it existed prior to April 1st, 1982, means that, in effect, our receipts from Establi<-hed Programs in 1982-83 will decline by 5.5% .

This must be contrasted with a growth rate racing us in expenditures for health and post -secondary education which is in excess of !4<T /o. BUDGETARY MEASURF:S Mr. Speaker, it is dear that the fi.-;cal arrangements situation I have outlined has exacerbated difficulties ari~ing out or tile gC11eral el·onomic situation. In order to eradicate the p<.>tcntial budgetary sllortfall, Government's approach in the first instance was a general scaling -down of all departmental expenditures.

However, this alone proved insufficient and it thus became necessary to cut more deeply into certain Government programs and as well to implement measures to strengthen the provincial revenue base. Faced with such a situation, we considered increasing the Retail Sales Tax rate as two provinces have done recently in like circumstances. This, we rejected. We reviewed the concept of a Health Insurance Premium currently existing in three provinces and costing families up to $500 annually. This, also, we rejected. ·1 4 i 4

May 27, 1982 Tape 672 TM - 3 We looked at imposin g a Payroll Tax as presently enacted in ()uchcc and as just announced in Manitoba, Again, rejected. We considered increa sing the rate of Gasoline Tax, but decided against so doing. On the expenditure side, we examined the possibility of revising dowm vard the University Student Aid program to the level current in other Atlantic Provinces, but ultimately determined to maintain the extra advantage ttl our own students.

We considered dosing 400 active hospital beds in vat ious areas t ilrou ghout the Province, but we decided to avoid that option as well and to seek altcr 1wtivcs for which the rationale is stronger. Revenue measures In reaching final decisions on the budgetary measures to introduce, Government took care to avoid those which arc regressive in nature in favour of measures whereby taxpayers who arc more able to pay, pay most; and those less able to pay, pay least. As well, where possible we aimed our thrusts for the gathering of additional rc\'cnues at purchase~ hy the public which arc discretionary in nat urc.

Accordingly, Mr. Speaker, I wish to announce the following fiscal measures: • The effective rate of Provincial Personallncomc Ta:-; will increa'>c by 20/o , with effect from July 1st, 1982. This increase will have a very modest impact on the low income earner. For example, a married taxpayer on an annuai income of $15,000; supporting a spouse and two children, will only pay an extra $16 a year. A person in tilL' '>ame family circumstances earning $25,000 per year will pay only an additional $54. A like person earning $35,000 will pay an additional $102, and so on up the scale .

I should point out that for 1982 the impact on the taxpayer will only he one-half the amounts which I just quoted. This measure wi II yield some $6,000,000 in 19R2-83 and represetll s l he first increase in the Personal Income Tax in five years . • The Newfoundland Liquor Corporation has been requested to illl-rcase its prices to provide an additional $5,500,000. • The Tobacco Tax will be increased immediately by an amount or J(N on a package of 20 cigarettes and a proportionate amount on cigar~ and tobacco. This will yield $4,500,000 in 1982-83. 'j I} 1 5

• The effective rate of Corporation Income Tax for large corporations will be increased by 1 OJo to a new rate of 161tlo effective January 1st, 1982. This measure will add $2,900,000 ·to provincial revenues in 1982-R3. The rate of Corporate Income Tax on small business will remain unchanged at 12%. • A new Capital Tax of 1.5% will be imposed on banks, loan and trust companies with effect from June 1st, 1982. There are five other provinces that impose a capital tax on corporations and banks.

This new tax is limited to banks, loan and trust companies only and is expected to yie ld $1,500,000 in 1982-83. • Variou s fees imposed for Government licences and services will also be increased to yield a funher $1,000,000. These fees include: cutting permit fees, ad ult education course fees, liquor licensing fees, and non­ n:sidcnt big game licensing fees. The fees for drivers' licences will be im:rcased with the regular rate being increased by $1 a year to a new level of $24 ror a three-year lice nce.

The fees for motor vehicle transfers , imransits, inspection book s, and beginners' Licences will also be im:rcased. A new fee of $10 will be charged for re-instating suspended driver licences. • The interest rate~ charged on new resource loans made by the Fisheries Loan Board, Farm Development Loan Board and the Rural Development Authority have been increased from 807o to 12% per annum. Mr. Speaker, these revenue measures total a litLlc over $21 ,000,000; an amount which approxi1mitcs the extent of the cutbacks in Established Programs hnancing payments.

Public Sector Restraint With regard to Current Account expenditures, Mr. Speaker, Government is committed to providing a level of service that addresses our priority needs. Unfortunately, we cannot yet afford the level of service that is enjoyed by many Canadians in other provinces and it therefore, has been necessary to exercise firm restraint with existing programs to achieve our financial targets. Almost half of the Current Account Budget of the Province goes to pay public service salaries and benefits required for program delivery.

Over the past number of years, we have seen the wage bill grow, through a compounding effect of annual increases, increments, new positions and new benefits. Govenment simply cannot afford to continue the trends of the past few years and will, commencing immediately, restrain the growth in provincial public sector salary 1 4 'j 6

May 27, 1982 Tape 673 TM - 1 cost. We have concluded that it is better to restrain wages and preserve employment where possible rather than to increase salaries by the rates recently experienced and then be forced by financial pressures to impose large scale layoffs. As an initial step in this wage restraint policy, salary increases to Executives in the Public Service will be held at 50Jo in the 1982-83 fiscal year. Crown corporations and other Provincial agencies will be requested to adopt the same approach.

At the same time, I am recommending that salaries and allowances to Cabinet Ministers and Members of this Honourable House be frozen for this fiscal year. I would emphasize that Government sees this policy of tighter restraint on wages being reflected throughout all groups in the Public Service, including 1hose affected by current collective bargaining negotiations, and thos e co ,u ed by existing contracts when they come up for renewal. Also, the private scdor should play its

part in the process of wage and salary restraint during in tlationary times. It is instructive to note the restrained wage settlements currently being negotiated in the U.S. even though inflation there is running at considerably lower rates than in Canada. Government will continue its restraint program with respect to other aspects of administration in the Public Service. The provision of new positions, public service travel, building maintenance funding and a variety of other housekeeping areas have all been exhaustively reviewed to ensure that expenditures are contained within the minimum levels required.

HUMAN RESOURCE DEVELOPMENT Mr. Speaker, it should be absolutely crystalcc!ear to any serious observer or the Peck ford Administration that its highest priority is the People or this Province. Government has consistently emphasized the Importance to our Provincial economy of natural resource development for the establishment of a sound stable revenue base. But resource development is merely the means to a more important end - the well-being of our People at every level and in every respect.

To that end, the Government has meticulously reviewed our human resource programs with the aim of improving them where the need exists, consistent with our limited financial reso·urces. I take great pleasure, therefore, Mr. Speaker, in outlining the following initiatives in these areas. Education Mr. Speaker, Government is conscious of the inflationary pressure~ of providing primary and secondary educational services in our Province and accordingly has increased operating grants to School Boards in 1982. In addition, I take pleasure in announcing a new initiative.

In recognition of the very difficult financial plight in which many of our School Boards rind themselves, a special ·1 4 1 7

funu of $2,500,000 is being established to provide a measure of assistance beyond the existing grant structure. Details of disbursements from this Fund will be announced by the Minister of Education after appropriate consultations have taken place. This year, Government will be providing $22,800,000 to the Denominational Education Committees for school construction. Of this amount, $12,000,000 will be spent on new facilities required for the Reorganized High School Program and the remainder will be used for other new school construction and for necessary extensions and renovations.

When coupled with existing school con~truction commitmems, these amounts will bring the total Government capital expenditure for school facilities this year to $47,000,000. Mr. Speaker, the Peckford Administration has long felt that this Province should be recognized as an international focal point for the study and research of marine resources and technology. For ~orne time now, we have been negotiating with the Government of Canada with respect to a cost-shared agreement for the establishment of a new campus for the College of Fisheries and Marine Technology. Although an agreement has not yet been reached, Mr.

Speaker, I am very pleased to announce that this Government has provided an amount of $2,100,000 for the acquisition of land for the new campus and to finalize planning of the facility. It is hoped that this initiative on our part will encourage the Government of Canada to expedite the concluding of negotiations for cost­ sharing the construction and equipping of a facility critically important to Canada's maritime activ ities. This decision is a further demonstration of Government's commitment to our fishing and marine industries and to all who arc associated with them.

Government has recently carried out a review of the various student assistance programs in the vocational schooi system. The students in this system are not eligible for Provincial Student Aid Grants at present even though Canada St udcnt Loans are available and, in some cases, weekly expense allowances are paid.

ThL·sc students also differ from their university student counterparts in that no tuition fcc is applicable in the vocational school system. l wish to announce t hal Government plans to change this situation in September, 1982, at which time all post-secondary students will be provided assistance under the same "needs based" program which i~ currently available to University students. Thus students in the college<; and vocational schools having demonstrated financial need will be eligible for grant assistance from the Province of up to $2,000 a year, if single, and up to $2,500 a year, if married.

When this new program is introduced, payment of the weekly expense allowances to students in our colleges and vocational schools will be discontinued and a tuition fee of $100 per semester will be introduced. 1 4 •j 8

May 27, 1982 Tape 673 TM - 2 ln response to the lack of demand in various traditional trades, certain training areas will be reduced in ~orne of our vocational schools. However, programs in Electronics Technology and Computer Data Processing will be expanded in the new year providing places for more Newfoundlanders to undertake instruction in these high technology fields, where job opportunities exist. Action is being taken in sevcral areas to improve educational services for handicapped children.

Provision is made in the Budget to complete design and site preparation work for a new school and for residential facilities to replace the existing School for the Deaf at Torbay. The new school will accommodate 150 students, 100 of whom will live in residence. The policy of proviJing rc~ources to local School Boards will be continued so that as many mentally and phy:-,ically handicapped children as possible can be if1tegratcd into a variety of "least restrictive" educational programs within the regular school system.

The Queen Elizabeth II Library at Memorial University will be officially opened this coming weekend. The Budget provides $1,800,000 to complete Government's contribution to its construction. Government is proud of this new facility which is seen as playing a fundamentally important role in the pursuit of higher learning at our University. An amount of $1,200,000 has been prmided in Memorial's 1982-83 Budget for necessary renovation.~ at the Henrietta Harvey Building in order to allow the University to accommodate ih growing needs in many areas. Mr.

Speaker, the Keorgani1.cd High School Progran1. begun at the (irade '< level ilil September, 19!-11, is progressing well. htllcon~ultation i~ taking place with all associated interest groups to help minimize phase-in dil'ficultic~. The new program will ~ee the fir~t Grade XII graduates in June, 1984.

Government will honour its commitment to allocate additional teacher salary units and capital funding this year to facilitate the implementation of the new program, and will also be providing additional financial assistance to School Boards for the purchase of equipment and supplies needed for some of the new courses. Social Services Mr. Speaker, I am pleased to state that funding has been provided for ' 0 important changes in Social Assistance services. Effective April 1st, 1982, regular and special foster home rates were increased by 10%.

General Social Assi~tanec rates and rental and mortgage allowances were increased by 10% effective May 1st, 1982. Child Welfare Allowances were increased by 12% dlective April 1st and the clothing allowances by 400'/u. Mr. Speaker, Government is very much aware of the increasing needs of our senior citizens. While we believe that every effort must be made to allow 1 4 'I 9

our senior citizens to remain in their homes as long as possible, it is necessary to provide facilities for the many who do require institutionalized care. Accordingly, Mr. Speaker, it gives me great pleasure to announce that (lovernment has decided to implement a three-year program to secure additional chronic care beds throughout the Province. I am pleased to announce that an expansion has been approved for the St. Patrick's Mercy Home in St. .John's which will bring to 200 the number of beds in this facility.

As well, approval has been given for an increase of 35 beds at the Harbour Lodge in Carbonear, an additional 10 beds for the Senior Citizens Home in Springdale, and a further 6 beds for the Blue Crest Interfaith Home in Grand Bank. Details of the second and third years of this program will be announced later. Government has provided funding for an additional 50 beds in licensed boarding homes and an additional 25 beds in homes for ex-psychiatric patients. We have also provided financial assistance for the operation of the Infirmary at the new Masonic Lodge in St. .John's. Mr.

Speaker, I am sure all Honourable Members will be pleased to learn that we have provided funds for the establishment of an Alcohol and Drug Dercndency Commission, and we are confident that this initiative will make significant strides in addrc-,sing the many facets of social problems relating to alcohol and drug abuse. Health Mr. Speaker, (invernmenl remains committed to doing everything within its power to provide ami maintain a health care system which is sensitive to the needs of our pcorlc and appropriate to our unique geography.

The cost of operating the health care system today constitutes a major portion of the Provincial Hudgel, and it is a continuing challenge to allocate to it sufficient funds as the pressures of other social and economic needs of our people become stranger. [)cspile economic restraints, Government is committed to the health facility construction program set forth in its Five Year Plan. Construction will be completed during this fiscal year on the Channel Hospital.

Today, I am pleased to announce that funds have been allocated in the Budget to complete planning and start construction or a new hospital at Clarenville. Also, funds have been provided to commence planning for the construction of a hospital on the Burin Peninsula to serve the growing needs of that very important part of our Province. I am also happy to state that Government has decided to proceed with Phase II of 1 he expansion plan for the hospital at Bona vista.

Finally, funds have been allocated to commence construction of new community clinics in Labrador at Black Tickle and Fox Harbour and to undertake major renovations and upgrading ., 4 2 fl

M~y 27, 1982 Tape 673 TM- 3 to community clinics at Cartwright and Mary's Harbour. Those clinics are being built and renovated under the provisions of the Labrador DREE Subsidiary Agreement. Mr. Speaker, for some years, Government has been evaluating certain aspects of the Co1tagc Hospital System, which was introduced during the day~ of Commission of Government. nearly fifty years ago. The System served the Province well, but has remained relatively unchanged for decades.

Cottage hospitals were built in outlying areas of the Province in times when patient referral to larger centres was not possible because of transportation and communications difficulties, except for very serious medical cases. In many areas, there were no regional centres. However, with improvements in road and other traw .. portation services, and with the construction of modern health care facilitie~ in mmt regions of the Province (and others under construction and in the final planning st:.:tgcs), a review and rationalization of the roles of some of' the ~mall cottage hospitals was obviously required.

Some of these hospitals are faced with low occupancy rates and an inability to provide a comprehensive service to the people they seck to serve. As a first step in this process, during the coming fiscal year, Government will change the role of the cottage hospitals located in Old Pcrlican and Markland. Essentially this process will pha.-;c out the treatment of in-patients as the predominant activity and concentrate instead on the improvement of out-patient clinical services. In each case, some holding beds will be maintained in order to deal with emergencies.

As Honourable Members arc aware, the health care system abound~ with technological change and this implies a continual need for funds to buy new equipment as well as to replace existing items. Mr. Speaker, Government has allocated $4,000,000 this year for these purposes. Despite these times of restraint, funding fat board- operated hospitals has increased by 15.50Jo over last year. In order to generate additional revenue, the existing nominal $3.00 per day ward charge will be increased to $5.00 per day and the ceiling for aggregate ward charges will be raised from $45 .00 to $75.00 per hospital stay .

The charges for private and semi-private rooms will increase from $18.00 to $30 .00 and from $12.00 to $20 .00, respectively. These increases in hospital rates are the first in four years and will be effective immediately. After undertaking a thorough review of our existing Children's Dental Program, we have decided to adjust the number of examinations and fluoride treatments permitted from two per year to one per year, effective April I, IC}R2. We have been assi1red by professional advice that this new level or service is entirely satisfactory for preventative denial health purposes.

Government is aware of the special needs of small groups of people who have health care problems of particular difficulty. In recent months, Government approved the extension of its medical transportation program to cover '14 2 .,

transportation expenses of Newfoundland residents who require kidney l ransplants in centres outside the Province. Included as well is a provision to cover 500/o of the transportation expenses of a spouse. Government is keenly interested in encouraging Newfoundlanders to pursue careers in specialty areas of health care where qualified people are in short supply. Consequently, Government is providing an additional22 places in an expanded bursary program to encourage more nurses to undertake specialty courses.

We have also provided additional bursaries for medical residents designed to encourage practice in Newfoundland after specialist qualification. Administration of Justice Mr. Speaker, substantial improvements have been completed in the c~mcctions area. Phase I of Her Majesty's Penitenriary has recently been opened and I he lirst regional facility at Clarenville is now fully operational. Construction is proceeding on

schedule on the Bishop's Falls regional correctional centre and it is anticipated that it will be completed in rhis fiscal year. I am pleased to announce two further steps in the modernization of our correctional system. Consr. ruction will commence this year on the Labrador correctional centre to be located in Happy Valley/Goose Bay. Renovations will also commence on the old centre block or Her Majesty's Penitentiary to provide for additional inmate programs, including a new chapel.

Consistent with Covcrnment's plan to merge the Trial Division of the Supreme Court with the District Court, the Budget provides funds for detailed design work for alterations to the Supreme Court. Included arc funds for planning to move the St. John's Provincial Court to leased accommodations. Additional support stall will also be provided to the Provincial Court in order that the provisions or The Small Claims Act are ma~e fully effective. These changes will help provide equal access to the courts for all residents of the Province.

Clovernmcnt has recently announced a major expansion of the Royal Newfoundland (\m~Labulary to Labrador City/Wabush to take effect in the Summer or 19R4. Fund" have been rrovided in this year's Budget for planning or a new Constabulary Building in I he area to accommodate the expanded service. BUSINESS INCENTIVES The marine industries ~ector of our economy includes establishments which manuracturc equipment or provide services in support of commercial and scientific activities in the ocean.

Government is anxious to encourage the expansion of Newfoundland companies in this area and to attract new ocean related industry to the Province. Mr. Speaker, I am pleased to announce that 1422

... May 27, 1982 . Tape 674 TM- l for the 1982-83 fiscal year only, a total of $1,500,000 in incentive funds will be made available to assist companies with the cost of approved capital project-; aimed at expanding local capacity in these areas. This assistance is evidence or Government's commitment to the development of a diversified marine indusirics sector to complement and enhance the traditional relationships or our economy with the sea. Full details of this program will be announced shorlly. In late 1981 Government announced its new policy with respect to industrial parks in the Province.

This policy has centralized the planning, administrative and development activities which were previously fragmented in a number or agencies and provides a consistent approach to meet the demand or imlustrial growth. I am pleased to announce that funding is included in the I<JH2 Rudget to commence Phase l of the new Octagon Industrial Park, including detailed planning and design work, as well as right of way acquisition. Work on six other projects will co ttl inuc, a~ wl'll. Government regards small business as a vital component of the provincial economy, employing many Newfoundlanders .

Economic benefits arc especially important where local manufacturing reduces the need for imported goods, and where sales of manufactured goods arc secured outside the Province. In order to encourage these types of business enterprise, Government has decided to bring in a new program. On an individual case basis, applications will be considered for exemptions from Retail Sales Tax for capital investment in machinery and equipment which results in increased local employment. The program will be jointly managed by the Department of ,Development and the Dcpartnwnt or Finance.

As a boost to the sawmilling industry, a Retail Sales Ta.x exemption is being provided for capital equipment expenditures made by the ~awmill operators and used directly in their manufacturing process. This exemption will not apply to the pulp and paper industry. OTHER INITIATIVES Government and Anaconda Aluminum arc continuing to co-operate in conducting a study to establish the feasibility of locating an aluminum reduction facility in the Province.

Considerable in-house work, both at Anaconda and the Department of Development, is ongoing and consultants have been retained to address other areas crucial to the completion of the study. All or these studies will be completed by August, after which full assessment can take place . Should the conclusions be positive, Anaconda would then be in a position to proceed with the detailed design and construction planning effort, subject or course to assurance that adequate and reliable power would be available.

While this study is focusing on two sites, one in l.abi·ador and one (Jn the Island, I wc.inl to .'ilre.'is that the results would, with some minor additional site specific work, be applicable to other locations in the Province. One of the hallmarks of the Peckford Administration has been an emphasis on the preservation of our heritage and unique way or life in this Province. Coincident with the development of our vast resources must be a determination to maintain and strengthen our rich history and traditions for the benefit or future 1423

generalions. I am, therefore, very pleased lo announce, Mr. Speaker, that (;overnrnenl has decided tn establish a Newfoundland and Labrador Heritage h)llndation. The primary function of this Foundation will be to identify, enumerate and preserve various properties and structures of historical and architectural signiricancc throughout the Province. An amount of $100,000 has been provided in the Budget to initiate a fund for this purpose and Government will assess the future need for contributions on an annual basis.

We are confident I hat the new Foundation will be instrumental in preserving important elements of Newfoundland's C\.llturally significant past and that the private sector as well, will endorse the Foundation and its objectives by providing financial support. In line with Government policy to promote cultural activities within the Province, I am very pleased to announce that funding has been provided to complete the planning for a new Arts and Culture Centre in the Labrador City /Wabush area.

The addition or this new facility will provide a focal point for artistic expression in this culturally rich area of our Province. Mr. Speaker, as a further demonstration of Government's commitment to the orderly and stable growth or credit unions within the Province, we have decided to provide a$ I ,000,000 deficiency guarantee for the purpose of assisting with the establishment of a Credit Union Stabilization Fund. This Fund will be administered by a board and will lend an additional measure of protection to cn:dit union members in place of insurance protection on their deposits.

The guarantee will enable the Fund to be established at $1,000,000 upon inception and will be provided for a five-year period. to be reduced at the rate of $200,000 per annum, as credit unions themselves make annual contributions to the Fund. Mr. Speaker, I am pleased to announce that Government has approved an increase for pensioners drawing benefits under the Public Service Pension Plan L'fkctivc May 1st, 19R2 which will average 10%. As in previous years, the larger increa~cs will be provided to those individuals who began receiving pension payments prior to March 31st, 1972 .

STIMULATION FOR TI-lE ECONOMY In my opening remarks I highlighted the pre1.ent status of the major economics in Norlh /\mcrica and the many forces impacting upon the economic environment in Newfoundland and Labrador. I pointed to the limited scope of a provincial government to resist strong international undercurrents of recession. I emphasized, however, that the Government of Newfoundland and Labrador i.~ committed to do ib part, within the confines of our financial resources, to ~timulale economic activity within the Province and thereby expedite the pace or economic recovery. Accordingly, Mr.

Speaker, I am particularly pleased to be able lo announce thallhc Provincial economy will benefit from various forms of public sector investment and financial support by the Province to a total extent or almost $500,000,000 in 1982-83 . The economic stimulus which will be provided through the provincial capital construction program including Crown corporations and agencies, will result in the creation of approximately 6, 700 man­ years or employment this year. In addition, a number of measures we have taken •j4 2 4

May 27, 1982 Tape 674 TM - 2 over the past several months will be instrumental in maintaining the continuity of employment in the fishing sector. When viewed in its totality, the impacl or these steps will be felt in all areas of the economy and all regions of the Province. Table III lists the major elements comprising Government's contribution to economic activity in 1982-83.

TABLE III CONTRIBUTION TO ECONOMIC ACTIVITY DIRECT BUDGETARY EXPENDITllRES Transportation Projects School Construction Hospital Construction Fisheries Support Fore~try Stimulation Municipal Infrastructure Newfoundland Dockyard Work Activity/Community Development Confedera,tion Complex Fisheries Institute General Capital Works CORPORATIONS Newfoundland _ & Lab:ado ~ ydro Corporation/ Power Distribution Districts Cat Arm Upper Salmon Transmission Lines, etc.

Power Distribution District~ Newfoundland a~~ -~~brad~:_J l~1using Corporation Housing Land Assemblies Industrial Development Building Lot Subsidies FINANCIAL GUARANTEES Municipal Water and Sewer Fisheries Support Municipal Paving Marystown Shipyard Limited Fisheries Loan Board Senior Citizens Homes TOTAL •j4 2 5 Impact $ 70,100,000 22.800,000 15,300,000 14,300,000 14,000,000 13,200,000 5,XOO,OOO 4,100,000 2,400,000 2, I 00,000 26,000,000 llJO,IOO,OOO 78,000,000 70,700,000 13,400,000 5,900,000 16H ,000,000 27 '600, 000 12, I 00,000 9,600,000 4,400,000 53,700,000 32,000,000 13,500,000 13,000,000 12,000,000 7,000,000 4,000,000 HI ,500,000 - - -- $ 493,300,000

The construction industry will benefit greatly both from the amount of public sector investment and, as well, from the procedural steps we have taken over the past few months to maximize employment. In particular, we have instituted measures to: • Get the work started early through advance tendering of major projects; • Make it possible for many smaller local firms to obtain contracts; and • Accelerate planned investment expenditures to shift work ahead to the present year.

This increased public sector spending will offset the slowdown in private sector investment during the 1982 construction season such that real growth in the construction sector is expected to reach between 3% and 5% for the year. Mr . Speaker, l would now like to comment upon certain specific sectors within <..lovcrnmcnt's stimulative financial and economic program for 1982-83. The Fishery The fishing industry, from an employment-generating perspective, continues to be a major component of our economy .

During the past two years, the industry has had to wrestle with high interest rates, weakened market conditions, and catch failures in certain sectors of the inshore fishery. These factors have contributed to an unprecedented cost-price squeeze for fishermen and processors. Despite these 'hort-tcrm difficulties, we are more than confident that long­ term stability can be assured through a number of initiatives directed towards overcoming specific <;tructural wcaknes~cs in the industry.

Over the past several months we have provided some $23,000,000 in direct assistance and guaranteed loans to the harvesting ami pr0ce~sing sectors of the industry, including $7,000,000 in direct <lssistancc pr0viJcd just prior to the expiry of the old fiscal year. The full impact of these measures will be f'elt in 1982.

More than any other fact, this level of assistance to the industry in trouble demonstrates Government's commitment to and f<lith in the l'llllllrillg naltrrc of the fishery, as it has helped save the jobs or approximatdy 9,400 rlant workers and at the same time, has assured the availability of processing facilities for the fish catches of some II ,000 fishermen. We arc confident of the resilience of our fishing industry and its ability to bounce back from temporary set hacks.

A number of conditions is attached to the assistance we have provided, i11cluding proof of the future viability of the individual operation, as well as clear evidence of management expertise. Government also stipulated that affected comranics must support Govenmcnt-initiatcd quality improvement measures, consoliJatcd marketing initiatives, and support Government should it decide to establish a consortium of Newfoundland seasonal operators to gain access to offshore northern cod outside the normal fishing period. 1426

- May 27, 1982 Tape 675 TM - 1 There can be no doubt about the long-term importance of these measures tu our most basic industry- an industry historically more interwoven with our way of life than any other. Newfoundland and Labrador Hydro Corporation Investment by Provincial Government enterprises, of which Newfoundland and Labrador Hydro is the largest , represents a significant portion of all construction investment in our econom y. Hydro is expected to increase its capital investment spending in 1982 by $63,000,000 to a total of arproximatcly $161-l,OOO,OOO.

Thi~ includes spending on a number of projects of which the Cat Arm and Uprer Salmon hydro developments arc the largest. During the construction sca~un in 19X2, employment will peak at 1,550 jobs as a result of all hydro projects in the Province. Transportal ion Mr. Speaker, capital expenditures on transportation in 11}82 -R3 will be up X6.4° /u to $70,100,000 as compared with $37,600,000 in 1981-82 . rhe greatest contribution to this increase comes from construction nf new highway .~. bridge s, and Gtu~cway~. and from roau reconstruction prnjcct s.

In addition to these projects, a tlllntbcl of new airstrips will be built along the Labrador coast, costing $6,200,000, a~ well a.-; a number of new marine ferry terminals, costing $4,400,000. Municipal I nfrastructun• During 19X2-X3 the Province will guarantee $32,000,000 in loan ., to :.Ollie 72 municipalities in order to finance water and sewer pJ()jccts. rhis is an increa!>L' of 28.5% from the $24,900,000 provided in J9RI-82 . (imcrnmcnt guaranteed loa11 ., of $13,000,000 will be provided to 3() municipalities for 1 oad constsruct ion <lltd paving projects. for an increase of 42.lJ 11.'o.

The Department of Municipal Affairs will also ii1LTL'asc its construction-rdated capital work-, budget to $13,200,000 to cover it:dustrial servicing, and other projects, including the major St. .John's water and sewer project\. Forestr~ Spending under the Forestry Economic St imulat io11 Progran1 and t lle l"mc"l ry I I Subsidiary Agreement is projected to r(:ach appro .ximatcly $14,000,000 in ltJX2-X3. These progr~uns include such mjjor clcmenb as forest acccs-, roads ~.·onst ruction, silviculture projects, and ldrvcsting budwprm-d<.iii _~agcd timber.

Together, the programs arc expt:cted to generate a peak of I ,500 jobs during the L·oming Summer. These programs arc co-operative efforts between the two nrdcr., of <..iovcrnment and the paper companies. The economic impact of these measures will be to increase the wood fibre yield in the Province's pulpwood logging operations by utilizing wood which would otherwise be lost, and to ensure the availability of a continued wood suppl y for the forest industry in the future. 1427

Housing Through the Newfoundland and Labrador Housing Corporation we have ;d1 cady invited proposals for the construction of 100 subsidized housing units. A further 60 units will be commenced in the next several months. In addition, we will spend $~.400,000 for land development in the Mount Pearl-Newtown area. As the Honourable Members arc aware, we recently introduced a building lot subsidy program in an effort to stimulate private construction of single unit housing. This program is worth $3,200,000 and will affect 1,200 provincially-owned building lots located in 18 communities.

As well, I arri pleased to announce the addition of a lot subsidy arrangement for the Cowan Heights Development affecting 200 lots with a subsidy of $5,000- $7,000 per lot. This particular subsidy will be effective for a six-month period only. Mr. Speaker, it goes without saying that a significant drop in mortgage lending rate-; would allow these programs to have a much greater impact on the level of housing starts. TifF GREAT CANADIAN IRONY Mr. Speaker, I have, this afternoon, reviewed the economy, Newfoundland's financial performance and the budgetary position for the coming year.

I have outlined a capital works program aimed at stimulating economic activity this year and I have rcitL ·r~\lt.:d the commitment of the Peck ford AJministration to manage the financial affairs of the Province on a sound and realistic basis. I cannot, however, conclude a Hudgct Speech for the Province of Newfoundland and Labrador at this time without addressing 1 he issues which are fundamentally important in determining the financial and economic destiny of this Province. They are abo fundamentally important to the future of our nation. We live in a world, Mr.

Speaker, Lhal has become ultra energy conscious­ a world where, notwithstanding temporary surpluses, nat ions struggle to locate new major reservoirs of oil, gas, and hydroelectric power. We see Canada stand out in sharp outline in this context with vast quantities of each of these resources, clearly idcnt i fied as economically viable and technically feasible to develop. The development or these energy resources would provide billions of dollars of economic stimulus. Yet, where arc wl'? The projects arc not proceeding, The national economy is in recession.

We arc still burning imported oil and the country is no closer to energy self-sufficiency than it wa .~ 5 years ago . Hundreds of millions of dollars worth of unharnessed hydro power arc flowing into the sea. Energy can be transmitted by pipelines across provincial boundaries but transmission of power by cables across the same boundaries to ready markets is still not permitted. One province exports the power of another rnovince and reaps hundreds of millions in profits for itself while virtually none goes to the owner of the resource. 1 l. 2 0 ., 0

May 27, 1982 Tape 675 TM - 2 Oil resources on land arc treated differently by the Government or Canada than the same resources in land extensions under the sea. Oil resources under rr<.:sh water are treated di rrerently from those under salt water. The exclusive right of !>Orne provinces to exploit and manage their petroll'ulll resources is recognized by the Governmem of Canada. Yet, for the offshore resources of the coastal provinces, the Federal Government claims the sole right of management and control. There is a refusal even to entertain propo~als for joint managemelll and shared jurisdiction.

In recent days we have witnessed the Federal Government's abandonment of any pretense or negotiating joint management and revenue sharing by taking the unprecedented action of referring the of1\horc issue directly to tile Supreme Court of Canada. Mr. SJK'akn. IIJ<ll i-., tile <ire;ll ("an;nlianlrony ( ';tn;td;~·, l·.ner gy Str dlq.!~ _ Mr . Speaker, it won't last. It can't last, It's too illogical and unreasonable. The world can't understand it. The people of Canada can't understand it and nL·it her arc they prepa -red to live with it. Newfoundland will do its -.,hare to bring reason to thi~ dl<Hh, 1\lr.

SpL·aker. Through the Water Rights Reversion Act which has now been upheld by thl' Newfoundland Court of Appeal and awaits decision by the Supreme Court of Canada, we will bring about rea~on in the hydro sector and achieve equity in 1 he utilization of the Labrador h:ydro re~ourcc. In offshore oil and gas, we will again bring about reason.

The unanimou~ condemnation of the recent Federal action by this Honourable llou~c is a matter of record and thi-., Government j-, determined that the cOlll ''e pur-.,ued by the Go' ernment of Canada in selfish desperation will not ~ucceed: Our legal ~trcngth and the 'olid reasoning of uur negotiating position will triumph mer the shallow tactics being praeti .sed by the present administration in Ottawa. We will work towards the legitimate goal of energy self-sufficiency' fnr our nation and \\l' will share the benefits therefrom \\ith our -,ister provinces. hnally, Mr.

Speaker, we will ensure that the resource is properly managed for the mutual benefit of Newfoundland and Labrador and all Can;Jdi<~ns. •j ' 2 ~ 4 ,_

May 27, 1982, Tape 676, Page 1 -- apb SO~ffi HON . MEMBERS: Hear, hear ! On motion, the debate was adjourned until tomorro14, Monday. MR. SPEAKER (JW~_!~H :ll..J.J2 Order, please! The hon . the Minister of Finance . DR. COLLINS: Mr. Speak er , I tvish to inform the !louse that 1 h.:Jve received a message from IIi s Honour tl w r.i c:u l c·n.1n 1 -Govc.-rnc>r· . MR. SPEAKER : All rise, please.

This message is addressed to the hon . the Minister of Finance(Dr .Collins) . •r, the Lieuten~nt Governor of the Province of Net>foundland, transmit estimates required for the public service of the Province for the year ending the 31st . of March 1983 , in Lh~ aggregate of $1,682 ,497 ,100 .00 and in accordance ,.,.ith the provisions of the Constitution Act 1867, I recommend these estimates to the House of Assembly. (Sg

d) N. Anthony Paddon Lieutenant-Governor ." I Sh<>\lld 1 i kt• l11 l.l~;,• a few moments to distribute the documents ·to the various members . Order , please! The hon . the Minist er of Finance. DR . COLLINS: Mr . Speaker, I move that the message from His Honour, together with the cstimntL·~, be referred to a Committee of Supply . On motion, that the Bouse resolve itself into a Committee of Supply , ~-lr. Speaker left the Chnir . ·1 it 3 n

May 27 , 1982 , Tape 676, Page 2 -- apb MR . CHAIRl-17\N (Aylward) : l't ,,gid~·nt of tlw Counc-i 1. MR . MARSUALL : Order, please ! The hen . the Mr . Chairman, I move chat the Committee rise, report progress and ask leave co sic again . On motion, that the Committee rise, report progress and ~sk leave to sit again, Mr . Speaker, returned to the Chair. MR . SPEAKER(Russell) : The hen . the Chairman of Committees . MIL CliAIR.tliAN : Mr .

Speaker , the Committee of Supply has considered ·the matters to it referred , has made some progress and as k leave to si t ,,q~in . on motion, report. rccc~vcd and adopted, Committee ordered to sit again on tomorrO\ .... NOTICES OF MOTION MR . SPEAKER : The hon . the Minister --- u I 1'11tili1CC . DR . COLLINS : Mr . Speaker , 1 give notice that I "'ill on tomorrow move that this House resolve itself into Committee of the Whole to consider certain resolutions relating to the imposition of a t~x on the income of individuals and the impositio n of a tax on the income of corporations . ~lr .

Sp<'•tkc•r, l CJl vc notice that I vlill on tomorro~o; move that this House resolve itself into a Committee of the Whole to consider certain resolutions relating to the imposition of a tax on tobacco . 'I :13 I

May 27 , 1982 , Tape 676, Page 3 -- apb p ~~-: .S.QH .. .f !'I~: Nt ·. Sp(~.1k1..'1", I qiv• • notice that I will on tomorrow move that this llou su resolve · itself into a Committe of the Whole to consider certain resoluti ons relating to the impositi on of a tax on the taxable paid up c.:tpital of certain corporations . MR. SPEAKER(Russell) : The hon . the President of the Council . MR. MARSHALL : Mr. Speaker , pursu iln L to Standing Order 119 I move that the following !leads of Expenditure be referred to the Resource Committee: Heading No . VII Head in(J No . vn 1 !leading No, VI Heading No . x Heading No .

IX Mines and Energy rlshc-ri t's U<:vcdopmcn L Rural, J\gricultura ] a11d NC>rl lh.:rn Development Forest Resource s and Lands . At the same time, Mr . Speaker, I would like to move that the following Beads of Expenditure be referred to the Soc ial scrvt ccs Com miLLuc : Heading No . XIX Jus tice Heading No . XV Health Heading No . XIII Education Heading No . XII Environment llt ~<.~d i tHJ Nu . xrv Soc i..11 ~)t'f "V j (~\!!; Heading No . XVIII Culture , Recreat ion and Youth I further move that the followi ng Heads of Expenditure be referred to the Government Services Commiltec : Heading No .

XVII Municipal Affairs Hcading .No . V Public Works and Servic es !leading No . XVJ L"bour i:lnd Manpower 1 ;, 3 2

May 27, 1982, Tape 676, Page 4 -- apb MR. Ml\RSIIALL: Finance Heading No. IV Heading No . XI MR. SPEAKER(Russell): Transportation Order, please! Is it the pleasure of the House to adopt the motion? Those in favour 'aye', contrarv 'nay', carried. President of the Council . MR. MARSHALL : The hon. the Mr. Speaker, I move that the House at its rising do adjourn until tomorrow, Monday, May 31, 1982, at 3:00 p.m. and that this House do now adjourn. On motion, the House at its rising adjourned until tomorrow, Monday, May 31, 1982 at 3:00 p.m. 'l 4 J ....