The House met at 2:00 p.m.

MR. SPEAKER (Lush): Order, please!

Before recognizing the hon. Member for St. John's East, on behalf of hon. members I would like to welcome to the galleries today fourteen students, accompanied by two teachers and an administrator, from the Vanier College, Canadian Studies Section, Montreal. Hon. members would like to give them a warm welcome, I am sure.

SOME HON. MEMBERS: Hear, hear!

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

MR. HARRIS: Thank you, Mr. Speaker.

I wonder if all members of the House would be prepared to join in an acknowledgement of the efforts of employers and employees in the fishing industry yesterday in a very large - there were many thousands of Newfoundlanders and Labradorians at a rally and demonstration to set off the flotilla to demonstrate the concern of people in this Province about the problems of overfishing, and to symbolically extend our jurisdiction over the Nose and Tail of the Grand Banks.

I wonder if all hon. members would be prepared to join in asking the Speaker to send a message to the captain of the Polar Storm, wishing the flotilla 'Bon Voyage' and wishing the whole fleet well in their efforts to call attention to this problem nationally and internationally.

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

MR. MATTHEWS: Thank you very much, Mr. Speaker.

We would certainly like to join with the Member for St. John's East, and say that it was quite an undertaking yesterday to see so many thousands of Newfoundlanders and Labradorians show up in support of the efforts of the Fishermen's Union and the fishing industry as the flotilla left St. John's, sailed through the Narrows, to go to the Grand Banks of Newfoundland to draw national and world attention to the very serious crisis in our fishery, and to the very serious issue of foreign overfishing.

Yes, Mr. Speaker, we would be more than glad to offer our support to the suggestion made by the Member for St. John's East, and I think it would only be fitting, if we were to send a message of unanimous support to those involved in the flotilla, because they are drawing attention to this issue for all of Newfoundland and Labrador. I think it would only be fitting that the elected members of the Newfoundland Legislature go on record and have a message relayed to them that indeed we are supportive.

SOME HON. MEMBERS: Hear, hear!

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

MR. CARTER: Mr. Speaker, naturally the government side will support that kind of initiative taken by the House, proposed by the hon. Member for St. John's East.

It is regrettable that we find it necessary to take that kind of action. After forty odd years a Province of Canada, to think that now we have to take that kind of action to protect our most important industry, but nevertheless, the action is obviously necessary and we support it and wish them well.

MR. SPEAKER: The hon. the Minister of Municipal and Provincial Affairs.

MR. HOGAN: Thank you, Mr. Speaker.

It gives me much pleasure to announce today that government has approved an amount of$59.9 million for the 1992-1993 Municipal Capital Works Program.

This year's Capital Works Program is being advanced by several months and the total expenditure of almost $60 million is sure to have a positive impact on government's efforts to stimulate and accelerate economic activity throughout the Province.

Our decision to announce the 1992-1993 Capital Works Program at this time will ensure that earlier tendering can take place and that projects for the 1992 construction year can start almost immediately.

This infusion of capital works funding will generate considerable employment in the construction and trades industry.

It is expected to create 2,400 direct jobs in addition to a considerable number of indirect or spin off jobs in the supply industry, small stores, motels, in heavy equipment operations and garages.

Another meaningful factor is that this work is spread throughout the whole of the Province as opposed to being confined to only one or two areas.

It is a most significant expenditure in view of the difficult economic conditions prevailing in our Province at this particular time.

These funds are being distributed fairly and equitably throughout the Province.

Some $57.9 million will address the most pressing needs as they relate to cost-shared municipal services such as water and sewer facilities and street and road construction and paving.

Another $2 million has been set aside this year for the construction of new regional waste disposal facilities and for emergency capital works funding.

In the last three years, government approved substantial expenditures under Capital Works including $50.3 million in 1989-1990; $63.9 in 1990-1991 and $53.1 million for 1991-1992. When added to this year's program they represent expenditures well in excess of $200 million on Capital Works since this administration assumed office.

The great need to provide municipal infrastructure throughout the Province is evidenced by the fact that some $178 million in funding was requested from government this year by cities, towns and communities throughout Newfoundland and Labrador. In all there were 412 requests for water and sewer and 254 requests for road construction and paving. To do all of this in any one year is obviously beyond the fiscal capacity of the Province.

A total of 135 communities will share in Capital Works Projects in 1992-1993. Some 147 water and sewer projects were approved for 112 towns at a cost of $41,470,000. Some 51 road projects were approved for 40 communities at a cost of $16,066,000.

We do have what is known as a Municipal Projects Board in place in Municipal and Provincial Affairs with a rating mechanism to assess requests from municipalities and it is designed to ensure that funds are allocated strictly on the basis of need and taking into consideration environmental and health problems.

Basically, the capital works rating mechanism reflects a comprehensive and thorough review of the criteria used to establish priorities for the distribution of funding for municipal infrastructure.

It is interesting to note that, at the present time, the average cost of a water and sewer hook up per household in this Province is $28,800 per unit.

This cost per service is one of the highest in all of Canada and it clearly illustrates the need for us to continue to explore new and innovative methods and technologies that can be adopted to the harsh terrain and weather conditions here.

The objective of this initiative is to provide services in a more economical manner thus allowing the installation of a greater number of services for the dollars available.

All financing for Capital Works is through the Newfoundland Municipal Finance Corporation (NMFC).

Road projects are financed on a 60/40 basis with the Province paying 60 per cent and the community paying the remaining 40 per cent.

The contribution by a municipality for water and sewer is based on the cost per household in a municipality or a percentage of fixed revenue.

In spite of our considerable Capital Works spending over the last number of years, we still have a long way to go before every community is provided with water and sewer services. It is estimated that $2 billion is required to complete water and sewer systems in Newfoundland and Labrador including new systems and systems that are in the ground and in need of replacement.

This is indeed a most significant announcement and I am sure it will be well received by the many municipalities which are sharing in this year's Capital Works Program.

As a result of this announcement, many residents will receive either new or improved water and sewer and road services and, while such services are taken for granted in many places, I can assure you that they are extremely important for those who, up until now, have had to do without them.

Today's announcement not only means the creation of jobs, it also means the provision of essential municipal services for a large segment of out people and I am most happy to be associated with such a positive and meaningful program.

Attached for the information of all members are the expenditures approved for 1992-93 fiscal year listed by municipality in alphabetical order. Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Humber Valley.

MR. WOODFORD: Thank you, Mr. Speaker. I would like, first of all, to thank the minister for giving me a copy of his release prior to coming into the House. I had approximately an hour to go over the statement so I want to thank the minister for that. Having said that, Mr. Speaker, I agree with the minister when he says it is positive news. It is, indeed, welcome news for municipalities in the Province, and not only for municipalities, in particular, but for construction companies and people who would be working, people who would be looking for jobs, particularly this summer when we have such a high unemployment rate of approximately 18.5 per cent.

Mr. Speaker, having said that, the $60 million that the minister has allocated to municipal affairs this year is pretty well on par, $4 million or $5 million more than last year. I asked the minister a couple of weeks ago, how many - my fear - how many of those projects can the municipalities in the Province take advantage of? I asked him how much money was left in last year's capital program but I don't think he came back with an answer. I said there was approximately $20 million left in that program, albeit, it may be committed, but are there some municipalities which cannot take advantage of it. That is my worst fear, Mr. Speaker: Can municipalities take advantage of the funds that are allocated here today? If every municipality could take advantage of this we could have a program in place today, within six or seven weeks, anyway, that would, as the minister has said, hire 2,400 or 2,500 people in this construction season; but I would venture to bet that probably 60 to 70 per cent of this particular program will be taken advantage of and that is it. The minister is aware of this, as well, that the lesser of 60 per cent of the first $750 of water and sewer debt charges per household, plus 100 per cent of the debt charges in excess of $750 per household and the current water and sewer debt charge subsidy received under the existing system, a lot of municipalities in the Province today cannot take advantage of that particular clause in the new grant formula.

Mr. Speaker, the announcement should come earlier and I think members opposite realize that as well as I do, that we should try to get it out earlier so that we can take advantage of the construction season. Municipalities now, especially municipalities where the plans are not done and the specs are not in place, have to go back to their consulting engineers, get those in place, and by the time it then goes back to the department for the minister to call the tenders, at least three weeks minimum, possibly four, by the time it comes back then and the tender is let, we are three parts into the construction season. So I urge the minister, when tenders come in and are submitted, to take advantage of that particular tender and let it go immediately. Don't let it sit on the desk for an extra two weeks, when municipalities or construction companies can take advantage of the construction season.

The minister referred, with regard to the rating formula, to the priority basis they have in place under the new system. I would have to peruse the statement in more detail, Mr. Speaker, to make an educated comment on that particular part of the program. But it is good for municipalities based on health, the need factor, and the bottom line, the finances, which will be approximately 25 per cent. So that remains to be seen.

Having said that, I would say it is a positive statement to get this particular capital program out so that municipalities in the Province could take advantage of it and people can be provided with much needed jobs.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Speaker, a question for the Minister of Finance. The minister, in his Budget Speech presented on Thursday, predicted that real growth in the Newfoundland economy will, in fact, decline by half a per cent, that unemployment will rise by 2 per cent, and that, generally, this Province is going to slip deeper into a recession during 1992-1993. Why, in view of these factors, did the minister put nothing in his Budget to try to stimulate the economy of this Province?

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

DR. KITCHEN: Mr. Speaker, if it talks like Gorbachev, and it acts like Gorbachev, and it looks.... But the hon. member is espousing a philosophy that everybody should work for the government. For seventy-three years we have tried that experiment in the world and they finally threw it out. It is not appropriate for governments to hire everybody in the population. Come again.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Speaker, the minister didn't answer my question directly, but his attitude shows clearly why there is nothing of value in this Budget, let me tell you. Clearly, the government has chosen to do nothing to stimulate economic growth, but it did a great deal to discourage economic growth in the private sector, by increasing the payroll tax, by broadening the base of the payroll tax to the resource sector, and by lowering the threshold. Why did government choose to tax jobs when keeping jobs and creating jobs should be the number one priority of this government?

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

DR. KITCHEN: Thank you, Mr. Speaker. If the hon. member would look at the Budget he will find that there is something, over $400 million there in activity for this year. So it is not entirely appropriate to say that there is nothing there to stimulate the economy.

As far as the increase in taxes is concerned, taxes did increase this year by $6 million in total, which works out to $10.42 cents per person in the Province, which is not what you would call a tax grab.

The Budget, itself, was under great constraint. We have to be very careful in this Province, in view of the bad economy, that we don't go overboard as far as debt is concerned, and we did not. This is a strong Budget, a good Budget, and a steady-as-she-goes Budget. We are on the right course, Mr. Speaker, and I guarantee you that in a few years, things will turn around in this Province because of the long-term action that this government has taken.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Speaker, the minister knows that the payroll tax is a regressive tax. He imposed increased payroll tax to replace the school tax which was a regressive tax. The rationale for getting rid of the school tax was that it was regressive, so why would the minister choose to put a more regressive tax in place to try to remove a school tax when, at the same time, he has tremendously increased the burden on private enterprise in this Province?

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

DR. KITCHEN: Mr. Speaker, I don't know where the hon. member found that we are taxing businesses more than we did before. Actually, businesses are $2 million better off under the present regime than they were before Thursday.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

The hon. the Member for Mount Pearl.

MR. WINDSOR: The minister likes to play with numbers and say that businesses are $2 million better off. When you annualize it, you will find that businesses are going to pay $15 million more next year, in total, than they paid last year. If the minister thinks that businesses are paying less money, how does the minister explain the fact that paper mills in this Province, which are literally hanging on by their fingernails today and which were exempt, did not pay any school tax, now will have to pay -

PREMIER WELLS: (Inaudible).

MR. WINDSOR: They did not pay school tax, I say to the Premier. You had better go check your facts.

They now, Mr. Speaker, will pay a 1 per cent tax and, in the case of Corner Brook, it will probably amount to $500,000 a year. Now, is that not going to be the final straw to break the camel's back, as it relates to Corner Brook?

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

DR. KITCHEN: Mr. Speaker, nobody is going to break the camel's back. The people opposite almost broke the camel's back, in fact they almost broke everybody's back with their tremendous attitude towards hiring everybody, getting all their friends and buddies into the Public Service. That is gone now. We are going to try to run a lean ship and we will do it that way.

I might point out to the hon. member that something like 10,000 businesses escaped the school tax and are not picked up on the payroll tax. So that means, virtually every small business with three or four employees has escaped the school tax that they were paying, the business tax that most of them were paying - and now they don't have to pay the payroll tax. So, that must be a good thing. Similarly, the overall effect on business is that the tax will not apply evenly to everybody, some people will lose a bit and some will gain a bit. Most of the companies to which he refers, the resource sector, were paying more or less towards the school tax. Some were paying more and will gain. Some were paying less and will lose somewhat; but, generally speaking, the effects of our tax will not hurt any industry or any firm significantly.

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

MR. MATTHEWS: Thank you very much, Mr. Speaker.

I have a question for the Minister of Fisheries. As we all know, the fishing industry is going through one of the worst crises, perhaps the worst crisis, that it has ever undergone in our history. The Minister of Finance, on Thursday, in his Budget Speech, talking about the fishery, said that this government will continue to do everything within its means to ensure that assistance is provided to those whose livelihoods are affected. I ask the Minister of Fisheries - I have had a chance to peruse the Budget document since Thursday, particularly the Departments of Fisheries and Employment and Labour Relations - can he tell me where I can find some dollar allocations in this Budget that will assist fishermen and fish plant workers who are severely affected by this fisheries crisis? Could the minister tell me what the Minister of Finance was referring to, and could he show me in the Budget where there are dollars to take care of that problem?

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

MR. CARTER: Mr. Speaker, that question should more appropriately be directed to my colleague, the Minister of Employment and Labour Relations.

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

MR. MATTHEWS: Well, Mr. Speaker, can the Minister of Labour tell me where, in this Budget document, this government has made any provision whatsoever for financial allocations to assist fishermen and fish plant workers who will now be severely affected because of the downturn in our fishery?

MR. SPEAKER: The hon. the Minister of Employment and Labour Relations.

MR. GRIMES: Thank you, Mr. Speaker.

The question has been asked in the House several times before, and has been answered in the House several times before. There are no definitive numbers in this document. There was no intention for them to be in this document. We have given an indication in this House on several occasions that we are already involved in discussions with our federal counterparts. We do not believe that we have the capacity to solve this problem by ourselves. We are willing to participate in any shared initiative, both related to the fishery and in areas not related to the fishery. We are already in discussions. We are analyzing the scope and the extent of the expected problem that will develop more fully as the year goes on, and we indicated to the public of Newfoundland that just as we demonstrated as a government the capacity to deal with that kind of a problem last year, while there are no specific numbers in this Budget document that you could find on Thursday, and you might not find them today, and you will not find them next week; but we have indicated that we do believe we have the capacity, and we are involved in discussions with our federal counterparts to make sure that as and when it is appropriate we will participate in programs, both fisheries-related and non-fisheries related.

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

MR. MATTHEWS: Thank you, Mr. Speaker.

The minister has confirmed that government has not made any provision in this Budget for this program. It has cancelled the adjustment program for fish plant workers, and the Emergency Response Program which were in last year's Budget and amounted to about $10 million. My supplementary to the minister is: Why didn't government keep that Budget allocation in place as core funding for what is obviously going to be a much needed response program? We all know the troubles in the fishery. We know there is going to be need for a response program. Why didn't they keep that funding, or equivalent to that funding, there as a core program for a response program?

MR. SPEAKER: The hon. the Minister of Employment and Labour Relations.

MR. GRIMES: Mr. Speaker, the Budget lines and headings that are required are there and maintained. The one that is missing is the special short-term, one-time program to keep the three plants open from a year and a half or two years ago. There is no need to keep that heading alive in the Budget, because it is a program that was targeted at three particular plants. It is finished. The older worker adjustment programs and so on that are in place on an ongoing basis are still indicated in the Budget. They are headings that are alive and can be actioned and functioned throughout the year, if and as required.

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

MR. MATTHEWS: Thank you, Mr. Speaker. A supplementary for the Minister of Fisheries.

The Minister of Finance also said on Thursday that government is seeking long-term constructive solutions to the difficulties in the fishing industry. I would like to ask the Minister of Fisheries: After all this time to reflect and evaluate, what are those solutions, and when will the people of the Province get to see what government's plans are for solutions in the fishing industry?

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

MR. CARTER: Mr. Speaker, I suppose, the most appropriate answer would be, the solution, of course, to the problem in the fishing industry is to get more fish, and I am afraid we don't have that authority on this side of the House, but certainly, Mr. Speaker, we do have initiatives that we are planning, and these will be announced as time goes on, especially during the detailed discussion of our Estimates, which will be taking place in the Chamber, very shortly.

MR. SPEAKER: The hon. the Member for Humber East.

MS. VERGE: Thank you, Mr. Speaker.

Mr. Speaker, my questions are for the Premier. More than ten days have gone by since I first raised in this House, serious questions about apparent police mishandling of an investigation of a complaint made against the Member for Naskaupi, at the material time, a member of the Premier's Cabinet. This is the first Question Period the Premier has attended since then.

My first question for the Premier today is, will the Premier now agree to have a judicial inquiry into the RNC response, or more accurately, lack of response, to the complaint made nineteen months ago, that the Minister of Environment and Lands sexually assaulted a woman?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, we will allow the police to complete the investigation. They know now that the matter has been raised in the public; hopefully, if they have been doing anything inefficiently or ineffectively or failed to do anything that they ought to have done, they will correct it. We will not allow the hon. member opposite, or anybody else to pressure such interference with an investigation that may in any manner, interfere with the proper, and I emphasize the word 'proper', prosecution of any charge that may arise out of it.

Now, Mr. Speaker, when the charges are laid and properly dealt with, if there is a need, if there is a need -

AN HON. MEMBER: Cover up.

PREMIER WELLS: I don't know what the members are talking about. If there is a need for an investigation, a full investigation will take place, but, Mr. Speaker, we will not allow politically motivated pressures to cause persecution instead of prosecution in this Province.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Humber East, on a supplementary.

MS. VERGE: Thank you, Mr. Speaker. My questions are for the Premier.

How does the Premier propose to address the fact that, fourteen months after the woman made the complaint to the police, an RNC member told her in the presence of the Leader of the NDP, that the Constabulary accidentally shelved the file and nothing had been done on the investigation?

How does the Premier propose to deal with the fact that five months after that startling admission, the police still haven't finished the investigation?

MR. SPEAKER: The hon. the Premier.

SOME HON. MEMBERS: Oh, oh!

PREMIER WELLS: Mr. Speaker, let me say again -

MR. SPEAKER: Order, please!

PREMIER WELLS: Mr. Speaker, let me say again, that we will allow the police to conduct the investigation fully and completely and lay whatever charges are to be laid without any interference whatsoever with the police. We have no intention of interfering. Then, Mr. Speaker, when and if charges are laid or the matter is properly dealt with, we will conduct such investigation into the police procedures as are necessary to fully disclose any shortcomings on the part of the police or any shortcomings on anybody else's part, for that matter. We have no intention of allowing the police to develop lackadaisical approaches or allowing any procedures to be operated in a manner that does not fully and properly deal with complaints in a timely manner.

MR. SPEAKER: The hon. the Member for Humber East, on a supplementary.

MS. VERGE: Thank you, Mr. Speaker.

The Premier did not hesitate to set up a judicial inquiry into allegations that an executive assistant to the former Minister of Social Services attempted to interfere in a public service job competition. Why is the Premier trying to avoid having a judicial inquiry into a much more serious allegation?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, I am not trying to avoid an inquiry.

AN HON. MEMBER: You are.

MR. SPEAKER: Order, please!

PREMIER WELLS: The hon. member knows - no, maybe I should rephrase that. She ought to know, that a decision of the Supreme Court of Canada has recently ruled that such an inquiry, Royal Commissions of this nature, into matters that are alleged criminal matters can prevent the proper prosecution and, in fact, are illegal, are ultra vires the Province. Now, the hon. Member ought to know that, and if she does not know it, then I refer her to the decision of the Supreme Court of Canada, and she should read it and see it.

Now, Mr. Speaker, we will ensure that there is such full police investigation as is necessary to ensure that anybody who has breached the criminal law is brought to account for that. That includes, Mr. Speaker, anybody who has breached the criminal law by reason of failing, for any improper reason, to perform their duties in carrying out such an investigation. Mr. Speaker, whatever is right and proper we will do, but we will not rush into insane approaches that prejudice the proper administration of justice because the hon. members opposite want to make political points and persecute people, instead of managing the system of justice so as to carry out prosecutions in a proper way. I am surprised at hon. members, quite frankly, Mr. Speaker.

MR. SPEAKER: Order, please!

The hon. the Member for Humber East, on a supplementary.

MS. VERGE: Mr. Speaker, this is not a supplementary, it is a new question. My new question is for the Premier also.

When I asked the Premier about his refusal to meet the complainant when she came to his office, he said he did not remember. Yet a few minutes later, just after Question Period, in Answers to Questions for which Notice has been Given, the Premier read a note from his officials saying: The lady came to his office and spoke to two of his assistants. He said: He understood she wanted to speak to him about a private business dispute with the Government and he told her he would not discuss such a claim with anyone. How was it, I ask the Premier, that the Premier's staff knew instantly which woman I was referring to? Is it the truth that both the Premier's staff and the Premier knew about the woman's complaint to the police shortly after the complaint was made nineteen months ago?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: No, Mr. Speaker, it isn't true. Nor can the hon. Member, with any degree of credibility, attempt to contort these statements to make it true. The simple fact is, Mr. Speaker, I do not remember what the hon. Member asked me last week. Now, that may come as an utter shock to her, but I don't, because I have more important things to do than run around memorizing what anybody said to me at any given point in time. I've got to run the Government of this Province. She may not be aware of that, she may not understand that.

Mr. Speaker, when the question was raised in the House members of my staff said: Yes, Mr. Premier, a woman came to see you and here is the matter that she raised. Now, I have virtually no recollection of the event or the incident at the time, but there is something, a recollection of somebody wanting to speak to me about a matter that was a claim against the Government, a threatened action or an action actually commenced - I don't know which - against the Government.

Mr. Speaker, I have no intention of dealing with anybody on those matters without having their lawyer present, and I never will. I have refused to do it every time anybody has ever raised it with me, and I will continue to do it, Mr. Speaker, because it is the proper course of action.

MR. SPEAKER: The hon. the Member for Humber East.

MS. VERGE: Thank you, Mr. Speaker. A supplementary.

I say to the Premier, he knows very well what I asked him. He was so upset at the time, he ranted and raved and got up on a point of privilege.

MR. SPEAKER: Order, please! Order, please!

The hon. Member is on a supplementary, and the supplementary question ought to be asked. We are not in debate.

MS. VERGE: Thank you, Mr. Speaker.

Did Doug House repeat to the Premier what the woman told him about her complaint to the police?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: I don't ever remember talking to Doug House about it. Maybe I did, but I don't ever remember talking to Doug House about it, not to the best of my knowledge.

MR. SPEAKER: The hon. the Member for Harbour Main.

MR. DOYLE: Thank you, Mr. Speaker.

I have a question for the Minister of Finance. Several times in the Budget Speech the Minister of Finance said job losses in the public sector will be minimal. Now, will the Minister tell us what is meant by that particular statement, and can he tell us directly how many jobs will be lost as a result of his Budget?

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

DR. KITCHEN: Mr. Speaker, we used the word minimal because that is what we meant. I do not know offhand, there may be some through some re-organization here and there, but the attempt in the Budget, in the strategy, was this time we would not make a conscious attempt to solve our budgetary difficulties by laying off a large number of people in the public service as we had to do last year. That would not be our strategy.

However, as we do make changes here and there in our organizations and so on undoubtedly there will be a few people who may or may not be laid off, but as far as I know there are very few involved in that.

MR. SPEAKER: The hon. the Member for Harbour Main.

MR. DOYLE: Thank you, Mr. Speaker. I draw the Minister's attention to his salary details that showed direct permanent employment by Government will be down next year by about 325. In addition 100 teachers -

SOME HON. MEMBERS: (Inaudible).

MR. DOYLE: Mr. Speaker, I will start again. The salary details showed direct permanent employment will be down by 325. In addition 100 teachers are going to be laid off. Another 100 employees of the School Tax Authorities are going to lose their jobs. As the Minister said in his Budget Speech, as the result of the government boards being eliminated and agencies being eliminated, there will be further cutbacks as well.

Now will the Minister confirm that as a direct result of his Budget at least 600 jobs are going to be lost in the Public Sector?

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

DR. KITCHEN: Mr. Speaker, there will be, as far as we can figure, a net gain in the number of jobs in the Public Sector this year as a result of the opening of the long-term nursing care homes and the extensions in Baie Verte, in Bonavista, in Gander, Corner Brook, Botwood, Agnus Pratt and so on. So there will be a net gain in the health care sector.

Now as the Member mentioned we do have this procedure that as there is declining enrolment in the school system, and as enrolments decline the number of teachers required is fewer, but they too are protected by the 2 per cent rule. As far as I know in most cases most superintendents can handle that through their normal attrition because every year teachers retire, and it is just a matter, if you are down a bit this year and you are protected by the 2 per cent rule, usually and as far as I know always - I cannot be sure about always - but virtually every case - not only can attrition to people who are retiring provide jobs for those for the jobs that are gone, not only that but people are hiring teachers every year. So there are more retiring -

AN HON. MEMBER: Many more.

DR. KITCHEN: Many more so that there is actually a net - new people are being hired into the educational system.

So I am sure that his estimate of 600 jobs is totally, totally wrong. There will be a net gain in jobs this year, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Harbour Main on a supplementary.

MR. DOYLE: Mr. Speaker, the only thing I can say to the Minister of Finance is that I have both copies of his salary details, this year and last year, and it shows a net decrease of 325. I do not know where he is coming from.

MR. SPEAKER: Order, please!

I have to remind hon. members that we are getting increasingly into a situation where hon. members are making comments on answers and getting into debate. Hon. members know they are supposed to be on supplementaries. I ask the hon. Member to get on with his supplementary, please.

MR. DOYLE: Well, Mr. Speaker, moving away from the permanent jobs for a moment, maybe the Minister can give us a little bit of information on the temporary and part-time jobs. Could he tell us how many temporary and part-time jobs will be eliminated as the result of this Budget?

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

DR. KITCHEN: Mr. Speaker, the same answer.

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

MR. HARRIS: Thank you, Mr. Speaker. My question is to the Minister of Finance and it concerns the plans announced in the Budget to eliminate the School Tax Authorities. As the Minister knows, this will eliminate 86 full-time and approximately 20 temporary jobs for a total of more than 100 jobs. Can the Minister advise the House what plans he has or has made to make sure that these people do not lose their employment? Are they going to be looked after in other aspects of the public service?

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

DR. WARREN: Mr. Speaker, it is my understanding that the figures of people employed by the School Tax Authority was approximately 80 to 85 full-time employees. I have been informed that since we made the announcement, Mr. Speaker, a number of them have already acquired jobs elsewhere. A number are retiring. There are others who at the end of June may lose their jobs, but I assure the hon. Member that we are going to threat them fairly. We want to treat all these people fairly. Severance arrangements are being examined, and also provision will be made for some of these to seek employment in other aspects of government, Mr. Speaker. We want to treat these people fairly, but the number is nothing close to 100 or 120 or whatever the hon. Member said.

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

MR. HARRIS: Mr. Speaker, a supplementary to the Minister of Finance concerning school tax. Can the Minister of Finance confirm that as a result of the changes in the school tax, individuals sixty-five years and older who were formerly exempt from the payment of school tax are now going to be taxed by this Government at a rate of 4 per cent more - an increase of 4 per cent on their personal income tax? The senior citizens who were formerly exempt are now going to be taxed fully for the school tax. Can he confirm that and advise why his Government decided to change this policy of exempting senior citizens from this tax?

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

DR. KITCHEN: Mr. Speaker, I am sure that very few senior citizens will be paying increased personal income taxes - assuming of course that the senior citizens have very little income.

But is it fair - I'll put it this way - for someone who happens to be sixty-four years of age, as opposed to someone who is sixty-five with the same income, that because someone happens to pitch over the mark that they are suddenly exempt from personal income tax? In my mind that does not seem fair. If you have the income, regardless of age, it's my view that you should pay your taxes.

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

AN HON. MEMBER: (Inaudible)!

MR. SPEAKER: Order, please!

AN HON. MEMBER: (Inaudible)!

MR. SPEAKER: Order, please!

The Chair has recognised the Member for Menihek.

MR. A. SNOW: Mr. Speaker, my question is to the Minister responsible for Mines and Energy. New York State has recently decided not to proceed with a $17 billion agreement with Hydro Quebec. I wonder if he could tell us whether or not the cancellation of this agreement would have any implication on the Lower Churchill development?

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

DR. GIBBONS: Mr. Speaker, it is my view that this should not have any implications for anything we are doing with the Lower Churchill.

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

MR. A. SNOW: Mr. Speaker, Quebec says that it will continue to proceed with the Great Whale project even if the New York contract indeed does not go ahead. But is it really credible that Quebec will need both the Great Whale and the Lower Churchill for its own use? If the Great Whale proceeds then isn't it true that development of the Lower Churchill will depend on sales to New York?

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

DR. GIBBONS: No, Mr. Speaker. The development of the Lower Churchill has never depended on sales to New York. Relative to all this, people should get in perspective that the contract that New York and Quebec are talking about here, that particular contract, was only for 1,000 megawatts. The total amount to be produced from the Great Whale and the Lower Churchill is more like 6,000 megawatts. It is going to accommodate the growth in demand for electricity in Quebec and in Newfoundland and Labrador for the long-term beyond the year 2000.

One other point relative to the New York part of it. The New York people themselves have said they will probably have to come to Quebec to talk about power for beyond 2000. The present contract was going to start in 1995. They are saying: we do not need it now, but we will probably need your power after the year 2000. There is only one group that is going to pay more for that power. In my view it is the people from New York when they negotiate a new contract for beyond 2000.

SOME HON. MEMBERS: (Inaudible)!

MR. SPEAKER: Order, please!

The hon. the Member for Burin - Placentia West.

MR. TOBIN: Mr. Speaker, I have a question for the Minister of Works, Services and Transportation. I would like to ask the Minister, Mr. Speaker, if his Government or his Department has made any decision in terms of laying off maintenance people, mechanics, with the Department of Transportation.

MR. SPEAKER: The hon. the Minister of Works, Services and Transportation.

MR. GOVER: Mr. Speaker, as the Minister of Finance indicated in the Budget Speech, layoffs will be minimal, if any.

MR. SPEAKER: Question Period has expired.

MR. SPEAKER: The hon. the Minister of Works, Services and Transportation.

MR. GOVER: Thank you, Mr. Speaker.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

The Chair has recognized the hon. Minister of Works, Services and Transportation, and he is the one we would all like to hear now.

The hon. the Minister of Works, Services and Transportation.

MR. GOVER: Thank you, Mr. Speaker.

I would like to table the Public Tender Act Exceptions for February 1992.

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

MR. DECKER: Mr. Speaker, under the provisions of the Newfoundland Medical Care Insurance Act I wish to table the Report of the Newfoundland Medical Care Commission for the year ended March 31, 1991.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Speaker, I would like to table the Report of the Public Accounts Committee of the House of Assembly for the financial year ending March 31, 1989. This is a report, of course, of the previous committee and in so doing I would like to express thank on behalf of the House to the former chairman, the hon. Member for St. Mary's - The Capes, the hon. Member for Burin - St. George's, and the hon. Member for Bonavista South, who have since taken leave of the committee. I table this on behalf of that committee, Mr. Speaker.

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

MR. R. AYLWARD: Thank you, very much, Mr. Speaker.

I give notice of a private member's resolution:

WHEREAS persons sixty-five and over were exempt from paying school tax, and

WHEREAS increases in the personal income tax rate were announced in the 1992 Budget expressly as a means of replacing the school tax.

BE IT RESOLVED that persons sixty-five and over be exempt from the increases in the personal income tax rate which were announced in the 1992 Budget.

MR. SPEAKER: The hon. the Minister of Works, Services and Transportation.

MR. GOVER: Mr. Speaker, I would like to answer a question that was asked concerning an exception to the Public Tender Act regarding the Lundrigan group of companies concerning space leased in Corner Brook and a renewal of that particular lease. The item is found on Page 7 of the December 1991 exceptions.

Mr. Speaker, under Section 45 of the Public Tender Act it is perfectly permissable to renew a lease as opposed to calling for public tenders, as long as that renewal is done on the same terms and conditions as the original lease document. The only other requirement is that if a renewal is made, that renewal will have to be reported as an exception to the Public Tender Act. Obviously, Mr. Speaker, Government renews leases of this nature when it feels that by renewal as opposed to tender it will acquire space at the lowest possible price. In this particular case the space in question was a considerable quantity of space, almost 20,000 square feet, and from September 1989 to June 1990 there were six tender calls, either by the Department of Works, Services and Transportation or by Enterprise Newfoundland and Labrador, for space in the Corner Brook area. These tender calls were for significantly lower amounts of space than the 20,000 square feet required in this particular lease. In fact the lowest amount of space was 2500 feet and most of them tended to come in around 5000, these previous six tender calls. In the previous six tender calls for this smaller amount of space the lowest price received was 27 per cent greater than the renewal lease price under the Lundrigan lease. Also, because the leased space is 20,000 square feet, as the amount of leased space increases the number of bidders decreases because obviously there are fewer landlords which have that quantity of space. It was determined that if a tender was called in Corner Brook it would be unlikely that there would be more bidders than the current landlord, and in effect if we went to tender that could give him an opportunity, knowing that, to increase his price above the $10.00 per square foot which was the original lease term, so as a result of that, Mr. Speaker, the Government in an effort to economize, achieve efficiency, and have top quality space for its operations, decided to renew as opposed to tender. Mr. Speaker, I believe this was the best decision to make.

Thank you, Mr. Speaker.

MR. BAKER: Motion 3, Mr. Speaker.

MR. SPEAKER: Motion 3. The hon. the Government House Leader.

MR. BAKER: Thank you, Mr. Speaker.

This is a Motion with regards to the appointment of a new Auditor General.

I would like to point out to this House that at the point we assumed government one of our main objectives was to bring in a new Auditor General's Act. That we did, and it was voted on and passed in this hon. House. In the interim the Auditor General, who was Auditor General at that point three years ago, became ill and subsequently retired.

To fill the void the Deputy Auditor General, Mr. Chris Hart, has been filling in as Auditor General. I would like to say at this point in time, Mr. Speaker, that we express our appreciation to Mr. Hart for the superb job he has done in the interim until we could get around to going through the proper process to appoint an Auditor General.

Mr. Speaker, the process was something like this: there was a recruitment committee set up, and that recruitment committee had the mandate to recommend to Cabinet an appropriate appointment to fill the position of Auditor General.

The committee consisted of the following: Mr. Gilbert Pike was Chairman of the Committee - he is Chairman of the Public Service Commission - Mr. Robert Healey of Ernst and Young from the Private Sector, and Mr. Stanley, Clerk of the Executive Council. This was a three person committee that was put together to investigate and to come up with recommendations for people to fill the position of Auditor General of this Provinces.

They subsequently went through a process where they advertised nationally, they accepted applications, screened applications, interviewed applicants and, Mr. Speaker, they recommended to Cabinet the appointment of Ms. Elizabeth Marshall as Auditor General for the Province.

Ms. Marshall's background, Mr. Speaker, speaks for itself. In her previous employment she has been an auditor with Thorne Riddell Company in New Brunswick and Halifax. She was a senior auditor with the Department of the Auditor General in Nova Scotia. She was manager of the Internal Audit Division, Department of Finance here in this Province, Director of Internal Audit Division, Department of Finance, Director of Government Accounting Division, Department of Finance, eventually being appointed to Assistant Deputy Minister in Transportation to Deputy Minister in Social Services, to finally Deputy Minister in the Department of Works, Services and Transportation. So her background has been in auditing and she is very familiar with the government process.

The latter caused us a little bit of concern because our piece of legislation creating the Auditor General's Act was done to ensure that the Auditor General, the position of Auditor General, and that office of Auditor General would be separate from government, would have more autonomy, more independence and so on. We were concerned about only one aspect of Ms. Marshall's appointment, and that was the fact that she was for some time within the public service of the Province and working within a couple of departments.

So, Mr. Speaker, in the resolution we have taken care of that eventuality. Now I would just like to very briefly read through the final 'BE IT RESOLVED THAT.' " BE IT FURTHER RESOLVED that to ensure public confidence in the independence of the Office of the Auditor General and to assure compliance with the Rules of Professional Conduct of the Institute of Chartered Accountants of Newfoundland requiring a member to hold himself or herself free of any influence, interest or relationship which, in the view of an objective observer, would impair the member's professional judgment or objectivity, the auditing or examining of the records of a Department of Government, relating to a period during which the Auditor General held an executive position in that Department, shall be carried out by an independent firm of chartered accountants."

So, Mr. Speaker, this will allow a smooth transition from an excellent public servant to the position of Auditor General, and allow the transition so that when matters arise that relate to departments in which she served for the period she served there, then an independent firm somewhere else in the Province, or somewhere downtown or whatever, will then carry out that function, so that the Auditor General is not responsible for commenting on the departments in which she served, or what happened during the time she served in government departments.

Mr. Speaker, the report of that independent auditor will be presented to the House of Assembly as an addendum or in addition to the report of the Auditor General. So it comes directly to the House of Assembly unchanged.

So that was done to take care of what we saw as perhaps being a little problem in the process. We are very pleased, and I am very pleased today, because we are very satisfied with the recommendation of that Committee. We are very pleased today to move that Ms. Elizabeth Marshall be appointed Auditor General for the Province of Newfoundland and Labrador.

MR. SPEAKER: The hon. the Member for Mount Pearl.

MR. WINDSOR: Thank you, Mr. Speaker. I do not think any of us can disagree with the choice of Ms. Elizabeth Marshall as the Auditor General. Ms. Marshall, in my experience in working with her in the public service, has exemplified herself I think in her conduct and her degree of professionalism. I think she is an outstanding public servant, a loyal public servant, who has dedicated herself. Let me say this in a very non-political way. I say that in all sincerity. In a non-political way. She has provided tremendous service to this Province. She is an extremely capable, well-educated and experienced lady, and I have no doubt that she will indeed admirably well fill this particular position. We certainly cannot find any reason to disagree with her particular appointment. I think we would all certainly support that.

The only problem I have with the process is the length of time it has taken government to deal with the issue. I think the government is to be faulted for that. I realise that it takes some time to go through a proper executive search and to screen the applicants, and the Committee no doubt did their job. But I suspect that this government has had the recommendation for some time. I think they have been sitting on this recommendation for some time. If not, then I am at a loss to understand why the Committee would take so long to bring a name forward.

I have to say that Mr. Chris Hart has served this Province well, as the President of Treasury Board has said. In my limited experience with him, since assuming the chair of the Public Accounts Committee, I have found him extremely helpful, very professional, very interested in dealing with first of all the whole Auditor General's Act, in being there when that was brought through. That Act, by the way, was initiated by the former Auditor General in conversations with myself when I was Minister of Finance. We initiated the structuring of that particular Act. So that was an act, as I said I guess when I spoke to that Bill, that I fully supported and I think was long overdue. We welcome the provisions that Act makes in giving the Auditor General autonomy in fulfilling his or her obligations, and in reporting directly to the House of Assembly instead of through government. I believe that is the way it should be.

The Auditor General's office of course, I guess, works very much in conjunction with the Public Accounts Committee of this House of Assembly. I believe the Public Accounts Committee can play a very important role. Over the past fifteen years, I guess, we have seen the Public Accounts Committee in this Province and in this House grow tremendously from when we first formed the Public Accounts Committee back, I believe, in 1976 or 1977. I was on that Committee as well, under the chair of the present Member of Parliament for Burin, Burgeo, whatever the name of the federal riding is. That was an interesting couple of years in trying to just decide exactly what the Public Accounts Committee should do, how much authority it should have, and what mandate it should have.

I believe we are at a stage in this Province where the Public Accounts Committee can now grow even further, and I have discussed this with the President of Treasury Board. In fact, there are many Commonwealth countries and many provinces of Canada that are now looking at the possibility of putting in place legislation so that the Public Accounts Committee has the same role and autonomy as the Auditor General now enjoys. I have to say in saying that, that I believe this House has treated the Public Accounts Committee over the past number of years well. I think we have had the cooperation of the House. I think we have had cooperation of members on both sides of the House of Assembly in dealing as a Public Accounts Committee should be, which is a non-political entity.

Now, that is very difficult when you take members from both sides of the House of Assembly who are politicians and who represent parties. But I believe members on that committee have acted in a responsible manner. I want to say that, in the several meetings we have had since I assumed the chair I have had nothing but the greatest of co-operation and support from members from both sides of the House of Assembly who sit on that committee, and that is as it should be. But I think there is a real question as to what teeth does the committee really have, and if we get into an issue that is a highly political issue, a highly sensitive issue, whether or not the committee would continue to act in an impartial and non-political manner.

So I believe that we may well, and perhaps we should indeed, begin to look at drafting legislation for Public Accounts Committees, and I think it would be a worthwhile objective of the present committee if we could put in place some sort of legislation. There is no legislation in Canada dealing with Public Accounts Committees to date. I think a couple of provinces are indeed looking at it, but there is no reason why we cannot begin to lead the way in that particular area.

I say that simply because I believe that the Auditor General's Office and the Public Accounts Committee have to work in parallel, work very closely. The Public Accounts Committee is, to a large measure, the Auditor General's voice here in the House of Assembly. We work closely with him in scrutinizing activities in the Province, be they actions of government or of Crown Corporations or whatever matters that may be referred to the Public Accounts Committee or that the Public Accounts Committee may choose under its present mandate to examine in some detail. I think it must have the right to summon witnesses, to summon evidence, have access to evidence in a somewhat quasi judicial manner, and have a right to report impartially to the House of Assembly.

The Auditor General will be very important in that role, he or she, in the power that the office now has under the legislation that the present government brought to this House - and we welcomed and supported that legislation when it came in. The Auditor General has a tremendous amount of power and can be very helpful to the Public Accounts Committee. In working together, I think there is a great role that can be played.

I do want to say that I think Mr. Chris Hart has done an admirable job during the time that I have been there. I think he has served us well and has proven that he certainly was extremely qualified, as well, to fill the position as Auditor General. In view of the length of time he had been acting Auditor General and in view of the manner in which he fulfilled those obligations, I would certainly have predicted that Mr. Hart may have been given that position. So, for his sake, I am disappointed, but that is to take nothing away from Ms. Marshall, who herself is highly qualified. I guess we should be pleased, as members of the House of Assembly, that we have two such highly qualified individuals who were available, and no doubt there were probably others who applied for that position. I have no knowledge of that, of course. But certainly I think we should be pleased that there are two such individuals who are so highly qualified, so highly respected in the professional associations in which they are involved and who were prepared to offer themselves for this particular position in this Province.

In saying that, again I welcome the appointment of Ms. Marshall. She is a highly qualified individual and I know we, in the Public Accounts Committee, look forward to working closely with her and with Mr. Hart and the rest of the staff, Mr. Speaker. So, we support this resolution.

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, I didn't intend to speak in this debate, because I think it is clear that it has widespread support, but a couple of matters have been raised by the hon. Member for Mount Pearl that need to be addressed. He expresses his support, and I appreciate that expression of support for the recommendation. The Government is happy to endorse the recommendation that came from the committee. That was the committee's recommendation and we have brought it to the House unchanged.

The hon. member, however, felt the government was at fault, that somehow we have been sitting on this report for some time. I just want to assure him that such is not the case. I think the former Auditor General retired some time in the summer of last year. By October -

AN HON. MEMBER: (Inaudible).

PREMIER WELLS: No, he had been ill and on sick leave for some considerable time, but his actual resignation, I believe, was some time early last summer. I believe that was about the time.

In any event, we had the new legislation through in October, but in anticipation of the new legislation, we put in place a search committee in early October, and they did their advertising between October 23 and November 15, 1991. They made their recommendation to the Cabinet on February 12. So we had the recommendation only on February 12. We got the recommendation, and on a professional basis, and on the basis of the individual's competence, we had no quarrel whatsoever with the recommendation, but Cabinet raised the concern and referred the recommendation back to the committee.

The concern that we raised was that Mrs. Marshall had been a senior executive in at least two departments of government in recent years, and it is possible that the Auditor General would be auditing in that time. So we referred it back to the committee with the request that they consider this matter and advise us as to whether or not this would cause them any concern, because it caused some concern for Cabinet, and asked them to advise the Cabinet as to how we ought to deal with that. As a result of that, instead of the first 'be it resolved', which was all that was involved in the initial resolution, the second 'be it further resolved' was added. Now I don't know when that came back to Cabinet - just in the last week or two. Cabinet dealt with it right away, and we moved right away. So there was no delay whatsoever.

I thought I should explain those matters, Mr. Speaker, because it is not as though the Cabinet was, for some reason or other, sitting on them.

Let me also express my pleasure and appreciation to Mr. Hart for the job that he did in his acting capacity, and assure him that the decision does not, in any manner, reflect any lack of confidence on the part of the government in Mr. Hart. We simply accepted the recommendation of the committee, and that is what we have brought before the House of Assembly.

With respect to Mrs. Marshall, I can only share the views of the hon. the Member for Mount Pearl that, in my experience, she is a very competent professional. She has served the public of the Province well, and I would note one other thing, Mr. Speaker. I believe this is the first occasion when this Province has had a woman Auditor General, and I am rather proud of that fact. It may, in fact, be the first woman Auditor General in the country. I don't know, off the top of my head, that there has been any other. So I am quite pleased that that very senior and very significant governmental position is now filled by a woman, and I wish both Mrs. Marshall and Mr. Hart well in the future.

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

MR. HARRIS: Thank you, Mr. Speaker.

I only intend to speak briefly to this motion, in support of it. I would like to say it is our belief that the process undertaken in selecting and appointing the Auditor General appears to be an appropriate one, that the consideration of the candidates was by a qualified committee, and I have no quarrel with the result of their findings.

Ms. Marshall, of course, has served the public service of this Province for many years, and I am satisfied that the government has taken sufficient concern to ensure that the office of Auditor General would not be open to the kinds of conflict of interest allegations that so often are made by people without knowing what they are talking about in many cases; that by undertaking the procedure that the government has included in the resolution with respect to an independent audit of those departments in which Ms. Marshall held an executive position, would be done by someone outside of the Department of the Auditor General. I think, again, that is most appropriate.

As I indicated, Mr. Speaker, quite often allegations are made about people, and flung around, and sometimes flung around this House, without any consideration for the realities or understanding of what it all means. By undertaking this procedure, the government, through the Auditor General's office, is ensuring that the Auditor General would not be treated to such kinds of comments by people and I think it is an appropriate method of doing so to ensure that not only would things be done properly, but be seen to be done properly by even the most cynical of observer. So, Mr. Speaker, I add these comments in support of the motion by the Government House Leader.

MR. SPEAKER: Is the House ready for the question?

All those in favour, 'aye', those against, 'nay'.

I declare the motion carried.

MR. BAKER: Motion No. 1, Mr. Speaker.

MR. SPEAKER: Motion No. 1, that the House resolve itself into a Committee of the Whole on Ways and Means to consider the raising of Supply granted to Her Majesty. The Budget Speech.

The hon. the Member for Mount Pearl.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: The hon. the President of Treasury Board wishes I only had twenty minutes, Mr. Speaker. The fact of the matter is, I have unlimited time, as I should, so, we will no doubt have an opportunity to cover a lot of ground before I take my seat. I would say to the President of Treasury Board that for the next three or four days I would hope to make some preliminary comments and then we shall get in full swing perhaps next week.

Mr. Speaker, I rise to speak to the motion and to debate in the House the Budget presented by the hon. the Minister of Finance, on Thursday past. This is his fourth Budget I guess, and the minister never ceases to amaze me, Mr. Speaker.

When he read his first Budget, I thought it was the worst Budget in the world and every year since, he has proven me wrong; they get progressively worse. The minister, Mr. Speaker, though is consistent. This government has certainly been consistent over the four years. The economy has been declining every year for the past four years and the minister is telling us now that next year will be no exception, we will see a decline in growth in the gross provincial product of a half of a percentage point. That is not much to be proud of.

In fairness, Canada is expected to grow only by 2 per cent. Newfoundland had been expected to actually lead the way in Canada until recent announcements in the fishing industry and Hibernia sort of took all the steam out of that, so now, as the minister shows in his own Budget, and as he admits in his Budget documents, we are faced again with suffering through recession for the rest of this year, and into next year, at least.

Although we see in Canada some mild improvement, I can tell the minister, if he believes there is any improvement in the recession in Newfoundland, he had better go out and hit the streets and check and see what is happening out there. It is interesting - I just spoke to a bank manager about an hour or so ago, I had a meeting with him on an issue and he said: 'I have to tell you that all I am doing is putting out fires, trying to save companies from going into bankruptcy.' He said: 'Every individual who comes in here, every business person who comes in, is looking for some help to get them over a difficulty. Very few are coming here to look for help to expand or to start a new business.' That is a sad commentary, Mr. Speaker, on the state of the economy in Newfoundland and Labrador today.

But the minister identified that, the economic indicator showed clearly that we are facing another very difficult year; they show that unemployment is going to increase by another 2 per cent this year to 20.4 per cent. Now, that should be enough to start the lights flashing and the bells ringing, to tell the minister that he, as the chief steward of the economy of this Province -

MR. MATTHEWS: (Inaudible).

MR. WINDSOR: - frightening as that sounds, but as the chief steward -

AN HON. MEMBER: I will leave on that note.

MR. WINDSOR: - of the economy of this Province - Yes. I don't blame my colleague, the Opposition House Leader, for leaving. In view of the response I got to questions to the Minister of Finance today, in view of that response, to think that the hon. minister is the chief steward of the provincial economy is, indeed, frightening. It is, indeed, frightening.

Mr. Speaker, the minister failed totally to respond to his own comments. He said we are going to have a negative growth in the economy, we are going to have an increase in unemployment, and then he said, we are going to do nothing about it - in fact, just the opposite, we are going to make it worse for private enterprise in this Province. We are going to increase a very negative tax, the payroll tax, which is a tax on employment. It is a tax on employment without any regard to profitability of a company. And it is interesting: I took time this morning - well, I was going to get into it later but I might do it now - I took time this morning to call a number of businesses around the Province, various types of businesses, to see what the impact was going to be on them, and I found only one that was going to pay less and that, basically, was a company involved in real estate. They have high property value but very low payroll. This company basically was renting real estate, basically a landlord, so that company would have very high property value, on each piece of which they would be paying school tax, and now, of course, the payroll tax is based on 1 per cent of the payroll, on their very minimal payroll.

AN HON. MEMBER: (Inaudible) $10,000 would have a payroll less than $100,000. They all have it.

MR. WINDSOR: There are those. Anything smaller than a bull's-eye shop, Mr. Speaker, will now be exempt from the school tax, I admit that. I don't disagree with that. That is quite clear.

MR. BAKER: Now, these weren't random calls, from my point of view.

MR. WINDSOR: I chose the ones I wanted to call to try to hit the various sectors. I don't need to call the corner store, which would have to be a very small corner store, by the way, to have a payroll under $100,000 today. Today $100,000 is not a very large payroll. If you have three or four full-time employees, which any corner store probably would have - if you are operating, particularly on a twenty-four hour basis, you can be sure to have more than that. Any corner store with three or four employees will now be into a situation where they would be over that $100,000 threshold. Admittedly, the amount is small, depending on the amount over $100,000, but there may well be 10,000 businesses in this Province that are not paying any payroll tax but they would have a very, very small amount of payroll. They would be very, very small businesses, almost one or two person operations, certainly, no more than that. The government says 10,000 and I have no basis on which to refute that, there may well be that, but there are many, many more which will now pay the payroll tax, or will pay more payroll tax.

Well, let us look at some of the examples that I got this morning. These are actual examples and figures that people gave me in confidence. I won't use any names but I use them simply as an example. One company, Mr. Speaker, had a payroll last year and this year of $500,000, not a huge company, but in Newfoundland terms, a fairly large company. Last year, because of the property the company has, they paid $3,000 in payroll tax and also $3,000 in school tax, for a total of $6000. This year, the company will pay $8,000, an additional $2,000 to that small company. What does $2,000 mean, Mr. Speaker? It will not bankrupt the company, it will certainly not bankrupt the company, but that is one summer job that will not be there this summer. That will be the impact; that is one student in this Province who will not find work this summer. And this is exactly what these business people are saying to me: The increase in the payroll tax in this particular case may not bankrupt us but it takes away the flexibility to hire that student next summer or to do something we might have wanted to do.

Another company, a much larger company, with 400 employees and a $7 million payroll - that is a fairly large company by Newfoundland standards - paid $100,000 in payroll tax and $20,000 in school tax. This year, it is going to pay $138,000.

AN HON. MEMBER: (Inaudible) more.

MR. WINDSOR: Quite a bit more - $18,000 more.

Again, $18,000 is not going to bankrupt a company that has a payroll of $7 million and, no doubt, a total cash flow of probably $12 million or $15 million in total. Eighteen thousand dollars won't bankrupt. I would not want to stand here and try to pretend that they would. But $18,000, again, represents six or eight summer jobs, or maybe, a permanent job or a couple of part-time jobs, some permanent part-time positions; that is a 15 per cent increase in the amount of tax that particular company is going to pay.

Another small company with a $400,000 payroll paid $1,500 last year in payroll tax and $2,300 in school tax. It will pay $6,000 this year for an additional tax of $2,200. That, again, is a fair number of dollars to that small company.

Here is an interesting one, Mr. Speaker. I called a fish plant, a fish company, one of the medium size fish companies, not the smallest ones; not Fishery Products International - their payroll must be tremendous. There is a fish plant that has, on the average, 350 employees, a fair size fish plant, very important to the community. We all know that there is hardly a fish plant in this Province today - if there are any - that is not having problems. This company had a payroll of $2.8 million. On that they are now going to pay $28,000 that they never paid before; $28,000 to a relatively small fish plant. That is a fair chunk of money. That is 1 per cent.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: It certainly can make a big difference to that company. Certainly $28,000 can make a lot of jobs in a rural community, if that $28,000 were available to hire summer students, or even permanent people. So that is the kind of impact that this payroll tax increase, Mr. Speaker, is going to have.

Now, the government stands up and says: All we are doing is eliminating the school tax. Everybody agrees that we should eliminate the school tax. I think you will find very few people that wanted to say: Oh no, you should keep the school tax - other than those involved in school boards. And the arguments that we have heard many times from them have been very legitimate arguments, of the autonomy that that represented to them in being able to gain their own revenue and to having a contribution from the local area to the schools in the local area. All of these are legitimate arguments.

But the government took the position that we can eliminate the administrative cost of that. We could equalize it more by using a more progressive sort of system, which is the personal income tax. Unfortunately, we hit the same people again. Every time we hit personal income tax, we find those who are paying the school tax, those who do not have all the exemptions that others have. It is always that very small - and this is what is frightening when you examine budget documents and really start to think about who is paying the cost, today, of government, who is really feeling the bite on that.

It is not the very wealthy, it is not the big corporations. They have the ability to live within the restrictions that are placed on them by these taxes. But it is the person who is actively employed, the small business person, or the individual who is bringing home a salary and supporting a family, who are not getting all of the exemptions that are available to people of lower income, all of the special assistance available to them, it is the working class that are supporting them. Fifty per cent of the people of this Province in the work force are being supported by Social Assistance or Unemployment Insurance. That leaves a fairly small number of us, Mr. Speaker, who are out there working in the Private Sector trying to generate activity in the economy of this Province - a very small number of us. Every time we do this we are putting an additional burden on these people.

Let's take a teacher in rural Newfoundland, looking at the government's own numbers - who is making $40,000. I think that would be a reasonable salary for a teacher with eight or ten years experience in rural Newfoundland. That person is probably paying $85 or $100. I am using the government's chart, and on this one it is based on $85. Probably paying $85 school tax last year. Based on $40,000 this year a person will pay $255. So an additional

$170, exactly triple what that person paid last year - exactly tripled.

The government would try to say that personal income tax increases, payroll tax increases on private enterprise simply make up for the money that we have lost from the School Tax Authority, the extra $30 million that we have to give School Tax Authorities this year. When you annualize those, when you annualize increases in personal income tax realizing that these taxes - in the case of the payroll tax take effect on July 1, in the case of personal income tax I believe it takes effect on April 1. When you annualize over the full year next year you will find that government, in fact, raises $45 million from these two tax increases.

So we have replaced a $30 million school tax with a $45 million tax.

DR. KITCHEN: You are wrong.

MR. WINDSOR: The Minister of Finance says I am wrong. Well I say to the Minister of Finance that his officials have told me something wrong because this is the information that was given to me by his officials in the (inaudible) and it is also in the Budget document. So the minister better have a look at it again because the increase in personal income tax is going to bring the minister $20 million this year and $30 million next year. The payroll tax is going to bring the minister $10 million this year and $15 million next year. Now that adds up to $45 million next year, Mr. Speaker. What this amounts to is a tax grab to the tune of $15 million under the guise of eliminating the school tax.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Under the guise of eliminating the school tax plus, of course, the $4.5 million the minister says we will save from the administrative cost of the School Tax Authorities. That is another $4 million or $5 million that I would hope is still going into education. The question is, Mr. Speaker, what will happen to the $15 million next year? Payroll tax is a health and education tax, or it is supposed to be. That is what the minister calls it. We are finally starting to call it the payroll tax. Now even in the Budget documents they are finally starting to agree that it is not a health and education tax, it is a payroll tax and we might as well stop playing games with the name of the thing. Where has been the increase since this tax came in? Forty-two million dollars was collected last year. I think it actually surpassed that above their expectations. They predicted $42 million less the cost that government has to pay back to itself.

The payroll tax last year actually brought in $45 million. As I recall, the minister estimated $42.5 million and actually brought in $45 million. He is going to bring in $66.8 million this year. That is an additional $12 million this year in payroll tax. Personal income tax is up by $50 million this year from last year. That is $62 million additional this year, and it will be more next year because personal income tax goes up by another 1.5 per cent next year and the payroll tax will apply for the full year instead of three-quarters of the year. So, you are going to see quite a bit more. Where did this $45 million go? There hasn't been an increase of $45 million in the education budget and the health budget since the payroll tax was imposed. The minister nods his head, but I say to the minister, the only increases you have seen are the normal growth that every other department of government sees.

AN HON. MEMBER: There will be no cutbacks.

MR. WINDSOR: No cutbacks, no. But the government says, we are going to put in a special tax for health and education. In effect what it has done, Mr. Speaker, is they have put into effect a tax of $45 million that was $45 million less that they had to spend otherwise.

AN HON. MEMBER: We would have had to cut.

MR. WINDSOR: You would have had to cut? Somewhere else, perhaps. Yes, you would have had to cut in other areas.

AN HON. MEMBER: In health and education.

MR. WINDSOR: You wouldn't cut in health and education because you couldn't, because you have cut health and education as much as you could. In fact, you have cut.

AN HON. MEMBER: Look at the figures.

MR. WINDSOR: Yes, I will look at the figures. The figures, from Memorial University this year, gives an increase of $1.2 million. When you take $600,000 out of that for payroll tax -

AN HON. MEMBER: Four hundred.

MR. WINDSOR: A little more than that. The balance of it will go on increased workmens' compensation because they voted themselves an 8 per cent increase when inflation is 1.8 per cent. So they unilaterally said, we need 8 per cent additional. Every employer in this Province got a letter from them saying, 'The Board has just decided we are going to have an 8 per cent increase this year.' Unemployment insurance premiums, the employers' contribution, have gone up. You will find that Memorial University has very little of that $1.2 million left, certainly far less than the impact inflation will have on them.

So, in real terms, Memorial University this year has less money to spend than they had last year, and that is going to mean increased tuition fees or a cutback in services.

MR. BAKER: About the same.

MR. WINDSOR: Now, the President of Treasury Board says about the same. How can $1.2 million, which is less than 1 per cent of the university budget, be the same as 1.8 per cent inflation.

MR. BAKER: The university budget is $40 million.

MR. WINDSOR: It is $40 million?

MR. BAKER: That is (inaudible).

MR. WINDSOR: Yes. When you take off what they have to pay back for payroll tax and the other increases I just mentioned, workers' compensation and UIC, you will find that the university has less money to spend this year.

MR. FLIGHT: (Inaudible).

MR. WINDSOR: At least that. It depends on how excited I get, if I decide to get into some other nice little issues, some little district things.

Mr. Speaker, to bring in these tax increases - and we are talking about a decline in growth when it is painfully obvious to anybody who is looking at what is taking place in this Province that private enterprise is struggling. Companies are going bankrupt every day and many more are just tethering on the brink. Then this government brings in additional taxation.

I recall when this government came into office a couple of years ago, Mr. Speaker. The Premier was waxing eloquently, saying that we are not going to put all of our apples on the big mega projects. We have to get out there and develop rural Newfoundland. We have to get small business moving, and tourism. Private enterprise has to be the stimulant. And we read the budget document and what do we see, the big items? The Hibernia Projects investment in the Province will cause it to grow by 4.6 per cent, and the Lower Churchill Development, 15,000 person years. There is the great hope, Mr. Speaker, now for development. This government now is starting to say, 'Oh, oh! We haven't done a very good job of creating employment in the private sector. We haven't utilized the private sector. We haven't leveraged them at all.'

They are saying now that they will have a strategic, economic plan for the Province. Mr. Speaker, they are only three years late. What has taken them three years to develop? They are admitting, first of all, that they have not had a plan for the last three years, and that is painfully obvious. There has not been an economic plan in place. This government has been flying by the seat of its pants, drifting in the wind. Now they are saying that later on - hopefully fairly soon, I would suspect whenever the House closes, or next fall - we will see a three year economic strategy plan. They have $3 million poked in the Budget there for that. What that is going to be used for I do not know - on top of the $46 million that is in for Enterprise Newfoundland and Labrador - and there are a few more million hidden away somewhere for the Economic Recover Commission, who seem to have gone into hiding. Then there is another bunch of money there somewhere for the Economic Advisory Committee, or the Committee on - I do not know what they call it - Advisory Committee on the Economy, or something of that nature. We have more committees and commissions, and we still do not have an economic plan, and even if they do get an economic plan, there is no money in the Budget to do anything with it. You have $3 million for implementation. I assume, and maybe the minister will tell me, I assume that $3 million is for administrative purposes of some sort.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: No? That is for investment in industry? Well we will be dancing in the streets. We have $3 million to invest in industry. I doubt, Mr. Speaker, if industry will see five cents of it. I doubt if they will see five cents of that $3 million - for what good $3 million will do.

This plan will offer a solid framework for focusing development, and will provide a basis for action aimed at economic growth and diversification. Now which one of the reports produced over the last twenty years was that one dusted off and taken out of, I wonder? What a novel idea - the economic diversification. What have governments been trying to do for the last twenty years? Precisely that.

There is nothing innovative, nothing imaginative, in the minister's Budget that will change what we have been seeing for the last three years. There is no new program - nothing to cause private enterprise to say, Aha! Now that gives me an opportunity to do something. I have been planning to do it. I have been trying to poke away a few dollars; trying to make sure that I can get access to a few dollars to do something, and now this new plan of government gives me what I need to get me started.

I do not see it. Retail sales in the Province was down 3 per cent last year. That should tell the minister that, as we told him in last year's Budget, he was overly optimistic. Due to the recession, yes. We all knew there was a recession coming. The minister put his head in the sand and tried to hide away from a recession. We all knew there was going to be a national recession - an international recession, perhaps - certainly a North American recession. The minister tried to hide away from that, and he predicted what I believe were unrealistic and unreasonable growth rates in retail sales tax last year. We tried to tell him that. We tried to tell him that he was not being honest with himself in the projections that he brought forward last year, and there is the proof. He was off by 3 per cent - off by 3 per cent.

Well he has learned his lesson a little bit and he is saying, it is going to go down by another 1.5 per cent this year, because retail sales is a very good indicator of the state of the economy. So we will be down by another 1.5 per cent in retail sales this year. That has to tell you two things. It has to tell you that the average person out there does not have the disposable income. Why doesn't he or she have the disposable income? Again it gets back to that middle-class wage earner, because the middle-class wage earner is the one that is spending money. That is the one that you have to get moving. The lower wage earner does not have it and will not have it. The lower wage earner may be on fixed income, support programs of one sort or another, and that person has the basic necessities of life and very little else in this Province. In some cases they do not even have that.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: That's right. The minister and I agree for once. I have had more calls from constituents with social assistance problems, with unemployment problems, and with housing problems. I have not yet had a chance to dig into the meat of this Budget as it relates to housing because you only get one number here, of $50 million or $60 million for Housing Corporation. I have not yet had a chance to analyze the impact of that. But when I do I hope that I can find that there is something in there. The Housing Corporation and the federal government will have to work together, because the Province cannot afford to put in place all of the social housing that is necessary.

But the greatest, the most crying need that we have out there today, is in social housing. Housing for single parents particularly. It was a problem that we identified six or seven years ago, that single parents housing was the most critical need. I have several constituents who are literally going to be out on the street in the next few days. Quite literally, will be out on the street. The Department of Social Services will have to put them up in a hotel or something. Women with one and two children with absolutely no means of finding a place to live. It is a sad testimony.

But these people are basically on fixed income. They do not have a lot of disposable income. So you are not going to cause them to start spending more. So it is the middle income earner and the small business person who we have to move. What have we done? We have increased personal income tax which hits that middle wage earner hardest, because they are in that tax level where they are going to have to pay, with less flexibility. So we have taken 4 per cent more from them on personal income tax. That has decreased their spending power. You are taking it from their disposable income. If they had any in the first place. But you have reduced that disposable income.

So that will further -

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Yes. They will save their school tax but it will cost them more on personal income tax. Anybody over $30,000 will pay more personal income tax than they paid in school tax. I am talking about people with salaries from $30,000 to $60,000. These are the people who provide the greatest amount of taxes to support the social programs. This is the area that you are talking about. These are the people who normally have some disposable income that is discretionary, that they can choose to spend or they can choose not to spend.

So when you increase the burden on them by increasing personal income tax then you decrease the amount of disposable income that they have available. It is these people that we have to get out there. These are the people who are poking a few dollars in the bank today. The banks will tell you that their bank deposits are higher than any time in their history. Because people are not spending. Because people are scared to spend. Because people do not know what next year or next month will bring. Public servants in this Province, because of the minister's Budget last year, when he announced: there are going to be great cuts in public service. Maybe there were 400, 500, 600, or 700 people actually cut, but there were tens of thousand who sat there waiting: will I be cut? And if so, I'd better hang on to that disposable income that I would normally spend for items that I can - well, if I have to, I can do without.

The discretionary income, it stopped. So, what happened? They put the money in the bank. So they have a couple of dollars in the bank now. They did not spend the money, so the minister's retail sales tax went down. Because this money was not being spent. The only way to move the economy now is to cause those people to take the money out of their bank accounts and start moving it. The Government of Canada brought in this new program for first time home owners to use registered retirement savings plan, similar to the old registered home ownership savings plan of a number of year ago. The two sort of parallel. What the Government of Canada said was: you may take some money from that now. That is a good initiative.

But it allows people to take some of that money and move it now. That will help stimulate the economy. It gives people a little bit of a tax break and it gives them an opportunity to do something now that otherwise they probably could not quite do. I would submit, Mr. Speaker, that there is a lot of private money sitting in bank accounts across this Province, or in old socks somewhere up in the closet, that could be moved -

AN HON. MEMBER: None in my house.

MR. WINDSOR: There is none in my house either. I have holes in my socks if I even tried to put a dollar in them. There is a lot of money lying around, Mr. Speaker, that could be moved.

AN HON. MEMBER: You have it in your back garden because I saw it.

MR. WINDSOR: The only thing in my back garden is what the dog dropped there over the winter and there is plenty of that. I have a weekend's work in the back garden.

Mr. Speaker, there is a lot of money there, private money from that middle level wage earner, and private enterprise money. Business people are finding it tough but there are a lot of very good proposals that people would like to move forward with but they are afraid to do it because business has been down. I can assure you that business is generally flat in this Province, in every sector, that is what is amazing, pretty well in every sector of this Province. You expect to see certain sectors hit, you expect that certain sectors might survive nicely, but pretty well in every sector of the Province, even the grocery business. I have spoken to people in the grocery business and people are buying groceries but they are buying hamburger meat instead of the roast. In the small stores in rural Newfoundland, that are grocery stores as well as general stores, people are buying their groceries but they are not buying hardware anymore, the same volume of groceries, shifting a little bit to lower value groceries, the less expensive items, but they are not buying the hardware anymore, and the other items that these little stores depend on really for a good chunk of their profits.

AN HON. MEMBER: They will not have to pay the payroll tax.

MR. WINDSOR: They may not because their payrolls are now going down. I know of one store in rural Newfoundland which has laid off four people. They had twelve and they have cut back to eight.

AN HON. MEMBER: They were paying more school tax.

MR. WINDSOR: I doubt that because in rural Newfoundland the building would not be evaluated that highly. It is a fairly substantial building for a rural community. It is a fair size supermarket for a rural community.

AN HON. MEMBER: (Inaudible)

MR. WINDSOR: That is right. Well, what they have done is cut back a lot of the people from full-time to part-time, whereas they were able to absorb them and keep twelve people working knowing that part of the time they were doing things that could probably be left. They were making sure things were neat, tidy, and clean, and the shelves were well stacked but now the place is not going to be kept as well, the shelves will not always be stacked as well. There may be a carton of beans thrown there instead of the cans stacked up nicely, so a lot of that discretionary sort of thing is down and productivity unfortunately has to go up. There is nothing wrong with that. That is an issue I want to address as well, this productivity. There is always some good that comes from everything and in this case the recession also has a little bit of good in it, it is forcing us to be a little more productive and efficient, and that is good because many of our businesses are weak in that regard. We tend to get lazy, we tend to let things slide when times are good but when times are tough we have to tighten up, so we find that people are cutting back on staff, they are reducing their hours, doing all kinds of things to lower their costs, and there is good and bad in that. It is good from the business point of view and it is bad for the individual who is losing his job or losing part of his job.

But there is money out there that could be moved, it is out there but what we have is a lack of confidence in the economy, and I had hoped and I had said many times publicly, hoping that the minister would hear, that what we needed in the Budget was something to stimulate some confidence in the economy of this Province, something to cause people who wanted to start a new venture or to expand an existing venture, to believe that the time is right to do it, because it is a self-fulfilling prophecy, that when somebody starts to move and starts to do something, everybody benefits and when everybody benefits many other businesses start to improve as well and they start to spend more, and so, it is very much the domino effect that one business starting to do something can improve the business of others, but there is money out there.

Mr. Speaker, let us have a look at the minister's document. The minister says we have made substantial progress towards our priorities without imposing an undue burden on future generations, our fiscal plan is working. Our fiscal plan is working, he says. Now, how can the minister make such a statement as to say our fiscal plan is working when what we are seeing is a decline in all economic factors. Gross domestic product is down by a half per cent this year, again last year; personal income is down by 1.9 per cent last year and is going to go down by one-third of a per cent this year; disposable income is down by 2.4 per cent last year and will go down another per cent this year; retail sales were down 3 per cent last year and are going down another 1.5 per cent; investment is going down from 6.2 per cent to 4.6 per cent; unemployment is going up by 2 per cent to 20.4 per cent and the consumer price index, the only bright spot believe it or not, the consumer price index is expected to increase by only 1.8 per cent, not an unreasonable level, if that in fact is the case.

But all of the factors are negative, yet the minister says: our fiscal plan is working. We have reduced the size of the public service, the minister says; reduced the size of the public service, well, interesting there, Mr. Speaker. I think we see that in real terms, as my colleague said during Question Period, we have in the Budget document, 6,794 public service positions this year, that is 325 less than was in the Budget last year, so we are losing another 325 positions; perhaps some of them by attrition, perhaps all of them by attrition, but we are going to see 100 teachers laid off; 100 people with School Tax Authorities laid off or redistributed, and of course the minister announced all the boards and agencies that will be eliminated, there must be some positions with those, and so we have seen from 1990, 456 positions lost last year and a further 325 directly on government payroll this year, Mr. Speaker.

The minister says: there is a reliance on debt declines, relative debt service-cost decline freeing up more funds to spend within the Province on health, education, economic development and other priorities. Mr. Speaker, how can the minister say that? The whole growth in the Budget is less than 3 per cent, the minister is proud of that and I guess we can hardly fault the minister for trying to keep the growth in the overall Budget down to 3 per cent. It is a noble objective but, as I said over the weekend, at what cost?

Interest payments have played a large part in the decline of the cost of debt servicing, and in giving the minister an opportunity to come as close as he did to staying on his Budget target. The minister was very proud of the fact that he was only $6 million or $8 million in total above the projected deficit figure for last year. A few months ago he was in a panic situation. He figured he was going to end up with a $95 million deficit, but then, interest rates fell, coming to the rescue for him.

Mr. Speaker, there is a graph on page 6 of the minister's Budget document from which I think he could learn a good lesson. It is the interest payments as a per cent of revenue. We talk about government's borrowing, and the ability to borrow. You have heard me speak many times in this House of the Five-Year Plan that we brought in in 1985. If you look at the graph on page 6, you will see that from 1985-1989, there was a steady and continued downward slope, carried over into 1990. In 1991 we jumped up again. In 1992 we came down a little bit, and we are hoping to go down a little bit next year. But that shows what a sound, economic plan can do - and the minister comes forward with his strategic economic plan. I hope that it will also take account of the factors that impact on the cost of borrowing in the Province.

There is another reference here on page 6 to which I want to refer: 'Before removing all the barriers to the free flow of goods, services and labour that exist in this country, we must ensure that there is a level playing field...' I address this to the Minister of Development, Mr. Speaker, who made some comments over the weekend that I want to congratulate him for, as it relates to free trade of inter-provincial barriers on beer. The minister was quoted in the paper, and I agree with him, and I support him on it, and I hope he sticks to his guns on it, because the minute you remove the barriers, then you can forget brewing beer in this Province.

This says: 'Before removing all the barriers to the free flow of goods, services and labour that exist in this country, we must ensure that there is a level playing field with respect to taxation, services and infrastructure, so that the goal of increased national efficiency is not achieved at the cost of increased regional economic disparity.' I couldn't agree more than I agree with that particular paragraph in the minister's Budget. That is a real danger here, in our haste to try to find constitutional accord, although critically important to this country; but in our haste to do that, that we be very careful about removing - not inter-provincial barriers. I don't like to call them inter-provincial barriers. They are perhaps regional incentives, something put in place to assist companies on a regional basis.

Beer is a prime example. If we remove that difference in price, then we will, indeed, lose it very quickly. I also want to caution this government on the minister's concept of returnable bottles in this Province. That can be even more devastating to bottlers, be it soft drinks or beer in this Province, than the payroll tax. The payroll tax is peanuts compared to what that can do in the marketplace, and to the competitive position in the marketplace, because the market will go down.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: We have an environmental problem. I couldn't agree more.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Yes. But I don't think the solution is in causing the bottling industries in this Province to spend millions of dollars to convert, and that is what they would have to do, spend millions of dollars to change their bottling line, change their transportation system, change their trucks.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Yes. That will not work. If you travel the countryside, you will find that, when you get back into the wilderness. I would sooner take an aluminium can that I can throw in the fire and it will burn than a bottle that I am expected to lug back empty. Because I probably - I will. But a majority of people will not. I usually come back from the wilderness with a bag of bottles and cans that somebody else left there.

MR. FUREY: (Inaudible) will people take the cans out of the wilderness if they have a value?

MR. WINDSOR: Yes. The value on an aluminium can is not going to be very much.

MR. FUREY: (Inaudible) the value is x, whatever x is. If we make x worthwhile, won't people bring it back?

MR. WINDSOR: Bring it back? I am not concerned. That is my point. If the deposit on a bottle is high enough, people might bring it back, I am not sure. We are talking about a very small portion here. We are talking about the numbers of people who go into the wilderness. But still, it is an important aspect of - the bigger problem is around city streets and on the sides of the highways. There's your big environmental problem. But the wilderness area is an issue that we will just talk about for a moment. There, if you are going out on a snowmobile or an all-terrain vehicle or in a canoe - all of which I do - you are not going to lug back half-a-dozen empty bottles. You will, but you have to be dedicated to the wilderness if you are going to do that.

But an aluminium can you can throw in your campfire and there will be no sign of it when you are finished, if you have a campfire burning at all. Or you can squat it up and poke it in your knapsack. The value of the can is negligible. You won't, for the ten or twenty cents, even, carry something back. I don't think it is incentive enough. If you are not the sort of individual who cares enough about the wilderness to bring it back, anyway, you are not going to do it for the sake of twenty cents. The cost of your trip is far more than that, and the twenty cents is peanuts.

But the cost of converting existing bottling lines would be literally millions in this Province. I know of great debates, great discussions that I held with them myself, back in the early 1980s, when they were bringing in new equipment. We gave them assurance at that time - I think we put a five-year limit on it, realizing we cannot bind forever governments. I think we said: For five years, this government will not introduce any legislation that will cause you to go to a returnable bottle - on that basis. They made tremendous investments then.

The cost, now, would be tremendous and, in fact, would literally put some of them out of business.

MS. COWAN: The tighter the environmental legislation, the better it is (inaudible).

MR. WINDSOR: See, that is spoken with blinkers on. There is an hon. member who has one objective in mind and has no concept of the needs of industry, or the realities of what is taking place out there. She obviously has not paid any attention to what I just said. Thank God, the Minister of Development has a far more open mind.

But that is frightening, Mr. Speaker, that that particular member, who was the Minister of Environment - thankfully is no longer.

MS. COWAN: (Inaudible).

MR. WINDSOR: Very few members in this House are more concerned about the environment than I am. I work with it, I've worked with it for many years. I think that there is a tremendous amount of work that needs to be done in this Province to protect the environment. Bottles and cans are part of it, but we have far worse environmental problems. I say to the Minister of Forestry, have a look at what is coming out of the paper mill in Grand Falls. If you want to see an environmental problem, a few cans and bottles along the Exploits river bank are far less than the problem you have from what is spewing out of the back of Grand Falls paper mill. Or go to Corner Brook.

MR. FLIGHT: (Inaudible).

MR. WINDSOR: Not the heck of a lot. They have spent some money to improve it and I have not inspected it since that - I don't know if that new settling tank is finished or not. They were spending $7 million this year, I think - $11 million, to improve Grand Falls, but they still were not going to tackle the whole problem. They were going to do part of it.

Corner Brook - the same way. I spoke to people in Corner Brook who are divers, who used to go diving in the Bay of Islands, who used to pick up lobsters off the bottom not far from the paper mill. Now, they say, if you want to find a lobster you have to go outside Frenchman's Cove. There is nothing left. The pollution in Bay of Islands is incredible. The pollution in the Bay of Islands is far worse than in St. John's harbour, because St. John's flushes itself once a day, the tidal action and the actions of the fresh waters that are going into the harbour in St. John's.

AN HON. MEMBER: It doesn't look like it down there.

MR. WINDSOR: It doesn't look like it, no. Amazingly though - I say this in all honesty and with some knowledge -

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Pardon? The paper mill. But the Bay of Islands is such a long reach - it is a twenty-two or twenty-three mile reach -that it only flushes itself once every seven days, in spite of the huge amount of water coming down the Humber River.

MS. COWAN: Where is it going when it flushes itself?

AN HON. MEMBER: Out into the ocean.

MR. WINDSOR: Into the ocean.

MS. COWAN: Into the ocean!

MR. WINDSOR: Outside the harbour.

MS. COWAN: (Inaudible) environment (inaudible).

MR. WINDSOR: Did the Minister of Development ever hear of a notion called 'dispersal'? Which is one of - the former Minister of Environment.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Did I? I apologize to the Minister of Development - the former Minister of Environment. Did she ever hear of a notion called 'dispersal'?

MS. COWAN: She is the Minister of Environment, now.

MR. WINDSOR: I thought she was changed

.

MR. MATTHEWS: She should be changed.

MR. WINDSOR: Oh, God! Dear Lord, help us! The Minister of Environment - gone from bad to worse, Mr. Speaker.

MR. MATTHEWS: (Inaudible) dispersal?

MR. WINDSOR: Dispersal, yes, which is the modern method of actually treating municipal sewage in a reasonable manner and is now being accepted by environmental agencies all across North America, I say to the minister, which is a method of getting an outfall far enough out, with a dispersal system, so that it actually can be dispersed, to minimize the impact on the environment. Yes, it is there, and far better to remove your suspended solids from that effluent than to put it out there. But it is at least far more acceptable to disperse it, to get it out into tidal and current action, so that the localized impact is less. That is what I am talking about in the Bay of Islands. But the Bay of Islands, unfortunately, doesn't have as good a natural dispersal as does the City of St. John's.

MS. COWAN: (Inaudible).

MR. WINDSOR: What did she say?

MR. MATTHEWS: (Inaudible) act big, or something. She doesn't know what she is talking about, boy. She wonders where the harbour went when the tide came up and went out (inaudible).

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Sorry?

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: The Harbour is bad. I am not saying that the Harbour is good, but it is not as bad as most of us would believe, when you do actual tests - and many years ago, I, in fact, actually did tests. I was working with an engineering company, doing a survey on that. At that time, people just could not believe that it wasn't as bad as they said it was. Now, there are all kinds of sediment on the bottom which has settled over the years. There is nothing living in the Harbour - not for very long. But it does flush itself, basically, once a day. That is not to say there isn't a problem, but it is more an aesthetic problem than an environmental problem. The actual water quality is not as bad as we might think. It is not as bad as it looks, by looking on the surface. If you could take some of the gross suspended solids out of it, then you would tremendously improve the overall impact from an aesthetic point of view.

AN HON. MEMBER: In terms of danger, it is not there.

MR. WINDSOR: In terms of danger it is not there. As the hon. gentleman knows, I am involved in that, or was. To give you another good example, there is North West River in Labrador. The council there is concerned that they don't have any treatment of their municipal sewage. Now, the little town of North West River is never going to pollute Lake Melville, which is 150 miles long and forty miles wide. It is just not going to happen. They put their sewage out into the North West River, right under the bridge, where, as hon. ministers who have been there know, there is quite a tremendous flow of water. It is a natural aeration process, a natural sewage treatment system. But it is the gross solids. Because that is also their best fishing area. The fishermen's nets are just below.

So whereas the Department of Environment officials will go up and test - you will test the water and you won't find any coliform count; you won't find any trace of pollution if you do a physical test on the water, but the fisherman has to pick his net once a week. Again, it is just the gross solids. What I am saying is that it is not a danger, but it is not very nice when you see what you're taking your fish out of. These are the sorts of things we have to deal with. I am way off my subject now. I got drawn into it there.

AN HON. MEMBER: What is the Gander situation?

MR. WINDSOR: The Gander situation now is greatly improved, not totally improved.

AN HON. MEMBER: We spoke on that before. (Inaudible).

MR. WINDSOR: No, no! I didn't bring it up at all. The minister asked me about Gander and said, 'What is the Gander situation?' Gander has gone to great expense to put in place a new system which is now treating, essentially, all of the sewage from the town of Gander.

AN HON. MEMBER: (Inaudible) water quality?

MR. WINDSOR: The water quality is tremendous improved, not as much as it should be because the town has not yet put in place the chemical system that was designed to aid the separators that were put in place. The separators are working well, and the chemistry can work but it needs to be set up properly. I say this without - the efforts have not been made to put the chemical system in place to improve the settlement. That is a fact. But the system can and does work very, very well. The Town of Gander has spent a lot of money on that.

The Town of Gander, by the way, has the only sewage treatment system anywhere in the world using that technology. It was developed right here in Newfoundland, the only one in the world.

AN HON. MEMBER: It should be used all over the Province.

MR. WINDSOR: It should be used all over the Province. If we could only get the Town of Gander to complete the system, to put the chemical system in there. Because the minister's environmental officials say, 'Yes, well, this is a good experiment, but you haven't proven it yet.' Because it doesn't work all year, it works during peak flows, because we are only trying to take out the gross solids. The influent almost meets environmental standards when you take the gross solids, but at a low peak, when the sewage is more concentrated, you have to have the chemistry to aid in the settlement, and the chemical system has not been put in place to cause that to meet standards all year. So the department's officials are saying, 'Well, you haven't proven this one yet. So, until this one is proven, we won't talk to you about it anymore.' So it is a Catch-22 situation for the company that I was involved with, and this is a non-paid political -

MR. BAKER: How does it work?

MR. WINDSOR: The President of Treasury Board knows the system well.

I spoke a moment ago about the system for Grand Falls. Abitibi paid, I think, $11 million or $12 million to put that system in Grand Falls. I was trying to sell them this technology at the same time. I could have done, I believe, the same job, if not better, for $3 million or $4 million.

In the case of Gander, the town's consultants, separate consultants, had designed a conventional sewage treatment system with aeration and lagoons which was estimated to cost $5.5 million.

AN HON. MEMBER: (Inaudible) 10 million gallons a day.

MR. WINDSOR: Fourteen million gallons a day at peak, yes. It wouldn't work, and that type of system will not work because at a low flow, it is underloaded, so it will not set up the septic action that is necessary, and at high flows it is overloaded. So those types of systems will not handle a broad range of flow. That is why the system that was put in place was effective, in this particular case, because it can handle a broad range of flow, and it cost 40 per cent of the estimated cost of the conventional system.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: We have done it. I have a model. Believe it or not, I spent four days of my honeymoon in the bowels of the paper mill in Corner Brook trying to prove to Kruger that we could take out 65 per cent of the wood fibre. They are dumping eighteen tons of wood fibre a day into the harbour in Corner Brook. I told them that I could take out 65 per cent without any chemicals.

Mr. Speaker, this is well away from the Budget.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: The hon. minister is familiar with it. The hon. minister officiated at the opening of the plant in Gander and was very kind in his comments. In fact, when he was on the council, Deputy Mayor of Gander, I believe, he was one of the chief persons who supported the concept and who had the confidence in the technology to try it. The whole town council of Gander at that time are to be congratulated, because it is new technology. As I said, we took a piece of technology that was developed in Britain for storm sewage treatment, for heavier solids, and we refined it and fine-tuned it to take out the finer suspended solids that you get in municipal sewage. The Town of Gander had the foresight and the courage to try it and I don't think they have been let down. I think they are generally pleased with the system that was put in place.

Mr. Speaker, I feel very much that I am in conflict when I talk about this sort of thing here, but I am doing so in response to questions.

MS. COWAN: I would like to ask a few questions.

MR. WINDSOR: Well, I would be pleased to give the minister any information that she wants. If she is in Gander she could have a look at it. I have photographs that I would be happy to sit down and show her, and I have some videos that explain the technology. Her staff are very familiar with it. Ken Dominie knows that system as well as I do.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Shortage of money for -

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Yes.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: The Town of Gander can do it. It is there and it should have been done. The thing just has not been completed. The money was in place and the system was there. We had nothing to do with that chemical system, and I am trying not to be unkind to other consultants, but other consultants were responsible for that; there was a contractor who was responsible for that; there were people who advised on the chemistry who were responsible for it. Between them all, it has not been put in place properly to work. We tried it for a little while about three or four months ago. It didn't do much.

I say to the Minister of Environment and Lands that I would be very pleased to give her any information. There is a broad range of uses for this any time you have a suspended solid in a liquid that can be settled. I am talking to mining industries about cleaning up their tailings operations. I am talking to paper mills about taking the fibre out of their operations. In municipalities, it is the first time we have ever done it. Storm sewage - it is being used broadly in England for taking sand and gravel out of storm sewage. That is easy because those are heavy solids that settle out quickly, but the finer solids that we find in municipal sewage has taken some time. We have refined it, fine-tuned it and have done it, and have proven to ourselves, but because of this problem with the chemistry, we cannot prove to your officials. Ken Dominie and your other officials there are very familiar with it and have been very helpful, I say to the minister. They have been very helpful, but are being a bit cautious at the moment.

We would like to move forward, but unless the minister has some funding for municipalities this year to build sewage treatment systems, then there is no point in us moving forward. The government has not funded any sewage treatment systems except for the Town of Whitbourne which has been, I think, in the last couple of years.

Interestingly enough, we have been asked by the City of Halifax, or the group designing the City of Halifax, to use the technology there, and I have had discussions with the City of St. John's. So perhaps we could export some technology from Newfoundland and be leaders in that technology if we could get that moving.

So, Mr. Speaker, I started off way back on page 6 to compliment the Minister of Development on the approach he has taken on the environment.

Mr. Speaker, the Minister of Finance has often talked about federal transfers as a percentage of revenues in Newfoundland and his own documents here show what is taking place there. We all know that the federal transfers have been declining slightly over the past number of years and it nice to see an increase this year of payments of $31 million to the Province projected for 1992-93. So I hope there is an end to our hearing that all of our troubles and woes are due to the cutbacks in funding from the Government of Canada.

Mr. Speaker, the minister, in his Capital Account Budget, came about $14 million less than he had projected - we found that interesting - $14 million less than the minister had projected to spend. Then we see also that he paid $14.5 million to Marystown Shipyard to cover some of the debt of the Marystown Shipyard. We support that, but that was $14 million more of capital debt. So now we are up to, in fact, $28.5 million of capital money that was scheduled for construction projects in this Province that was not spent. $28.5 million last year could have had a tremendous impact in this Province. It could have had a tremendous impact in this Province. It is hardly a year when the government should try not to spend capital. The minister can say: well we are borrowing, and we are borrowing. Yes, we are borrowing, and we will have to borrow for capital, and the level of borrowing –

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: When hon. gentlemen are finished here, Mr. Speaker -

AN HON. MEMBER: I am sorry about that.

MR. WINDSOR: I realize these are important issues that they are talking back and forth about.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Prompted from both sides, I suspect, Mr. Speaker. It does make it difficult when I cannot hear what I am saying, I must say.

Mr. Speaker, that is $28.5 million of capital expenditure that could have had a tremendous positive impact in this Province last year. When unemployment rose by 2 per cent last year, that $28.5 million could have had a tremendous impact on that, because the construction industry is an industry that would very much affect that type of employee. Why, can the minister tell us, were these funds not expended? Government came to the House; we debated it last year. The House gave the government authority to borrow that much money - to expend that much money on capital works in this Province - and the economic impact of that construction activity is certainly a major factor, I think, not only from government's point of view, but certainly from opposition's point of view, in supporting that kind of a Budget. Yet that $28 million was gone.

Also the minister, in the same paragraph, makes mention of the fact that instead of building three health care facilities, it was decided to enter into a lease/purchase arrangement. There is another one that we are going to discuss in due course, but that is more capital money that was not spent. I do not know how much was in it last year. I think $3 million was in the Budget last year for those three health care facilities? And that was not spent because government has entered into a lease/purchase, so there was no cost up front. That was another $3 million or $4 million that could have been spent.

Overall, Mr. Speaker, current account was down by $56 million - $55.9 million. If you look at Table 2 on Page 9 of the Budget, gross capital account expenditure was down by $55.9 million, because when you look at it carefully you find that a lot of this capital expenditure was cost-shared programs. Now here the government -

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Still being spent? Why was it not spent last year is my point? The money was there. The provincial share was there. The federal share was there, and there is $55.9 million of capital expenditure that was not undertaken last year. $55.9 million would have had a tremendous impact on the bottom line in this document for last year. It would have had a tremendous impact on sales overall and on personal income tax overall. All of those things would have benefitted. It certainly would have had a big impact on unemployment; $60 million would create a lot of jobs, Mr. Speaker. The point is that if you are leveraging federal money, then it is good money. It is well spent.

Our capital account for this year is down by $16.5 million - again, down by $16.5 million. The government says that they are moving ahead with an expanded budget, but yet we are going to have $16 million less. Why, if we are going to spend $16 million less on capital, why could the government not, for example, borrow that $16 million and put it into a program for economic development? If we do not need it for capital construction, if we can keep our capital works program down a little bit, why could we not borrow that $20 million for a job creation program? Not short-term job creation, but a program to stimulate the economy. To leverage some private investment or to leverage some federal money.

As the President of Treasury Board said in a panel discussion we had: you can afford to do that. It makes good economic sense from the provincial point of view to do that. If you can get 70 per cent cost-sharing from either private enterprise, through their investment, or through the federal government, thirty cent dollars are good dollars to spend, and we should spend all of the thirty cent dollars that we can get. Be they federal dollars or be they private dollars, Mr. Speaker.

So why could we not take the $16.5 million that we are saving on capital account this year and earmark that for some sort of activity?

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Well, I say to the hon. gentleman, if he wanted to have a look at the major expenditure items in here, particularly if you look at the transportation budget, if you got rid of Mulroney there would not be very many roads built in this Province this year. I can tell you that.

MR. TOBIN: Eight hundred thousand! Eight hundred million!

MR. WINDSOR: Eight hundred million. This is the hon. crowd, Mr. Speaker, that said: oh, the Roads for Rails agreement, you're giving it all away, it's terrible. They don't have any trouble announcing the money now, now that it is being spent. The Minister of Finance -

MR. TOBIN: They even announced the Petit Forte Road.

MR. WINDSOR: Petit Forte Road.

MR. TOBIN: That is what was in the Budget.

MR. WINDSOR: Yes. That is all federal, isn't it?

MR. TOBIN: Yes!

MR. WINDSOR: One hundred per cent federal, Petit Forte Road.

MR. TOBIN: Announced the Burgeo road, 100 per cent federal.

AN HON. MEMBER: Ask them about the ferry.

MR. WINDSOR: Yes. I didn't hear any ferries. No ferry for Fogo. I do not understand that. Could the hon. Member for Burin - Placentia West explain that? I do not understand that.

MR. TOBIN: What he is talking about is the ferry from South East Bight.

MR. WINDSOR: Oh, yes. That's provincial. That is one that I need to do some more research into, Mr. Speaker, is the Municipal Affairs (Inaudible). The minister announced some projects today, and I congratulate the minister on that. Nice to see them starting to move. Hopefully those are actually now announced and the municipalities can move ahead with them immediately. That is much better than we saw last year, for sure.

But I notice in this figure of $59.9 million, that also includes major recreational facilities. I have not had time yet to go through that particular item, to try to sort that out and compare that with last year. The minister does say that there will be no new projects this year. That it is the ongoing projects that are being funded, for water and sewer and roads in municipalities.

So it will be interesting to see just exactly what is taking place. Maybe what we are talking about is that we are now funding the jobs that did not get done last year because the money was not spent last year. Because it was so late in being announced that municipalities were not able to take advantage of it. As my colleague said earlier today, a lot of municipalities will not be able to take advantage either because they cannot come up with their share as required under the new Act. But we will get into that in more detail a little later on.

Now I spoke about sales tax and equalization tax. I spoke about attitude. That one of the big problems that we have in the economy today is that we have lost confidence in the economy. But we have done nothing to try to attract investors to the Province. In fact, the taxes that have been increased are the highly visible taxes. Our consumer taxes are the highest of anywhere in Canada. Other taxes admittedly are low, and the minister's document shows that on average we are 103 per cent of the national average of taxation effort, overall when you consider all taxes in place.

But when you look at the payroll tax and the retail sales tax you will see that our consumption taxes are 163 per cent of the national average whereas our property taxes, for example, are only 35 per cent of the national average. So it is very difficult to compare province by province except to say that overall we are at 103 per cent. What is painfully obvious is that the highest ones we have are the personal income tax, the corporate tax and the retail sales tax, followed closely now by tobacco taxes too, a very close fourth place there. These are the highly visible taxes.

One of the real problems, for example, that I see with the GST is that it is so visible. Many of us feel that we pay it on many items far more than 7 per cent. The old manufacturers tax, nobody gives any credit for the fact that that is eliminated, but now we see the 7 per cent GST is a terrible tax. Everybody hates the GST, but so do they hate the retail sales tax, it is just that we have been paying it longer. When you add GST and RST together you are now paying 20 per cent in this Province. When you look at personal income tax it is now up to 60 per cent of the federal tax level.

The average wage earner, Mr. Speaker, is paying a tremendous amount of money out in taxes. The overall tax effort now is incredible, just incredible, what you are taking out of the pocket of the tax payer. It is becoming very much a disincentive for persons to work. I am very concerned about the fact that these consumption taxes are so highly visible that companies are coming into the Province comparing this Province with, for example, Nova Scotia, which is our nearest competitor for business. But there is nothing much here to entice a business to establish in Newfoundland. If they had the choice between establishing something here or something in Halifax they are going to go to Halifax. You may well see with this payroll tax in place companies now operating regional offices out of Halifax, the payroll actually being done in Halifax, and they are avoiding a 1 per cent - or 2 per cent now - tax by doing that.

Mr. Speaker, that is enough on payroll tax for now. I have talked about the payroll tax and I have talked about the personal income tax. I will though just emphasize again the impact that the payroll tax is now going to have on the resource sector, on the forest industry, the fishing industry, the mining industry, all of which were having difficulties - and mining industry yes and no. There are no mines on the Island at the moment that are in operation that I am aware of.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: What is left? What one am I missing? The talc mine in Manuals operates part-time.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: What one?

AN HON. MEMBER: (Inaudible) Port au Port.

MR. WINDSOR: Okay, there are a couple on the West Coast. But the big one would be Labrador City - Wabush, of course, and I think the impact on them probably will not be great. In fact, they are probably better off. I would think they are better off. I would think the value of their property would have put them into a higher level of property tax than the payroll that they are paying.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Their what?

AN HON. MEMBER: Their school tax grants were bigger (inaudible).

MR. WINDSOR: School tax grants were bigger. But are we eliminating now the grant in lieu that they gave the school boards? That was a special thing that was negotiated. Is that now gone?

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: That is gone.

MR. TOBIN: In Labrador?

MR. WINDSOR: Yes, they had their own separate school board there and there were grants from the two mines directly to the school boards.

AN HON. MEMBER: That was above and beyond any taxation.

MR. WINDSOR: That was above and beyond anything. Yes, so that is above and beyond school tax. That is still there. School tax is eliminated, but that special negotiated grant is still there.

AN HON. MEMBER: I do not know.

MR. WINDSOR: You are not sure. I would be interested if the minister could find that out because I know -

MR. TOBIN: Didn't the mining industry pay the tax last year?

MR. WINDSOR: I do not know, but it was a very generous amount that the mines paid. They had been attempting to reduce it or to eliminate it.

MR. TOBIN: Did the mines pay the payroll tax last year?

DR. GIBBONS: Yes.

MR. TOBIN: They did, did they?

DR. GIBBONS: They paid last year.

MR. WINDSOR: Yes, but you have to recognize that the cost of education up there is so much higher than anywhere else, just the cost of heating alone is incredible. Cigarettes, Mr. Speaker, the minister has picked up $7 million on cigarettes. Now, that is no problem to me as a reformed smoker -

AN HON. MEMBER: That is a lot of money to go up in smoke.

MR. WINSOR: That is a lot of money going up in smoke. The minister is picking up $60 odd million on tobacco, I think it is -

MR. TOBIN: $60 million in tobacco? $60 million in tobacco in taxation?

MR. WINSOR: -$63.4 million, tobacco taxes this government is collecting this year versus $56.5 last year and that is just the tax. Imagine how much is spent on tobacco in this Province -

MR. TOBIN: No wonder they are bringing it in from St. Pierre.

MR. WINSOR: - if the tax is $63 million there must be $250 million spent on tobacco in this Province. It is just amazing and look at lotteries, Mr. Speaker, there is a dandy. The minister is going to get $29.5 million from lotteries this year, that is up slightly from last year which came in at $28.5, but the minister only estimated $20 million on lotteries last year but he actually netted $28.5 million, now there is a real test of the state of the economy. How much money is being spent on lotteries?

I have spoken to people who operate convenience stores which sell lotteries tickets and if business is normally slow, come Saturday afternoon all kinds of people are coming in to buy their lottery tickets. They have to come in and get their lottery tickets. The lottery sales are up almost 50 per cent from what the minister predicted and part of that is because he has the new electronic one - armed bandits in the bars now, we have the electronic gambling machines in the bars.

The old slot machines, I think, are still outlawed in this Province but we have the equivalent, the electronic equivalent through the Atlantic Lottery Corporation, that is giving a tremendous amount of money to government and I would suspect that a good chunk of that additional $8.5 million that the minister received last year, came from those machines. But that is a good indicator of the state of the economy, when people are so desperate today, that they are saying: I have to take my last ten bucks or my last five bucks and go and buy a lottery ticket and hope that I might win. They are turning to such desperate measures and that is, Mr. Speaker, exactly what is happening today, people are so desperate that they are clinging to the incredibly great odds against them that these lotteries hold. All you need is for one fellow in Mount Pearl to pick up $3 million and I think the sales tripled for the next three weeks, more than tripled I think, because the guy is very well known who won the $3 million.

Fees and licences, Mr. Speaker: The minister was quoted as saying over the weekend that it is his pet project. It does not take much to amuse the minister as I found out during Question Period today. I am not surprised that it is his pet project, it's very, very interesting. Significant reduction, cost inconvenience and paper burden. Now, Mr. Speaker, on the first blush one would say: this is great, 171 fees and licences eliminated, and many of them I could not agree more with, but you have to realize that it probably cost government as much to collect the money as they received from it, so they really have not given up a great deal, but, there are a couple of them that I disagree with.

One, for example, is the entry permit to the Salmonier Nature Park. The complaint I had from people is that it only cost fifty cents for adults and twenty-five cents for a child and if you go to Nova Scotia or New Brunswick or Ontario, you are paying three and five dollars for the same sort of thing. The complaint I had from people was: why don't you increase the fees, put more money in the park to improve it a little bit. So I do not know if that is a valid thing or not but what you have done by eliminating that, is you have eliminated three or four seasonal jobs on the gate of the wildlife park now. There are three or four summer students who would have been employed in the wildlife park, and in the other provincial parks, a lot more. The provincial parks will need a lot less people this year because the fees have been eliminated. I am not sure if that was not a counterproductive move. Even if we only collected enough to pay for three or four students, it at least gave you some control over who was going in and out, and it created three or four jobs; but no doubt people will be pleased to say: well we can take a stroll now through the Salmonier Nature Park anytime at all without paying a fee.

Tourist establishment licence fees, hunting and fishing camp licensing fees - I have no problem with that. It is not a great burden, I would not have expected, but we can see where they are. They are all here in the back of the Budget. The minister kindly listed them all for us. They are gone from $20, $40, $60, $80 and $100 down to nothing. You still have to get a licence, so what was the benefit? We have given up a few dollars, but the nuisance is still there. The paper burden is still there. The cost to government is there. Now there is no revenue. A $20 fee was not onerous.

Travel trailer establishment licences - the same sorts of things - eliminated. The fee is eliminated, but you still have to go get a licence.

All kinds of educational fees, certified copy of marks, testing fees –

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Yes, nuisance fees. I couldn't agree more with eliminating a lot of those.

Environment and lands fees, well driller's licences, pesticide vendor's licences, pesticide applicator's licences - what were they for in the first place, Mr. Speaker?

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: Pardon?

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: No, they were there a long time, I would say.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: We eliminated quite a few too. We eliminated quite a few. We should have eliminated these. We were in the process of examining all of them, and a lot of them we were going to drop.

A lot of them through the Department of Environment - permits to establish or alter boundaries. The problem is, they have not removed the licences. They have just removed the fees. You still have to have the licences. It just does not cost you anything now.

Here is one that I do disagree with - non-residential trouting licences - non-residential. Now we can have people coming into the Province without having a licence, and that would particularly impact on Labrador because there are so many people flying in from Quebec into Labrador. The Minister of Tourism is not here now, but that is a major problem for some of our hunting and fishing outfitters in Labrador. There are so many outfitting stations on the Quebec side of the Quebec border, and they can very easily in some cases walk across or come across by boat or on all terrain vehicles into Labrador to hunt and fish or they can fly into some of the better remote locations of Labrador.

In many cases we have outfitters there who have invested hundreds of thousands of dollars on building a facility and marketing that facility and attracting people from all over the world, and down swoops this airplane from Quebec and these people get out and fish or stand on the pontoon of the aircraft and fish, and they do not have any licences. Now that we have removed the requirement for a licence - yes we have even removed the requirement for a licence, not only the fee, which was only $20 for a non resident licence and $30 for a non resident family, but we have removed the requirement for a licence now.

So now what control do we have over them at all? If a wildlife officer went out, those people are now legally fishing, so instead of dealing with the problem of unfair competition and having people coming in with no licences, paying no respect to bag limits or anything else, and they frequently don't, they frequently fly in with their coolers and their bags of ice and load up on trout, char and salmon in Labrador. Now we have removed any opportunity for a wildlife officer or a fisheries officer to at least know that these people are licenced and that he has some control over them. Try going to Quebec, Mr. Speaker, and catch a fish without a licence. Try going to Quebec and you will see what happens.

Provincial park seasonal vehicle entry permit: I already spoke about that one. It is going to be nice to be able to drive into a park now without having a sticker on the car, but there are a few student jobs gone. Anyway, there is a whole list of these kinds of things, brewers retail licences, transportation services licences, and waiters licence. There is one that I think I said last year that is a nuisance. I am told there were 9,000 people registered as waiters, waitresses and bartenders in this Province. Just an absolute nuisance, Mr. Speaker, just incredible.

I think last year, if I am not mistaken that was increased. I believe the fee last year was increased. I believe I spoke in this House against it at the time and said: what you are doing is imposing another fee on students, primarily, and young people who work in that trade.

MR. WALSH: I believe I recommended afterwards that it be abolished.

MR. WINDSOR: Well, I congratulate the hon. gentleman if he was able to have an influence on his colleagues in the Cabinet to abolish that particular one because it is one that was a nuisance. Not only that, as it says in the document, having to display the certificates -

MR. WALSH: (Inaudible)

MR. WINDSOR: I give the hon. Member for Mount Scio - Bell Island full credit, if indeed he had any input into it, if indeed he did. I suspect the hon. gentleman was just as pleasantly surprised as I was when I saw it on Budget day.

MR. WALSH: We have been most kind to each other (Inaudible)

MR. WINDSOR: The hon. member is quite correct, we have been very good to each other. Well, those are welcome ones to be rid off, and a lot dealing with the fisheries, birth certificates, and marriage certificates. We only have one birth certificate but on marriage certificates now we can save a dollar because we might have a few of those, but birth certificates we are guaranteed one and death certificates only one. That is one thing that is sure, so that is ten dollars each in a lifetime that we have saved, $20.00 in a lifetime, but on marriage certificates at $10.00 each we could have saved quite a bit, I suspect. That is interesting.

MCP cards, free MCP cards now, good. Food production licences, food processing licences, no charge, but the licence is still there, you still have to have them, so the nuisance is still there. In Mines and Energy there are some savings there. In Municipal and Provincial Affairs, protected road zones, a tremendous reduction there in some of them for major developments, particularly a couple of hundred dollars, quarries $50.00, day care centre licences, gone, driver's licence replacement fee, beginner's driving permit, renewal of driving permit, nuisance fees, not the end of the world. The beginner's driving permit is still there, $10.00, you still have to pay once, I guess, for the right to terrorize the road. Pulpwood trucks operating on woods road, that is a positive thing. They pay $436 a year, an interesting number. They paid $436 a year for a licence. Now, they do not have to have a licence. I do not know how much revenue we lose there, probably not a great deal.

Replacement plate fees - delighted to see that. I paid $10 last week to get a new licence plate. If the minister had only told me, I could have saved $10 I suppose. It is neither here nor there, Mr. Speaker. How often do you have to get a licence plate renewed?

I find it interesting that the minister could get so excited about his fees and licences - 171 of them. He took out a full page, or more than a full page, in the Budget, to talk about some piddling little fees and licences, and he has termed it as his 'pet project' through the news media. That was his 'pet project'. The minister will be recognized in history as the minister who eliminated the fees for food processing licences and things of that nature. That is his greatest accomplishment, Mr. Speaker. Then he blows his credibility. He says, I am requesting that municipalities consider reducing any unnecessary fees and charges they might have. An interesting statement, Mr. Speaker.

It would also be beneficial to business if financial institutions would consider reductions in or removal of some of their miscellaneous charges. I find it hard to disagree with that. If you look at the revised lists of all of the fees and charges now that the banks impose on you, it is staggering. It is staggering. If you had a cheque bounce on you now, it might be a $10 cheque, you will pay, I think it is a $20 fee to have that cheque returned - a $20 fee to have a $10 cheque returned. I actually saw that happen to somebody awhile ago. So they added $20 to the account - put it in overdraft $20 by the amount of the fee, but they would not put an overdraft of $10 or $5 to pay the cheque. So the overdraft now was bigger than if they had honoured the silly cheque and let it go on for the sake of $10. It is just incredible. Anyway, I will have another day to get at the banks.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: The minister makes a very profound statement, Mr. Speaker: Governments, financial institutions and business must continue to work together to create the best business environment possible in this Province. I could not agree more with that statement. I only wish that the minister believed it. I could not agree more, and that is what I have been saying here. Government, financial institutions and business must work together. As I said to the bank manager I spoke with earlier today: if you people lose confidence in private enterprise in this Province, if you start pulling in - which they are already doing - if you start tightening up and making it harder - what they are doing is reducing lines of credit; so a company that was operating, say on a $100,000 line of credit, now that things are getting tight, sales are dropping, people are taking longer to pay and the banks are tightening up their line of credit, cutting it back to $50,000 or $40,000 or $30,000, which makes it very, very difficult and that gets to the real crux of the problem we have today with private enterprise in the Province, Mr. Speaker, that there are three things really working against them.

First of all, profit margins are down because you have to be so competitive today that the profit margins are down. Sales are down, so your volume has been greatly reduced and the cost of doing business has increased because people are not paying as quickly any more, whereas, previously, you could expect to get paid within thirty days generally, thirty to forty-five days you would expect to get your account paid, people today are using other people's money and they are going to sixty and ninety days and more if they can get it without paying their accounts and so, you have to carry that.

If you have to carry that money for three months instead of a month or a month and a half, then the cost of financing that cuts significantly into your profit margin. Now you add that to the reduced volume of sales, add it to reduced margins of profit because of competitiveness, add it to increasing costs of doing business, add it to increasing taxes such as the payroll tax and you have a private enterprise company that is having serious, serious problems and that is what is happening today. Most of them could have handled one or the other, they could have handled a little lower sales, they could have tightened up other areas.

If sales were good they could reduce their profit margins a little bit, but when you have all three or four of those factors impacting at the one time, then you have a company that is, without any doubt, going to find themselves with a serious financial problem. The minister says government's financial institutions and business must continue to work together and what does he do? He eliminates the Newfoundland Stock Savings Plan and he eliminates the Venture Capital Tax Credit Program, two excellent programs, Mr. Speaker, that were designed to leverage private investment; two excellent programs highly spoken of by the financial community in this Province, highly spoken of by the business community.

Unfortunately, these programs were only in place three or four years, unfortunately they did not have the uptake that we would like to have seen, simply because of the state of the economy. The recession, unfortunately, came in and caused people not to move forward but it did provide an excellent opportunity and an excellent vehicle for leveraging investment from private enterprise, Mr. Speaker, and I think it is a very negative thing.

AN HON. MEMBER: (Inaudible).

MR. WINDSOR: The President of Treasury Board is telling me, I think, that it is time to go, not that he wants my head cut off or anything else.

Mr. Speaker, I will adjourn the debate until tomorrow.

MR. SPEAKER: The hon. the President of Treasury Board.

MR. BAKER: Thank you, Mr. Speaker. The resolution for debate on Wednesday, Private Members Day, is the Opposition resolution put forward today by the Member for Kilbride. He wants the school tax back or something.

AN HON. MEMBER: He wants the school tax back.

MR. BAKER: Is that the one? I cannot remember what the resolution is, but anyway it is pertaining, Mr. Speaker, to the school tax.

On motion, the House at its rising adjourned until tomorrow, Tuesday at 2:00 p.m.