The House met at 2:00 p.m.

MR. SPEAKER (L. Snow): Order, please!

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

MR. ROBERTS: Mr. Speaker, in the absence of my colleague, the Minister of Finance and Treasury Board who is in Ottawa for meetings with other finance ministers, may I make a statement on behalf of the government, Sir.

In May, Mr. Speaker, the Premier announced that the government would be bringing forward amendments to the Mining and Mineral Rights Tax Act, which will provide a more equitable sharing of revenues from highly profitable mining operations while maintaining incentives to explore for minerals and providing an attractive regime for smaller or lower profitability mining projects.

The bill to effect these changes will be distributed to the House and made public today. The following measures are contained in the bill: The corporate income tax credit offsetting mining tax for the first ten years of a new or expanded mine, now will be capped at a maximum credit of $2 million annually and a total of $20 million for any mine. In addition, the minimum processing allowance of 15 per cent of taxable income is eliminated. In its place, the processing allowance rate for milling and concentrating will increase from 8 per cent to 10 per cent.

The uncapped income tax credit and the minimum processing allowance primarily benefit large, highly profitable mining operations. The changes will reduce the benefit to them. The $2 million credit increase in the processing allowance rate contain or enhance incentives for smaller and lower profitability mines. A new category of processing allowance is added for refining also at a 10 per cent rate. A refining allowance is a common feature of mining tax regimes in other jurisdictions; the smelting allowance is being reduced from 15 per cent to 10 per cent providing a uniform allowance rate of 10 per cent across all processing activity; the processing allowance is as members are aware, provide a deduction from income for the further processing of minerals beyond the primary crushing stage.

Government's position is that, where it is economically feasible to do so, minerals mined in the Province should be processed in the Province. The amendments clarify that for the allowances to be eligible as deductions, the processing activity, must take place in the Province. The act is also being amended to permit the accelerated write-off of preproduction development expenses. This will bring our policy more in line with other provinces and can enhance cash flow in the early years when it is important for new operations to establish a sound, financial position.

Mr. Speaker, it is this government's policy that the wealth derived from the development of our non-renewable resources must be shared fairly between the people of the Province and the developers of the resources. This means that the greater the wealth derived from non-renewable resource development, the greater must be the return accruing to the people of Newfoundland and Labrador. They are the owners of the resources and the people who must benefit from their development.

To ensure that the Province receives its fair share of our non-renewable resource wealth the Mining And Mineral Rights Tax Act is being amended to impose a non-renewable resource development tax in addition to the existing mining tax. The tax is profits based and will apply only after resource developers recover their full investment and receive rates of return which reward them in fair measure for their risk and their contribution to development. Only, if these rates of return are surpassed will the non-renewable resource development tax apply. The tax will provide the people of the Province with a higher share of the profits derived from the depletion of non-renewable mineral resources.

For the purposes of computing the tax, the profits from the full spectrum of mineral development activity from mining, through concentrating and smelting, to refining will be aggregated as if it occurs within one company and one taxable entity. This aggregation will be made regardless of whether or not the companies involved are operating at arm's length. If these activities are undertaken by more than one company any aggregate tax liability will be apportioned among them on a reasonable basis.

Before any liability can arise for the tax, developers must first recover their entire investment incurred up to the commencement of commercial production. The recoverable investments include all expenditures from exploration costs to capital assets and the provision for working capital.

The new non-renewable resource development tax will not be paid until a developer has recovered its total investment in full. It is a two-tier tax based on a rate of return. The first tier tax will be levied at a rate of 10 per cent on the profits beyond a 20 per cent rate of return and the second tier will apply if the project rate of return exceeds 30 per cent in any given year. The tax rate on the second tier profits is a further 10 per cent. In any year that these rates of return are not earned the amount of shortfall can be carried forward to a subsequent year. The tax will apply only to a project with gross revenues greater than $100 million a year.

This tax is in addition to the existing corporate income tax and mining tax regimes which continue to apply independently.

Mr. Speaker, the mining industry has been, and will continue to be, an important component of the economy of Newfoundland and Labrador. The mining potential of the Province is receiving international recognition and this is leading to a dramatic increase in mineral claims and exploration activity. It is important that government and industry work together to develop this potential and to bring new mineral projects to fruition. It is the desire of the people of this Province to have a successful and prosperous mineral industry, and government is committed to working with industry to bring this about.

We are also committed, Mr. Speaker, to having the mineral resources developed in a manner that benefits the people of this Province. These benefits will be derived in two ways. First, by maximizing industrial benefits through having minerals mined in the Province, processed in the Province where it is economically feasible to do so -

SOME HON. MEMBERS: Hear, hear!

MR. ROBERTS: - and secondly, by receiving a fair share of the profits derived from the depletion of non-renewal mineral resources. Mr. Speaker, I am confident that the amendments to the Mining and Mineral Rights Tax Act I am announcing today will ensure that we receive a fair share of the resource revenues to which the people in this Province, as the owners of these resources, are entitled. Thank you, sir.

SOME HON. MEMBERS: Hear, hear!

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

MR. WINDSOR: Thank you, Mr. Speaker.

My first observation is to wonder why the House Leader was reading the statement in the absence of the Minister of Finance, why the minister of mines did not read it? It is a mineral tax act. I am wondering whether the minister of mines is in agreement with these particular amendments or not. It certainly causes one to wonder, Mr. Speaker, whether or not Cabinet is together on this particular one.

Mr. Speaker, the Premier promised these amendments last year and here we are a week before Christmas now finally getting a major piece of legislation which the government has indicated that it wants to put through the House before we recess for Christmas. Well I hope government has ordered up turkeys for us, Mr. Speaker, because we are going to be here Christmas Day if this piece of legislation is going to go through without proper consultation. That is the real problem here, Mr. Speaker, that there is no time being provided now to consult on this particular matter. It is a very, very important piece of legislation. It can have very serious far reaching implications for the mining industry well into the future.

We saw last year, the amendments to the Mineral Tax Act rushed through this House, late at night if I recall, just a night or two before we recessed for Christmas. Government has now found that they were hasty in those measures in their desire to attract more exploration to the Province which they did because that one was far to generous and we have had record exploration this year. Now that we are having a measure of success as a result of that, now government wants to change the rules mid-stream. What we are doing is totally destroying the confidence of the mining exploration companies in this government and in this Province, Mr. Speaker. That is what this government is doing, changing the rules mid-stream, being inconsistent, once again not being consistent at being straightforward with companies that have come in here in good faith, invested millions and millions of dollars in exploration and now they are trying to claw it back.

Now, Mr. Speaker, we agree that the people of this Province and the provincial government should have a fair rate of return. We agree that if smelting can be done in this Province or refining in this Province it should be done if it is reasonable and economical to do so. We don't find fault with that at all, Mr. Speaker. The big problem we have with it is first of all, it is time to consult, that this is being rushed through the House once again, a very, very important piece of legislation that will haunt us for a long period of time if it is not done correctly. We need time to consult.

I ask the minister, I ask the Premier now, will he refer this piece of legislation to a committee of the House to hold public hearings, or at least to have consultation with the mining industry, a Select Committee of the House? We don't need to rush this through.

SOME HON. MEMBERS: Hear, hear!

MR. WINDSOR: We don't need to rush this through before Christmas. There is not going to be a smelter built over the next three weeks, or over the next month, Mr. Speaker. We think that the people of this Province, and members of the House of Assembly who need time to digest and to analyze this very serious piece of legislation, should be given that opportunity, and certainly that the people of the Province and those involved directly in the mineral industry should have every opportunity to examine this -

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.

MR. WINDSOR: - to debate it, to question the Ministry and to have input into it.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for St. John's East. Does he have leave?

MR. ROBERTS: Yes.

AN HON. MEMBER: (Inaudible) point of order.

MR. HARRIS: Yes. A point of order asking for leave to speak to the Ministerial Statement.

AN HON. MEMBER: Agreed.

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

MR. HARRIS: Thank you, Mr. Speaker.

I welcome the statement of the minister as giving the government's consideration to all of these issues. They finally have done it after a year when it was pointed out to them this time last year they were potentially giving a free ride to Voisey's Bay. Since then, the government have given some thought to it.

But I say, along with the Member for Mount Pearl, that what the government has failed to do to date is to give the people of this Province time to consider these very complex rules and regulations. It not only affects the mining industry but it is going to affect the fiscal regime of this Province for many years to come. There are a number of good ideas here that need further consideration. I think it is time that government, instead of rushing into something prior to Christmas, perhaps to meet some personal agenda of members opposite - perhaps to do that - there should be time for the people of this Province to consider all of these amendments and to consult with the mining industry, to consult with those who have a view on this, and to see what the most appropriate method is, of doing this.

I think it is a good start and we should all have time to consider it, debate it, and perhaps make amendments to it.

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

MS VERGE: Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

MS VERGE: Mr. Speaker, I have questions for the Premier about the Hydro bill, Bill No. 35, now before the House. Premier, why are you rushing Bill No. 35 through the House just before Christmas, refusing public hearings, allowing members of the House just a few short days to study it? The indecent haste with which you are proceeding makes it seem to people that you are trying to hide something from them. Why the haste, Premier?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: We spent the last two days - two full days of debating time -

SOME HON. MEMBERS: Oh, oh!

PREMIER WELLS: Two days?

MR. ROBERTS: Monday and Tuesday.

PREMIER WELLS: We spent Monday and Tuesday -

AN HON. MEMBER: Three or four speakers.

MR. ROBERTS: They went on and on.

MR. SPEAKER: Order, please!

PREMIER WELLS: They can say what they like. This is my answer and I give it.

We spent Monday and Tuesday debating a minor bill in this House, no major principle involved at all. Last year when we attempted to privatize Hydro because we thought, and we still think, it is in the best interest of the Province, those who opposed it said, `No, government; that is the wrong thing to do. The right thing to do is to make Hydro efficient and effective and profitable and keep it for government.' That is precisely what we are doing.

SOME HON. MEMBERS: Hear, hear!

PREMIER WELLS: Now, let me say again, Mr. Speaker, this is not a rush at all. It is a very simple, straightforward, minor amendment in relative terms. There is no principle of any significance involved here. We are simply making the Hydro Corporation more effective and efficient, and those who have said, like the hon. the Member for St. John's East - which I think was a shocking statement on his part - that this is a sly or subterfuge method of trying to privatize Hydro, an utterly, utterly unfounded and illogical statement, and I am quite surprised at the hon. member for making it, quite surprised. Shocked, as a matter of fact, is a more accurate description of it.

Mr. Speaker, the government's position on the issue of the privatization of Hydro is exactly as it was a year-and-a-half ago when we stated clearly in the House, government would take no initiative whatsoever to privatize Hydro unless it were satisfied that met with the approval of the clear majority of the people of the Province. That remains the position of government.

MR. SPEAKER: The hon. the Leader of the Opposition, on a supplementary.

MS VERGE: Thank you, Mr. Speaker.

I say to the Premier, what is shocking is hearing the Premier of this Province still say that Hydro should be privatized. That is what is shocking!

SOME HON. MEMBERS: Hear, hear!

MS VERGE: I ask the Premier: Isn't the use of closure by your government to cut short debate on these critical amendments to the Hydro legislation a crass abuse of power? Isn't the use of closure to cut short debate after less than a week of the bill being printed, after only four members of the Opposition spoke, the mark of a desperate, dictatorial government?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: No, Mr. Speaker.

The only abuse is the abuse of the Opposition in trying to prevent the majority of this House from exercising their judgement on behalf of people. That is the abuse.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

The hon. the Premier.

PREMIER WELLS: Thank you, Mr. Speaker.

Mr. Speaker, that is where the abuse lies. Government has put forward this proposal to ensure the appropriate implementation of the Electrical Power Control Act which this House passed over a year ago but it was done in the context of then assuming a privatized Hydro. That has been changed. This bill will make a couple of minor adjustments in the EPCA in order to provide for the operation and regulation of a Hydro that will continue to be owned by the people of this Province.

Now, Mr. Speaker, that is the only thing in that bill, and we will make Hydro an efficient, effective operation; that is the purpose of it, Mr. Speaker, and I am quite proud of it.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: The hon. the Leader of the Opposition, on a supplementary.

MS VERGE: Thank you, Mr. Speaker.

I say to the Premier, who do you think you are fooling?

SOME HON. MEMBERS: Hear, hear!

MS VERGE: If the Hydro bill, Bill 35, is such a simple, minor, technical, innocuous measure, why did you use closure to cut off debate after only four members of the Opposition had spoken?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, I am not fooling anybody. I am totally confident I am not fooling one single person in this Province, but I am equally confident in something else. They are not fooling anybody either.

SOME HON. MEMBERS: Hear, hear!

PREMIER WELLS: Now, Mr. Speaker, we have been sitting, I do not know how many government business days since we started, and look at the amount of legislation. It is clear that the Opposition are trying to prevent the passage of this bill. Any self-respecting government must put the interest of the people of the Province ahead of the interest of the Opposition, Mr. Speaker, and that is precisely what we have done.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

SOME HON. MEMBERS: Oh, oh!

SOME HON. MEMBERS: Hear, hear!

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

I caution hon. members about their language. If we are to continue with Question Period, I certainly want some order and decorum in the House while we are doing it.

The hon. the Leader of the Opposition.

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier, since you opened the House for the Fall sitting on October 16, why did you wait until last Thursday afternoon, December 7, to release Bill No. 35, the major amendments to the Hydro legislation and related bills? Why are you allowing less than a week for members to study it? Why are you denying members of the public a chance to participate in scrutinizing the bill through public hearings? Why, pray tell, have you used closure to cut off debate after three-and-a-half hours of discussion and after only four members of the Opposition had a chance to speak?

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, we have had thirty days of government -

MR. ROBERTS: Forty days, and thirty-two government days.

PREMIER WELLS: Thirty-two days of government business in this House since we started in the Fall, and we got something like twenty-odd or thirty-odd pieces -

SOME HON. MEMBERS: Oh, oh!

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

A question has been asked. I ask hon. members to do the courteous thing and let the Premier answer the question.

AN HON. MEMBER: He is not answering it.

MR. SPEAKER: Order, please!

PREMIER WELLS: Mr. Speaker, we have had thirty-two days of government business since this House opened and thirty-six or thirty-seven pieces of legislation. Now, two of those thirty-two days have been spent on this one relatively minor bill to effect some amendments to the Hydro act. Now, Mr. Speaker, the government also has a responsibility to see to the orderly discharge of the government business in the interests of the people of this Province, and that is precisely what we are doing and will continue to do.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: The hon. the Member for Green Bay.

MR. HEWLETT: Thank you, Mr. Speaker.

I saw the Premier on television last night dealing with this issue. He referred to it as a minor bill. He referred to it as not privatizing Hydro. I will grant him that. In the short or immediate term it doesn't privatize Hydro. But one thing the Premier said on that t.v. show had to do with: `It has nothing to do with power rates.' That is his quote.

Mr. Speaker, when we consider the rate of return change, when we consider the unfunded liabilities going into Hydro from the pension plans, those are just two items which will drive Newfoundland and Labrador Hydro to the Public Utilities Board for rate increases. So when the Premier said it has nothing to do with power rates, that was a lie! I ask the Premier: Why do you lie to the people of the Province?

MR. SPEAKER: Order, please!

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

I ask the hon. member to retract that statement. It is certainly clearly unparliamentary and not acceptable.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

I remind the hon. the Member for Mount Pearl that we cannot tolerate that kind of statement either.

SOME HON. MEMBERS: Oh, oh!

MR. HEWLETT: Mr. Speaker -

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

I ask the hon. member to retract his statement.

MR. HEWLETT: Mr. Speaker, this is a very important issue. I realize it puts -

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

I ask the hon. member to retract his statement. I ask him to withdraw it, please.

MR. HEWLETT: Mr. Speaker, I realizes this puts Your Honour in somewhat of an awkward position -

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

I asked the hon. member to withdraw his statement. I give him some -

AN HON. MEMBER: Mr. Speaker, he has to be allowed to speak.

MR. SPEAKER: Order, please!

The member has made an unparliamentary statement. The Chair is asking him to withdraw.

MR. HEWLETT: Mr. Speaker, I regret, I cannot withdraw. I spoke the truth and I stand by the truth.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

Again, I ask the hon. member to consider the statement that he has made. I can give him some time to consider it. I ask him again to withdraw.

MR. HEWLETT: Mr. Speaker, again, with my apologies to you, personally, and your role in this House, I cannot withdraw. What the Premier said was not true, the same as what he said on the education issue in this House -

MR. SPEAKER: Order, please!

MR. HEWLETT: - with the church leaders in the gallery.

MR. SPEAKER: Order, please!

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Again, the Chair has no alternative but to name the hon. the Member for Green Bay, and I name him: Alvin Hewlett.

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, in accordance with accepted and appropriate parliamentary tradition, I move that the gentleman from Green Bay be suspended for the rest of this day's sitting.

Motion carried.

SOME HON. MEMBERS: Oh, oh!

MR. E. BYRNE: A point of order, Mr. Speaker.

MR. SPEAKER: Order, please!

MR. E. BYRNE: Mr. Speaker, this is unbelievable!

MR. SPEAKER: Order, please!

AN HON. MEMBER: It is a point of order, Mr. Speaker.

MR. SPEAKER: Order, please!

The Chair has not recognized the hon. member.

The hon. the Member for Kilbride.

MR. E. BYRNE: This is unbelievable! We see an act brought into this House, Bill 35, last week, that has serious implications for the people of this Province, serious implications on the Lower Churchill development, serious implications on what people will pay in higher electricity bills. The Member for Green Bay stands up and asks the Premier a legitimate question about a lie that he told in the press yesterday -

MR. SPEAKER: Order, please!

MR. E. BYRNE: - and no one can get up and answer it. It is a travesty. That is all it is.

MR. SPEAKER: Order, please!

I ask the hon. member to take his seat.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

MR. E. BYRNE: (Inaudible).

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

The hon. member had no point of order. Again, the hon. member was unparliamentary in his statements, and I ask him to withdraw them.

MR. E. BYRNE: Mr. Speaker, with the greatest respect to you, Your Honour, and the Chair, and the position that you hold, I have no intention of withdrawing it. And what is unparliamentary is the Premier's response to the questions asked in this House today. That is what is unparliamentary.

SOME HON. MEMBERS: Hear, hear!

MR. SPEAKER: Order, please!

Again, I will ask the hon. member to consider what he has said, and I ask him to withdraw it.

MR. E. BYRNE: Mr. Speaker, I was elected in this House to stand and tell the truth and speak it as I see it. I intend to stand by the comments I made, and I will not withdraw my statement.

MR. SPEAKER: Again, the hon. member leaves the Chair no option but to have to name the hon. the Member for Kilbride: Ed Byrne.

The hon. the Government House Leader.

MR. ROBERTS: Mr. Speaker, I move that the hon. gentleman from Kilbride be suspended for the rest of this day's sitting, and I may say, his father-in-law would be ashamed of him if he were here today.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

Motion carried.

MR. SPEAKER: Order, please!

The Chair is going to recess the House briefly to let hon. members consider what is happening here, and we will reconvene in ten minutes.

MR. SPEAKER: Order, please!

The Chair recessed the House because of some serious disorder here. A motion had been put and carried that the hon. the Member for Kilbride remove himself for the remainder of the sitting of the day. The Chair recessed to give the opportunity to the member to consider his actions. Quite, I guess, extraordinary, his actions are, causing very serious disorder in this House, putting the House into disrepute so that the House has not been able to carry on with its business. As I said, the hon. member has time to think about it and I again ask the hon. member to remove himself.

MR. E. BYRNE: Mr. Speaker, I have given it every consideration and I feel strongly about this issue. Too many times, the Premier of the Province has stood in this House and said one thing and done completely another. I have no intention of leaving this House of Assembly today.

MR. SPEAKER: Order, please!

I just asked the hon. member to reconsider. Obviously, he has decided not to go, and I have no alternative but to call on the Sergeant-at-Arms and ask him to remove the hon. member.

I instruct the Sergeant-at-Arms to call on his officers to assist in removing the hon. member.

The Chair is going to have to suspend the sitting of the House, because, obviously, there is some serious and grave disorder, and until that is resolved, the House is suspended.

***************

MR. SPEAKER: Order, please!

The Chair suspended the proceedings in the House after he had directed the Sergeant-At-Arms and his officers to remove the Member for Kilbride. The Sergeant-At-Arms and his officers were prevented from doing that by hon. members to my right, which indeed is, in my opinion, most reprehensible. It has brought this House down, in my opinion. The dignity and the decorum of this House has certainly, tremendously been reduced. The Chair has asked that hon. members respect the House itself and the precedents of this House, and that we continue to conduct the business of this House in an orderly and proper fashion. The Chair has very grave concerns about the conduct of members to my right today and it has brought the House, indeed, as I said, to a very low ebb in its history.

There being no questions for the Order Paper today or for the Late Show, I will put the motion to adjourn.

On motion, the House at its rising adjourned until tomorrow, Friday, at 9:00 a.m.