June 6, 1994                HOUSE OF ASSEMBLY PROCEEDINGS                Vol. XLII  No. 56

The House met at 2:00 p.m.

MR. SPEAKER (Dicks): Order, please!

Statements by Ministers

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

MR. DECKER: Mr. Speaker, I am announcing the cancellation of the public exams for the school year.

The ongoing teachers strike and the complications surrounding it has made it impossible to conduct successfully the public exams for the 1993-1994 school year. This decision was taken only after careful consideration and consultation with stakeholders throughout the education system. Numerous cases have been made to me as to why the exams could not be carried out. The following are some of the key concerns expressed:

Superintendents cannot guarantee the security of the exams.

There is no guarantee that striking pickets would permit students to enter the examination area.

Difficulty with securing supervisors for the examinations.

No guarantee that the exams would be marked.

Students are threatening to boycott examinations due to lack of preparation and review time.

Students have expressed concern over exam content which has not been covered since the beginning of the strike.

Mr. Speaker, another aspect of the yearly examination process is the scholarship examination. It is our intention to proceed with this exam as scheduled. Details will become available in due course. The decision to dispense with the public exams for this year was not taken lightly. The Newfoundland and Labrador School Boards Association and School Board Superintendents have endorsed the cancellation of public exams.

The Department of Education has been assured by Memorial University that arrangements will be made to accept graduating students for the fall semester. I am confident that a similar arrangement will be finalized with other post-secondary institutions in the Province. Meanwhile, the department is continuing to work with the various school districts to finalize marks for students based on their marks to date.

Mr. Speaker, as you know, there was a demonstration of students today. I spoke with them on my way to the House and I am tempted to say to them that I listened and acted swiftly, however, as tempted as I am to take advantage of making a political point I have to admit to the students that this decision was made over the weekend after we had a lot of consultation with the stakeholders, so I cannot take the credit for listening all that well, although I do listen even time someone makes a point to me.

Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

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

MR. HODDER: Mr. Speaker, I want to thank the minister for forwarding the copy of his Ministerial Statement prior to the opening of the House this afternoon. I want to say on behalf of the Opposition that we understand the perspective of his government, and we do also acknowledge that students' study routines have been seriously disrupted since the beginning of the teachers strike; parents have been trying their best to cope with the situation, as are students. In particular, of course, those students who are taking the Level III courses, the eighteen courses, who are eligible for public examinations - they have been very, very concerned, particularly since they have not, in some cases, finished the course content, and the public examinations would have had the effect of evaluating them on material that they had not properly completed. These students feel that they were inadequately prepared for the public examination process.

Mr. Speaker, the minister must now decide how those students who are eligible for graduation will receive their Level III diplomas, and how their final marks will be indeed tabulated. While the measure announced today will get the students through the immediate problem of admission to Memorial University, we are not sure what the students will face -

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.

MR. HODDER: - when they apply for admission to other institutes of post-secondary learning and, Mr. Speaker, all of us hope that there can be a negotiated settlement to the teachers strike, and that can occur in the next few days. While that will not affect the cancellation of the public examinations, it certainly will let us complete the school year in a more adequate fashion; and I say to the government that a settlement to the teachers strike is needed in this Province, and is needed immediately.

MR. SPEAKER: Does the hon. the Member for St. John's East have leave to address the House?


MR. SPEAKER: No leave.

Oral Questions

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

MR. SIMMS: Thank you.

Mr. Speaker, we are, or will be asked to deal with a piece of legislation in the next day or so, which will help to accommodate the privatization of Newfoundland and Labrador Computer Services. I understand it is on the Order Paper. Yet, the public, and we in this House of Assembly, know very little about what is exactly going on. Not many months ago - well, I guess it was, actually, a fair number of months ago now that I think about it - I think it was in June of 1993 that the ads first appeared in the paper where, the government asked for proposals from investors for the purchase of Computer Services.

Some time later, I know in the last few months we have been told, the public was told, that the government had now commenced discussions on a bid, or on the bid put forward by NewTel. May I ask the Premier, is NewTel the only bidder that the government is talking to and, has the government, in fact, made the decision to sell NLCS to NewTel?

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

MR. BAKER: Thank you, Mr. Speaker.

It was announced some time ago and discussed in this House, that of the four bidders for NLCS, a decision was made to proceed through the final stages with a consortium comprising; Bell Sigma, Anderson Consulting and NewTel. Their proposal was judged to be the best proposal, providing details could be worked out. The decision was made on the basis of the development of the IT industry in the Province, the proposal that would provide the most new business for this Province, the proposal that would provide the most long-term jobs and be of greatest benefit to the existing IT industry in the Province through contracting of work and so on. So it was a rather complex decision. It was decided to proceed with this one consortium rather than the other three. Discussions have been ongoing ever since in a rather intense fashion. It's a complicated deal to put together, but we are attempting to have it finalized before the end of June. At this point in time, there have been no major hitches and it seems to be going fairly well in terms of the consultations or the negotiations with Bell Sigma, Anderson Consulting and NewTel.

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

MR. SIMMS: Thank you, Mr. Speaker, a supplementary.

I thank the minister for that little bit of information but again, the point I make is that we really don't know anything of any detail. Let me just ask him this, according to the Auditor General's report, Newfoundland and Labrador Computer Services has total assets of around $10 million and the book value of shareholders equity is about $6 million. May I ask the minister this: Have you in fact agreed upon a price for Newfoundland and Labrador Computer Services? In other words, how much do you expect to get in net proceeds for the Provincial Treasury from this particular sale, this privatization?

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

MR. BAKER: Mr. Speaker, I'll try to explain again. This is not like selling a house or selling a piece of property. The main purpose in this privatization was the development of the IT industry in this Province, the bringing to the Province of a lot of business and the creation of new jobs in the Province. This is the main criteria, Mr. Speaker, that have been used in terms of the negotiations with all of the consortium, finally settling on this one consortium to go through the process with. The main consideration is the development of the IT industry in this Province, the creation of new jobs, and the bringing of a lot of new business to the Province. That is the main consideration.

I would like to say to the hon. member that I understand that there is a value. There is a building, for instance, and there is a main frame and so on, but the real value of that business goes far beyond that. The real value of that business is the value of the employees who are working there and their expertise that we must keep here and expand. That is the real value of that business and you can't simply go talking about book value.

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

MR. SIMMS: A supplementary, Mr. Speaker.

I appreciate the lecture by the minister, I understand that, but there is no reason why we couldn't ask the question. I merely asked the question: What proceeds do you get expect to get for the treasury? If you can't tell us then simply get up and say: We don't know yet or we can't tell. Because the problem is we have not yet had a statement from the government about what it expects to achieve through the sale of Newfoundland and Labrador Computer Services; nothing in this House and nothing of a detailed nature outside this House. That is precisely the reason for the questioning here today.

Now, we assume that the government is interested in more than just the cash for the treasury. We understand that. We also understand that Newfoundland and Labrador Computer Services operates in the realm of IT, or information technology for those who aren't as knowledgeable of this as the minister, and that is rapidly expanding economic activity everywhere in the world. So, clearly NLCS could be the vehicle to launch us into that global market in a pretty significant way.

The minister has told us that here is what he expects or he thinks. Can I ask him specifically: What steps is the government taking to ensure that a privately owned NLCS remains a Newfoundland company - tell the House that and the people of the Province that - and what detailed steps, in fact, it intends to take to ensure that it will be in position to participate, if you want, and compete for a slice of that global activity that he talked about? What detailed specifics are there? Will he provide them to the House of Assembly in a statement before the House closes?

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

MR. BAKER: Thank you, Mr. Speaker.

I wasn't questioning the Leader's right to ask the question, and I gave him information requested in his question. I would say to him that I have now explained to the House what the main purpose of this privatization was and what we hope to accomplish out of it.

Obviously, Mr. Speaker, the negotiations have not been completed yet. Upon the completion of negotiations this House will be given full information as to the amount of new business coming in, the guarantees that this new business will come to the Province, the guarantees of new jobs, the guarantees of contracting out, and the development of the rest of the IT industry in the Province and so on, the assurances that this will not be a predatory company, but will be a company that goes after international business. In that regard, Mr. Speaker, Anderson Consulting is the largest firm in the world, and have access to a lot of business. Bell Sigma has access to a lot of business in Canada. So all of these details, when the deal is worked out, will be made available to everybody.

We cannot go making pronouncements on it at this time because the negotiations simply have not been complete, but I can assure the hon. gentleman that everything he mentioned in his question is a consideration, and in due course he will see exactly what has been negotiated as soon as the negotiations are completed.

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

MR. SIMMS: Thank you, Mr. Speaker, a final supplementary.

Regrettable, I say to the minister, that will probably occur after this House has closed, and that is one of the problems with it; the public really have no access or no information to some of the things he is telling us about today in a very general, general way.

He talks about Bell Sigma, and he talks about Anderson Consulting. That will lead to whether or not the questions along the lines as to whether or not the new NLCS, NewTel, or whatever it is going to be called, is really interested in competing globally, or whether it is more interested in locking up the local market.

AN HON. MEMBER: (Inaudible).

MR. SIMMS: Yes, and he just explained that.

What I want to ask him is this: In order to provide information to the public and the people of the Province, presumably there are some plans submitted as to what NewTel will do with this new operation. Will those plans be made public before a final decision or deal is made, or will it be done only after the deed is done; if the minister understands my question and my concern?

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

MR. BAKER: I understand the hon. gentleman's question; I don't understand his phraseology about the deed being done and the nefarious implications that are generally carried by a phrase of that nature. I regret that that is the approach taken by the Leader of the Opposition.

This is a deal that is being put together for the benefit of the Province, and everything will be explained. I would like to say to him, that I have no objection to having the House open to do it, but I will guarantee him that if the House is not open, full disclosure will be made through the media to the public. I will make arrangements for him to, for instance, examine officials, if he wants, in terms of the details of the deal. Everything will be totally open. If we do reach a successful conclusion in this negotiation it will be a superb deal for the Province. If we do not reach a successful conclusion to this negotiation, then we have the ability to go back to other people who bid on the privatization to see if, in fact, they could offer us a bit more. This will all be totally open if a deal is reached.

I don't want to cast any doubt, at this point in time, on the fact that a deal should be reached. I mean, negotiations, although they've been long and intense, there are a lot of complex problems that have to be worked out, and all indications are, at this point, that we will come to a successful conclusion very shortly.

MR. SPEAKER: The hon. the Member for Burin - Placentia West.

MR. TOBIN: Thank you, Mr. Speaker.

I have a question for the Premier. In the business section of Friday's Telegram, the Premier is quoted as saying that people can expect a very significant announcement on the development of Terra Nova within the next few months. In that same news item, Petro Canada denied there would be any significant announcement during that time frame. I would like for the Premier to clear up the confusion. Would he be able to tell me: Will government and Petro Canada announce an agreement on the development of Terra Nova sometime this summer?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, I don't know what the Telegram said. I can tell the House my view of it and the positions, the opinions, that I have expressed and the views I have expressed on various occasions, that in recent months the government and representatives of the owners of the Terra Nova oilfield, the owner interest, have met and we've had some discussions. I'm confident that we will see plans for an orderly development of that field. I doubt that there is going to be anything in the next few months. I don't recall that I've ever suggested that anywhere. I would think, though, that perhaps - I don't know. I would say we will know where we are going within the year. We should have some idea of where we are going and what is likely to happen or what is not going to happen. There is every indication, every reason to believe, that each of the oilfields out there will, in a reasonable order, be developed and we will see development. The most probable one for the next stage of development is Terra Nova.

MR. SPEAKER: A supplementary, the hon. the Member for Burin - Placentia West.

MR. TOBIN: Mr. Speaker, it has been fairly obvious for some time now that the government wants to take quick action on the development of Terra Nova and try to get the oil flowing in that field as well. I would like to ask the Premier then: In order to get something going on the Terra Nova field, has government discussed the mode of development, and is there is a possibility, or has it made a decision, as to whether or not it would be expecting Petro Canada to use a present floater system that is somewhere in existence now?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: No, Mr. Speaker, no decision has been made. The government has indicated to Petro Canada and to the other owners that from government's point of view, we see the development of the offshore oil fields as, in a sense, a partnership. The government and people of this Province have a real interest in the development and the outcome of those fields as well. We understand the incentive and drive on the part of the participating owners. They want to generate the maximum level of return they can with the least level of exposure, in terms of capital investment and operating costs. It may well be less costly to develop it by one mode than another. The government can't alone look at the cost. We have to look at a variety of factors and we have so advised the oil companies. I don't expect we will be in a position to make a decision in the immediate future, and I can assure the member that a decision has not as yet been made.

MR. SPEAKER: A final supplementary, the hon. the Member for Burin - Placentia West.

MR. TOBIN: Mr. Speaker, the Premier says he is going to have to look at all the issues. If there is going to be a floater system for Terra Nova versus a GBS, obviously there will be some sort of a trade-off in terms of economic development and jobs for royalties. I wonder if the Premier can tell us if government is close to an agreement with Petro Canada on royalties, and can he tell us how much the net revenues would be? That is with the adjustment for equalization put in place. How much do you anticipate will flow to the Province annually over the life of the development?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the Province is nowhere near an agreement with Petro-Canada or anybody else with respect to royalties and we are not in any position to estimate at this time the flow of royalties to the Province.

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

MR. WINDSOR: Mr. Speaker, a week ago during debates on the Estimates, I put some questions to the Minister of Works, Service and Transportation dealing with the Public Tendering Act, and specifically, exceptions to the Public Tender Act as tabled by the minister in accordance with the legislation in the House of Assembly. Now, the minister didn't seem to be too aware of those difficulties, nor did he have concern, and his response to me was that I should have brought them to his attention.

Well, I did that a week ago and the minister has now had a week. Can the minister now tell us the reasons for these particular exemptions and some of the ones I pointed out? Specifically, why did Works, Services and Transportation purchase $6,000 worth of gasoline without going to public tender, for snow clearing operations? Obviously, that could have been planned. Why did the Department of Fisheries award a $60,000 contract to the Town of Englee and some local contractor instead of going to tenders? And, why did Newfoundland Hydro lease a shredder for $14,600? What was such an emergency that needed to be shredded that they couldn't call tenders?

Would the minister give us the answers to those questions now, a week after being notified of them?

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

MR. EFFORD: Thank you, Mr. Speaker.

Every single day, the Department of Works, Services and Transportation and all agencies of government go through quite a number of tenders. It has been the history of government in the past to write and ask for exceptions, or at least get exceptions to public tendering, and that has been done all down through the years of governing. There has been no change within the Department of Works, Services and Transportation in recent months to make any exceptions to the normal rule.

There are some, as the member quite clearly pointed out, that if you look at them at face value, do not sound reasonable, but when you go back through the history and check out why was this done, there is a reasonable explanation. Now, I have tabled each monthly report over the past several months in this department, several hundred over that period of time, but I can't explain each individual one at this particular time.

By the way it was not a week since the hon. member gave them to me.

MR. WINDSOR: It was last Monday night.

MR. EFFORD: I gave to the officials of the department, the next day, the particular ones he gave me, and asked the people in the department to go back to the individuals concerned, whether it was Newfoundland Hydro, the university, or whoever, and give me a full explanation as to why these exceptions were made. I intend to bring that back to the House of Assembly on an individual basis and give a full explanation to the House.

I am sure, as the hon. minister has experienced as a minister in the former government, and as he knows full well, there is a reasonable explanation for all those exceptions to the Public Tendering Act.

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

MR. WINDSOR: Mr. Speaker, there is a reasonable expectation that officials will try to get around the Public Tendering Act whenever possible and that is what we are seeing here.

Obviously, the minister is not as concerned as he would like us to believe he is about these exemptions. The fact that he tables the exemptions for the month does not mean that those are legitimatized by that. The minister is responsible for them and when he sees these exemptions it is his responsibility to know why they are there and to ensure, if there is an exemption, that it is a valid exemption in accordance with the act, and I suggest many of these are not. Would the minister now tell us, Is the act still enforced, is it selectively enforced, or does it only apply to those who don't want to try to get around it?

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

MR. EFFORD: Thank you, Mr. Speaker.

Let me tell the hon. member that this minister, and this government, are much more responsible to the administration of the Public Tendering Act than ever his government was, in seventeen years of full operation. We take great pride in the department to ensure that the Public Tendering Act is followed to the letter of the law. We are far above any other province in Canada with our public tendering system.

The hon. member knows quite well that on many occasions when there is an emergency you have to give exception to the Public Tendering Act. When we bring one of the ferries in for refit in an emergency we cannot take thirty days to call a public tender when we need to get that ferry back in operation. I am quite proud of the department.

AN HON. MEMBER: What about the Ashley Building?

MR. EFFORD: The Ashley Building held the Department of Social Services. The Department of Social Services requested an expansion to their present office, which was in the same building, and that was an exception given on that basis.

I have no problem defending anything in my department when it comes to exceptions to public tendering.

MR. SPEAKER: A final supplementary, the hon. the Member for Mount Pearl.

MR. WINDSOR: Thank you, Mr. Speaker.

Would the minister like to tell us, if he is so determined that the act is being enforced, why he - or the previous minister - awarded a tender for three health care centres to one contractor who was not the lowest bidder? Would the minister like to explain that? Would he like to tell us why he refuses to come before the Public Accounts Committee and answer for that?

SOME HON. MEMBERS: Hear, hear!

MR. WINDSOR: And would the Premier tell us, will he now take the handcuffs off the members of the Public Accounts Committee representing that side so they can deal with it when the matter is not before the courts? It is only in discovery - and it will be months and months yet before it can get to the court. There is no reason why the minister should not appear and answer for that breach of the Public Tender Act.

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

MR. EFFORD: First of all, there were no public tenders called; public proposals were called. Very clearly, according to the legislative law, you can call public proposals.

Secondly, when I got the call to go before the Public Accounts Committee, I checked with the Attorney General in the Department of Justice. I was advised not to appear before them until in due process the courts were heard.

That is the manner in which I operated, and I have not changed, nor will I change, that position.

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

MS. VERGE: Thank you, Mr. Speaker.

I have questions about arts and culture which I will direct to the Premier since there is no minister responsible, and the acting minister is not present this afternoon.

The government owns and operates six Arts and Culture Centres at a net annual cost of about $5 million, with the St. John's centre being by far the most expensive in costing about $2.5 million a year. Is the government going to divest itself of all six Arts and Culture Centres, including the St. John's centre? Specifically, is the government going to transfer administration and control of the St. John's centre to the St. John's City Council, or some board of volunteers?

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

MR. BAKER: Thank you, Mr. Speaker.

There is an effort under way to privatize some of the Arts and Culture Centres in the sense that they are obviously community assets and perhaps better use of the facilities can be made if, in fact, they are owned and controlled locally.

Discussions are being held at the present time, I think, with two groups, town councils, one in Stephenville, the other in Gander. These discussions are still ongoing and I don't believe there has been any conclusion to them yet, but the money is in the budget for the complete operation of all Arts and Culture Centres.

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

MS. VERGE: Thank you, Mr. Speaker.

I would like to ask the Premier, or the Minister of Finance, how an Arts and Culture Centre can be privatized and continue to operate as an Arts and Culture Centre; and again, specifically, is it the government's intention to divest itself of the St. John's Arts and Culture Centre?

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

MR. BAKER: Mr. Speaker, it can be done fairly simply. As I indicated to the hon. member, perhaps the purpose of these buildings can best be solved if they are not under the control of St. John's, if they are not within the government system. If, in fact, the towns - in the case of the Town of Stephenville and the Town of Gander - actually have control of these facilities, they can provide certain services with their own work force and so on with regard to ongoing maintenance, and provide the service to the community in making decisions as to which community activities can best take advantage of these centres, without having to live with government restrictions and government guidelines. The community itself can decide the best use for these buildings, and they can function as Arts and Culture Centres, because the communities want the Arts and Culture Centres. They will survive, and not only survive, but will get much greater use in terms of the community - that is what we believe.

Mr. Speaker, as I said, we have been talking to two communities. We have not made any decisions in terms of the other Arts and Culture Centres. If we get expressions of interest from other councils and so on, then certainly, we will consider them, but we are not out there actively trying to divest ourselves of all of these Arts and Culture Centres, including the one in St. John's - no, the answer is no.

MR. SPEAKER: A final supplementary, the hon. the Member for Humber East.

MS. VERGE: Thank you, Mr. Speaker, a supplementary to either the Premier or the Minister of Finance.

The government is now spending about $5 million a year, net, on the six Arts and Culture Centres. After the government unloads the centres on either municipalities or boards of volunteers, will the government continue to subsidize the centres at the present rate or to any extent at all?

The last minister, the Member for Mount Scio - Bell Island talked about phasing out provincial subsidization over three years and cutting the centres loose at that point. Is that the current thinking? For example, is that the current thinking for Stephenville or Gander?

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

MR. BAKER: I don't know the exact details of either of these negotiations. I do know that government's continued support, at least for a certain period of time, is a point that has been discussed I believe with both these councils, but that's a matter of the negotiation back and forth and there are arrangements that can be made other than that, I say to the hon. member, that don't involve continued subsidies or that do involve continued subsidies. These are things that are being discussed and it's not a simple matter of saying: Here it is, take it and that's it. No, it's not as simple as that. We're into negotiations with these councils and as soon as we complete one of them the House will be advised of all the details of what they've agreed to, and it will be done with their agreement.

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

MR. J. BYRNE: Thank you, Mr. Speaker.

Mr. Speaker, my question is for the Minister of Municipal and Provincial Affairs. Two years ago the government passed over responsibility for fire-fighting on the Northeast Avalon to a regional committee representing the city and town councils. The system hasn't worked because the whole show is being run by the City of St. John's. It is pretty obvious now that the councils are not going to be able to work out their problems. How long is the Minister of Municipal and Provincial Affairs going to let this problem fester? Will he take action to ensure that all councils have some credible say in the management of the regional fire-fighting services and are not simply (inaudible) for the City of St. John's?

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

MR. REID: Thank you, Mr. Speaker.

The member is absolutely correct. This is a problem that has been haunting me, I suppose, since last May when I was appointed to Cabinet.

I just received a letter - I was reading it in fact just a second ago - in which the Mayor of St. John's basically asked me to speak to him before I go to Cabinet and ask for direction on what to do with the fire-fighting services. My note is: Clarence, please arrange for me to speak to John Murphy before I go to Cabinet. It's been a real dilemma as far as my department is concerned and as far as I'm concerned.

I'm hoping, quite honestly, that within the next two to three weeks - now I made that commitment some time ago if you remember and I couldn't fulfil that commitment at that time - but I'm seriously saying to you and to the House, that within the next two to three weeks I'm hoping to be able to make a recommendation to my Cabinet colleagues, and at that time, I'll be free to make a public announcement on what exactly we're going to do with the Northeast Avalon fire-fighting service.

MR. SPEAKER: A supplementary, the hon. the Member for St. John's East Extern.

MR. J. BYRNE: Thank you, Mr. Speaker.

The minister knows that the town councils have refused to pay portions of the bills sent to them by the City of St. John's. The City of Mount Pearl is the latest to withhold payment. Has the formula used by St. John's to apportion cost to the various towns been approved by Cabinet? If it hasn't, are the towns under any legal obligation to pay the bills?

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

MR. REID: The answer to the second part of the question, whether it has gone to Cabinet yet and there has been a rate set, is no.

To answer the hon. member's questions of whether or not the small towns must be made to pay what is considered to be their fair share, the answer to the question is yes.

I ask the hon. minister and I ask my colleagues and you, Mr. Speaker: Should the people of Corner Brook, Carbonear, St. Anthony or Wabush pay for the fire-fighting service on the Northeast Avalon? The answer is no, of course not. So someone has to pay the bill and the bill will be paid by the people who are demanding and getting the service.

The question of whether they are compelled to pay is a question of, I suppose, the service provided. I think if municipalities on the Northeast Avalon refuse to pay for the service then it's going to be detrimental to the service, and it could possibly cause problems that could, I suppose, ultimately cause a death or a bad fire or something in one of the areas. My personal feeling is that they should at least continue on paying what they've been paying for the past two or three years and give me a chance, along with all the mayors who have been meeting on a regular basis, an opportunity, to sit down and iron out a solution to this. No, I'm not going to stand in this House and say that there's no responsibility now in the Town of Paradise to pay for fire-fighting service. Every community in this Province has a responsibility to pay for the services that are provided for them. That's where I basically stand on it, and I don't think that anyone in this House should have an argument about that.

MR. SPEAKER: A brief supplementary. Question Period has almost expired.

The hon. the Member for St. John's East Extern.

MR. J. BYRNE: Thank you, Mr. Speaker.

The towns on the Northeast Avalon have been paying three times what they are legally required to pay I would say to the minister. The towns on the Northeast Avalon believe the cost-sharing formula devised by St. John's has no relation to the services they receive. Will the minister insist that the formula is changed so that the towns are assessed fairly on the basis of services received?

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

MR. REID: I will make a commitment to the hon. member, Mr. Speaker, and I will say this: When the final decision is made by this government and the formula is approved, we will feel that it will be fair to the people on the Northeast Avalon. Now I can't go any further than that. This government doesn't make decisions that are not fair to people provided with services in the area. I can't say what the cost will be, but I will say, quite honestly, that people who live on the Northeast Avalon and avail of that service, as far as I am concerned, should pay for it.

Now if that cost is too high in comparison to other areas on the Northeast Avalon, yes, that question should be addressed. I am dealing with that, I am talking to the hon. member, I am talking to my colleague from Waterford - Kenmount, I am talking to my hon. critic almost on a weekly basis on that question. It is a dilemma, but I am hoping, quite seriously, to be able to resolve that dilemma in the next couple of weeks.

Thank you.

MR. SPEAKER: Question Period has expired.

Presenting Reports by

Standing and Special Committees

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

MR. GRIMES: Thank you, Mr. Speaker. Pursuant to section 12(1) of the Workers' Compensation act I table the annual report of the Workers' Compensation Commission for the year ended December 31, 1993.

I draw attention, for all hon. members, to a couple of points: That when they study the report it indicates that reported injuries for the calendar year 1993 were down by 16 per cent, which is a real decrease of 14 per cent, in that there was 2 per cent less activity in the workforce, as reported through Workers' Compensation.

The employer assessments increased to $101 million, up from $92 million in 1992. More of the services were provided through regional offices as a result of restructuring. The unfunded liability decreased from $144.6 million down to $134.1 million, so that the funding position of the Commission has actually improved in the calendar year from 48.1 per cent in 1992 to 54.8 per cent in 1993.

The only other noteworthy indication, Mr. Speaker, is that the one other real indication of success is that not only have the number of injuries and the number of claims been decreasing, but also the duration of claims is also reported to have decreased in this annual report covering the calendar year 1993.

MR. SPEAKER: The hon. the Minister of Social Services.

MR. LUSH: Mr. Speaker, I would like to table the annual report of the Department of Social Services for the fiscal year 1991-1992.

Notices of Motion

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

MR. ROBERTS: Mr. Speaker, I give notice that on tomorrow I shall move that a select committee be appointed to review the issues for consideration by the Legislature identified by the Commissioner of Members' Interest in his report of 25 April 1994, and to make recommendations with respect thereto, and that the committee report to the House by 30 September 1994.

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

MR. HARRIS: Mr. Speaker, I give notice that I will on tomorrow ask leave to introduce the following resolution.

WHEREAS the Newfoundland pony represents a significant element of the working heritage of our Province, providing transportation, working power in the woods, in the fisheries and in farming, and being the virtual engine of outport and rural life for hundreds of years;

AND WHEREAS the Newfoundland pony is a distinctive breed of horse unique to our Province, having developed from various strains of Moorland ponies and other horses brought here in the seventeen, eighteenth and nineteenth centuries, and through natural breeding and adaptation evolved characteristics especially suited to our climate and the needs of our people and communities;

AND WHEREAS economic changes and the lack of recognition and protection for this important part of our living cultural heritage has caused the number of Newfoundland ponies to dwindle to the point where there are less than one hundred breedable animals;

THEREFORE BE IT RESOLVED that the House of Assembly urge government to recognize the importance of the Newfoundland pony by introducing legislation establishing the Newfoundland pony as a heritage animal;

AND BE IT FURTHER RESOLVED that measures be taken to assist in the establishment of the Newfoundland pony as a recognized breed, including providing or endorsing means of acknowledging individual animals as Newfoundland ponies;

AND BE IT FURTHER RESOLVED that government protect Newfoundland ponies from being exported from the Province for meat and take steps to encourage the growth and development of the Newfoundland pony population.


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

MR. WOODFORD: Thank you, Mr. Speaker.

I would like to take this opportunity - although it might seem that it is a bit outdated it is not, because there are concerns addressed in this petition that I have received mostly from students, but some parents as well, from the Deer Lake, Cormack, Reidville area, as it pertains to education and the exams.

Mr. Speaker, last week I rose in the House and presented a petition on behalf of students and parents from that area, and in that petition some of the parents, Mr. Speaker, said they would advise the students, if there was no settlement within a couple of days, to boycott the exams. Now that was a little over a week ago.

Yesterday I met with a group of ninety-eight students, graduates and parents in the Deer Lake area, and they asked pretty well the same thing - at that time they had other concerns as well - but this time they were more categoric. The petition of the undersigned concerned parents and students committee of Deer Lake went on to say that the Government of Newfoundland and Labrador cancel all public exams for the school year 1993-'94.

Now, Mr. Speaker, the minister rose in his place today and said that they would cancel exams for this year, so that really addresses the prayer of the petition with regard to exams themselves, but there are other concerns that they asked me to raise as well, if the exams were cancelled. Some of those, Mr. Speaker, were addressed by the minister today in his statement.

Students, Mr. Speaker, are wondering - and the minister addressed it in the last part of his statement - about Memorial University. They would be accepted no doubt, but what about universities outside the Province? Has the minister, or will the minister, ask universities outside the Province, such as UNB, Acadia, Dalhousie and some of the other universities, for special consideration for Newfoundland students for this year?

I have had some reports from students saying that they were looking at it and there is a possibility that they may give special considerations. One of the students in my area had a letter from Dalhousie saying that she would be accepted. So it is a bit conflicting, Mr. Speaker, and I would ask the minister in his capacity as minister to -

AN HON. MEMBER: (Inaudible).

MR. WOODFORD: I would say that he got, according to his statement, a guarantee from Memorial University that no student would be turned down for admission this September. But make sure to ask the other universities, because a lot of students in the Province have made application to universities outside the Province, for special consideration for students from Newfoundland and Labrador, so that they will be accepted into the programs for September.

The other concern expressed was the scholarship exams. The minister has stated that they will go ahead. That is positive and I hope that the minister will keep his word because there are a lot of students out there looking forward to writing the scholarship exams. It means a lot of money, it makes the difference as to whether some of those students will be able to go to university this fall or not. So I would ask the minister to also address that particular concern.

Now, Mr. Speaker, having said that, there is a price to pay. There is a price to pay somewhere down the road for not writing exams, and that price is going to be paid by students and it will be paid by parents. It will be paid by parents because of the money that will be allocated to students this fall who will go and find out, probably after the first semester, that it is just too late. It will be paid by students because they will probably be accepted into universities or post-secondary institutions not knowing what the exact mark is.

That leads me to the other question, the big one: Where do students and how do students get a graduation certificate this year, and if you did get one, what is it based on? What is that graduation certificate based?

When, somewhere down the road, whether they go to university or look for employment for instance, how are they going to be evaluated and what kind of a mark will they be given in their final year in high school? That is a question, I think, that is going to have to be addressed by the department and the minister involved, and I'm sure that after the dust has settled, and with the exams being cancelled today, that some of those other questions will come to light and they will be asked by both parents and students.

I would say to the minister, take the situation -

MR. SPEAKER: Order, please!

The hon member's time has expired.

MR. WOODFORD: Thank you, Mr. Speaker.

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

MR. HARRIS: Thank you, Mr. Speaker.

I support the remarks of the hon. Member for Humber Valley in raising the concerns of students as to what is going to happen now. I think we all support the decision by the minister, in the circumstances, of cancelling the public exams. It was the only thing to do, particularly since the anxiety of students. The uncertainty to students up until today, of having to write exams as early as this Friday, was a great source of stress for them, and the obvious release of that stress we heard in the noises that we could hear from outside the Chamber coming in when the students realized the full import of what was said by the minister.

There are still a lot of questions that have to be answered, and I don't want to see the minister and the government use this cancellation of public exams as an excuse now not to sit down and seriously negotiate with the teachers some solution to this strike, that is going to take into consideration the needs of students.

The students who were concerned about the exams have been relieved. The students who wanted to have some exams because their midterm marks were so poor that they felt they weren't going to pass, are still concerned about what is going to happen to them. There are a number of students who wanted the exams, or felt the need for an opportunity to upgrade their marks to be able to complete their school year. That is a serious question that has yet to be answered: What happens to them?

What happens to the students, Mr. Speaker, who are going to have to go on next year to higher courses in science and mathematics in particular, who aren't going to have the grounding that they would have otherwise had because they missed not only a month of school, but the review and the intense period of learning that goes on in the last month or so when students and teacher both are focused on all of the things they have to know to not only be able to write exams, but to be able to go on to the next course, whether it be a higher degree of mathematics, courses for which prerequisites are very important, and a good solid grounding is there?

So the needs of students are still being left out so far of the equation when we are dealing with the teachers and the government over this strike. I want to suggest to the minister, to the government, and to the NLTA, that in trying to devise a solution to this strike they may also consider the option of finding a way of helping those students who do need some assistance to either upgrade their marks or to understand and to learn the things that were left out of the last month of school.

Perhaps, Mr. Speaker, given the fact that the government is saving an enormous amount of money on a daily basis, they will have some flexibility in using some of that money to pay teachers beyond June 24, perhaps, to assist those students who need the help of teachers in order to complete their school year, in order to understand the work that they were supposed to be doing, and to progress to the next semester. Perhaps that is something that the Newfoundland and Labrador Teachers' Association and the Minister of Education and the Minister of Finance, in negotiating this issue, can have, not just the government's interest and the teachers' interests on the table when they sit down and make the decisions, but also the interest of students and the fairness to students in trying to find ways of helping those students who may not have the burden of public exams - and I am sure that is a great relief to them all, and they would be quite happy not to have to write exams. What about those students who need a little help, Mr. Speaker, to make sure that their school year is completed satisfactorily so they can have the confidence that they need to go on to the next year and not feel left behind?

It is all very well for some students. Some students are lucky, that things come quickly and easily to them. Other students are fortunate enough to have parents who hire tutors for them. But what about the vast majority of students who need the help of teachers and our education system in order to learn the things they need to learn, and have a satisfactory basis for the future? They should be helped, too, and the government, the Minister of Education, the Minister of Finance, should sit down with the Newfoundland and Labrador Teachers' Association, not use this as an excuse to put everything off until September or maybe the end of September, but to try and solve the problem now, and keep the students in mind when they are doing it.

Thank you, Mr. Speaker.

MR. SPEAKER: The hon. the Member for Burin - Placentia West.

MR. TOBIN: Mr. Speaker, I have a petition to present similar to the one that was presented by my colleague from Humber Valley. This petition basically has been addressed by the announcement the minister made earlier today. I did speak with the minister prior to the House beginning, in explaining to him that this petition was given to me to present in the House by a group of students from my district, and that's the intention even though the minister has basically addressed it. But when the minister stands to speak, as I understand he probably will, as it relates to both petitions, I would like for him to comment on how it applies to accessibility to other universities on the mainland; because on the Burin Placentia, the South Coast and, I guess, other parts of the Province, traditionally, a number of students, after graduating from high school, attend universities whether it be St. Mary's or St. Francis Xavier, Dalhousie or Acadia, there are a significant number who do travel to the mainland. I'm wondering if the minister has already worked out plans with these universities so that the students can be accepted? Now, there are also some concerns that were raised by the Member for St. John's East regarding students who probably found themselves in a situation after the mid-term exams where they weren't doing so well and they would like to have that looked at as well.

I will table the petition, Mr. Speaker, I have signed it, adding my support to it and I ask the minister if he would be so kind as to address the concerns that were raised by the three speakers so far on this petition. Thank you.

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

MR. DECKER: Mr. Speaker, I was aware that there was a second petition coming so I thought my remarks could apply to both petitions.

When the hon. members presented their petitions they did call to attention some problems that they want answers to. One of the problems is that some students actually want to write the exams and that's quite correct. After I had presented my ministerial statement, I was going through my mail, as I do most days when the House is in session, while I'm listening to what's going on in the House - and I had some letters, at least one letter from a parent who had anticipated we were going to announce that there would be no exams and that parent gave me all the reasons in the world why we should have exams, Mr. Speaker. So it's one of these cases where you're damned if you do and you're damned if you don't. It's not always easy to be all things to all people. That has been tried over the years. However, we've made the decision, Mr. Speaker, not based on whether a student wanted them or didn't want them, whether a parent wanted them or not, or whether a school wanted them or not. We made the decision based on educational grounds. We went right through all the pros and cons, we pictured exams where there might have been some disruptions. Students would not have been able to perform at their best, so at the end of the day, as much as I personally would like to have seen the exams go ahead, we came to the conclusion that it would be difficult, if not impossible, to do so. So we cancelled the exams, Mr. Speaker, in the interest of education.

In the interest of the universities outside the Province - as I said in a statement, Memorial University has assured us they will be accepting students for the fall semester - we have had contact with some universities in the Maritimes and we're confident, Mr. Speaker, that they, too, will accept students this year.

The Member for Humber Valley said there will be a price to pay. The hon. member is quite correct, there will be a price to pay, not so much because the students will not have written the exams but there will be a price to pay in that many students have not covered the year's work. So what we will see this fall is students being accepted into university who will not be able to perform as well as they should have, had they gotten the full year's work. I would venture to suggest that come Christmas, where there's normally a drop-out rate of about 5 per cent of the first year class, there will probably, this year, be a drop-out rate in excess of the normal 5 per cent. That's the price some students are going to have to pay. Maybe they would not have been accepted into the university if we had gone through the process and the exams had been written, and they might not have performed as well, but that is one of the downsides of having to do this.

The hon. member talks about a certificate. The problem in preparing a diploma isn't of great concern for those students who intend to go on to a post-secondary institution - all of the post-secondary institutions will accept students this coming year; but the problem is with students who don't intend to go on to post-secondary institutions, who plan to join the workforce, or who, for whatever reason, want to have proof that they did complete Grade 12. Maybe that is all they intend to do, that is all the formal education they intend to have. They, too, are entitled to a certificate.

The Department of Education is watching very closely the negotiations which are still ongoing with the teachers, and hopefully, I have no reason to suggest one way or the other, but hopefully, this matter will be resolved in time so that teachers can get back into the classrooms, if to do nothing else, at least be able to evaluate the year's work, so they can put together a certificate or an evaluation that the department can use to issue diplomas to people who deserve them.

What I am saying, Mr. Speaker, is that this year, and this year only, the certificates that will be awarded will be based on the evaluations and the marks that are provided by the schools. I am hoping that this strike will some day come to an end, sooner rather than later, and that teachers will be able to get back into the classrooms to do these evaluations. Failing that, we will have to find some way, it will become imperative, that we get access to the mid-term marks, the quizzes, and the evaluations.

MR. SPEAKER: Order, please!

The hon. member's time has elapsed.


MR. SPEAKER: By leave.

MR. DECKER: The future of the students is so important that we all have to wrack our brains to find some way, if this dispute is not resolved, to get access to the mid-term marks and the evaluations, so that we can give the students a diploma which means something, not just a slip of paper with my signature on it, or whoever the minister happens to be. It has to be a piece of paper that has some validity, and that will be accepted. I believe, if we can get access to the year's work, get access to the mid-terms and evaluations, that a process can be put in place to deliver and present to the students a valid diploma for what they have done.

Thank you, Mr. Speaker.

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

MR. SULLIVAN: I rise to support my colleague, the Member for Burin - Placentia West in his petition to have public examinations cancelled. We are aware, from the minister's statement this morning, that has happened. I think it was a little late, because I think, last week everybody realized that public exams are based upon the full year's content, and because of the teachers strike we know that a certain amount of the year's material that was built into those public exams was not covered, and it would have been very unfair - even last week if they had gone back, it would have been very unfaIr to go ahead with public exams, because students would be writing exams in which there would be material they had not yet covered.

Now, the department has records on hand of all students right up to Level II and they could compare the performance of students in Level I and Level II, and there is a great degree of consistency. In fact, I happened to teach the first year they brought in this 50/50 evaluation. I have taught for over twenty years in a Level III homeroom, actually, and have been involved in the trends that have been established over these years. Students are very predictable from year to year with only very few exceptions.

The department can, and I am sure they have, in some boards, have access to mid-term marks. Some schools have them on computers and school boards have access to these, and by projecting ahead and giving the benefit to students, I am quite sure you can get a mark that is very, very valid, in fact every bit as valid as based upon a one-shot exam in June of this year, because I think the past and the consistency would be very much brought forward.

I do not think it was any major surprise today in that announcement. It was no major surprise to me. I have been saying since last week that public exams should not go ahead. It would be unfair to students to do that. They probably should have allayed the fears and anxieties of parents and students from the time over a week ago when they started gathering, and told them earlier that there would not be public exams. The students would have been at rest then, and they would not have to compete, I guess, with other students who are not subject to strike.

Overall, the petition, I think, was well-intended here and action has been taken. There is just one other point to the minister that is of concern, and that is scholarship exams. While the minister may not realize it, I hope he does, scholarship exams also are based upon academic content in each specific subject area.

There is an area in language, and an area in mathematics and science, that is based upon what was studied this year. They are not just general exams of knowledge, they are based upon factual information that is taught during the course of high school.

I think it is very important, as well, on the scholarship exams, to use some type of tolerance factor in marking and scoring these to make sure that they have valid results, too, and they really project the proper marks, and the students who are most deserving would end up, in the result, getting the particular accolades they deserve.

Thank you, Mr. Speaker.

Orders of the Day

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

MR. ROBERTS: We are on Orders of the Day, I take it, Mr. Speaker.

MR. SPEAKER: Orders of the Day, yes.

MR. ROBERTS: As I advised the House on Friday, we will be asking the House to deal first today with the two loan bills. They stand as Motions 1 and 2. Perhaps we could begin with Motion 1, which is the Local Authority Guarantee Act, Bill 14. Then, assuming we finish that, at some point, we will go on to Bill 22. We do not plan to ask the House to sit beyond 5:00 p.m. this afternoon, Sir.

On motion, that the House resolve itself into Committee of the Whole, Mr. Speaker left the Chair.

Committee of the Whole

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

Bill 14.

The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Chairman.

This is a fairly routine piece of business that happens once a year, where we add municipal loans and guarantees issued since the last loan bill was put before the House. In this case, it is for the period October 21, 1993 to February 25, 1994. These are the municipal loans and guarantees that were issued during that period to town councils and community councils around the Province. Generally it was for a variety of municipal works.

The first one is the Town of Appleton. This had to do with, I think, water and sewer. It was a two-year thing, $31,000 spread over two years. I think the rest of them are very similar to that, relatively small amounts of money by-and-large. It is a requirement that we add those to the Local Authority Guarantee Act once a year. So this is a fairly routine occurrence.

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

MR. WOODFORD: Just a few short comments on this bill, the Local Authority Guarantee Act, Mr. Chairman. It totals some $5,826,000 in this particular - what I find a bit odd is that it comes between October of 1993 and February of 1994. Usually, all municipal programs are released in the spring of the year or in the summer, and so on. Very few, I suppose some, come out in late fall, depending on what it is for, if it is drilling of wells or - but there is not much road work or municipal work announced at that time of the year. There are a few there in the $800,000 category, but the rest are usually $10,000, $30,000, $50,000 and so on.

I was wondering why it is so late that the guarantees are issued. Are they loans? How many are loans and how many are guarantees? Loans have to be listed with a financial corporation. The others sometimes are loans guaranteed by the Province to the banks on behalf of municipalities. I'm just wondering what percentage of that and what the breakdown was. Maybe the minister can get the - the minister responsible can probably later on address those few questions. What are loans guaranteed to the financial institutions, like chartered banks, and how many are guarantees to the municipal financing corporation on behalf of municipalities in the Province? And the lateness of some of the guarantees - that is quite late in the year for municipal work. Some are fairly substantial. There are a couple of $800,000 ones there and so on; so, just a few short comments as it pertains - I know it is an annual thing, in any case, Mr. Chairman, and maybe the minister can address those two or three concerns that I have.

MR. CHAIRMAN: Shall the resolution carry?

The hon. the Member for Mount Pearl.

MR. WINDSOR: Mr. Chairman, there is not a great deal one can say about these bills, except in generalities. Once again, as is normal, we are asked to approve this retroactively because these funds have already been spent; the loans have been approved some time ago and municipalities, no doubt, have undertaken the public works.

My colleague brings up the amount that is here; there is only $5.-something million, I believe the hon. member said, I didn't bother to add it up. I think it is worth noting that this is an incredibly small amount; I assume this part of the year - this is not a whole year? Did we not do some in the fall session? Did we not do part of last year's in the fall? These little ones that now have been put on long-term financing, the others were already on before; so the overall package was how much? Maybe the minister could tell us how much was actually spent last year and compare that with previous years. As we have been led to believe, we are probably spending less and less each year, making less and less funds available to municipalities in spite of the fact that costs are increasing each year. But I suspect this is probably the lowest amount we have spent on municipal capital works for years, probably twenty years - the amount has gone down tremendously.

Now, we could get into a whole debate on the federal infrastructure program which the government is piggy-backing on and try to take credit from.

AN HON. MEMBER: You are not right there.

MR. WINDSOR: Well, if I'm not, then the minister will correct me, and I hope he can, I will be delighted, if there is more money being spent than previously, but I think the minister -

AN HON. MEMBER: Unfortunately, there is.

MR. WINDSOR: I don't think there is; if the minister has the facts he will tell us, I'm sure; but it is curious that there are some very, very small amounts here. All or most of them are very small amounts and I suspect there is not more of them there is less of them and they are smaller amounts, that's why I said I think we are going to do a lot less work this year than in previous years, Mr. Chairman.

There is not much else we can say, it is already done, it is a fait accompli, the money is spent, loans are gone, the municipalities are not responsible for it, they have to pay it back and we have no choice, of course, but to put the amendment to the legislation to give effect to these loans.

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

MR. BAKER: Just a few comments, Mr. Chairman. First of all, most of these are guarantees; I don't know how many of them are actually loans, not very many, they are all guarantees. There might be one or two loans snuck in there, I'm not sure, but I could find out.

The hon. gentleman, the Member for Mount Pearl is absolutely correct. Last fall we did one of these bills and this is essentially what we did over the winter, which is a small segment of the year and that is why it amounts to only $5 million.

MR. WINDSOR: Or what was (inaudible) by the fall to carry over.

MR. BAKER: Yes. Now, the question I really want to deal with is comments about the amounts and so on that are being financed in terms of the municipalities in the Province.

In the last four years, there has been a tremendous increase, and I say, as Minister of Finance, unfortunately, we still have a tendency to perhaps overextend ourselves, and have exhibited that tendency over the last four years, to overextend ourselves in this field. I know there is great pressure in terms of municipal works and there is great pressure to, every year increase the amount further and further and further, and it is an urge, Mr. Chairman, that we have to control, because we have to get our total debt and that would include the guarantees, work we do under the municipal financing corporation, to get that under control as well, because even though it seems as if it is not a real expenditure in every given year, it is a real expenditure and it adds to our debt and adds to our guarantee debt each year.

Back in the late 1980s, I think the amounts probably averaged $25 million to $30 million a year that were done this way. In the early 1990s, the average has been over $50 million a year; there has been a tremendous increase in the amount of this type of work done, and again, I am not saying this - I am not bragging about it, because I really think we went too far. There has been a tremendous increase.

I tell you what I will do for the hon. gentleman - I will get him an exact breakdown now of the last eight or ten years. It is not something I'm overly proud of, but there has been a tremendous increase. One year it went over $60 million, I think; and it has fluctuated, it has gone from, I think, a low of about $40 million up to about $62 million - $63 million, averaging out somewhere above $50 million a year in the last four years. This year, of course, because of the infrastructure program, it is going to be ballooned a lot more, and that is unavoidable.

I would like to point out that as hon. members go through this, they have to realize that in many cases here, that amount is not really something that the Province ends up paying. In the case of the smaller communities, in the communities with less fiscal ability, the Province ends up paying a large share of it. In the communities that are financially sound and can afford it, have a good tax base and so on, especially if it is water and sewer work, the whole cost is picked up by the municipality. So, in terms of exactly what the Province has to pay, you would have to do an analysis and you would have to leave out the larger centres here, because most of this is paid for entirely by themselves. In terms of what the Province will eventually have to pay, you have to simply look at the other municipalities that don't have a tax base, where we pick up 100 per cent of the cost.

So I will make the promise to the Member for Mount Pearl that I will go back and get the total amounts of the financing over the last few years, from my perspective, as well as his. I think it would be interesting for both of us to have a look at and comment on one way or the other. As I said, we are at the point where we have to be very careful as to how much we spend in this regard even though the needs are great. Because whether it is this particular government that is in power or a few years down the road some other government is in power, we have to realize that these are real debts on the Province and that we must, at some point in time, reach the stage where we are paying our own way for a while, until our debt-service ratio gets down, and our debt-to-GDP ratio gets down. Then we can start on the track to perhaps a little more deficit financing, but we have to be very careful of this type of expenditure.

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

MR. HARRIS: Thank you, Mr. Chairman.

I don't have a lot to say on this bill except to ask the minister a couple of questions concerning the approach taken by government on this.

Looking through the list, obviously there is hardly a particular community you can object to a loan being guaranteed by the Province. But in light of the minister's comments and occasional government comments about the size of the provincial debt, I wonder if the minister could explain what the procedure is and what the criteria are. I know, of course, that banks, like most lenders, will take whatever security they can get, and usually will ask for far more than they need. Usually, they will lend you money if you have money. If you have money and are prepared to lay it down in one pot, they will lend it to you out of another pot.

Obviously, the banks are going to try to get whatever they can. Are we giving security where it is not necessary? I see, for example, the City of St. John's has $53,000 there being guaranteed by the Province, on page 8 of the bill. Would the bank lend them money without a guarantee from the Province? I don't know. I don't know what it is for, or what it relates to. Does the government ever say no when a town council says that the Royal Bank or the Bank of Nova Scotia or whatever would like to have a government guarantee on this? Has the government ever said: No, the bank should loan you that money on your own merits, on your own tax base, or whatever?

In other words, are we getting into a situation here where really all the government is doing is providing comfort for the banks, which they don't need, and at the same time, jacking up our own numbers in terms of the contingent liabilities of the Province for government guarantees for the municipal corporation or whatever?

I'm not questioning any individual or specific allocation here, as to whether it should or should not have been granted, but I ask the overall question: Are we just providing an extra measure of comfort for the banks, adding numbers to our provincial debt? Are there criteria that government applies in making decisions about this? Do we ever say no? and basically what procedure the government follows here, because I wouldn't want the banks, as a matter of course, to be insisting on this type of guarantee in order to facilitate their loan operations, or to save the reputation or the angst of the local bank manager. If that's all that is going on, then we shouldn't be doing it.

It may be that they will give a loan at a 2 per cent less interest rate if there is a government guarantee, and that amounts to some sort of saving for the municipality. If that's the case, then I can see some advantage in the government providing a guarantee. There may also be some argument for the government charging a fee for that. Who know? I'm not proposing that as a solution. I know, obviously, the government decided in the case of Newfoundland and Labrador Hydro a few years ago that if they were guaranteeing all of this debt, then they were going to charge a fee for it. I don't know what the circumstances are with municipalities. If they are getting a special interest rate from the bank because of the Provincial Government guarantee, maybe somewhere between the rate that the banks would ordinarily charge and what they get from the government guarantee, something could be done there to ease the burden on the Province.

These are just speculative questions, but I hope the Minister of Finance will be able to address them in his remarks.

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

MR. BAKER: Thank you, Mr. Chairman.

In one sense, I suppose, the issue is really a non-issue. Obviously, if government guarantees a loan, then there is more security for the bank than if government didn't guarantee the loan. All that means is that the bank is more sure it is getting paid; therefore, it presumably can offer a lower rate.

AN HON. MEMBER: In theory.

MR. BAKER: In theory, yes.

Also, of course, whether government issues a guarantee or not to most of the communities in this Province, the municipalities are creatures of the Province, and even if a community, I suppose, were to go out and borrow money, the Province ultimately would be on the hook, because the municipality is a creature of the Province, or the tendency would be that the Provincial Government would not see a municipality sort of go bankrupt and not straighten out their debts and all this kind of thing. Consequently, in terms of the municipalities that don't have the power to pay, banks then wouldn't give them money anyway, or if they did, they would charge high interest rates.

In terms of the municipalities that can pay, it doesn't really matter, because these municipalities end up paying, in terms of water and sewer, the full cost anyway. This was the big problem with the City of St. John's in terms of the infrastructure projects, where we made the decision to use the infrastructure money along the lines of our current programs, so we had an 80-20 recreation facility program; we had a 60-40 roads program, and we had a water and sewer program where the municipalities pay according to need, and according to ability to pay, so that places like Gander, St. John's, Grand Falls and Corner Brook, perhaps, would end up paying, in terms of water and sewer, the full amount of the loan, whereas other communities having lesser ability to pay might end up paying back half of it, and a large number of communities having no ability to pay would end up paying 0 per cent and the Province paying 100 per cent.

These are the types of programs that we have, and I am not so sure it makes a difference in terms of the Province and the Province's obligations, whether they guarantee these loans or not. I know that some of the municipalities, the "richer municipalities", the municipalities with the tax base, quite often go and get loans on their own. I think they still have to have the permission of the Department of Municipal Affairs, but sometimes they do go and get loans totally on their own, with no government guarantee.

The only instances I know where that happens is in some of the larger municipalities, that they do in fact get loans without any government guarantee at all because of the absolute certainty that they can pay them back. I don't think that happens a lot, though, but I know of some instances where it has happened. Municipalities have gone ahead, simply to do a project, gone out and borrowed the money themselves, and paid it back themselves, but obviously, their budgets at the end of the year have to be vetted through the Department of Municipal and Provincial Affairs and we would be very careful to see that these municipalities are not over-extending themselves. It's only when they over-extend themselves that government would then have a moral obligation, if not a legal one; but it would have a moral obligation in case they ran into difficulty.

So, the whole issue of whether government is doing too much of it, I suspect we are. Should we be saying `no' more often? You're probably right, and judgements have to be made, but there are all kinds of forces at play here, political forces, environmental forces, health forces and so on, that have dictated recently that we say `no' less often, even though we do say `no' an awful lot - but we say `no' less often than we have in the past.

The issue of whether we should guarantee loans or not is an interesting issue, but as I said, I'm not so sure because of our moral obligation anyway, that it makes much difference. The only thing I would have to check into is whether the government guarantee does give them the lower rate, and it should. It's something I wouldn't mind checking into.

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

MR. HEWLETT: Thank you, Mr. Chairman.

I'd like a few words on this Act To Amend The Local Guarantee Act. As the Minister of Finance pointed out a moment ago, there are certain municipalities in the Province which have the ability and, in reality, do pay their own way. I represent one such community named Springdale, Mr. Chairman.

There was a degree of concern in Springdale over the last few days that it was not approved for project under the new federal infrastructure program - a program, which, in the case of a town like Springdale, would have seen the Town still having to come up with two-thirds of the cost of the project they applied for, insofar as Springdale, in terms of the municipal and provincial end of any water and sewer project, would be picking up the total cost which, under the new federal program, would have been two-thirds of the cost.

Springdale had an application in for several hundred thousand dollars to install a new water supply line from the existing reservoir serving Springdale to the west end of the town. Springdale is substantially serviced, Mr. Chairman, and these services were installed, a lot of them, by pick and shovel back in the 1950s, in the years of the Smallwood Administration. So needless to say, it's a town that is not overly burdened with debt compared to other communities in my district and the Province. However, not being funded under the infrastructure program means that Springdale is still faced with a real problem in terms of its water system. Fire flows are very low in the west end of town and the new service line from the reservoir would correct that problem but instead of having to pay two-thirds of the cost of such a project, if the town gets it under the regular municipal financing provided by government, it would have to pay 100 per cent which, of course, is a larger burden on the town. Failing to get on the annual water and sewer program, either through the infrastructure program or a direct provincial program, the town will be forced to do as the Minister of Finance indicated, get permission to borrow, an approval to borrow, from the Minister of Municipal and Provincial Affairs which is, in the case of Springdale, somewhat of a formality, and go to the local bank and raise a loan, as you or I would, based on our financial reputation, our creditworthiness, etc. That, I don't think, would be a problem for Springdale. Obviously, it would be easier, and perhaps better, as regards an interest rate, if it had a government guarantee. It would have been much better had it gotten approval under the infrastructure program, in that it would have had to pay only two-thirds of the cost of its water line, versus 100 per cent.

So therefore, Mr. Chairman, I would like to put on record that I ask the Minister of Municipal and Provincial Affairs, in further funding under the infrastructure program, to consider Springdale for an addition to its water system, badly needed for fire flows. Failing that, I do believe the Town will have to come to the government for approval to borrow on its own strength.

Thank you, Mr. Chairman.

MR. BAKER: I would like to thank the Member for Green Bay for making the case for some water and sewer money for the Town of Springdale. In a lot of ways, I look upon Springdale as my hometown. I started school there in Kindergarten and went as far as Grade 6, I believe it was, and have very fond memories of Springdale. I went back and taught there for three years, as the hon. member knows. He was in school at the time, and I still remember him. He wasn't very old, but I still remember him in school. He was a very interesting person at that stage in his life as well.

I say to him that there is still money left under the infrastructure program to be allocated. It won't be allocated right now, but there is more left, and I would suggest to him that he make sure that if in fact what is happening there now is resulting in a real safety problem in terms of water pressure, availability of proper water pressure for fire trucks and so on, if this is that type of situation, that he go and talk to Municipal Affairs again to make the case, to make sure that all these safety things are included. Because they do their analysis and we pick them according to rankings, and the secret is to get all of the points across, about the particular project you are talking about, and it seems to me, there is extra stress given to safety features like that.

I would suggest to the hon. gentleman that he make sure those points have been taken into consideration. I, myself, would like to see, if that is the problem in Springdale, that it is corrected. I would suggest that the hon. member just do another check. I know he has checked before, but do another check to make sure all those factors are included with Springdale's application, and that the officials involved understand the seriousness of it.

Motion, that the Committee report having passed the resolution and a bill consequent thereto, carried.

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

MR. BAKER: Motion 2, Mr. Chairman.

MR. CHAIRMAN: I understand the minister is calling Bill 22 now.

The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Speaker.

This again, is a normal occurrence each year, but members may recognize that this year there are some complicating factors they may want to debate.

First of all, this gives authority to raise $300 million on the markets if and when the need arises. What happens is, we try to have enough borrowing authority to cover our needs with a fair amount of leeway left over for the next year. In actual fact, there is probably about $150 million authority left over from last year that we could use. That's the way it is year after year. We ask for authority up to a certain point to give us enough leeway to carry over into the next year, so that we never get caught short. If, at a certain point in time, the markets are so good that we can quickly access the markets with the expectation that things will turn worse a couple of months down the road, or a couple of weeks down the road, then we do so and we pre-borrow for several months ahead, even though the need may not be there at the time. It allows us an awful lot of flexibility to get the commitment, or to set the limit high enough to be able to do that.

In this instance, we are asking for authority of the Legislature to raise $300 million by way of loan for the purpose of the Consolidated Revenue Fund. That would be enough of borrowing authority to carry us through this year and part of the year after. We would hopefully have quite a significant amount of this authority left over at the end of the next fiscal year so that that could carry us into next summer - as we do this year; we have, as I said, about $150 million authority still left over.

So, again, it is a normal piece of business that allows us to function in a manner that is to the benefit of the Province and doesn't put any restrictions on us. We must do that before we actually run out of borrowing authority that we now have.

MR. CHAIRMAN (Barrett): The hon. the Member for Mount Pearl.

MR. WINDSOR: Thank you, Mr. Chairman.

I guess, the interesting thing about this bill is that it is here at all. I would have thought this year, that with the proposal to sell Hydro, the minister would be standing up today saying: I don't need to introduce a bill to raise $300 million. We are going to sell Hydro and not borrow any money. Now they've changed their tune. Why are we borrowing $300 million if we are going to privatize Newfoundland and Labrador Hydro and not have to borrow any this year and perhaps none for next year? The minister just told us that he has $150 million left over from last year. So surely, that is enough, together with the revenue to be realized from the sale of Hydro, to carry us for at least two years. I don't understand why the minister has this bill here at all.

On the other hand, then, I haven't heard anything about the Hydro bill recently. Where is the Hydro bill all of a sudden? That doesn't seem to be on the agenda for this week. Perhaps what the minister is telling us is that we are not going to proceed, at least not now, with the Hydro bill.


MR. WINDSOR: We are not going to proceed with the Hydro bill. That is good news, Mr. Chairman. I say that is good news. That makes good sense. I would sooner have the minister come here and ask to borrow $300 million this year, which is not an unreasonable sum; in fact, it is a much smaller sum than we've been borrowing annually for many years for various reasons. I'm much happier debating the borrowing of $300 million than if we were here debating the giveaway of our hydroelectric resources in this Province.

I think this makes eminently more sense than privatizing Hydro. This is a small percentage of the benefit of retaining that Crown corporation. I am not going to get into that debate any more than that at this point in time because hopefully we will never have to debate it. If we do, then we will debate the pros and cons in full measure. Let me simply say again that this is far more preferable. So $300 million, as the minister said, this is -

AN HON. MEMBER: If we do.

MR. W. MATTHEWS: We need a statement first to clear the air.

MR. WINDSOR: This is a normal piece of legislation that comes in every year, that is the borrowing. I was just about to look to the Estimates and see exactly what the - I had forgotten for the moment what the overall budgetary requirement is; four hundred and seventeen million dollars.

MR. BAKER: That includes the rollover which we don't need authority for.

MR. WINDSOR: That includes the rollover from last year. We didn't then need to borrow as much last year as the minister had authority for. The minister said that each year we always have some at the end, but that's not the case. There is very little, normally, left over. We normally borrow all that by October, November - we've borrowed all that the authority was asked for. It's not normal to have money left over, to have authority left over at the end of the year. It may have been this year and last year but -

MR. BAKER: That has been for the last three years.

MR. WINDSOR: The last two or three years - most unusual, Mr. Chairman. Normally, we don't ask the House for authority to borrow any more than we have to. And the reason for that, obviously, is because once the minister asks the House for authority to borrow and receives authority to borrow, that then, is a liability on the Province's books. The credit rating agencies will then look at that far more seriously than they would look at the Hydro debt, which is simply a guarantee of a debt that can never be called on, that guarantee would never be called on. That borrowing doesn't bother me, or the guaranteeing of borrowing by Hydro, totally self-sufficient debt, has very little impact on the Province's credit rating.

Borrowing $300 million or $400 million does have an impact. If the minister is borrowing $100 million or $150 million more than he needs, then I say that is not wise. The minister could always come back in the fall if he finds that by the end of the year he is going to be short and ask for $100 million if, in fact, that is the case. The indications we've had - and the minister says he will let us know in due course - but the indications are that the Province's financial position is a little bit ahead of expectations. Obviously, the teachers strike is going to give them a great boost as well. We don't know what will be the resolution of any savings there. The minister is talking about putting it into the teachers' pension plan or something, which is fine in some ways and not so fine in others. We will debate that at another time.

MR. BAKER: (Inaudible).

MR. WINDSOR: I am not totally in favour of that, I say to the minister. It all sounds well and good, and it is great for government. It is a liability we have anyway, and certainly it is a benefit to have that in there, but it is the children of this Province, I say, who have suffered by this strike more than anyone else. I would sooner see those savings go into education, into equipping schools, and upgrading schools, and providing better facilities in the educational system, not taking it out of that and putting it into the pension plan.

MR. BAKER: We could argue that.

MR. WINDSOR: We can argue that, sure. It is a matter of opinion, and there are benefits to both sides. No doubt, there is a benefit in making a significant contribution to the teachers' pension plan. It is a liability the Province has anyway; it has to go in there sometime, so it is certainly not an unwise use of those funds, but I am not sure that it is top priority for those funds at this point in time, when we are closing down hospital beds and reducing the number of teachers and everything else. I am not sure that is the best use of those funds at this point in time.

This bill is routine, as the minister has said, something that we do every year by resolution that gives effect to the borrowing program announced by the minister, and it is less than was announced by the minister in his Budget, so obviously the government will need these funds to provide services in the Province for the coming year.

Mr. Chairman, with those few words, I will pass on to some of my colleagues.

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

MR. BAKER: Thank you, Mr. Chairman. I would like to briefly comment on some of the things the Member for Mount Pearl mentioned.

First of all, for the last at least three years that I know about, we have always ensured that there was enough borrowing authority left over at the end of the year so that if conditions were such that the market was absolutely perfect to borrow, and we knew we needed money during the summer, but maybe in May sometime, the market conditions were absolutely perfect and we were getting a really good deal, that we could go in May, even though we may not need to go until July or August, and it provides that kind of flexibility, because by the time the Budget gets to the House, and by the time the loan bill gets through, there may be a window that is missed, so the extra borrowing authority is simply for the flexibility of the system, and I think that flexibility is kind of important.

We don't actually go out and borrow. We only borrow what we need, and we like to keep, as the hon. member knows, so much money on short-term deposit anyway, and on the average throughout the year there is perhaps $100 million on short-term deposit, and that varies. Sometimes we might go in the hole a little bit, and we have borrowing arrangements with the bank, but generally we like to keep a float of maybe $100 million, or around there, in short-term deposits in case of emergencies and this kind of thing, and in case we come to a point where we need to go to the market but the market is not right; we can then postpone it a little bit longer. So keeping that float there also provides us with added flexibility.

In terms of the rating agencies, I think they believe that we should create that type of flexibility for ourselves so that we can try to get the best deals at all times, and not be forced into going to the market when the market is simply not there and we would have to pay high rates for our money, so I think flexibility is important.

In terms of his comments about the pension plan and the use for that money, he is right; that is an argument that we could have, and I guess there is an argument to be made on both sides. I can see both sides of it, and probably that is a great fault that I have, that I can generally see both sides.

One could argue that there are other needs in the Province, immediate needs that need to be met, and the monies put to better use, but I also can see where - you know, previous to 1980, the government simply used the money that was collected from people for pensions, didn't put in any of its own money, and used the money that was collected in current account, and maybe that was understandable in those days, but it simply did not work out to be the proper way to do it. Consequently, that is one of the causes of the tremendous unfunded liability, and particularly the teachers pension plan. Government has an obligation to pay that back and that obligation, the money that was taken and used for road work and things like that, plus accumulated interest from the '50s, '60s, 70s and up, would probably amount to well over $300 million that this Province actually owes to that plan, and should put in the plan because we were rapidly approaching the point a few years ago when the plan would, in essence, be bankrupt and we would have to fund the payments as a current account, and that is not a proper way to go. So we made some changes in the plans. We increased the contributions of both the employee and the employer and put it on a current, service-cost basis which pushed the date out when it would go bankrupt. The teachers plan now is about 2006, 2007 which gives us some breathing space.

I really think that it is kind of important that we start paying back some of that $300-and-some-odd million that we took out and used. I think it is kind of important that we start replacing that. It is kind of important that our public employees get the impression that we are taking that obligation seriously, and not just having a written obligation on paper without ever doing anything about it.

As I say, I can understand both sides. There are the needs that we have now and there is that horrendous problem that we have, having to replace money that previous governments used. I guess it is a balancing act.

We have decided that the pension plan is really important. As to what we will ultimately do with the so called strike savings - don't forget that if, for instance, you want to talk about strike savings, if you assume that we pay the employees $2 million a day, then the savings to us is not $2 million a day. Because of that $2 million that was going out in pay, maybe 30 per cent of that was our own money that will come back in income tax, and maybe only 70 per cent of it was usable money for the employees. So the savings are not as much as it might seem on the surface because of the loss of income tax and RST and everything else that goes along with that money being spent.

Certainly there are some savings and the decision has to be made as to where it goes. It should certainly go one of two places. I mean, it should go into the pension plan or it should go into much needed services, particularly in the education system. So it should go in one of the two places.

Those are the only comments I want to make right now, Mr. Chairman.

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

MR. HARRIS: Thank you.

Mr. Chairman, I would like to make a few remarks about the bill. It is obviously an important bill authorizing the borrowing of up to $300 million for public purposes. I would say, first of all, that I support the legislation. Obviously the government program requires a borrowing program to go with it, and in the absence of authority to borrow, government may feel constrained to have another excuse to say that we have to sell Newfoundland and Labrador Hydro, and say: We had to do it, the House wouldn't let us borrow any more money. We asked them and they said no, so we cannot borrow any more money. So we have to sell Hydro.

I mean, I can hear the minister saying it now on the radio, that we wanted to borrow more money but the House wouldn't let us. So we now have another whole series of ads going all summer to tell us how we now have to sell Hydro because the House wouldn't let us borrow any more money.

I want to put it on the record that I support the legislation, I will vote for it. I am not asking the minister to withdraw it. I support the legislation and I want to see it passed.

In doing so, Mr. Chairman, I want to make a few comments about the public debt in general. You know, the government and governments across the country, particularly those who want an excuse to say no or to cut back or to do further damage to our social welfare system and to the social needs of people that are being met by government programs, quite often talk about the great burden of the debt and all of this sort of thing. I don't wish to minimize it, but I want to say, and I think we should all understand, that in this Province, as compared to other provinces, we are not really doing all that badly. Our per capita debt in Newfoundland is a lower per capita debt than six of the ten provinces.


MR. HARRIS: I hear the members talking back and forth, ignoring the per capita debt, because now somebody else could come along with another measure that can put us on the bottom of the heap.

The reality of the matter is that the ability to service the debt is based on the percentages of your revenues that are used to meet the interest costs. The ability to service the debt is based on your revenues, and in Newfoundland about 13 per cent of our revenues are used to service our public debt. So the ability to pay: Obviously you get a better credit rating if you don't need the money, but the reality of life for Newfoundland is that we do need the money to be able to maintain the level of public services that is consistent with other provinces. In fact, that is constitutionally recognized, that we ought to be able to have sufficient revenues and a proper fiscal relationship with the Government of Canada, to allow us to have an equal, or relatively equal, burden of taxation, and provide the same level of services.

When we look at other provinces, on a per capita basis our debt is not high compared to other provinces. There are only three provinces that are lower, in fact. Prince Edward Island is one of them, British Columbia is another, and Ontario is the third. So on a per capita basis we are not really doing that badly, and that is a consideration that has to be recognized. In terms of what percentage of our resources we are using to support that debt, it is relatively modest, 13 per cent per year. It hasn't gone up in the last two or three years; in fact, if anything, it is going down very slightly. That compares to the federal government's debt burden whereby thirty-four, maybe up to thirty-six cents now, of every dollar in revenue collected by the Government of Canada goes to service the Canadian government's debt.

I support a sensible borrowing program. We recognize that government does have to borrow money on the markets in order to finance its activities, and I think we will expect - all of us expect - that that borrowing will be limited to what is absolutely necessary to meet the objectives of the Budget as passed by the House.

With those remarks, Mr. Chairman, I will conclude my speech and indicate my support for the legislation.

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

MR. SULLIVAN: Thank you, Mr. Chairman.

I have just a few brief comments here. Certainly the bill is authorizing government to borrow the $300 million. Of course, we know that it is needed to be able to meet, I guess, future debts and the refinancing of our debts that are there. I think a point to keep in mind, too, is that we can't be so naive as to think that just because we pay a low percent in the financing that we are in tremendous shape among provinces in Canada - quite the contrary. Newfoundland is at the bottom, actually, of the heap in terms of its ability to be able to repay its debt in terms of our gross domestic product.

AN HON. MEMBER: (Inaudible).

MR. SULLIVAN: Yes, and a lot of our costs are pretty fixed costs where we don't get the flexibility. We are depending on, I believe, $1.4 billion of transfer payments that are filtering into specific areas that are needed, and with the other federal assistance programs that are on a cost-shared basis, with our social assistance and so on, we don't have flexibility in those areas. We don't have very much flexibility. We have mushrooming costs, and each year we are taking up a bigger percentage of the disposable, flexible income which we have, to be able to meet our needs. We have growing needs in health care - we know that - and education and other areas, and our flexibility is limited. While it might be a low percentage it is far, far from a very enviable position. In fact, with our total debt factored in, I think we are 125 per cent over, based upon our debt to gross domestic product. When you factor it in, it is 125 per cent for this Province. We are the highest of any province in Canada.

We have problems with taxation alone dealing with these. In fact, we have some of the most, I guess regressive, if you want to look at it that way, negative aspects in taxation that the government seem to think necessary.

The Workers' Compensation report tabled here today: We have some of the highest worker compensation costs in this country. In fact the highest, I believe. Ontario might be a little bit close to us, I think. We are the highest. We have a payroll tax that is the second-highest I believe in the country. Quebec is substantially higher. The rest is just a margin, 2.2 per cent I think in another province. Just a very little different than ours in another province or two.

We have a lot of negatives still, from a business aspect, that are going to be able to generate revenues to be able to increase our gross domestic product. If we want to be able to increase our gross domestic product we can't be frustrating and limiting the ability of businesses to be able to grow. With inter-provincial barriers coming down, we all see a need to be more competitive. I'm sure if government is not addressing, maybe it is discussing some of these areas. It hasn't addressed some of these areas.

I know they dropped corporate income tax, or proposing to, down to 14 per cent. We all know that is positive, but it is really going to do very little in terms of real dollars. Because we are only taking in, proposed, I think $52 million this year in corporate income, $48 million, $49 million last year. We are not going to take a big percentage in anyway, because of that measure. It does have bit of a cosmetic effect, no doubt.

The big area that we are finding: Over the past five years we were taking in $70 million in corporate income tax. Now we are only taking in $49 million, $50 million, proposed $52 million this year. The real killer is the big payroll tax. We are paying businesses 60 per cent more in those two taxes than we paid five years ago. Here we have inter-provincial barriers coming down, trying to be competitive. If we don't get businesses in here, we don't increase our GDP. We have a higher percentage of our GDP. In fact, if it doesn't increase and our debt is going up it is causing a grave problem.

We were recently ranked - I think the Fraser forum here ranked us down with some of the Third World countries. You can take that opinion, I guess, for what it is worth. They have some interesting statistics here on provinces across this country. Newfoundland - I will just give you an indication when I find it here exactly where we fit into the picture. Actually out of severely indebted categories, we are twenty-fifth. Nicaragua, Guyana, Mozambique: they are the ones that are below us in that rating; Honduras, Egypt, Angola, Panama. We are the twenty-fifth most severely indebted country. Nova Scotia, thirtieth; Prince Edward Island thirty-fifth; Manitoba, forty-first, and right up the line.

We are not considering in some of these debts - we are failing to consider other debts: Unfunded liabilities, other related debts, and so on that are not factored in. So, we do have major problem here.

One big area of concern that hasn't been addressed sufficiently is creative ways to be able to entice businesses to speed up the growth in the economic sector in the Province here, business-wise, and to be able to increase our GDP, and to be able to put us in a better position financially to be able to cope with these debts and hopefully to be able to borrow less in the future. There are some areas that need to be addressed by this government.

Thank you, Mr. Chairman.

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

MR. BAKER: I just want to make one comment, Mr. Chairman, about the hon. gentleman for Kilbride. Where is it? Kilbride, is it? No.

AN HON. MEMBER: Ferryland.

MR. BAKER: Ferryland. Sorry! Yes, the hon. gentleman for Ferryland.

While he was up speaking I detected that he was sounding very much like a Minister of Finance. I would like to remind him that he has to be very careful, because Minister of Finance has been the death-knell for many a politician. I would like to suggest to him that perhaps he should start sounding a little less like a finance minister if he wants to survive in politics. That is the only comment I would like to make, Mr. Chairman.


"That it is expedient to bring in a measure to authorize the raising from time to time by way of loan on the credit of the province the sum of $300,000,000 and the additional sum or sums of money that may be required to retire, repay, renew or refund securities issued under an Act of the province or that may be paid into the Newfoundland Government Sinking Fund."

Motion, that the Committee report having passed the resolution and a bill consequent thereto, carried.

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

MR. ROBERTS: Mr. Chairman, since we're in committee I wonder if the House would agree to deal with Orders 3 and 4 which are the committee stages on two bills to which we gave second reading a few days ago? I don't think they're matters that would delay the committee for long although one can never be certain. If I get my friend from Grand Bank inflamed we could be here all day on the amendment to The Internal Economy Commission Act.

When that's done, the House will go on to deal with the Income Tax Act which I gather is the less controversial of the two taxation bills.

Perhaps if we could call the committee stage on Bill 23 and then committee stage on Bill 25, Mr. Chairman?

MR. CHAIRMAN: Bill no. 23.

A bill, "An Act To Incorporate The Grand Concourse Authority." (Bill No. 23)

Motion, that the Committee report having passed the bill without amendment, carried.

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

MR. ROBERTS: Would you be good enough to call Bill No. 25, Sir, The Internal Economy Commission Act?

MR. CHAIRMAN: An Act to amend The Internal Economy Commission Act, Bill No. 25.

A bill, "An Act to Amend The Internal Economy Commission Act." (Bill No. 25)

Motion, that the Committee report having passed the bill without amendment, carried.

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

MR. ROBERTS: Your Honour would you be good enough please to rise the committee and then we'll deal with the two loan bills at third reading, maybe give third reading to those two bills and then go into the Income Tax Bill?

On motion, that the Committee rise, report progress and ask leave to sit again, Mr. Speaker returned to the Chair.

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

The hon. the Member for Bellevue.

MR. BARRETT: Mr. Speaker, the Committee of the Whole on Supply have considered the matters to them referred, have passed a certain resolution and recommends that bills be enacted to give effect to the same, Bill No. 14 and Bill No. 22.

In addition a second report, the Committee of the Whole have considered the matters to them referred, and have passed Bill No. 23 and Bill No. 25, without amendment and ask leave to sit again.

On motion, report received and adopted.


"That it is expedient to bring in a measure further to amend The Local Authority Guarantee Act, 1957, to provide for the guarantee of the repayment of loans made to, and the advance of loans to certain local authorities."

"That it is expedient to bring in a measure to authorize the raising from time to time by way of loan on the credit of the province the sum of $300,000,000 and the additional sum or sums of money that may be required to retire, repay, renew or refund securities issued under an Act of the province or that may be paid into the Newfoundland Government Sinking Fund."

On motion, resolutions read a first and second time.

On motion, the following bills read a second and third time, ordered passed and their titles be as on the Order Paper.

A bill, "An Act To Amend The Local Authority Guarantee Act, 1957." (Bill No. 14).

A bill, "An Act To Authorize The Raising of Money By Way of Loan by the Province." (Bill No. 22).

MR. ROBERTS: Your Honour, could we give third reading to Bill No. 23 and to Bill No. 25, please?

On motion, the following bills read a third time, ordered passed and their title be as on the Order Paper.

A bill, "An Act To Incorporate The Grand Concourse Authority." (Bill No. 23)

A bill, "An Act To Amend The Internal Economy Commission Act." (Bill No. 25)

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

MR. ROBERTS: Your Honour, would you be good enough to call Order No. 9.

Motion, second reading of a bill, "An Act To Amend The Income Tax Act." (Bill No. 10)

The hon. the Minister of Finance.

MR. BAKER: Thank you, Mr. Speaker.

It will only take a couple of minutes. It gives me tremendous pleasure to introduce this bill in the House. This measure was announced in the Budget and is part of our overall plan to make this Province the best place in North America for businesses to come and invest their money. Mr. Speaker, this is one small step, I suppose, in that process.

Over the past couple of years we have made changes to the general tax rate on corporations, the tax on manufacturing and processing, and things like that, and this is just another step in that direction. This bill reduces the general tax rate on corporations from 16 per cent. I remember a couple of years ago it was 17 per cent and we reduced to 16, and now we are reducing it to 14, and on manufacturing processing income from 7.5 per cent to 5 per cent.

This, Mr. Speaker, will be an encouragement for people to come here to make a profit, and in doing so they cannot do it without also creating jobs in the Province.

Mr. Speaker, I recommend this piece of legislation to all members of this hon. House. It is a tremendous move forward and part of our plan to rebuild this Province.

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

MR. WINDSOR: Thank you, Mr. Speaker.

My hon. colleagues are correct, the minister makes it sound like peaches and cream": What a wonderful government we are, we have lowered tax rates! That is the kind of bill that any minister, particularly the Minister of Finance, likes to bring into the House of Assembly, a bill to reduce tax rates, Mr. Speaker, but he has to tell the other half of the story.

The minister says, we are pleased to do this because it is going to be such a great boost to businesses in stimulating the economy of this Province, and he is right. The problem is we need stimulation because this government has decimated the economy of this Province in the five years they have been in power. In 1989, if I am not mistaken, the first Budget of this government raised the corporate tax rate from 16 per cent to 17 per cent; and I sure if I went back to Hansard, I guess I told them twenty times, you are making a mistake. It is hard enough to do business in this Province now. We have enough natural disadvantages of doing business in this Province: The cost of transportation; the geographic location of this Province; the weakness in our technological base; and in skills in many areas compared to other parts of Canada. It is tough to do business in this Province, particularly if you are competing with businesses from outside of the Province, and particularly if you are competing with other Maritime Provinces of Canada. Those are our closest neighbours and those are generally our biggest competition, except for the big corporate giants that come in from Ontario, Quebec, and the United States, or wherever, and they are competing everywhere. It is very difficult for small local companies to deal with them, or compete with them.

Sixteen per cent is now down to 14 per cent. We cannot argue against that. It is just too bad that it doesn't go down further, but 14 per cent compares very favourably with the rest of Canada, Mr. Speaker. I have the table here provided by the minister's staff during the Budget debate, the Budget lockup, and 14 per cent is the lowest one except for Quebec which has a totally different system anyway. It is very difficult to compare tax rates in any part of Canada with tax rates in Quebec.

In terms of other Maritime Provinces, we are now 1 point below PEI, 2 below Nova Scotia, and 3 below New Brunswick. In manufacturing and processing we are now down to 5 per cent, which is great. PEI has 7.5 per cent and Nova Scotia and New Brunswick which are our biggest competitors do not have any rate. They do not charge a tax on manufacturing and processing.

MR. BAKER: (Inaudible)

MR. WINDSOR: So, they charge 16 and 17?

AN HON. MEMBER: Big difference.

MR. SULLIVAN: Which provinces?

MR. WINDSOR: Nova Scotia and New Brunswick.

MR. SULLIVAN: Nova Scotia and New Brunswick have sixteen?

MR. WINDSOR: That is on (inaudible). I'm talking about manufacturing and processing.

What is even more significant, Mr. Speaker, is that none of the other Maritime provinces have a payroll tax. There is one of the big differences here when you talk about a direct disincentive. The minister has already admitted that the payroll tax - as we told him when it was introduced, we told the previous minister when it was introduced, that it was a direct disincentive for doing business in this Province. It is a penalty for creating employment. It is the most ridiculous tax anyone could ever imagine.

MR. BAKER: But they have higher education taxes, municipal taxes (inaudible).

MR. WINDSOR: Oh, you have to look at the whole gamut, Mr. Speaker. Sure! As we, as parliamentarians, would have to do. But the businessman coming in, deciding where to establish a business, he looks at what affects his bottom line. Sure, indirectly education tax and all the rest of it, and salary levels, and everything that is expected of an employer, is a factor that he or she would have to consider, but nothing as much as the direct taxes on the corporations themselves. These are the ones that we have here. You have the regular corporate tax rate, manufacturing and processing taxes, and on small business.

Would the minister tell me: Has the minister extended the tax holiday for new small businesses? There was a three-year tax holiday, and if I'm not mistaken, that has now expired. It was something that the previous government introduced and we extended it every year for one year, so we always knew that for the next three years there was going to be a tax holiday, a three-year tax holiday for everyone. That has not been done the last number of years. According to this chart, in fact, there is no record on this chart that I have that that tax holiday is now in place, but there is a tax holiday for Nova Scotia, Quebec and Saskatchewan; two years in Saskatchewan, three years in Nova Scotia and Quebec.

Maybe the minister could tell me if that tax holiday now for new small businesses is in effect, is now available. You always had to apply for it. Is it still available or has that now expired? I believe it might have expired.

MR. BAKER: We are bringing in a new bill dealing with that.

MR. WINDSOR: You are bringing in a new bill.

MR. BAKER: In the fall.

MR. WINDSOR: In the fall. So it has expired. Somebody establishing a new business today will not get a tax break.

MR. BAKER: (Inaudible) believe so, I will check.

MR. WINDSOR: I would appreciate that from the minister.

MR. BAKER: I'm sure it did but I just have to double check. We are bringing in a new bill in the fall.

MR. WINDSOR: Certainly, Mr. Speaker, the $60-odd million that is collected by way of payroll tax - and the minister has already admitted in the House, and I think outside the House, that it is a regressive tax, that it has been a disincentive to business and industry, and that he is hoping to find a way to start decreasing that, or phasing it out.

Would the minister, when he speaks again in closing this debate, tell us what has he done in that regard? Is he proposing to phase out the payroll tax, or is he going to eliminate it altogether, which he should do? How does he propose to collect the $61 million? Obviously government can't eliminate $61 million of taxation and not replace it somewhere else, except with spending cuts. There are not a lot of those available to the minister.

MR. BAKER: Or growth.

MR. WINDSOR: Pardon?

MR. BAKER: Or growth.

MR. WINDSOR: Or growth. That is right. Or growth. Maybe the minister could tell us, Mr. Speaker, how he proposes to deal with the payroll tax. What is in store for businesses in this Province as it relates to payroll tax.

Let me tell you, Mr. Speaker, businesses in this Province would be delighted to see that tax removed. Not only is it a financial burden, it is an administrative burden. It causes a lot of complications for the Province.

Would the minister also tell us, Mr. Speaker, while we are doing that - we have an amendment coming up on retail sales tax, don't we? I will get into that on the next bill, maybe. Let's leave retail sales tax for the retail sales tax bill.

Thank you, Mr. Speaker.

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

MR. HARRIS: Thank you, Mr. Speaker.

I would like to say a few words on this bill because it is one of those pieces of legislation that brings out the similarities, shall we say, between members on that side of the House and members on this side of the House, and it causes people to get up, like the Member for Mount Pearl, and the Member for Ferryland, and brag about how competitive we ought to be, and how we should be jumping over one another to lower the taxes on business down as low as we possibly can. Lower it; it will mean more profit for business, less taxes; lower it all down.

The Member for Menihek, the former New Democrat, now has seen the light, joined the Tory party, no taxes for business. What else did he do when he joined the Tory party? He went into business. He started three or four businesses, and now he joins with his Tory colleagues, the Member for Ferryland and the Member for Mount Pearl: `Lower the taxes for business - more profit for business.'

They are all reading the little books that are sent out by David Summerville and the Fraser Institute and all this stuff, all the little books.

AN HON. MEMBER: Tell lawyers' jokes.

MR. HARRIS: Tell a few lawyers' jokes, too, make fun of them. They all get out the books now. You see them all on the ministers' desks - the Fraser Institute, this ex-patriot Newfoundlander running down the Province, running down the people of Newfoundland, and praising up business, how profit for big business is good for everybody. It used to be: What is good for General Motors is good for everybody. Now it is: What is good for anybody with a deep pocket has got to be good for everybody.

That is why we hear the Member for Ferryland get up and praise business and profit, and lower the income tax rates on business, lower the income tax rates on the rich. That is the kind of stuff, and you can't tell them apart.

The Minister of Finance gets up and talks about how: Oh, yes, we have to lower the tax rate on business. We are going to make this the best place in North America to do business. Then the Member for Ferryland gets up, and the Member for Mount Pearl, and say: You are not doing enough. You are not giving enough profit to the corporations. You are not making it attractive enough for business.

There are places like Alabama, they don't even have minimum wage laws. Why don't you change those? We are going to compete in the international market, we are going to compete with everybody in North America, we are going to compete with the Asians, so what we have to do is to make our place attractive for business and for profit.

Now, Mr. Speaker, I can agree with some of the things that are said, and I have to say this: I agree with the Member for Mount Pearl that we have too much in the way of payroll taxes, and let me say why; because payroll taxes discourage people from hiring employees. So the more cost there is per employee, the more incentive there is to get rid of employees and to employ more capital and more machinery and more other costs that are not related to employee costs, the more incentive there is to have part-time instead of full-time employees, the more incentive there is to contract work out to other people who might not be subject to these types of payroll taxes. When I am talking about payroll taxes, I am talking more than just the payroll tax, the so-called payroll tax. I am talking about unemployment insurance costs that employers have, workers' compensation costs that employers have, all of these things that go on. Each and every time $100 is paid out in payroll, there is a few dollars in cost that goes to the government. Those are all payroll taxes, and each and every one of them discourages employment.

The reason I am concerned about this is because I believe that governments have other ways of providing incentives to companies. Now, we have great big incentives to companies on the basis of capital investment. The more capital you employ in your business, we will give you money for that. Here is $100 million; here is $50 million for the big, big companies. For the smaller companies, here is $100,000 or $200,000 in loan guarantees, and what are they for? Usually, these incentives are for plant and equipment - plant and equipment which quite often modernizes and puts down the number of employees and doesn't create jobs at all. We hear this great phrase now: We are not saving jobs; we are not creating jobs; we are protecting them. So by giving them $150,000 or $250,000 we are allowing them to expand their plant, to buy new equipment, but it is putting people out of work and not creating jobs.

What we have to start doing, as government, is finding ways of providing incentives for those employers who are creating jobs, and we see that happening more and more in the small business sector - and I don't mean small business as defined by the income tax department, like $250 million a year or something - I mean the real small business. It is the small business sector which creates most of the new jobs. And most of the new jobs in Canada are created by the small business sector. We have a very unfair tax system in this country, Mr. Speaker, not just in this Province but right across the country.

What is happening in this country is that the tax system is becoming increasingly unfair to working people - people who have jobs and are just barely able to get by to pay their rent and buy their food and groceries and keep a car going. Those individuals, Mr. Speaker, between 1984 and 1991, the taxes on the working poor increased by 44 per cent, by 44 per cent, Mr. Speaker; the middle classes had their taxes increased by 10 per cent. And during that same period, between 1984 and 1991, when the Tory Government was in power in Ottawa, the upper income earners had their taxes decreased by 6 per cent.

On the same line, Mr. Speaker, the contribution to taxes by corporations, in the last twenty years, has gone down significantly by 50 per cent or more and the contribution to all the taxes paid by individuals has gone up by an equivalent amount, so what is happening, Mr. Speaker, is that the tax burden is being shifted from the wealthy, from the corporations, particularly the wealthy corporations, is being shifted from these corporations to the individuals, and the tax burden disproportionately falls on people with lesser incomes. Now, that's what is happening in this country, Mr. Speaker, and this kind of measure here which suggests that the problem is that we are not attractive enough to business that is why business doesn't exist in Newfoundland, is a lot of malarkey.

This is all part of the end result of a major campaign by the corporate interest, by what others have called it and I have no problem using it, the corporate agenda for Canada has been played out over the last ten years, formulated by, articulated by, carried out by the people in the media, the business council on national issues and Thomas d'Aquino has been the major proponent of an awful lot of these measures which ended up as part of the corporate agenda, most of which were adopted by the Tory Government in Ottawa under Brian Mulroney, the Free Trade Agreements, the attack on social programs which we are going through, the lowering of costs for business people, the promotion of the kind of corporate concentration that has taken place across this country, all this is part of the corporate agenda. And, of course, the corporate agenda and their followers, the smaller types, the smaller businessmen, are all to get on the bandwagon, and they say: Let's make this place more attractive for business, let people make all kinds of profits as a way of attracting business.

Well, Mr. Speaker -

MR. TOBIN: What do you have against business?

MR. HARRIS: I hear the Member for Burin - Placentia West ask what I have against business. Well, I have nothing against business what I do have is against the money-grabbers, the greedy corporations, the people who want everything their own way and aren't prepared to put anything back into the economy - the people who are taking and not giving. Those are the ones, Mr. Speaker, that I am concerned about. Our Province and our government should design programs in the interest of people first, I say, and the way to do that is not by giving away our tax points or tax concessions to corporations on the general interest income tax rate, but rather to provide incentives for those companies who are in fact creating jobs, who are creating new jobs and transfer some of the incentives

MR. EFFORD: (Inaudible) NDP freeze.

MR. HARRIS: Yes, well, I will tell you what the NDP found out about in Ontario when they took over government, it was that the Free Trade Agreement, supported by your party and this party here nationally, ended up losing 400,000 jobs to the places that made it attractive to do business, to the Georgias and to the Alabamas who have no protection for employees, no pollution protection, no occupational, health and safety rules, no minimum wages. That's where the jobs are going, down to the people who - like the minister selling stoves, the cheapest way to do business is to make as much money as you possibly can and pay out nothing to the people who are working for you - that's the places where those jobs are going. The jobs are going down to Alabama and to Georgia, those are the places where they're going. Get up and tell us about selling stoves now and the Federal Government programs you're involved in. Get up and tell us about how much money you made selling stoves now.

That's what's happening, Mr. Speaker, the jobs are going down to places where there's no protection for people and we can't compete by trying to make this the most attractive place in the world to do business. If we do that, Mr. Speaker, we're going to be doing it at the expense of our own people. Corporations - god bless them, the ones who are coming in and creating jobs and building the industry, building enterprise and creating jobs, more power to them. We should make things easier for them to hire more employees and provide incentives for those who are doing it. But the answer is not to compete on a level with those who are prepared to lower the corporate income tax rates to the point that we can't get any revenue.

We're getting more revenue in this Province on video gambling and gambling than we're getting on corporate income tax. Can you believe that, Mr. Speaker? It's wrong when something in the order of $70-odd million is coming in from video gambling and about $50 million or less coming in from corporate income tax. It's wrong, Mr. Speaker, and the answer - we're not going to stimulate the massive business investment by lowering the corporate rate by one point or two. That's not going to stimulate massive business investment. Let's fact it, Mr. Speaker, anybody who knows anything about how businesses are run, very little shows up on the profit line. It might be big bonuses to the directors, all kinds of perks here and there, after tax profit, after all is said and done, Mr. Speaker, very little shows up on the profit line that they paid taxes on anyway,and the Member for Ferryland can get up and tell us all about that and how it works. I'm sure he knows that you don't - you only pay tax on your profits and there are lots of ways or things that might be considered profits don't end up as profits at all. They end up as bonuses to the directors or bonuses to the directors families, perks, houses or cars. It's all done, of course, in the course of business, all business expenses, Mr. Speaker, but that's the way it works. So we're not really attracting any big business by lowering the corporate income tax rate, all we're doing is passing over a few extra dollars to the corporations. If the minister was coming in with some legislation that was going to provide incentives, whether they be tax incentives or whatever, for those companies who are hiring people, tax credits or tax incentives for those companies who are hiring people and creating new permanent jobs, I'd be all for it, because we do want to see as many businesses as we can operate in this Province. I say that because I believe that small business, in particular, has been an engine of growth in jobs at least, in our economy, in a national economy, and here in this Province. If we're going to continue to contribute to that growth we should provide incentives for those who are providing jobs, not just lower the general corporate income tax rate.

Thank you, Mr. Speaker.

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

SOME HON. MEMBERS: Hear, hear!

MR. SULLIVAN: Thank you, Mr. Speaker.

Now that speech is a speech of a person who will never be in a position to have to govern. What does he think businesses were established for? Isn't it one of the roles of businesses to make profits? If you go into business not to make profit, to lose, you should stay out of business. Where do you think unions get their memberships if they don't get it from business employees? Who do you think hires lawyers? Who do you think pays their bills handsomely to the legal profession and others?

MR. TOBIN: They're a bunch of crooks.

AN HON. MEMBER: (Inaudible).

MR. SULLIVAN: I'm sure the Canadian public doesn't agree with all this and I'm sure if the people in Ontario had their time back they wouldn't agree with all of this, if they had their chance.

MR. SIMMS: Is cable TV paying their taxes, `Jack'?

MR. SULLIVAN: In this Province here, we have the most adverse and negative business climate of any province in Canada. Now, in the Budget this year we budgeted $41 million on corporate income tax, and I am assuming the Minister of Finance made allowances in his projections for the massive reduction in corporate income tax when this government jacked it up from 16 per cent to 17 per cent, dropped it to 16 and preached the break they were giving to business, 1 per cent of the corporate income tax, l out of 17, that was a break of $2.some million. If you look at the cost this year, the break of 2 per cent in taxes amounts to around $5 million this year in corporate income tax. At the same time, they are increasing and receiving an extra $3.5 million in payroll tax. They are going to receive this year $72.5 million in payroll tax. Payroll tax is a very regressive tax. If you are going to tax anything you should tax the profitability of companies.

AN HON. MEMBER: (Inaudible).

MR. SULLIVAN: The Member for St. John's East said they will take it out in bonuses to the receiver. Well, if you do take it out in bonuses you are going to get hit personally with the highest personal income tax rate of any province in this country, 69 per cent of the federal rate this Province charges. Now, just to compare other provinces, other provinces are substantially less. There is only one other over 60 per cent and that is New Brunswick. The rest of them are right down. Alberta is 45.5 per cent. So, if you don't get it on personal income tax, it will be hit in the business end, in the business end of the spectrum.

Business has been crying out - they hire employees. And we had a bill come through the House here to increase our fuel tax, which is the highest of any province in Canada, our workers' compensation costs, and most of our business costs are higher. Businesses are laying off employees because of the negative tax burden that is being placed upon businesses in this Province. What we are doing here in this bill is only scratching the surface. The minister called it a step. He very weakly said a step, one very small miniature step really, at the same time giving it out with one hand and taking back on the payroll tax with the other hand an extra $3 million.

I support the direction. It is very little. It is not going to address the real taxation problems, interprovincial especially across Atlantic Canada where we compete with other provinces, especially, and with other business across Canada. It is not far enough. They haven't looked at incentives. I agree with the Member for St. John's East on one point, the incentives to hire people.

AN HON. MEMBER: You agree with him?

MR. SULLIVAN: That is right, I agree with that. We need incentives to hire people. We should be patting companies on the back and encouraging them to be profitable. We should congratulate them when they make profits and not condemn them, because the greater the profits the more taxes they pay. If they don't show up on the bottom line on their operations, the shareholders pay it in taxes at the highest rate anywhere in Canada. It is the worst province in Canada in which to position a business from a business and personal tax perspective in this country.

MR. EFFORD: (Inaudible).

MR. SULLIVAN: I agree with the member, that governments have nurtured businesses in certain ways too much. They should be putting incentives in business, incentives to make profits, to hire more people.

With that, Mr. Speaker, I will sit down. The little conversation between the Minister of Works, Services and Transportation and the NDP Member for St. John's East is drowning out my conversation, so I will conclude at this point, Mr. Speaker.

MR. SPEAKER: The hon. the Minister of Finance, if he speaks now, will close the debate.

MR. BAKER: Thank you, Mr. Speaker.

I thank members of the House who participated in this debate, "An Act To Amend The Income Tax Act". It's an historic measure that will improve the business climate in the Province and encourage new business to come to this Province to make money and create jobs.

I thank the Member for St. John's East for providing us with his usual tirade against the evils of business and the evils of making profit and so on. I appreciate hearing his comments and all about the corporate agenda and the fact that all these great corporations are controlling the agenda of government. Mr. Speaker, if only we had a few more of these great corporations here in this Province, we would all be a little better off. So, I would like to thank the gentleman for reminding me of that.

Mr. Speaker, I commend this bill to all members of the hon. House and ask all members to support this bill.

On motion, a bill, "An Act To Amend The Income Tax Act." read a second time, ordered referred to a Committee of the Whole House on tomorrow. (Bill No. 10).

MR. ROBERTS: Mr. Speaker, we will end the day on a rocky issue. There is a minor amendment to the minerals act that stands at Order No. 15, if we could call it and deal with it please.

Motion, second reading of a bill, "An Act To Amend The Mineral Act". (Bill No. 19).

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

DR. GIBBONS: Thank you, Mr. Speaker.

Mr. Speaker, a very minor amendment. Under the Mineral Act we have a category of mineral licence called, an exempt mineral land. This is something that would apply to, for example, the St. Lawrence Fluorspar deposit where we know it is a known deposit and we don't just want to put it out for general grounds taking where you could have a bunch of companies coming in and staking bits and pieces. We want to keep it as a package. Or, for example, on the Baie Verte Peninsula, one with which I am dealing right now, the Rambler Lands, the former Rambler Lands, where we kept them together as a package as an exempt mineral land.

Presently, the way the Mineral Act is written, a section of the mineral act delegates authority to the Lieutenant-Governor in Council to, by public tender, dispose of exempt mineral lands. What this minor amendment is doing is delegating to the minister instead of the Lieutenant-Governor in Council to dispose of and exempt mineral land by public tender. So we are basically changing the words in section 30 of the Mineral Act to `minister' from `Lieutenant-Governor in Council.'

So, there are two parts of section 30, section 30 (1) and section 30 (2), where we delete the words, `Lieutenant-Governor in Council' and replace them with the word `minister.'

As a result of that, as a consequence of that, we have to delete Section 41 which allows the Lieutenant-Governor in Council to make regulations according to an exemption of land and we are inserting in place of it, Clause 3 of this particular bill which is now going to be numbered 41.1 to allow the minister to make regulations according to. So it is a very, very minor amendment and I would like to move second reading for this minor amendment.

Thank you.

MR. SPEAKER: The hon. the Member for Burin - Placentia West.

MR. TOBIN: Mr. Speaker, I don't have any great problem with what the minister said, but Clause 2 of the bill will remove the authority from Cabinet to exempt minerals in, on or under those lands under water that are defined, but it doesn't give authority in Clause 2 to the minister.

Clause 2 removes the authority from the Cabinet but it doesn't give it to the minister; I know in Clause 3 it does.

AN HON. MEMBER: 1 and 3 give it to the minister.

MR. TOBIN: Yes, but what about Clause 2? It is just (inaudible) exemption to Cabinet?

DR. GIBBONS: It refers to Section 41, which has the Lieutenant-Governor in Council doing the regulations. Clause 2 deletes that requirement and Clause 3 puts it in for the minister to make regulations.

MR. TOBIN: Okay.

Mr. Speaker, we do not have any great problems with that as far as I am concerned. I spoke to the minister, and my colleague for Humber Valley has been speaking to him as well on that bill. I think that the minister explained it as it relates to St. Lawrence, and that to me makes a lot of sense, and the same with Rambler on the Baie Verte Peninsula. So, Mr. Speaker, there is no need to get into a long debate on this. We don't have any great problem with it.

MR. SPEAKER: The hon. the Member for Baie Verte - White Bay.

MR. SHELLEY: Yes, just to make a quick comment on it, Mr. Speaker. As the minister just said, basically it is the authority of the minister now as opposed to the Lieutenant-Governor; and I think it gives it a chance to move on a bit quicker. It seems as if we get bogged down at that level. I think it is a good move as far as the amendment goes. Suffice to say that these properties that have been held up now, I think this will speed up the things that could possibly happen in some of those areas.

You referred to the Rambler properties in Baie Verte. I think there is potential there and co-operation could speed up the delivery of those properties. I hope the minister will be working closely with the group there in that area.

Thank you, Mr. Speaker.

MR. SPEAKER: The hon. the Minister of Mines and Energy; if he speaks now he concludes the debate.

DR. GIBBONS: Thank you very much, Mr. Speaker.

I agree with the comments just made by the Member for Baie Verte. This is helping the process as much as anything else. Presently you have to do the paper work, you have to cover the paper. The Lieutenant-Governor in Council is required to go to public tender, the minister is required to go to public tender. By doing it this way the process can be gone through a lot faster.

We know the types of properties we want to deal with: At Baie Verte, at St. Lawrence, an (inaudible) deposit would be no deposit.

Mr. Speaker, there is nothing further that need be said. I move second reading. Thank you.

On motion, a bill, "An Act To Amend The Mineral Act," read a second time, ordered referred to a Committee of the Whole House on tomorrow. (Bill No. 19)

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

MR. ROBERTS: Mr. Speaker, before I move the adjournment of the House - I assume members will be willing to call it 5:00 p.m. - just in case members are following along where we are, there are four bills that the government will ask the House to address in the next few days in no particular order.

Bill No. 11, the retail sales tax act amendment. It is Order No. 10 today. Order No. 19 on today's Order Paper, which is the Workers' Compensation Act amendment. These have now been distributed to the House. I believe my friend for Kilbride had a copy of them over the weekend. Bill No. 28, which is the Literacy Development Council - that bill is now in the hands of members, I understand - and the NLCS bill. That is Bill No. 24, which I believe has been distributed for some time, several days. These are the bills that are on my list.

We will also ask the House to deal with the motion, to constitute a select committee to which we can refer the Commissioner of Members' Interest report. They can do their work over the summer and come back in the fall with whatever.

AN HON. MEMBER: Are you going to do Bill No. 20?

MR. ROBERTS: Bill No. 20. I will have to speak with my friend the Minister of Finance. It looks like a long bill but I gather it is really a very straightforward piece of -

AN HON. MEMBER: (Inaudible).

MR. ROBERTS: I'm sorry?

AN HON. MEMBER: (Inaudible) Bill No. 2.

MR. ROBERTS: Bill No. 1, Order 2. My hon. friend for Burin - Placentia West will have to possess his soul in patience. In the fullness of time all will be revealed, even unto him, I say, even unto the least of ye, I say to him.

MR. TOBIN: I had a bet (inaudible).

MR. ROBERTS: I had a bet on my friend for Carbonear which I lost so I'm out of the wagering business for a short time, anyway, because he insisted on collecting his stake. S-T-A-K-E. It wasn't an S-T-E-A-K. It was an S-T-A-K-E.

Your Honour, in the House tomorrow, I'm not sure exactly in what order we will deal with these matters. There is a question of what we do on Wednesday which we will have to discuss as well. I would say to my friend from Grand Bank, that he and I should anticipate speaking on the morrow, and I will undertake to call my friend from St. John's East, if his duties downtown will permit him to speak to a humble politician.

AN HON. MEMBER: (Inaudible).

MR. ROBERTS: All members are my friends, I say to my - after the thirty or so years I have seen the House at work, many friends.

Your Honour, with that said I move that the House, at its rising, adjourn until tomorrow at 2:00 p.m. and that the House do now adjourn.

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