December 11, 1995           HOUSE OF ASSEMBLY PROCEEDINGS          Vol. XLII  No. 73


The House met at 2:00 p.m.

MR. SPEAKER (Snow): Order, please!

Oral Questions

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

MS VERGE: Thank you, Mr. Speaker.

I have questions that I would like to address to the Premier. I expected he would be in the House of Assembly today since he was due back from England on the weekend. Since the Premier is expected momentarily I will yield to one of my colleagues and rise when the Premier takes his place.

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

MR. WINDSOR: Mr. Speaker, actually my question I should have put to the Premier as well but I can put them to the Government House Leader or the Minister of Finance, since we are dealing today with the Auditor General's Report that was tabled here on Friday. The report expressed concern, in fact last year's report expressed concern that the House of Assembly has not been receiving sufficient, appropriate, and timely information necessary to ensue accountability of all government departments, agencies, and Memorial University. She also says this year that during periods of fiscal restraint it is even more critical that legislators and tax payers received this information but unfortunately there has been little progress in this regard.

Mr. question, Mr. Speaker, is in view of this continued annual reporting by the Auditor General of concern of accountability in the accountability process that the House of Assembly, which is really the final step in the accountability process - we often say the Public Accounts Committee is, but in fact the Pubic Accounts Committee is just a branch of the House itself, but the House of Assembly must have adequate information and good reporting in order to properly control the public purse, and government appears not to have taken any action in this regard whatsoever. Is the government now prepared to take some action and put in place an accountability process, more specifically legislation dealing with the reporting by all government departments and agencies?

MR. SPEAKER: The hon. the Minister of Finance and Treasury Board.

MR. DICKS: I share the Auditor General's concern with the necessity of getting information to the public of the Province. This is a perennial issue that comes up. I believe Memorial University is one that she has continually tried to audit and the question, I guess, is whether or not audits should be for value? There are people who may not know there is a distinction as to whether or not most audits, for example, whether or not the money is spent for the purpose it was given. A value for audit is whether or not that purpose is a proper one. I share the Auditor General's concern as to getting appropriate information before the people of the Province, however, the decision as to how that should be done is one for government to consider, and if necessary to take whatever steps to amend the legislation. It is a matter for Cabinet to consider as a whole, and beyond that I am not sure there is too much I can add.

MR. SPEAKER: The hon. the Member for Mount Pearl on a supplementary.

MR. WINDSOR: Thank you, Mr. Speaker.

Let me say to the minister that in reading the Auditor General's Report I have not seen anything about value for money. What she is talking about here is accountability process, government departments being required to produce annual reports. There are only three or four departments that have been doing that over the past number of years, actually tabling annual reports in this Legislature. Most government departments, most Crown agencies, Memorial University, do not produce annual reports that will allow this House, the members of this House who are responsible to the taxpayers of this Province, to properly assess the role of the departments, whether or not that role has been met, whether it has been done efficiently and effectively, whether or not we are receiving good value - without getting into the value for money concept - good value for the taxpayers' dollars that are being spent.

MR. SPEAKER: Order, please!

I ask the hon. member to get to his question; he is on a supplementary.

MR. WINDSOR: If we do not have any reporting information, how does the House of Assembly assess that?

MR. SPEAKER: The hon. the Minister of Finance and Treasury Board.

MR. DICKS: Mr. Speaker, we are talking in part about the role of the Auditor General, and we may be getting a little confused. There is a whole process of accountability in government. Treasury Board itself is a group of ministers that regulate what happens in government departments to a large extent. We, as much as any other group in the Province, rely on the individual managers in each government department to do that. I would be the first to admit that we ourselves find fault with that process and from time to time demand further accountability. Given the size of government, I can tell hon. members, some of whom have sat on this side of the House, that it is a considerable challenge and one that is difficult to meet, and I have yet to find a process that will result in perfection.

When I see the Auditor General's Report I often concur with most of the comments that she, in this case, makes. As to whether or not and what types of processes one needs beyond that, government is responsible for delivering services in an efficient manner to the public. We, each day in this House that it is open, account to the public through the questions of the Opposition. In turn, we are accountable when we go to the electorate for our management and stewardship of the taxpayers' dollars. Beyond that, the Auditor General acts as a secondary process of review of the whole of government's finances, puts before the Legislature of the Province each year, as I tabled, I believe, on Thursday or Friday of last week, the consolidated financial statements for the Province, and tells the taxpayers if the money has been spent in accordance with the budget approved by the Province.

Beyond that, Mr. Speaker, I don't think there is a lot I can say. We take the Auditor General's comments into account each year. The House will hear in due course whether or not Cabinet decides that further legislative changes are necessary.

MR. SPEAKER: The hon. the Member for Mount Pearl, on a supplementary.

MR. WINDSOR: Mr. Speaker, I find it incredible that the minister is not prepared to accept the fact that legislation is required to ensure reporting to this House of Assembly, very simple and straightforward, Mr. Speaker.

Let me ask the minister this: The Auditor General also reports many variances from the Public Tender Act, and the question, I guess, to the minister is: Is the Public Tender Act of any value at all if government is going to continuously ignore it, Mr. Speaker? And we have seen it in every Auditor General's Report, in many departments of government, and certainly, in the Crown Agencies and government-funded bodies that we have looked at over the past couple of years, in particular, this report, Mr. Speaker. It relates a whole series of breaches of the Public Tender Act, or breaches of the guidelines associated with it. Also, Mr. Speaker, on, I think, thirteen occasions, the final decision on the hiring of consultants was passed on to a Committee of Cabinet.

Mr. Speaker, my knowledge of the Public Tender Act does not tell me that there is any Committee of Cabinet established under the Public Tender Act which allows us to do that. Consulting, and so forth, is supposed to be done according to the Public Tender Act. Will the minister tell us what this Committee of Cabinet is all about, and on what basis does this Committee of Cabinet select the consultants, or is it on the same basis as most of the ones reported here, done without public tender call, without proposal call, just done on the basis of preference?

MR. SPEAKER: The hon. the Minister of Finance and Treasury Board.

MR. DICKS: Thank you, Mr. Speaker.

My recollection of the history of the Public Tender Act, is that it was set up in the late 1970s in response to perceived abuses by the government of the day. In fairness, this government, which has been a part, has followed the Public Tender Act with a great deal of precision, but what I would say to the hon. member is that, certain services are excluded from that and those are consulting services. Those are not subject to the Public Tender Act.

What is often done is, there is a call for proposals which have to be evaluated and it is a little bit different when you are asking to have a specific type of thing built; if, for example, you need a car that meets certain specifications, it is very clearly a matter of value. The hon. member, being an engineer, knows, that type of work is, by-and-large, rotated among a group of qualified engineering firms, for example, and consulting services are a little bit harder to monitor.

If the hon. member has any specific questions regarding specific tenders, my friend, the Minister of Works, Services and Transportation can speak to any particular tender. The only other ongoing thing that I know from time to time, are a matter of leases for space that are already contracted for, which have renewal terms, and sometimes those are extended in accordance with the Public Tender Act, subject to the decisions of routine Cabinet so, Mr. Speaker, I don't think there has been any substantial variation or failure to follow the Public Tender Act in any major respect, to my knowledge.

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

MS VERGE: Thank you, Mr. Speaker.

I have questions for the Premier about last weeks financial statement made by the Minister of Finance while the Premier was over in Europe. My questions have to do with the government's lack of planning, incompetent management and bad choices. The Premier commented from London that he and the government had no choice but to make the decisions announced last Tuesday.

I ask the Premier, doesn't even a low-income mother running a household have choices? Doesn't the mother not have the choice of planning realistically, managing carefully and choosing to spend the money needed to feed the children on groceries and choosing to do without the sofa advertised on sale, no matter how good a bargain it is, if money to buy the sofa on sale has to come from groceries? I ask the Premier, why did he and his colleagues, last summer, spend $7.2 million on water bombers when that expenditure was not authorized in the March budget? Why instead, did they choose to take the $7.2 million from students, children in Kindergarten to Grade 12, students in colleges, students at the University, just before Christmas?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: I can't figure out if there is an intelligent question there or not. There was a lot of blather about relating unrelated subjects. With that kind of a convolution of totally unrelated and non-substantiated statements, it is difficult to discern a sensible question. The one question that - the one thing that did stand out has been answered, I think, about eight times before in the House, but if that is what the Leader of the Opposition wants to do, I will repeat the answers that I believe were given before by the Minister of Finance, the Minister of Natural Resources and perhaps others. Why did the government choose to spend $7.2 million on water bombers? The department and the minister and all officials concerned came to the government with a compelling case. We sent it back because we did not want to do it. It was outside of the Budget, it had not been provided for in the Budget. We felt it should not be done. It went back and it came back to us again with the suggestion that look, our water bomber fleet, some of it, is fifty years old. Some of it is fifty years old. If we don't do something to replace it now we could well lose it and that means putting in jeopardy the jobs and economic benefit derived from the three newsprint mills that operate within the Province.

With great reluctance, the government agreed to do it. On second thought, in knowing what we know today, I don't think the government would do the same thing if we had the decision to make today. We would run the risk, probably. But that is why it was done, and those are the circumstances in which it was done, and it has nothing to do with the convoluted gobbledegook that the Leader of the Opposition put forward.

MR. W. MATTHEWS: Totally incompetent, boy - it's time for you to go. Make no wonder you've decided to go.

MR. SPEAKER: Order, please!

The hon. the Leader of the Opposition, on a supplementary.

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier: Why didn't you and your Cabinet colleagues know about the state of the water bomber fleet in March when you prepared the Budget for the year? If so, why didn't you make provision for two water bombers then? Why are you now placing in jeopardy schools by taking more than $9 million from education institutions late in the year, leaving those institutions only three-and-a-half months to make up the savings when the institutions planned in the summer for the academic year?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: The only question that I can sort of discern from it is why didn't we know at the time of the Budget that the water bombers were fifty years old and planned then to buy water bombers. It is fairly simple. We knew that they were fifty years old, but the price of new water bombers was $22 million each, of the CL-415, is it?

AN HON. MEMBER: The 415, yes.

PREMIER WELLS: The CL-415 cost $22 million each. So we couldn't afford to do it and we didn't plan for it. These two came on the market, used, but in quite good condition I'm told - I didn't see them; I rely on the advice I got in that regard - for $7.2 million for two. Now, the alternative if you buy them new is to spend $44 million to get two. The terms and conditions, we were persuaded, made it a good buy and a good deal for the Province to protect the long-term interests. That was the sole basis for the decision, and that is the explanation as to why it wasn't in the Budget to spend $44 million to buy two.

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

MS VERGE: Thank you, Mr. Speaker.

Yet the Premier said in answer to my first question that with the benefit of hindsight the government made a mistake, that the government shouldn't have spent the $7.2 million on water bombers this summer.

I ask the Premier: Why did you and your Cabinet colleagues spend $6.6 million on Marble Mountain this summer when that expenditure was not authorized in the March Budget? Why did you spend $5 million over budget for the Economic Recovery Commission this year, since the Economic Recovery Commission has yet to contribute to the economic well-being of the Province? Why, instead, did you choose to take major amounts of money back from education institutions, the health sector and social services, very late in the year?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: The answer is fairly simple. None of what the hon. member said is accurate.

To begin with, the expenditure on Marble Mountain, as the hon. member knows, a project started originally by the former government, was cost-shared with the Federal Government 70/30, so what she is looking at is the gross expenditure, not the net. It was cost-shared by the Federal Government on a 70/30 basis. The ERC did not overspend by $5 million. That is the SRDA agreement entered into with the Federal Government.

Now, we could turn it down and say -

AN HON. MEMBER: Cost-shared in what way?

AN HON. MEMBER: Seventy/thirty.

PREMIER WELLS: Again, 70/30 money. We could turn it down and say, `We don't want your money,' and the Federal Government would have been quite happy to take it and add it to their budgetary measures; but we need it in the Province, so we took the money because it is good for the Province. It is in the best interest of the Province to do it.

MR. W. MATTHEWS: What advice did the Queen give you, by the way?

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

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier: Why didn't you plan for those expenditures in your March Budget? Why did you have to come to the House of Assembly in October with Special Warrants for $6.6 million for Marble Mountain and $5 million extra for the Economic Recovery Commission? Why, instead, are you taking that money from the disabled and the sick, and from public servants who lost their jobs?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, it wasn't in the Budget because the funding for it wasn't agreed by the Federal Government at the time and we couldn't put it in there, and without Federal Government participation we would not have spent it. Now, there is the explanation. It is quite simple, quite straightforward, quite rational and quite reasonable. Nothing whatsoever was taken from anybody, students, unwed mothers or otherwise. Nothing was taken from anybody.

AN HON. MEMBER: (Inaudible).

MR. SPEAKER: Order, please!

The hon. the Leader of the Opposition, on a supplementary.

MS VERGE: Thank you, Mr. Speaker.

I suggest to the Premier that he talk to the people affected by the budget cuts announced last week. If he had not been over in Europe he perhaps would realize that there has been considerable hardship resulting from last week's budget cuts.

I ask the Premier: Why did the government, this summer, spend $3 million in excess of what was budgeted for roads - $3 million over budget on roads? Why did the government spend $2.7 million that was not budgeted for Cabot celebrations? Why, instead, is the government taking that money, money that was spent without Budget provision from students, from the disabled, from the sick, and from public servants who were all penalized in the decision last week?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Again, Mr. Speaker, the Leader of the Opposition has no idea what she is talking about. The $3 million additional money spent on roads was 100 per cent paid for by the federal government out of the compensation for the elimination of the transportation subsidies, totally 100 per cent paid for by the federal government. We could have turned it down and it would have gone to New Brunswick or Nova Scotia.

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

MS VERGE: Thank you, Mr. Speaker.

I ask the Premier, why did you lose count of your temporary hiring? Why did you not set in place a mechanism to monitor employment, since in repeated Budgets in the previous six and a half years the government has announced an intention to freeze hiring and to be frugal in spending on public servants? Why instead did you lose count, and will you give the House an accurate number of the growth in public service positions through permanent hiring, as well as temporary hiring since you took office, and explain why you did not have proper controls in place to execute your stated policy, and why instead you made panic decisions late in this Budget year to abruptly terminate 390 public servants just before Christmas?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, again most, not all, of the premises of the Leader of the Opposition's question is totally without foundation and has no merit. We did not just hire increased numbers of temporary people. We made the mistake of following the management system, the personnel management system and approach that was in office when we took office. We should have made major changes before and regrettably we didn't. Now, Mr. Speaker, that is not to say that I am without any responsibility whatsoever. I should have been on it before. I acknowledge and I accept that responsibility.

Now, Mr. Speaker, I still say better late than never. We will, as a result of the exercise that government is going through now, we will do a complete assessment of what is genuinely needed to run the government of this Province on a proper and efficient basis, and that is the structure we will have in place. We are not going to rush at it and do it overnight. We are going to do it over a reasonable period of time, do a full assessment, and we believe at the end of the day, when we are finished with it, the government and people of this Province will be infinitely better off and have a much better system than they ever had before.

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

MS VERGE: When the Premier took office almost seven years ago he inherited a system involving Cabinet Committee approval for all hiring, temporary, part-time, student, as well as permanent. Did the Premier change that system, and if not were the Cabinet Ministers who approved the out of control hiring asleep at the switch?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the same system essentially is still functioning and the same approval levels were necessary. As the result of assessment done I have since discovered some of the increases. For example, in social services there were fifty-five in one sudden increase, in order to meet the increased demand, in order to meet the recommended levels of services in social services there were fifty-five people added. I think that was the number. I can get it checked, and there were a number of other areas where in fact those approvals were given by the committees of Cabinet and by Cabinet as a whole. Mr. Speaker, we should have been paying closer attention to it. I have already admitted that. That is not new. I said that three weeks ago, or two weeks ago at least, so that is not new.

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

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

I have a question for the Minister of Education flowing out of the Auditor General's Report. The Auditor General noted that colleges in the Province received block funding which is not based on student enrolment or programs. I would like to ask the Minister of Education on what he bases the amount of block funding that each college receives? What is it based on? If it is not student enrolment or programming why do they get the dollars they get and what is the criteria used to determine the amount of funding?

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

MR. DECKER: Yes, Mr. Speaker, every year each college board, represented by their president, meets with people in the Department of Education and they go over their expenses, the cost of their operation and they give them a block fund.

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

MR. W. MATTHEWS: Mr. Speaker, it is quite obvious that the minister in charge does not know on what basis the government and his department gives funding to our colleges. That is obvious from the lack of an answer from the minister, which I guess really the minister has answered the problem or has given the answer for the problem. Obviously, there is not adequate accounting by the colleges.

Let me ask him this then, why doesn't his department have a procedure for monitoring the financial reports, the information that comes into his department from the colleges? Can the minister explain why he has not seen fit to put in place a procedure to monitor the financial data that comes in from those colleges so then he would be better informed for the next fiscal year to determine what block funding they get, can he answer that?

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

MR. DECKER: Mr. Speaker, I think it was in 1988 the then minister, Mr. Charlie Power, read the ministerial statement when he talked about the five regional colleges. The intent Mr. Power had was to put more control into the regions. Actually it was probably a good intent, Mr. Speaker, unfortunately it got out of control to the extent that the Auditor General is quite right, we don't have the reporting process in place. It is not quite as bad as the report would have you believe. We do receive their budget proposals every year, we do have to go over them. There is a division in the department which does that but there are some weaknesses within the department when it comes to colleges. I have said publicly that I agree with many of the observations that the Auditor General has made and that I am in the process, which has started a year and a half ago, to try to correct some of the problems which are there. The over-administration, the lack of accountability in some areas are concerns which the department is quite concerned with and we are trying our best to put a process in place to deal with it, Mr. Speaker.

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

MR. W. MATTHEWS: Thank you very much. A final supplementary for the minister, Mr. Speaker.

Can the minister inform me and the House what happened to the document by Dr. Warren, former minister, post-secondary educational agenda for the future, the Triple E agenda he called it; equality, excellence and efficiency whereby he was about setting up a five year strategic plan for the college system in the Province? Can the minister inform the House what has happened to that? I watched the minister a few days ago reacting to the Auditor General's report. It was almost like he was trying to blame everyone else, going back to the days of Smallwood, Moores, Peckford and Rideout, that he had no part of it. I was just wondering what happened to the Triple E agenda that Dr. Warren brought forward and the five year strategic plan, can he answer that?

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

MR. DECKER: Mr. Speaker, there is still a lot of sense in the report which my predecessor dealt with, the White Paper which he floated. Remember the incorporation of the Marine Institute into Memorial which was part of that process and like everything else, it made a lot of sense but there were certain factors which we did not fully expect. The decline in the enrollment has certainly impacted on it. The total backing out of the federal government from post-secondary education was not anticipated at the time, Mr. Speaker. So what the Auditor General is telling us is it is time for us, once again, to take a look at the college system and see if we can streamline it just a little bit more.

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

MR. HEWLETT: Thank you, Mr. Speaker, a question for the Minister of Natural Resources.

Since I last questioned the minister in the House, Mr. Speaker, I have continued to have concerns expressed to me from the mining and mineral exploration industries about the dampening effect of the upcoming tax changes. One of the things they have suggested to me is that the taxation scheme be left as is but with a proviso attached that for large projects we have project agreements like we do for Hibernia, Terra Nova, et cetera with industrial benefits packages like a smelter or whatever and a revenue package. I ask the minister, has that been put to him by the industry and what is his reaction to it?

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, I have received copies of the same correspondence I am sure that he has been receiving. It has been copied to every member of the House of Assembly and probably to all the media and he will see what we are going to do when we table our legislation.

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

MR. HEWLETT: Mr. Speaker, as I indicated in my remarks the other day, one of the problems we are having here is considerable uncertainty and close to panic, as a matter of fact, out there in certain sectors of the industry. Would the minister care to indicate whether or not, once this bill is tabled, that he appears to be going to table without further consultation, that a time frame be put in place for some consultation with the industry and members of the public generally who might want a say before it is finalized?

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, my door is always open and the industry knows that my door is always open. If it wants to express its views to me about anything it can express its views to me at any time. I am going to be meeting with industry representatives tomorrow. Later on I'm sure there will be others who will want to come in and talk to me and express their views. I welcome that at any time. With regard to specifics of what we may do, that can only be available when the bill is tabled.

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

MR. CAREEN: Thank you, Mr. Speaker. My question today is to the Premier. During the past fiscal year, and this fiscal year, the Province received in excess of $50 million to take over the South Coast ferry system. Originally the Minister of Works, Services and Transportation said the monies would be put into a separate account that would pay for the ferry system into perpetuity. That never happened. The monies were taken to help force a balance on current account. The federal government was let off the hook.

I am now asking the Premier if his government is accepting monies in excess of $10 million to take over the federal wharves and freight sheds on the South Coast, wharves and freight sheds in other isolated ports, thereby letting the feds off the hook again and closing the $11 million gap that the finance minister said he was looking for last Tuesday?

MR. SPEAKER: The hon. the Premier.

PREMIER WELLS: Mr. Speaker, the first part of the hon. member's comment is not correct. The minister confirmed for me that he never said any such thing.

SOME HON. MEMBERS: Oh, oh!

MR. SPEAKER: Order, please!

PREMIER WELLS: Mr. Speaker, in terms of assessing whether or not it was the right decision for the Province to take, it was assessed on that basis: The value of the money, what it would earn if it were deposited in a trust account, and so on. That was the basis on which the assessment was done. Government never made any such decision, and would not make a decision to handle its funds in that way. It would not be in the public interest to have done so.

As to the further question that the hon. member asked, we have been conducting discussions with the federal government with respect to the wharf facilities that are used by the Province in connection with the ferry services only.

AN HON. MEMBER: (Inaudible).

MR. SPEAKER: Order, please!

PREMIER WELLS: I repeat again, we have been having discussions with the federal government with respect to harbour facilities or dock facilities only in the ports where the provincial government is operating the ferries. That is a sensible thing to do. We believe it is in the best interest of the Province to do it, and those discussions are continuing at the moment.

MR. SPEAKER: Question period has expired.

Orders of the Day

MR. ROBERTS: Oh, I am sorry, Mr. Speaker. It is seldom that we get so quickly through the routine. The arrangement for the day is that we will start with Committee stage on Orders 24 through 28. These are bills we dealt with on Friday morning if recollection serves me well, and then, once we deal with those which I understand is likely to be fairly quickly, we will go on to Order 31 which is second reading of a bill, To Amend The Hydro Corporation Act, The Electrical Power Control Act; that's Order 31.

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

Committee of the Whole

MR. CHAIRMAN (Barrett): Order, please!

The hon. the Government House Leader.

MR. ROBERTS: We are going to ask the Committee, Sir, to deal with Orders 24 through 28 in that order. These are all Committee stage on today's Order Paper. Would you be good enough, Sir, to start with Order 24 and then we will take them, serially, as they come?

"An Act To Amend The Animal Protection Act", (Bill No. 3).

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

"An Act To Amend The Workers' Compensation Act", (Bill No. 4).

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

"An Act To Amend The Highway Traffic Act", (Bill No. 26).

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

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

When this bill was discussed on Friday morning in the House, Mr. Chairman, the Minister of Works, Services and Transportation was confused, and as usual, Mr. Chairman, he got up you know, and made statements about how he is going to have to read it slowly so that the people on this side could understand and what have you, but people's words come back to haunt them sometimes, Mr. Chairman, and basically, I am going to refer to Hansard, page 2543 of Friday morning, and the Minister of Works, Services and Transportation said: " Clause 7 would amend section 178(3), to remove an exemption allowing drivers to not wear shoulder belts. When the legislation was brought in, as well as the belt across the waist, you had to wear the shoulder belt, but now, it is separate. Some of the newer vehicles have the belt in two sections, and what we are changing in the act now is that you can drive your vehicle with the waist belt only and not have to wear the shoulder belt." Mr. Chairman, this is not right.

Again, he goes on to say, on page 2544, the last sentence there: "They changed the design of the belt and now you don't have to wear - to not wear the shoulder belt" and, Mr. Chairman, I responded, after some elaboration: "To me, that clearly says now, that you are required to wear both the lap belt and the shoulder belt. There was permission allowed before, that if they were separate, it was not required to wear both, but now, you are required to wear both", and he clearly said: "No"!

Now, Mr. Chairman, under section 7 in the bill itself, if you read it properly, if the minister could read it properly, okay, section 7.(1) Subsection 178 (3) of the Act is amended by striking out the words and commas "but, where a seat belt assembly comprises a pelvic restraint and a torso restraint which are not joined, the driver shall be required to wear the pelvic restraint only". That is what is being struck out, I would say to the Minister of Works, Services and Transportation, so now, he does understand that you are required to wear both the pelvic restraint and the shoulder restraint. I would ask the minister to confirm that, that is what this bill is saying.

Also, section 7 (2) subsection 178(4) of the Act is amended by striking out the words and commas "but where a seat belt assembly comprises a pelvic restraint and a torso restraint which are not joined, the passenger shall be required to wear the pelvic restraint only".

That is what is being stricken out of this, so in actual fact the minister was confused on Friday morning and now he is straightened up. The Member for LaPoile tried to straighten the minister out. I think he added a bit more to the confusion. I would like the minister to confirm that, please.

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

MR. EFFORD: Thank you, Mr. Chairman.

I must admit that I was confused on clause 7 on Friday morning. Far be it for me that I could not make a mistake occasionally; I do admit that. As the hon. member just pointed out, clause 7 reads exactly as is, because when I left the House of Assembly I talked to the constable outside and we discussed it. I went immediately to my department and rechecked it, and the hon. member is quite correct. It now remains that you must wear the waist, the pelvic and the shoulder strap in all instances.

MR. CHAIRMAN: The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Chairman, I was not here on Thursday or Friday, so if this has been discussed and brought to the minister's attention, maybe he can let me know and I will just sit down.

Paragraph 2(j): "commercial motor vehicle" means a vehicle designed to carry goods, and includes a bus, a school bus...

From what I understand in talking to some of the officials in the minister's department, that word in the old act was `designated'. When this bill was brought to committee we had a problem with the word `designed', and we thought that maybe insurance companies might use it in order to bring forward commercial insurance rates and attach them to vehicles which are designed to carry goods but not necessarily designated to carry goods. There is a big difference in both words.

At that particular time the minister's officials were going to go back, and felt that maybe the word `designated' should be reapplied there again. I think it was their idea to take it out because they thought `designed' was a better word, but after quite a discussion followed they felt that the word `designated' should go back there, and not `designed'.

AN HON. MEMBER: (Inaudible).

MR. FITZGERALD: Paragraph 2 on page 4, Minister, (j), top of the page: "commercial motor vehicle" means a vehicle designed to carry goods...

What I am saying, and what the committee suggested was that we change that word `designed' back to `designated' to carry goods, because there is a vast difference. It could be another way of an insurance company looking at applying commercial rates to vehicles used for domestic purposes, like a pick-up truck for instance, which is designed to carry goods but not necessarily designated for that purpose.

I would like to know what the minister's thoughts are on that, and if he has any problem with changing that word from `designed' back to `designated'.

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

MR. J. BYRNE: I want to address that also.

At our Government Services Committee meeting on October 26 there was a motion put forth by the member and myself, and the motion was carried, and it was exactly that, that the word `designed' be replaced with the word `designated' included. I just wanted to let the minister know that, that it was carried at that meeting.

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

MR. EFFORD: Thank you, Mr. Chairman.

No, I have talked to the people in my department, and I have had full consultation with them, and the commercial motor vehicle means a vehicle `designed' to carry goods. There is nothing wrong with that. "...a vehicle designed to carry goods, and includes a bus, a school bus, a truck, a truck tractor and other motor vehicles designed for commercial use but does not include camper type vehicles designed or adapted exclusively for recreational purposes;".

I don't see anything wrong with that. Any vehicle designed for carrying goods - designed to be a commercial vehicle - should require a commercial inspection, for safety purposes only. The regulation of the trucking industry caused us to bring in safety inspections only, and required the operator of that vehicle for that use only. It is designed for commercial use, and is exactly what the interpretation of the bill says.

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

MR. J. BYRNE: I hope the minister is not getting confused again. At the committee meeting the discussion was on and the people from Works, Services and Transportation who were at that meeting also, representatives, they agreed with what was being discussed. In that a vehicle could be designed for commercial purposes but not be used for commercial purposes. Some of the insurance companies may take advantage of the situation and require people to pay rates on insurance for a vehicle that is designed for commercial purposes but not being utilized for that purpose. I would like the minister to make sure he understands what is happening here.

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

MR. EFFORD: I understand the point that the hon. member is making. I wasn't part of the committee. I had taken the advice from the officials of my department. The officials have told me that they didn't have a problem with this. I've just nodded to one of my people who is in the gallery and said go check it, because I want to be absolutely sure. The bill is written. I assume there is nothing wrong with it, and I understand the reasons why it was put in there. A commercial vehicle designed to carry goods or people or whatever.

You can designate a trolley to carry goods. You can designate whatever type of vehicle you wish to carry goods. The explanation that they give me that they were satisfied with under the Highway Traffic Act, the fact that a particular vehicle is designed to carry commercial goods. I can designate my machine which is a Jimmy to carry commercial goods, but this one is designed specifically for that. That is all, these vehicles are designed to carry commercial goods. If I carry commercial goods this afternoon in my vehicle, which is a light-weight vehicle, because it is designated to carry it that doesn't say I have to go through a safety inspection twice a year or once a year.

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

MR. FITZGERALD: Mr. Chairman, I don't think the minister fully grasps what is being said.

MR. CHAIRMAN: Order, please!

I recognized the Member for St. John's East Extern.

MR. J. BYRNE: I will give leave.

MR. CHAIRMAN: Okay.

The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Speaker, I'm not so sure that the minister fully realizes what is being done here. Because in a great many cases an insurance company will charge a rate, or designate a commercial vehicle, by the type of licence plate that it carries. A C plate for commercial - it may not be C, but there is a different designation for a licence plate for a commercial vehicle.

The minister's Jimmy, or the minister's car I suppose, can be designed to carry something, but that doesn't automatically make it a commercial vehicle. But if it is designated, if he has a pick-up truck and he uses it in the construction business, and he designates that truck as a commercial vehicle for hire and compensation, well then it is a commercial vehicle. But because it is designed, because it has a pad on it and it is capable of doing something, that doesn't necessarily make it a commercial vehicle. I can see this as an entrapment where many people may be forced to pay a commercial rate on a vehicle that is being used for domestic purposes.

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

MR. EFFORD: Mr. Chairman, that is the hon. member's interpretation of what it may or may not do. Any individual who goes to an insurance company to get a vehicle insured - I can have my vehicle designated to be commercial, and I go get a licence. I also can go to the insurance company. I may not do it. In fact, my vehicle is designated - I pay a higher insurance because I am using it for work, for business. But that is up to you to go to the insurance company and get that corrected.

AN HON. MEMBER: (Inaudible).

MR. EFFORD: Yes.

MR. CHAIRMAN: The hon. the Member for Bonavista South.

MR. FITZGERALD: This is exactly what I'm saying to the minister. Because he is designating his vehicle to be what he wants it to be. That is exactly what the argument is. Minister, what you are saying is you are agreeing with the argument but you are not agreeing with changing the term. The committee - I think it was pretty well unanimous - agreed that this go back and be changed. The two officials from your department were there and fully agreed that: Yes, maybe we should revert, and there is a very good reason for that word being put there in the first place.

But the minister comes back and defies the committee and says: No, it is not going to be changed because it is already written. If the committees are going to function and go through the procedure of meeting and looking over legislation, and bringing back unanimous consent, then I think the minister should take it probably a little bit more seriously, and respond to the suggestions that are being brought forward.

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

MR. EFFORD: As I pointed out, Mr. Chairman, the word `designed' here says exactly what it is, what a vehicle is designed for, and as I said in the remarks I made a couple of minutes ago, also what a vehicle could be used for. It is a clear interpretation on the part of the owner or the insurer to what they say, and that vehicle may be a private vehicle of commercial size but if it is not used for commercial use then it does not have to be insured for that. That interpretation is up to the individual at the particular time, so what we are saying is what it is designed to do but also what the user uses that particular vehicle for. In the meantime, where you are saying that the committee was unanimous and that the officials of my department - I mean, the bill is written and I am just double-checking and making sure that when the bill goes through it is to the satisfaction - I will have an answer back now in a minute.

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

MR. J. BYRNE: Just to try to clarify this situation, Mr. Chairman. If I own a pick-up truck and I have that truck insured, under the definition here now, if it is `designed', it would be classified a commercial motor vehicle, so the insurance company can charge me the rate for a commercial vehicle.

MR. EFFORD: Unless you go and -

MR. J. BYRNE: No, no. You are putting in legislation now that it is a commercial motor vehicle. That is what it is being described as now, a commercial vehicle. If you put in the word `designated' - designed `and designated', we are taking care of that problem because then the vehicle will not be designated as a commercial vehicle. That is what the minister has to understand. When are we going to have the answer back from your department? If we are going to pass this here today it is going to be too late then, so we need to know now.

AN HON. MEMBER: You will know in just two or three minutes.

MR. J. BYRNE: But this is going to be passed through as soon as we sit down. Either the minister agrees or disagrees.

MR. EFFORD: I disagree with you.

MR. J. BYRNE: Well, he disagrees.

AN HON. MEMBER: I can't see how Cabinet could approve that.

MR. J. BYRNE: No, I don't either. So, the minister is saying that he is going against the recommendations from the representatives of his department at the committee meeting held on October 26, 1995. He is going against the recommendations of the committee which were passed unanimously and nobody objected to them. The minister is over there now basically saying the same thing we are saying. He is confirming our argument but he is not agreeing to make the change that will solve the problem. Is that what the minister is saying to us now? Why can we not just amend it and put in the words -

AN HON. MEMBER: (Inaudible).

MR. J. BYRNE: Look, if you have a problem with the word `designed' and you want the word `designed' to remain there, instead of taking out the word `design' and putting in the word `designated', leave `designed' there and put in, `and designated' as a commercial vehicle. That takes care of your problem and it will take care of the problem of the people in the Province who have vehicles that are designed as commercial vehicles but will not be designated as commercial vehicles, and you will not have to pay increased insurance rates. Because, if you have a pick-up truck which is designed as a commercial vehicle you can mark it down that the insurance companies will end up charging me the rate for a commercial vehicle. You are going to get up now and say, if it is designated, but if it is not in there that's what is going to happen. So, put it in there and we have our problem solved.

MR. SPEAKER: The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Chairman, the hon. member is right, you can add both words here, because when the minister gets up to explain it all he is doing is justifying the very reason why we want it changed. The minister is saying he is going to go to the insurance company, or he is going to go to Motor Registration, and he is going to tell those people the way he wants the vehicle to be used, so in doing that he is designating the use of that vehicle for either commercial or for domestic purposes. Right now, you can have a person going with a pick-up truck with a C plate on it and the next thing you know you are going to be charged a commercial rate for automobile insurance.

MR. EFFORD: (Inaudible).

MR. FITZGERALD: Yes, you can, Minister, yes you can, but if you have it designated as a recreation or domestic vehicle, then you would go and be charged for the exact use of that particular vehicle. So not only must it be `designed', it also must be `designated', because there is a vast difference in those two words.

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

MR. EFFORD: Mr. Chairman, you are arguing over your interpretation of a word in a clause and what an insurance company may or may not do. The insurance company will simply - if the vehicle you have is for private use, you tell the insurance company so. If ten million people in the world have a pick-up or other vehicle and if they have it for commercial use, they tell the insurance companies it is for commercial use, if it is not, it is for private use.

AN HON. MEMBER: Boy, oh, boy!

MR. CHAIRMAN: The hon. the Member for Bonavista South.

MR. FITZGERALD: Mr. Chairman, here again, the minister is wrong. The minister can go out and he can buy one of those pick-up trucks with the double wheels, I don't know if you've seen them; there are not a lot of them around - I think they are a one-ton truck. Well, if the minister has one of those, I can tell him that he has it insured as a commercial vehicle because they will not insure it as a domestic vehicle. It is automatic, commercial. It is automatically a commercial vehicle because it is a one ton-truck even though it only has a one - it has a pan on it or a box on it, the same as a half-ton pick-up. So that is the difference right there in a `designated' and a `designed' truck. So unless the truck is `designated' then the insurance companies can play around with it. You can have a lot of people out there, after this piece of legislation is passed, driving half ton, three-quarter ton pickups for a Sunday afternoon drive and be paying a commercial vehicle rate on it as it relates to automobile insurance but if you had the word there `designated' then when you go to insure the vehicle or when you go to license the vehicle it would be clearly interpreted exactly what it is being used for.

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

MR. ROBERTS: Mr. Chairman, I appreciate my friend, the Member for Bonavista South, yielding the floor. He can come back again if he wishes, of course.

The argument seems to be, if I follow it, we are talking now - it is clause 1 of the bill, it would substitute for the present 2(j) a new 2(j) which appears -

AN HON. MEMBER: `Ed', are you saying (inaudible).

MR. ROBERTS: Yes, hold on now. Just let me -

AN HON. MEMBER: (Inaudible).

MR. ROBERTS: Yes, let me just say what I have to say. The proposal is that 2(j) of the main act would now read: commercial motor vehicle means a vehicle designed to carry goods, etcetera, etcetera. Now, the present statute, the present 2(j) says, "commercial motor vehicle" means a vehicle designated to carry goods..." My understanding is that the concern is with the use of the word, `designed' instead of the word, `designated.' Now, Mr. Chairman, there are other changes in the definition, but I gather they are not of concern, the committee are prepared to accept the other changes in the definition.

So on that basis I have asked my friend the minister, and he just asked the law Clerk to have a word with the officials who deal with this directly for us. So I am going to suggest that the Committee are amenable, and we simply let this bill stand for a little bit. I should have an answer quite quickly and then I will take instructions from my friend, the minister on whether he is prepared to change `designed' to `designated'. It may be as simple as in the drafting, the drafter chose the word, `designed' instead of the word, `designated' with no more then that behind it. So we will find out. Now, I am not sure anything of substance hinges on it but if it will ease the Committee's concern, then we will try to address it. So if it is agreeable, Sir, I would simply suggest to you, let this stand and we will go on to the next bill for a bit.

MR. CHAIRMAN: Okay, so the next order is Order 27, "An Act To Amend The St. John's Assessment Act." Bill No. 45.

The hon. the Member for Kilbride.

MR. E. BYRNE: Thank you, Mr. Chairman.

I will direct my comments maybe to the Minister of Municipal and Provincial Affairs or the Government House Leader, dealing with, "An Act To Amend The St. John's Assessment Act."

I have some questions for the minister dealing with the rate of assessment. In Clause 2, 49(1), "Real property shall be assessed at its market value, that value being the amount which in the opinion of the assessor would be paid if the property were sold as of the base date established by the chief assessor by a willing buyer to a willing seller both of whom are knowledgeable in the market." I ask the minister, does such an assessment - will that be now included in terms of farmland that probably was taken out of the agricultural freeze, say, in my district, or would it be included in large tracts of land that there is no development on, that are not for sale? If you, as minister, owned five to seven acres of land - how will these changes to the St. John's Assessment Act be impacted upon somebody in that situation?

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

MR. REID: What has been happening is that because this particular section was not included in the act, today somebody could go out and buy a piece of property, ask for the property to be assessed, and the assessment for that piece of property today could be either up or down from what it was assessed in the last assessment year, so you had a mishmash. Every time somebody was buying or selling a piece of property they were asking for an assessment, and the assessment was going up and the assessment was going down, so there was no base rate; there was no base set year. The City of St. John's was the only one in that situation, so what they have asked us to do is, like the rest of the Province is doing, you do an assessment in a base year.

Let's say 1996 would be a base year for the City of St. John's. Then, two years or three years down the road, somebody wants to sell that property, to get it reassessed, the assessment then has to reflect what the assessment was in the base year rather than the year they are buying. What was happening was that there were a number of court cases and people were losing money, and in a market today in particular where property values are decreasing, the city council from one year to the next could not make plans in regard to how much taxes it was going to collect from a particular piece of property. Do you follow what I am saying? Because any time during the year, that assessment could be challenged, another assessment would be done, and then the assessment could be up or down. So what the City of St. John's has basically asked us to do is to set the base year that you are going to do the assessment for all properties - every property, regardless - every property in the city would be assessed at a given time. That assessment would stand until the next base year, or the next time when a complete assessment would be done, and that way that is being fair to everybody. Because if it is not done that way, then one person could possibly be paying more taxes than the fellow across the street. I will just give you an example.

Two convenience stores, or two service stations on the corner of an intersection, both of them, when they are assessed to begin with, are assessed equally in the amount. Two years after, one gentleman decides to sell his service station. He asks for an assessment to be done on his property, and because property rates fluctuate up or down, his property is assessed lower than the guy across the street. Now, is that fair to the person across the street who is paying on the base year, and he is getting a reassessment done in the middle of a term, say in the second or third year, and he is paying lower taxes. That, then, causes problems for the City, because at the end of the day almost anybody can ask for a reassessment at any time, and that puts the City of St. John's into a situation where any given year they don't know what amount of taxes they are going to actually collect. Because if you are going into large buildings, for example, you could be looking at large amounts of taxes, and if they are going to be assessed almost on a yearly basis, then it is going to cause all kinds of problems.

I cannot answer the gentleman. I don't know what the act says as it relates to vacant agricultural land, but I would think that yes, it stands for that, too. I would think that if there is a base year for property, then it would relate to a base year as well for agricultural land. I think you would stay there, at that base. Now, I am not sure about that but I can check it out for you.

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

MR. E. BYRNE: I appreciate the minister taking some time to explain the situation, and I understand generally what the City of St. John's has faced compared to what other municipalities have been doing in the Province, but while that may be true and the problem that we are about to correct there, generally speaking, for 90 per cent to 95 per cent of the cases, in certain areas of the city, especially in newly incorporated areas like ones that I represent, where there are individuals in there who have large tracts of land, for example, the assessment rate, I mean, it is based more upon what the market can bear at the time than it is actually - the city's assessment rate may be unrealistic compared to what the market can bear in terms of what they can sell it for. While they may be able to sell it, on the one hand, for whatever they can get, which is fine, but the assessment could be abnormally high to a point where they would be paying abnormally high taxes on the land and therefore be put into a situation where they would have to be forced to sell it for whatever they can get just to take care of taxes.

Now, while that may not seem a significant problem, it is a problem to some constituents in my district who own large acreage of land that has just come out of the agricultural freeze, say, on the major arteries where you are talking 400 to 600 feet long, 300 backward in depth. It could create a real problem for those people.

If the minister is going to check on it - I don't know if he has any other feelings based on what I've just put forward, but if he can check on it and elaborate probably a bit more.

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

MR. REID: Just let me say this to you. If a person finds himself in a situation where his property - be it real property or land or whatever - and he thinks it is overly assessed, well, then, he uses the appeals process. I can't really get into that question I say to the hon. member, because there is a process whereby when the assessment roll goes out from the City of St. John's to your friend in the Goulds or your friend in Kilbride, then he has the right to appeal up to a certain number of days - I'm not sure in the City of St. John's, I think it is ninety days - to appeal that assessment.

Then he or she, whoever it might be, takes that assessment to a court of revision, and the court of revision then decides whether the City has over-assessed the property or under-assessed it. He takes his chance. At the end of the day, he has to accept the verdict of the court of assessment, or take it to the Supreme Court of Newfoundland. Now, not very many cases go to the Supreme Court of Newfoundland. But then it stops, at that point.

MR. E. BYRNE: (Inaudible).

MR. REID: No.

MR. E. BYRNE: (Inaudible).

MR. REID: Yes. We are not talking about in the appeals. No, that is a different process altogether. That is outside the appeals process. That should answer you.

MR. E. BYRNE: (Inaudible).

MR. REID: The appeals process is a general appeals process that anybody can go to. If you have a property that you - right? That process has to continue to work anyway. After the appeals process - the appeals process is part of the base year process. So then the base is set after the appeal. Okay?

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

MR. E. BYRNE: No, I appreciate now the -

MR. CHAIRMAN: No, no (inaudible).

MR. E. BYRNE: Oh, I'm sorry.

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

MR. HARRIS: Thank you, Mr. Chairman.

I want to say a few words on this legislation.

First of all, I think the point needs to be made that there is a difference between the appraised value and the assessment. Quite often the two get confused when in fact an appraisal that was done will tell you the market value of the property as of today's date, what you could get for it now. As I understand this legislation, what this legislation is going to tell you is the market value or assessed value as of the base year. For example, the agricultural land that may just come on the market as available commercial land, if that needs to be assessed now, or if somebody were to build a new house and there has to be an assessment, the assessment won't necessarily be based on the market value of the house the day it was built, but in fact on the base year which may be two or three years previously.

The assessor is doing a very different job from that of an appraiser. The assessor has to determine the market value, but then also has to relate it to the base year; so that if you, as a minister, build a house on a particular street and my house is on the same street, and mine was assessed in 1990, yours is being assessed in 1994, well, we are supposed to be paying comparable taxes based on the comparable homes. So your house, even though it is built in 1994, has to be assessed as if it had a value in 1990.

That seems to be fair. Because even though your house may be a brand new house and the market may have risen by 15 per cent in the four years, you ought not to be paying a higher rate because yours is being assessed in 1994 when mine was assessed at a fairer market value in 1990 of 15 per cent less than yours. The only way to really be fair is to go back to my house and jack my assessment up by 15 per cent, which you can't do because you would get the whole thing all jigged up.

Now, as I understand it, this amendment tries to sort out that problem so that there is a base year on which all properties are assessed. So that even if you make an improvement to your house this year, and there is a reassessment done, which can be done, that, that reassessment reassesses that increased value again going back to the 1990 tax year or whatever the base year that's established.

Now, as I understand it, that's what is happening here and I do understand there are lots of problems at City Hall at the assessment and at the appeals level, whereby people have varying assessment dates and assessment years. In fact, I have seen just today, from the City of St. John's, two assessment notices coming out with two different base years on it; one for 1995 and one for 1990.

Now, I am assuming that this is going to be cleared up once this bill passes, that would be my understanding, because it would be very difficult for someone to be able to know whether or not they have a valid point in challenging an assessment if they go down to City Hall and see all kinds of different assessments for different tax years. According to this legislation, similar to the assessment acts that apply elsewhere, the only real ground of appeal is that the assessment of my property is unfair in relation to the assessment of another property which is of equal value.

People look at the assessment, the assessed value of property is often very different from the appraised value of a property and quite often the assessed value is significantly lower than the appraised value of the property, so it is no good to say that I have an appraisal here that shows my property is worth less than the assessment, what you really need is a comparability between my property and other properties of similar nature and what they have been assessed at. The only way to fairly compare those is to have the same base year applied to all properties, and if my understanding is correct, and I think it is - I see the minister nodding there - then, I think that this legislation is in order and very desirable, because as it stands right now, there is a tremendous amount of confusion as to what grounds of appeal may be valid and you will have a lot of unnecessary appeals because the rules are so difficult to follow and understand, that people will put in an appeal just to cover themselves and then a court of revision has to deal with it and try to sort it out.

Perhaps the minister will comment. If my understanding is correct, then I have no difficulty with the bill. If I am wrong in that, perhaps the minister can say so. And, would he indicate, whether or not the City of St. John's plan to bring these assessments in order or are they waiting for the new assessment year, which I think is coming up?

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

MR. REID: Let me say, Chairperson, that I appreciate the comments that my hon. friend, the Member for St. John's East made because I think he explained it quite adequately.

Yes, the City is waiting for a new assessment to be done. They are hoping to be able to set the base for the whole of the city within the next twelve months or so and they are doing it. So then that will, as soon as legislation - legislation is retroactive to January 1, last year, too, because there is a number of court cases - a number of cases have been challenged now already, and once we set the base date, it is going to be a lot easier for the City of St. John's, then, to actually, without having the problem of being challenged so often as they have been, over assessed values, be able to actually tell their planners and assessors, here is the base rate, what we are doing is equal or fair to everybody, and by the way, they are only coming on line, believe it or not, with the rest of the Province. That's the way the rest of the Province operates. So, unless there are any other questions, the hon. member is correct, I thank him. I would like to thank my hon. colleague, the Member for Kilbride and of course, the Member for Waterford - Kenmount, who supported this piece of legislation.

The City, by the way, I will say to the hon. member, have been after me almost on a daily basis for this. They need it as quickly as possible.

MR. HARRIS: The new base year will be 1995.

MR. REID: The new base year will be January 1, 1995.

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

MR. ROBERTS: Order 28, Sir, Bill No. 39.

"An Act To Amend The Hospitals Act", (Bill No. 39).

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

MR. L. MATTHEWS: Thank you, Mr. Chair.

There is not much I can add to the eloquent presentation that I made on Friday on that particular bill. I would simply say ditto to all that I said on Friday morning, and would recommend that you follow and get this thing through as quickly as you can.

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

MR. SULLIVAN: Thank you, Mr. Chairman.

I don't have too much to add either. The minister did such a thorough job the last day, he covered everything in great detail. He even talked about tobacco taxes and revenues, and how we are going to deal with those issues. I am sure the minister has done a very, very thorough job, and I think we will leave it at that; I had my comments the last day.

A bill, "An Act To Amend The Hospitals Act." (Bill No. 39)

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

MR. ROBERTS: Your Honour, may we go back to Order 26, that is Bill No. 26.

MR. CHAIRMAN: "An Act To Amend The Highway Traffic Act," (Bill No. 26).

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

MR. EFFORD: Mr. Chairman, seeing it is so close to Christmas, I find it necessary, after talking to the people in my department, to say to the Opposition, we will change the word from `designed' to `designated'. I think that will, according to members on this side and members on that side, make everybody happy.

AN HON. MEMBER: Designated drivers.

MR. EFFORD: Designated drivers.

MR. J. BYRNE: May I speak to that?

MR. CHAIRMAN: Is there an amendment to the bill? Because the minister -

AN HON. MEMBER: I moved the amendment.

MR. CHAIRMAN: Okay, because the minister cannot -

MR. ROBERTS: (Inaudible).

MR. CHAIRMAN: Okay, so the amendment has been proposed by the House Leader.

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

MR. J. BYRNE: I will second it.

Seeing that it is close to Christmas, I am going to pay the Minister of Works, Services and Transportation a compliment now, and I am going to say it is good to see the Minister of Works, Services and Transportation being man enough in one day twice admitting that he was wrong.

On motion, amendment carried.

On motion, clause 1 as amended carried.

A bill, "An Act To Amend The Highway Traffic Act." (Bill No. 26)

Motion, that the Committee report having passed the bill with amendment, carried.

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

MR. ROBERTS: Mr. Chairman, would you be good enough, please, to rise the Committee, and perhaps we could deal with the amendments to Bill No. 26 in the Whole House and then we will carry on with debate on the Hydro Amendment Act 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!

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

MR. BARRETT: Mr. Speaker, the Committee of the Whole has considered the matters to it referred and has directed me to report having passed Bill Nos. 3, 4, 45 and 39, without amendments and Bill No. 26 with amendment, and ask leave to sit again.

On motion, report received and adopted. Committee ordered to sit again presently by leave.

On motion, amendment to Bill No. 26 read a first and second time, ordered read a third time on tomorrow.

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

MR. ROBERTS: Mr. Speaker, in accordance with the order of business we outlined earlier would you be good enough to call Order 31, Bill No. 35, please?

Motion, second reading of a bill, "An Act To Amend The Hydro Corporation Act, The Electrical Power Control Act, 1994 and other Acts." (Bill No. 35)

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Thank you, Mr. Speaker.

This bill deals with amendments to a number of pieces of legislation, particularly the Hydro Corporation Act, The Electrical Power Control Act, and a number of others that are consequential. This bill clearly indicates our intention that in the future Hydro will operate with more independence of government than in the past on a day to day basis, and with less political interaction on a day to day basis.

I would like to first take a look at the explanatory notes. Number one: the amendments to the Hydro Corporation Act would affect changes to the internal operations of the corporation, a number of the clauses that are in this bill, and among those changes would be the possible establishment of a private pension plan for the employees of the corporation, and also the application of the Labour Relations Act to the corporation instead of the Public Service Collective Bargaining Act as at present. The amendments to the Hydro Act would also subject the corporation to full regulatory review by the Public Utilities Board. In that regard in the future the Public Utilities Board would set the rates for both retail customers and industrial customers, rather than as at present where the PUB only makes recommendations to the Cabinet, so Hydro in the future would be subject to regulations just as Newfoundland Power is today.

The second clause in the explanatory notes regarding the Electrical Power Control Act, and this is the new Electrical Power Control Act that was passed last year, the amendments contained in Clause 15 of this bill, this amendment has been made necessary by changes in the Public Utilities Income Tax Transfer Program by the Government of Canada. They no longer exist, they have been cancelled, so we no longer need this clause and we will be deleting it.

The amendment contained in Clause 16 of this bill, regarding the Electrical Power Control Act, would provide that the Lieutenant-Governor in Council may give direction to the Public Utilities Board with respect to the policies and procedures to be implemented by the board with respect to the determination of rates of public utilities.

The final clause in the explanatory notes, the amendments to the Crown Lands Act, the Freedom Of Information Act, The Provincial Preference Act, and the Public Tender Act, are consequential to the other amendments as Hydro would be subject to the Crown Lands Act but not to the other three.

Now, I would like to take hon. members through the bill because there are a lot of clauses and subclauses in this bill so I want to ensure that people understand where we are going here. On Page 4 starting with the amendments to the Hydro Corporation Act, Clause 1, where now the Lieutenant-Governor in Council determines, we will now say that the shareholders will determine by special resolution. The shareholders are us, of course, we are the only shareholder, the government is the only shareholder, but it would not require reference to Cabinet, it would be the shareholder. Right now the Minister of Energy reports to me.

MS VERGE: And the Minister of Finance.

DR. GIBBONS: And the Minister of Finance, of course, holds the shares, but reports to me in terms of responsibility, so it would not have to go through the Lieutenant-Governor in Council to the Cabinet. The shareholders would sit - in this particular case, we are dealing with directors fees - so Clause 1, deals with directors fees, the shareholders will determine.

Clause 2, deals with the appointment of the chief executive officer and there shall be a chief executive officer appointed. Now the shareholders, by special resolution, will approve the appointment of the chief executive officer.

AN HON. MEMBER: Who are the shareholders?

DR. GIBBONS: The shareholders are ourselves.

Clause 3, is regarding the contract for the chief executive officer and again Clause 3 has the contract being approved by, "the shareholders by special resolution."

In Clause 4, presently Section 10 of the Hydro Act requires that Cabinet approve by-laws and we are saying that is not really necessary. The Board of Directors can approve its own by-laws relative to holding meetings in such internal matters in Hydro. So that is the way we are changing this. "The board may make by-laws" in the future and that is dealt with in Clause 4.

Clause 5, Section 14 of the Hydro Act is repealed. Section 14 of the Hydro Act gives Hydro an exclusive franchise to water rights on the Island of Newfoundland. We are repealing this so that in future, if Hydro wants Hydro rights it must come to government and apply just like anyone else would apply.

Clause 6 of the act, "Paragraph 16(1)(h) of the Act is repealed and the following substituted: (h) deposit money or securities with a bank, trustee, trust company, or other depository in Canada or outside of Canada;". This is an internal matter and no Cabinet approval is required and the Hydro board will deal with it.

Clause 7, Sections 17, 18, 19, 20 and 21 of the Hydro Act are repealed and the following substituted: starting with 17(1). Now 17, 18, 19 and 20 are primarily dealing with water rights. As I said, relative to Clause 5, Hydro will have no special provision and will be treated like any other corporation that would apply for water. Section 21 though of the Hydro Act is the section where Hydro was exempted from Public Utility Board regulation. By repealing this now, Hydro will be subject to full regulation by the Public Utility Board.

As we go down now to the new sections, seventeen onwards, Section 17(1) of the Hydro Act. 17(1)(a) and (b) basically preserve existing policy relative to the accounting methods and the rate stabilization plan that exists today. 17(1)(a) deals with the rate setting mechanism for accounting methods, depreciation and amortization and 17(1)(b) deals with the rate stabilization plans. So there is a carry over of these matters until the Public Utilities Board has a rate hearing and makes any changes. So otherwise, until the next rate hearing the existing situation will be maintained.

Section 17(2), again, is maintaining the status quo relative to the rate base of a property and assets of the corporation will be maintained at their net book value, as they are today and stay that way for rate setting purposes.

Section 17(3) "For all purposes of the Public Utilities Act, the expenses chargeable to operating account by the corporation shall include..." a number of items. On page 6 of the bill we have sub-item (a), related to a pension plan. Sub-item (b), related to foreign exchange losses, dealing specifically with a Swiss-Frank loan and a Japanese Yen loan. Subsection (c) deals with four contracts that are in existence for non-utility generators that are due to start in a year or so.

In the case of pension liabilities and the pension clause, subsection (d) assigns fifteen years for the amortization event any liabilities that are outstanding to be taken care of and charged to the operating account. Subsection (e) deals with the foreign exchange losses and is specifying that the foreign exchange losses be taken care of over a forty-year period so that there would not be a major impact on the rate payer as we take care of these losses.

Section 17(4) is more for technical and legal clarity to put the matters beyond doubt that the items I've just talked about, relative to the pension plan and the foreign exchange losses and the existing contracts, should be provided for and should be considered to be reasonable and prudent for the purpose of the Public Utilities Act.

Section 17(5) is a transition clause related to rates and tolls and charges and mainly is saying it provides for the status quo until the next rate hearing. Likewise, Section 17(6) is a timing matter related to the capital budget. Presently we approve the capital budget annually. I have this year approved the capital budget for 1996. In the future the capital budget will have to be approved by the Public Utilities Board, and that will start with the budget for 1997.

Section 17(7) is also a transition clause regarding contracts for the supply of electricity and liabilities according thereto. Section 17(8) is stating that where there is a conflict between Section 16 of this act as now provided and the Public Utilities Act, the provision of this act shall prevail.

The new section 18. Section 18(1) deals primarily with definitions of the Government Money Purchase Pension Plan which is for part-time employees, the Hydro Money Purchase Plan, the Hydro Pension Plan, and onwards. Section 18(1) deals with definitions.

Section 18(2) is more significant. It is under section 18(2) that the corporation may, with the approval of the Minister of Finance and Treasury Board, establish a Hydro Pension Plan in part (a) or a Hydro Money Purchase Plan in part (b). That is section 18(2) allowing the setting up, with permission, of a Hydro pension plan system.

Section 18(3) specifies that the Minister of Finance and Treasury Board may enter into an agreement with Hydro or with the corporation regarding the transfer and assumption of assets and liabilities of the pension plan. Likewise section 18(3)(b) deals with transfer relative to the Money Purchase Plan. Sections 18(4) to 18(8) are more related to the mechanics of how to set up the pension plan for Hydro.

On page 10 of the bill the new section 19(1) specifies that the Labour Relations Act will apply to the corporation. As I said earlier, presently the public service collective bargaining act applies. In future it will be the Labour Relations Act.

Sections 19(2) and 19(3) are again transitional clauses. Section 19(2) confirms that the present collective bargaining agreements are assumed as if made under the Labour Relations Act, and section 19(3) assumes that the present unions are certified for the purpose of the Labour Relations Act. So it preserves the status quo in both cases.

Section 19(4) mentions that section 11.1 of the Public Sector Restraint Act, 1992 applies to the corporation and its employees. This is to ensure that there could be no retroactive cancellation of restraint measures as they applied back at that time to all public servants. This is a go forward bill. Section 19(5) is recognizing that today Hydro has an agreement with its union relative to some essential employees. In the future this will be continued, but the status quo will be maintained until changed by the Public Utilities Board. In the future the Public Utilities Board will have governance over Hydro relative to essential employees.

Clause 8 repeals two unnecessary matters. Section 22 deals with the public service collective bargaining act, and that will no longer apply to Hydro. Section 23 applies to a requirement relative to the Golden Eagle Refinery. Of course, the Golden Eagle Refinery no longer exists; it has been closed for many years, so we are repealing that particular section.

clause 19 states that subsection 25.(1) of the act is repealed and the following substituted relative to share capital, so that again the shareholder will approved share capital, whereas in the past it was the Cabinet and the Lieutenant-Governor in Council.

Clause 10 states that section 26 of the act is repealed, and section 26 of the Hydro Act refers to a contingent water franchise in Labrador, so even Labrador Hydro has to come to the government and apply through the normal process for water rights in Labrador.

Clause 11 deals with the borrowing program, and we are repealing subsection 40(2) relative to the borrowing program and approval thereof.

Clause 12.41(3) of the act is repealed, and the following substituted relative to the appointment of auditors. In the future, the Board of Directors of the corporation shall appoint its auditors.

In clause 13 we are again dealing with matters that are primarily technical and legal relative to the mechanics of the operation of a utility. Subsections 44(3), 44(4), 44(6), and sections 45, 46, 47, 48, 49 and 50 of the act are repealed. In the future, all of this will be covered by the Public Utilities Board. The normal principles of the Public Utilities Act apply, and Hydro will be treated in the future the same as Newfoundland Power is treated today in the normal operation of a utility. For example, subsection 44(3) deals with frequency of electricity; 44(4) deals with inspection of wiring, and 44(6) deals with the terminating of service for reasons, so in the future the PUB will regulate that, and Hydro will not have any special need for these particular sections.

Clause 14 is transitional. "Section 47 and subsection 48(2) of the act shall continue to apply, notwithstanding their repeal, to and for the benefit of the corporation in respect of a cause of action, claim or liability against the corporation existing on the date of proclamation of this section." To our knowledge, today there are no such claims, but we have to leave this as transitional until the act is proclaimed.

Now we go on to some amendments to the Electrical Power Control Act, 1994. As I said earlier, Clause 15 deals with the section of the Electrical Power Control Act related to PUITTA, and since PUITTA has now been cancelled there are no rebates to consider so we no longer need this particular section, paragraph 3(e) of the Electrical Power Control Act.

Clause 16, I mentioned earlier in the Explanatory Notes, deals with giving direction to the Public Utilities Board, so we have included a clause there, "5.1. Notwithstanding section 3 and section 4 of the Act and the provisions of the Public Utilities Act, the Lieutenant-Governor in Council may direct the Public Utilities Board with respect to the policies and procedures to be implemented by the board with respect to the determination of rates of public utilities..." and some specific examples are given in the bill.

Clause 17 is repealed. Clause 17 deals with section 23(7) of the act which is repealed and the following substituted. Now this deals with the governance, the corporate ownership part and governance part, of the Electrical Power Control Act. I would want you to note that in subsection (7) everything after the word `act' - "Notwithstanding sections 99 to 102 of the Public Utilities Act..." everything after that is already present in the Electrical Power Control Act. What we are doing is adding that clause "Notwithstanding sections 99 to 102 of the Public Utilities Act...", but we are not proclaiming, or have no plans to proclaim, the corporate ownership section because that is not required at this time.

Clause 18 and clause 19 refer to sections that are being repealed, and these relate to the ability to make regulations for the public utilities income tax transfer program. As I said earlier, that program has been cancelled by the Government of Canada so these sections are no longer necessary.

Clause 20 deals with the Crown Lands Act. Subsection 50(4) of the Crown Lands Act is repealed. That is because previously the Crown Lands Act was subject to the Hydro Act and in the future there is no need of that. Hydro is now going to be subject to Crown Lands matters just as any other corporation.

Clause 21, deals with the Freedom Of Information Act; Hydro operating in this way fully regulated by the Public Utilities Board, will be exempt from the Freedom Of Information Act. Clause 22, deals with the Provincial Preference Act and Clause 23, deals with the Public Tender Act, likewise, Hydro operating, regulated fully by the Public Utilities Board will be exempt from both the Provincial Preference Act and the Public Tender Act. CF(L)Co today is exempt from both those acts, and clause 4, just states that this act or a section or subsection of it comes into force on a date to be proclaimed by the Lieutenant-Governor in Council in the future.

Mr. Speaker, that concludes my comments in introducing Bill 35, and I am pleased to move second reading.

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

MS VERGE: Thank you, Mr. Speaker.

I say, shame on the government. Shame on the government for trying to sneak through the House of Assembly just before Christmas hoping nobody is watching a major piece of legislation which will have significant ramifications.

Mr. Speaker, this bill indeed will have the effect of distancing Hydro from the government. It will have the effect essentially, of commercializing Hydro, of making what is now a Crown Corporation, like a privately-owned utility. Mr. Speaker, we have to ask: Is this a measure designed to set the stage for yet another attempt at privatizing Hydro, because that's what it looks like, Mr. Speaker.

No. 2, Mr. Speaker, this bill contains several measures which will ensure higher rates for consumers, higher light bills for households and businesses in this Province. Mr. Speaker, as long as the government continues to own Hydro, the cumulative effect of the measures will be to have camouflaged increased taxation, to higher electricity rates and ongoing dividend grabs from Hydro by the government. The government started that practice in March of this year by taking $20 million in dividends from Hydro and then continued the practice in a mini-Budget last week by taking another $2.9 million from Hydro in dividends.

Mr. Speaker, this measure contains provisions which will have the effect of allowing more BRINCOs by repealing a provision of the Hydro Act giving Hydro a monopoly over the larger hydro sites on the Island of Newfoundland. The door will be open to private developers to get rights to the larger undeveloped sites remaining on the Island, and then, Mr. Speaker, the repeal of section 26 of the Hydro Act, relating to franchises and rights over Labrador waterpower is extremely worrisome. The minister glossed over that provision.

Now, Mr. Speaker, the Smallwood government gave away the rights to the Churchill River to BRINCO. Newfoundlanders and Labradorians are haunted by the knowledge that the Smallwood government entered into a disastrous arrangement for the development of the Upper Churchill giving away all the Churchill River water rights in the process. In the mid-1970s, the Moores Administration bought BRINCO's shares in the Upper Churchill paying some $120 or $130 million for them and remember, those were mid-1970s dollars and then, paying another $30 million for the water rights to the Lower Churchill. Mr. Speaker, the Smallwood government gave away the water rights to the Lower Churchill. Twenty years ago a PC administration paid $30 million to get them back. Now is this Liberal administration, through a legislative change that they are trying to sneak through in late 1995, preparing to give away water rights in Labrador once again to allow more BRINCO's?

Mr. Speaker, these provisions will have major consequences. The extent of the ramifications will remain to be seen but, Mr. Speaker, these provisions cannot be allowed to proceed through this House of Assembly before Christmas. These changes deserve a full and public hearing. Now the minister and his colleagues learned that Newfoundlanders and Labradorians are extremely protective of Hydro. People in this Province want our water rights to be retained by the government and developed for the benefit of the residents of this Province. That is why thousands of citizens participated in the outcry over the Wells Governments attempt to privatize Hydro a year and a half ago. Mr. Speaker, those people deserve to know about these changes. Those people are entitled to an opportunity to have their say about these proposed amendments. Mr. Speaker, the minister kept his head down as he read from notes, presumably hoping people would not notice what he was saying. Mr. Speaker, this is an extremely unfair and insidious effort to make major legal change without the people of the Province knowing about it. Remember it is the people's water rights that are up for grabs and it is the people who are going to have to pay electricity bills in this Province for ever more.

Mr. Speaker, I have outlined the four major provisions of this bill that I have seen. I only got this bill on Thursday afternoon. It was only Thursday afternoon that the government printed and distributed the bill. We have not had nearly enough time to study and analyze the bill. The citizens of the Province, outside this Chamber, have not had any opportunity to find out what is contained in these provisions. Mr. Speaker, on the surface a move to make Newfoundland and Labrador Hydro like a private utility - question, is the real agenda to privatize Newfoundland and Labrador Hydro to achieve what the government could not get through in 1994? That is the big question.

Second, is it designed to increase electricity rates to make electricity consumers in this Province pay substantially more for a necessary commodity? Is it a move, Mr. Speaker, for the government, as long as the government retains ownership of Hydro, to get more money from the citizens of the Province through a disguised tax, through allowing Hydro to make higher profits and then taking large amounts of dividends into government coffers to meet current account demands, as the government started doing this year? Finally, Mr. Speaker, what is the motivation for the provision that will open up water rights on the island, as well as in Labrador, the vast undeveloped territory of Labrador, to private development, to subject our Province to more disastrous deals like BRINCO, to allow the few to profit at the expense of the many?

Mr. Speaker, I would like to go through the bill from the beginning and make a number of comments. The first section of the bill, amending Hydro Corporation Act, has a provision which the minister failed to explain even though some of us asked him questions across the Chamber as he was on his feet. The sections substitute the Cabinet for shareholders. Now what is the rationale for that? Right now, as I understand it, the Hydro shares are held on behalf of the people of the Province and the government of the Province by one Cabinet minister, namely the minister of finance. That is the reason for the government moving to change the legislation to use the word shareholders - plural - and provide that the shareholders - plural - have certain final decision making power instead of the Cabinet? Does that have to do with the government's commercialization-privatization scheme? What possibly is the explanation for that change? It is a technical legal change; there must be a technical legal explanation for it.

Mr. Speaker, one of the next provisions has to do with deleting section 14 of the Hydro act. Section 14 of the Hydro act gives Hydro the sole right to develop hydro sites on the Island of Newfoundland. The only exception, as I understand it, has to do with small sites, sites capable of generating only up to 15 megawatts. This government has chosen to allow private developers, such as Genergy and Bell Island Power, to embark upon development of smaller sites such as Northwest River. That is going to involve higher cost to rate payers in the long term.

What is the public policy purpose of opening up the larger sites on the Island to private development? Isn't it clearly in the public interest to restrict development of the larger sites - in fact, I would argue all sites - to the publicly owned utility? What is going on here? How can the government think that it can make this major change without involving the citizens of the Province in a public discussion?

The purpose of having a publicly owned utility develop hydro sites and have a monopoly over their development is to see to it that the benefit is spread among all the citizens of the Province, as rate payers and as tax payers. Through this change a few private developers will benefit greatly and handsomely, while the majority of us will be paying higher electricity rates.

Then we proceed to some accounting changes where section 17 is amended. These changes on the surface may not make sense to the lay person. But I ask the minister: Don't they open the door to higher electricity rates? Aren't they a further contributor to higher electricity rates? There are changes relating to the method of depreciation of Hydro assets. I ask the minister: Don't these changes have the affect of depreciating more on the front end, and therefore loading more cost onto rate payers in the short term rather than the medium or longer term? What is the purpose of doing that? Does it have to do with the hidden agenda of privatizing Hydro, of making Hydro's books more attractive to private developers, of eliminating the distinction between rates that a publicly owned Hydro would be charging versus what a privately owned Hydro would have to charge?

Then we have the provisions that transfer the Hydro pension plan from the public service pension plan to a new Hydro pension plan. The minister should tell us about the assets in that plan now, accumulated through contributions paid by Hydro employees, versus the liabilities. What is the difference between the assets and the liabilities, and don't the provisions authorizing the differential to be amortized inevitably leads once again to higher electricity rates. Overall, is not the Province simply transferring part of its unfunded pension liability to Hydro and allowing Hydro to cover the shortfall by jacking up rates? And what are the amounts, I ask the minister? What is the differential and how much would that work out to according to the amortization scheme set out in the bill? How much would that come to in annual rate increases over the next several years?

Mr. Speaker, next we come to the repeal of Section 26 of the Hydro Act. That is a provision that I have grave concerns about and I would like to dwell on it. Section 26 of the Hydro Act says that the Cabinet may, for the consideration, whether nominal or substantial, and upon the terms and conditions considered desirable subject to the rights of a person then existing - the Cabinet may vest in the corporation, in other words Hydro, a subsidiary of Hydro or another person absolutely or for a prescribed term, all or part of an exclusive right or franchise to develop and generate power in Labrador, and sell the power in the first instance for consumption by way of domestic, industrial, or other use, or for resale. Then it goes on in Subsection 2 to say: a right or franchise conferred on a person under Subsection 1 shall be vested in him or her by the deed, lease, license, permit, or other instrument that the Minister of Justice determines to be appropriate for the purpose, and every instrument shall be issued under the Great Seal of the Province.

Finally, Subsection 3 says: a person in whom a right or franchise is vested under Subsection 1, has, may exercise, and shall enjoy that right or franchise for the period prescribed and to the extent provided in the instrument issued in accordance with Subsection 2.

Mr. Speaker, the effect of the bill now before us is to repeal section 26, everything I just read out. What does that mean, I ask the minister? What effect will that have on the Lower Churchill? What will that mean for the Lower Churchill Development Corporation's franchise over the Lower Churchill? Will that open the door to another BRINCO, after twenty years ago the Moores Administration paid $30 million, in mid-1970s dollars, to buy back the water rights the Smallwood Government gave away back in the 1960s? Is this a measure that is going to open the door for another BRINCO disaster, I ask the Minister of Works, Services and Transportation, and what about all the other undeveloped hydroelectric sites in Labrador? How is this provision going to affect them? What is the meaning of this section? Where did the idea for it come from? Has the minister subjected it to legal interpretations?

Now, we all remember the disastrous Upper Churchill contract with Hydro-Quebec.

DR. GIBBONS: If I may, Mr. Speaker?

MS VERGE: Yes, I will yield for the Minister to comment.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Thank you, Mr. Speaker.

Just for clarification, Mr. Speaker. Section 26, as the hon. member read, says that Cabinet `may', not shall. The Labrador section is only a contingent franchise. It is not a shell, it is not like the Newfoundland one. Presently, relative to the Lower Churchill Development Corporation there is an annual assignment of that lease. Every year on November 24th, I sign the lease for the Lower Churchill to the Hydro group of companies, so the Labrador one really has very little meaning or significance. It was only a contingent franchise as said, and it is only something that Cabinet may do, so nothing has changed, really.

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

MS VERGE: Mr. Speaker, the minister really isn't making sense. The bill that he introduced has the effect of repealing section 26. Why? I ask the minister.

DR. GIBBONS: They can still come to us and apply for a certain river and and we can do the same as we have done with the Lower Churchill. (Inaudible).

MS VERGE: What protection do the people of the Province have, I ask the minister, of our interest in undeveloped power sites in Labrador? What safeguard is there against an incompetent or a corrupt government giving away or giving a sweetheart deal over rights to develop the Lower Churchill or other undeveloped water rights in Labrador to BRINCOs or their ilk? I will yield for the minister to make his comments.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, what the hon. member is saying frankly exists today, because a government of the day may do what a government wishes relative to water rights in Labrador under the present situation. Section 26 is only giving Hydro a contingent franchise. It is not like the franchise that they have for the Island - water rights on the Island of Newfoundland - where they have first priority above all others. They have it in that and we are withdrawing it all to the government so it will be under normal regulations of government, under the Crown Lands Act and the Water Resources Act, that we would assign the rights to anybody.

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

MS VERGE: Mr. Speaker, I am afraid I cannot accept the minister's explanation.

I come back to water rights on the Island. He did not explain the agenda associated with opening up all remaining hydro sites on the Island to private development, of cancelling Hydro's monopoly over the more substantial remaining undeveloped hydro sites on the Island. What is the excuse for that? Has the government entered into negotiations with private developers for the remaining undeveloped sites on the Island? Why would the government want to do away with Hydro's monopoly on undeveloped sites on the Island? Why wouldn't the government want to maintain the advantage Hydro has, and to allow Hydro to use the expertise it has acquired to develop any remaining Hydro sites, whether on the Island or in Labrador, for the benefit of all citizens of the Province, and the Government of the Province, instead of opening the door for a few developers to cream off the substantial amount of profits that can be generated through developing remaining hydro sites in our Province? If the minister wants to comment on that, I will yield again.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, in the future when there is a need for power to be added to the grid on the Island, when there is a need for power, Hydro, completely, totally regulated by the Public Utilities Board, will have to determine how to best get the lowest cost possible for the future sources of supply, and that is specified in the Electrical Power Control Act; you have to get the lowest cost possible. One of the options in that regard, because it will be overseen by the Public Utilities Board, is that anyone will have an opportunity to put forward proposals to give the lowest cost supply - absolutely the lowest cost supply - for the ratepayer, and the Public Utilities Board will then rule on that as to who can put forward the lowest cost supply. If that is Hydro bidding and saying, `We can provide it from a certain source,' or if it is Newfoundland Power saying, `We can provide it from a certain source', if it is a private company that already has existing rights, and we have companies in this Province that have existing water rights, if they come forward and say, `We can provide the lowest cost power that is going to be the next addition to the grid,' that is the one that we should be selecting, the lowest cost option, and if it is Hydro we will sign the lease for water rights for Hydro. If it is somebody else that does not have water rights, then we can sign a lease for them, but we have to make sure that the supply of electricity that goes into the grid on this Island has to be the lowest cost supply to keep the rates as low as possible. It need not be Hydro; it may be somebody else.

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

MS VERGE: Mr. Speaker, that is nonsense. If the minister and his Administration were seriously interested in keeping down Hydro rates they would not have put this piece of legislation before us. This legislation is riddled with provisions that are going to force up electricity rates. It is an insidious change that is going to remove Hydro's advantage and make Hydro like a private utility.

That brings me to the next section of the bill which is the new provision of the infamous Bill No. 2, the Electrical Power Control Act, 1994. Those provisions authorized the Cabinet to direct the Public Utilities Board about the way it sets rates for Hydro and also privately-owned utilities. That opens the door for the Cabinet ordering the Public Utilities Board to impose a rate of return basis for setting Hydro's rates, and thereby doing away with the main cost differential between a publicly-owned utility and a privately-owned utility.

During the debate of 1993 and 1994 when the government got hammered for trying to sell the people's Hydro, it was clearly shown that privatization would significantly add to electricity rates in this Province, that privatization would enrich the few at the expense of all the electricity consumers in the Province. This change in clause 16 which inserts a new section 5.1 into the Electrical Power Control Act is one of the most dangerous provisions in this whole bill.

It says: "`Notwithstanding section 3 and section 4 of the Act and the provisions of the Public Utilities Act, the Lieutenant-Governor in Council'" - in other words, the Cabinet - "`may' direct the public utilities board with respect to the policies and procedures to be implemented by the board with respect to the determination of rates of public utilities" - plural - "under the Public Utilities Act and, without limiting the generality of the foregoing, including direction on the setting and subsidization of rural rates, the fixing of a debt-equity ratio for Hydro and the phase-in, over a period of years from the date of coming into force of this section, of a rate of return determination for Hydro and the board `shall' implement those policies and procedures."

Now, Mr. Speaker, the minister glossed over those changes. The minister, if he is honest, will look up and admit that these changes are going to cancel the cost advantage Hydro has always had as a publicly-owned corporation. It is going to set up Hydro as a cash cow for the government, as long as the government continues to own Hydro, and then it is going to do away with the price differential that was one of the main arguments against privatizing Hydro.

AN HON. MEMBER: You are totally misreading that.

MS VERGE: I am not totally misreading it. Maybe the minister himself doesn't understand it. Will the minister care to explain the difference between a rate of return basis for setting Hydro rates and the basis that is used now? Will the minister not admit that a rate of return basis, which is now used for private utilities such as Light and Power, involves a rate of return about twice as high as what Hydro has been getting from the Public Utilities Board? Will the minister explain why he and his colleagues want to make this change?

MR. SPEAKER: The hon. the Minister of Natural Resources.

MR. HARRIS: A point of order, Mr. Speaker.

MR. SPEAKER: The hon. the Member for St. John's East, on a point of order.

MR. HARRIS: Mr. Speaker, I understand this is second reading debate. I don't think the minister should be speaking four or five times without unanimous consent, which I do not offer.

MR. SPEAKER: To that point of order, it is my understanding that the Leader of the Opposition has sixty minutes in which to engage in this debate, and she has relinquished her portion of the time for the minister to reply to her questions. So there is no point of order.

The hon. the Leader of the Opposition.

MS VERGE: Thank you, Mr. Speaker, that is correct. I yielded to the minister to try to force out more information about the true meaning of this bill. The minister, in his short remarks, glossed over some of the most dangerous and insidious provisions of the bill. I will now yield while I hope he will begin to get into an explanation of the ramifications of the new section 5.1 for the Electrical Power Control Act.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, it is not this section but a different section that is going to make Hydro subject to the Public Utilities Board regulations and subject to rate of return regulations. That's elsewhere in this bill, and this particular clause, clause 16, with the subsection 5.1 is basically just giving the government authority to give direction on any matter it concerns. It is not in this section that we are saying you will go to a rate of return regulation, that is elsewhere in this bill, but if we, as a government, or any future government might wish to give direction on a particular issue, then this clause allows it to do it.

For example, you mentioned, the phase-in over a period of years of going to rate of return regulation. We are saying: if, instead of going instantly to rate of return regulation, you want a phase-in over a five-year period or whatever number of years it would be, then you are going to have a modifying effect, flattening effect on any rate increase that would be effected.

If the government would want to give some direction on fixing the debt-equity ratio, that, too, has an effect of how far you can go in terms of the rate of return regulation and how high your rates can be. So, we are specifying that you can fix the debt-equity ratio in terms of giving direction on that.

If you want to do something as a government relative to what the rates should be in the rural diesel areas, presently, there is a policy that the first 700 kilowatt hours per month will be at the interconnected rate. Recently, we saw a public report from the Public Utilities Board which said: Throw that out, throw out that long-standing policy and charge them more. What we are saying in this clause, is that, if government wishes to give direction on that, we could give direction saying: you shall maintain a lifeline rate of 700 kilowatt hours or some particular number, so that's all that this clause is doing, allowing the government, any government, to give direction on any aspect relative to the regulation of Hydro. Give direction on any aspect - but the rate of return regulation is what it is going to be because of other aspects of this act.

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

MS VERGE: Thank you, Mr. Speaker.

It is the rate of return basis for setting Hydro's rates that this amendment has the effect of establishing that is going to significantly add to electricity prices.

Now, the minister, through his convoluted explanation, did indicate that the rate of return basis for setting rates will lead to higher rates; what he did not acknowledge is the extent of the necessary rate increase from what it would be if we leave the status quo, if we leave the interest margin basis for calculating rates.

Now, I would suggest to the minister, that the rate of return basis for setting rates, which is what is used for private utilities, will lead to a substantial increase, perhaps in the order of $20 million a year. If the minister has other figures, then he should make them public. He needs to lay all this out on paper for the public to examine carefully and not just try to sneak it through the House of Assembly without a clear or adequate explanation, in the last few days before Christmas, hoping that the news media and the public are not watching.

Mr. Speaker, I maintain that the switch to the rate of return basis for setting rates is going to have the effect of substantially increasing rates, and of doing away with most of the price differential between a publicly-owned Hydro and a privately-owned Hydro. In the short term, while government continues to own Hydro, it will set up Hydro to earn more profit that the government can raid through taking more and more dividends as the government started doing this year, $20 million in March, $2.9 million last week. In the longer term, perhaps it will be used to cancel one of the most powerful reasons for wide-spread public objection to privatizing Hydro namely, higher rates, Mr. Speaker.

DR. GIBBONS: (Inaudible).

MS VERGE: And the debt equity ratio under this new régime can be essentially dictated to the Public Utilities Board by the Cabinet and then the Public Utilities Board will have no choice but to implement the Cabinet's directive.

DR. GIBBONS: (Inaudible).

MS VERGE: But at any Cabinet meeting, any Thursday morning behind closed doors, the Cabinet can make a different decision and impose it on the Public Utilities Board.

DR. GIBBONS: That would become public, it would not be behind closed doors.

MS VERGE: Mr. Speaker, I come back to one of my first points: This is far too important a piece of legislation, with far-reaching consequences, to have go through the House of Assembly without putting it out to the public through hearings. I emphatically call upon the minister to refer this bill to a House committee for public deliberations over the winter. What possible reason could the minister and his colleagues have for rushing this through the House of Assembly in the few days leading up to Christmas? This was made available to members of the House of Assembly only last Thursday afternoon. None of us, on this side of the House, have had an ample time or opportunity yet, to analyze it and to understand clearly all of the consequences of passing it. We have seen some negative provisions, which I have outlined, and on that basis, I would express strenuous objection to the principle of the bill. There may be more negative contents that we have not yet had an opportunity to decipher.

Now, Mr. Speaker, regardless of that, it is not fair to the citizens of Newfoundland and Labrador to have this measure proceed before Christmas. People showed clearly in late 1993 and 1994 how fervently they care about Newfoundland and Labrador Hydro. Hydro is their corporation. It is a corporation owned by all the people, with the Minister of Finance holding the shares in trust for the citizens of the Province, and it has to be maintained and used for the ongoing benefit of the citizens of this Province, the people now in the Province and generations to come.

Mr. Speaker, Hydro gets most of its power from water. Hydro now owns and controls water rights on the Island and in the vast territory of Labrador. Mr. Speaker, we have to oppose, in the most strenuous way, any legal change that is going to give up our ownership and control of those water rights and allow for a more disadvantageous deal like the infamous BRINCO deal. Mr. Speaker, we cannot allow a Liberal Administration in the mid-1990s to repeat the colossal blunders in developing the Upper Churchill made by the Smallwood Liberal Administration in the mid-1960s.

Mr. Speaker, if this bill sees the light of day, if it is put out to the public and allowed to be carefully and thoughtfully analyzed, I believe the minister and his colleagues will hear a barrage of opposition and criticism, the same as they got in late 1993 and 1994 when they made an overt attempt to sell Hydro. Mr. Speaker, I believe once again, Newfoundlanders and Labradorians will plead with this government to hold on to one of our most valuable and productive assets, an asset that will continue to generate profits and benefits for the people of this Province in perpetuity as long as the water flows, and the water will flow forevermore.

Mr. Speaker, if the government had gotten their way and sold off Hydro back in 1994, what would they have done to balance their current account this year? They were looking at selling it off in 1994 for something like $300 million. Well, by now they would have had that $300 million frittered away. This year alone, they got $10 million approximately from Hydro on a loan guarantee fee. They took $20 million in March in the way of dividends and last week they took another $2.9 million. Mr. Speaker, we still own Hydro, and through Hydro, we own and control all the water rights in the Province.

Mr. Speaker, the minister is smugly saying that in future under this measure it would be done through government. Well, this measure distances the government from Hydro. This measure overall makes Hydro more independent. It commercializes Hydro. It sets up Hydro for sale in the future. It dresses up Hydro to have the same kind of rate of return as a privately-owned utility. It sets up Hydro to pass on higher rates to the eventual consumers to generate higher profits which government will take in the short-term, and which would be available to a private developer in the event of a sale.

Mr. Speaker, the people of the Province spoke loud and clear in late 1993 and early 1994 when government was trying to privatize Hydro. The people of the Province want to keep Hydro, want Hydro protected and developed for the overall public good, and the people of the Province do not want any changes in the law that are inconsistent with that fundamental aim. The people of the Province do not want the water rights on the Island or Labrador opened up to private development. The people want the water rights held by a publicly-owned corporation, controlled by the government on their behalf for their benefit. The people of the Province do not want to pay higher taxes under the guise of higher electricity rates, higher taxes dictated just as surely by the Cabinet as if the Cabinet put sales tax on electricity once again.

Mr. Speaker, if government wanted to get more revenue from electricity they could do it through the front door by imposing a sales tax on electricity. If they had wanted to get $20 million from electricity consumers this year they could have put a 5 per cent retail sales tax rate on electricity and they would have gotten approximately $20 million. Instead what they did, was take $22.9 million in dividends from Hydro. Mr. Speaker, that amounts to the same thing. The same citizens are forking out more money. Citizens have $22.9 million less disposable income because of the measures of government. One way or another, the people of the Province are paying.

As long as the government continues to own Hydro, under this régime Hydro, through the rate of return basis, for the PUB setting its rates, through having to assume the unfunded pension liability and having that cost spread over a period of years by the rates set by the PUB, through having different accounting practices, such as a new depreciation method, will have to charge higher rates, will gets orders from the PUB requiring it or authorizing it to charge higher rates. With the higher profit margin from the rate of return basis for setting rates, there will be more dividends available for government to take, an indirect taxation, and then when the times comes for this government, or their ilk, to have another go at privatizing Hydro, the stage will be set. The price differential argument will be cancelled, because under this measure Hydro's advantage in the determination of rates will be taken away. The same method for setting rates and using the rate of return basis as is used for Light and Power and other privately-owned utilities elsewhere will be used by the Public Utilities Board for Hydro. Hydro will be operating more independently than it has in the past, from the Cabinet, and the Minister of Finance, and the government; Hydro won't even be subjected to the Public Tender Act. That is one of the changes in this bill. It is one of the provisions that appears towards the end, just a little, tiny clause near the end, exempting Hydro from the Public Tender Act.

The Auditor General just nailed this Administration for various violations of the Public Tender Act, for ignoring the Public Tender Act. She faulted the government for allowing some of its corporations and some of its divisions to operate in defiance of the Public Tender Act. The Marble Mountain Corporation was one of the ones cited.

The government got caught a couple of years ago flagrantly violating the Public Tender Act through a series of calculated moves orchestrated by the Premier and carried out by the present Minister of Finance, the former Minister of Finance, the current Minister of Education and Training, and a couple of other ministers, in the notorious Trans City affair. Now, Mr. Speaker, it wasn't just the Auditor General who nailed them for that abuse. The Supreme Court of Newfoundland Trial Division ruled last January that the government broke the Public Tender Act in awarding the three hospital construction contracts to Trans City Holdings, the firm owned by Tom Hickman and other significant supporters of the Liberal Party.

Mr. Speaker, that is going to cost the taxpayers of this Province a substantial amount of money, first of all higher costs for the three hospital facilities, which will be paid out over a period of many years through a complicated lease/purchase arrangement involving financiers, as well as the local Liberal developers, and then there is the matter of the court-ordered damages. The court, in ruling that the government broke the Public Tender Act, said that the government has to make substantial payments to one of the losing bidders, one of the bidders who, with correct application of the Public Tender Act, would have been awarded contracts. The estimate of the amount of damages that is going to have to be paid was $3 million.

Well, the government appealed that decision. The Court of Appeal heard arguments two months ago, around the middle of October, and everyone is waiting for the decision of the Court of Appeal. It could well be that the Court of Appeal decision will entail a finding that the government did worse than the Trial Division determined. The Court of Appeal order could cost the taxpayers even more. This is a government that has been found to indulge in sleazy practices that are expensive to the taxpayers of the Province, so why would the government want the people of the Province and the House of Assembly to go along with an amendment which will exempt one of the government's largest and most substantial corporations from the Public Tender Act?

Mr. Speaker, Hydro carries out high-cost capital projects. Just maintaining Hydro's existing facilities involves substantial capital cost. If the demand for electricity grows, Hydro will have to get into some new developments, and just maintaining the existing plant and equipment comes to mega-millions of dollars in the run of a year. Why should we run the risk of having Hydro award such high-cost, high-value contracts without necessitating the calling of public tenders and the scrutiny that involves? The government has not made a case for taking Hydro out of the Public Tender Act. Through its actions in almost seven years in office the government has demonstrated that we need not only the protection of the Public Tender Act that we have had but we need even greater protection. It has been shown that this government will take advantage at every opportunity and make twists and turns to take even more advantage as they did in awarding the hospital contracts to Trans City.

Mr. Speaker, the minister has not said anything at all about the process for consideration of this bill. I will yield now while I wait for the minister to tell us what kind of a public consultation process he and his colleagues envisage. I will wait for him to tell us that he is going to refer this bill to a Committee of the House of Assembly for public hearings, public debate and public input before coming back some time in the New Year, perhaps in the spring sitting of the House of Assembly, for further consideration of the bill and the many recommendations for change, alteration and deletions which surely will come from any meaningful public consultation.

So I will yield now for a minute, to have the minister explain to us the public consultation that he has in mind. Are you going to consult the public, I ask the minister? Are you going to allow a reasonable period of time for the public to find out what is in this bill, analyze it and study it and give the government their conclusions and recommendations? Is the government going to involve the public in this Province? Is the government going to draw upon the wishes and recommendations of the people who own Hydro and the people who showed, through their strenuous efforts a year and a half ago, two years ago, how deeply they feel about retaining ownership of Hydro and retaining public control of water rights in the Province? Is the minister going to involve the public in the process? Mr. Speaker, the minister is saying no.

MR. SPEAKER: The hon. the Minister of Natural Resources.

DR. GIBBONS: Mr. Speaker, I have no plans to refer this bill to a committee that will travel the Province. We will be dealing with this bill like the others we dealt with today here in this House in committee stage.

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

MS VERGE: Mr. Speaker, this is absolutely shameful. It is clear that this bill has major consequences, long term consequences. This bill opens up the door to private ownership and control of water rights. This bill may be paving the way for the government, in the short term or the longer term, to sell Hydro. It will surely lead to substantially higher electricity rates and will boost Hydro's profit and make it a tax collector for the government. Mr. Speaker, these are significant changes and significant is even an understatement. These are monumental changes and it is simply unacceptable for the government of the Province to be trying to rush these through the House of Assembly, in the week or so before Christmas, without any plan or intention to consult the people of the Province. Mr. Speaker, the minister learned the hard way that the government cannot be trusted to make decisions about Hydro in the absence of public involvement. If it had not been for public involvement in late '93 and early '94, the people of the Province would be without the benefit of Hydro today. Mr. Speaker, in the end, public opinion may have simply slowed down the government's timetable for selling Hydro. The government may have simply expanded the timetable.

The Chrétien Government's Budget in the Winter of '95, with the elimination of the Public Utilities Income Tax transfer arrangement, surely had an effect on the government's intentions regarding privatizing Hydro but, Mr. Speaker, that federal measure probably means something like $30 million in the run of a year for a privately owned Hydro versus a publicly owned Hydro. Mr. Speaker, that can change and the combination of measures in this bill will cancel out the other aspects of the price differential between a publicly owned Hydro and a privately owned Hydro.

There is no reason for people in this Province, based on the government's history, to think that privatizing Hydro is still not on its agenda, if not for the short term for the longer term. We can't allow this legislation to proceed unless the bill goes out to public hearings and unless there are radical changes made. On the face of it, the significant provisions of the bill are all negative. The provisions that have the affect: of boosting Hydro's profits for raiding by the government; of essentially making Hydro and the PUB and the retailer, Light and Power, tax collectors for the government; of jacking up electricity rates, taking more money from the pockets of electricity consumers; and opening up undeveloped water rights on the Island and in Labrador for private development. With one stroke of the pen doing away with Hydro's monopoly on the larger hydro sites on the Island, and then with another stroke of the pen deleting section 26.

I'm not satisfied with the minister's explanation about section 26. That is a section of the Hydro act that has to do with Labrador power. There is immense wealth entailed in the undeveloped hydro sites in Labrador. There is no way we in this Chamber can make a change in the law to jeopardize the availability of that wealth for the government and the people of the Province, for the benefit of Newfoundlanders and Labradorians. There is no way that we in the Opposition for one minute will entertain a measure which will lead to another BRINCO.

I have to say I'm extremely disappointed with the government. I've been a critic of the government as a member of the Opposition, as Leader of the Opposition. I've been cynical about a number of government moves. But after the experience of late 1993 and early 1994 when the government tried to sell Hydro, first through a merger with Light and Power and then on a stand alone basis, and then with the federal government cancelling the PUITTA rebate which many of us opposing Hydro privatization had pointed to as a danger, I thought the government had put behind itself once and for all any thought of privatizing Hydro.

I'm not at all sure. Reading this bill it looks to me as though the government simply altered the timetable, as though the government is now embarking on a plan to be carried out over a period of time, of setting the stage for a renewed effort to privatize Hydro. These measures are going to distance Hydro from the government, of commercializing Hydro, of treating Hydro much like a privately owned utility, of exempting Hydro from the Public Tender Act, of having the PUB determine Hydro's rates on a rate of return basis, the same as the PUB would set rates for a privately owned utility, of thereby necessitating significantly higher rates and higher profits, and then cancelling the rate differential objection to privatization that was one of the strongest points made by opponents to privatization last year and the year before.

If the government were simply doing what the minister is trying to suggest and make some innocuous accounting changes and bureaucratic moves, why the secrecy, why the deviousness? Why wait until last Thursday afternoon to distribute the bill, and why attempt to rush it through this week and in the few days remaining before Christmas? If it is so harmless, why not put it out to the public? Why not refer it to a committee? What is the purpose of having House of Assembly committees if important pieces of legislation are going to bypass the committees, if ministers refuse to refer the substantial legislative changes to the committees?

Mr. Speaker, it seems that the committees have been relegated to a very low level, to the status of examining non-controversial, inconsequential legislative measures, but when it comes to anything of substance, of consequence, a measure such as this which has major public policy implications, Mr. Speaker, the government has chosen to ignore the committees and proceed in a dictatorial fashion using their majority to rush the measures through the House of Assembly, but, Mr. Speaker, this is too important a measure for the members of the House to be making decisions on and voting on, without a longer period of time for careful scrutiny and informed public discussion. Mr. Speaker, the minister knows full-well because he saw first hand, a year-and-a-half ago and two years ago, how much the people in this Province care about Hydro.

Mr. Speaker, the people of this Province rallied to the cause of saving Hydro, of preventing our Hydro from being sold like they have rallied to no cause this decade. The Hydro privatization fight, Mr. Speaker, was a fight mounted by thousands and thousands of citizens of this Province. Newfoundlanders and Labradorians in every community, from every walk of life, joined the debate about Hydro in '93 and '94 and, Mr. Speaker, those people deserve to be involved in the discussion about this bill. Those people are entitled to have their views taken into account before votes are made on this very, very major piece of legislative change. A change that's going to affect their lives in the short-term, a change that's going to force up the electricity rates that they will have to pay, a change that's going to open the door to private developers instead of a public corporation to develop remaining water rights and reap the riches that will be derived from development of Hydro sites.

Now the minister says it is his intention to allow the most cost-efficient proposal for development to be chosen, but, Mr. Speaker, under the current law, under the present rules, Hydro will always be the best cost option. It has to be, Mr. Speaker, Hydro is regulated the same as the other utilities but the rate of return is significantly lower than is provided for private utilities. That differential will be done away with through this measure so, Mr. Speaker, the government has deliberately through this bill, changed the rules, to take away Hydro's advantage so this must mean a calculated move on the part of the government to favour private developers, to handicap Hydro and favour private developers.

Mr. Speaker, the big question is whether this is a measure calculated to serve up all of Hydro to private developers, to do in the future what the government was stopped from doing last year, stopped from doing by the tremendous force of public opinion, from objections raised by Newfoundlanders and Labradorians from one end of this Province to the other. Mr. Speaker, it is simply reprehensible, to use one of the Premier's favorite words, that the government will now attempt such major changes that will have such major consequences without allowing the public to even find out what is going on. It is reprehensible that the government is even contemplating these changes in the first place, changes which clearly are at odds with overwhelming public opinion that was expressed during the Hydro debate.

Mr. Speaker, I have only had the bill since Thursday afternoon. There may be negative consequences that I have not yet seen. To recap the major negative consequences that I will strenuously oppose, and the Official Opposition will fight, are those that distance Hydro from the government and commercialize the corporation in a way that may lead to a future privatization of Hydro, changes that will augment Hydro's profit by imposing a new basis for setting Hydro's rates, changes that will make Hydro more of a cash cow than it is now for the government, that will increase Hydro's profits and allow the government to take larger and larger chunks of money out of Hydro in the form of dividends while the government still owns Hydro, changes that are going to hike electricity rates for consumers in this Province. There is a whole series of measures which I outlined earlier, only one of which is the change in the basis for setting Hydro's rates, others which include the transfer of responsibility for the Hydro pension plan to the corporation, and some of the accounting measures which will increase the rates that are eventually imposed on consumers through the PUB and the retailer.

Mr. Speaker, in particular I strenuously oppose the measures which will open up undeveloped waterways on the Island and in Labrador to private development. The minister has confirmed that will be the result for the Island. He denies that is the effect for Labrador. Now I challenge the minister to lay out on paper in much more detail his analysis of the meaning of this bill, and in particular on the effect of public ownership of and control of water resources in this Province.

Mr. Speaker, immense wealth is at stake, and that wealth has to be derived for the people of the Province through government control, through public ownership of Hydro. It is really disappointing, as 1995 draws to an end, to see the government proceed with this measure. It is extremely disappointing and disheartening. It seems as though the government learned nothing from the privatization debate of last year and late 1993.

Mr. Speaker, the Minister of Works, Services and Transportation seems to be treating this as a joke. Well, I would suggest that the residents of his district won't be amused when they find out what he and his colleagues are up to, because the people in Bay Roberts and the other communities in his district thought that the minister had finally come to his senses a year ago when the Premier said that he would not be selling Hydro, when the Premier said that the government was backing off. The people of Port de Grave district thought that the government had finally realized that the Province and the citizens of Newfoundland and Labrador would be better off with government ownership of Hydro and with government control of water resources, and those people, the same as people in every other district, are going to be very, very disappointed and hurt when they realize that their representatives, when they realize that the government of the Province, did not heed public opinion, and instead just waited awhile, bided its time, before coming to the House of Assembly with a measure that is going to have the effect of making Hydro more attractive for sale to the private sector which is surely going to significantly increase electricity rates whether there is public ownership or private ownership, and which will plumb Hydro's profits for any tax starved government which will essentially set up Hydro as a tax collector for the government, indirect taxation, camouflaged taxation, Mr. Speaker, and of course that will only be possible as long as Hydro is publicly owned.

Mr. Speaker, before I conclude let me reiterate my strong disagreement with the contents of this bill as I have been able to read and understand them in the short time I have had the document, and my absolute disgust with government's refusal to put this measure out to public discussion and allow reasonable time for the public to discover the meaning of this bill.

Mr. Speaker, it is hard to understand that after the establishment of the committee system, after the pledges of respect for the public, of the promises of fairness and balance, that the government would for a minute consider trying to proceed with this measure without the benefit of public discussion. I say to the Government House Leader, why conceivably would you refuse to put this bill to a House Committee for public consultation over the winter? Why conceivably would you want to rush this through the House of Assembly in the last few days before Christmas?

The Government House Leader is trying to slough it off as a piece of minor legislation, but it is not a piece of minor legislation. Just how major it is, and just what negative consequences will result, is hard to tell from a few short days of scrutiny, but what I have been able to discern already indicates that there would be serious negative consequences for rate payers, for tax payers, for Newfoundland and Labradorians of the present as well as future generations. What is at stake here, Mr. Speaker, is water rights, the generation of electricity from free-flowing water, water that flows in perpetuity.

The Government House Leader was part of a Smallwood Administration that made a colossal blunder with development of the Upper Churchill. He was part of the gang which gave away the water rights on the Lower Churchill, the rights that the Smallwood government had to spend $30 million of public money to buy back. Now he is participating in another give-away of our hydro resources. This is shameful. Thank you, Mr. Speaker.

SOME HON. MEMBERS: Hear, hear!

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

MR. HARRIS: Mr. Speaker, I would like to speak on this bill, and I intend to do so at some length, because this piece of legislation which is called An Act To Amend The Hydro Corporation Act, The Electrical Power Control Act, 1994 And Other Acts should rightly be called the Hydro privatization enabling act, or the Hydro pre-privatization act. This legislation in fact is Hydro privatization take two.

There are at least two ways to privatize Hydro. The last round was a bill that would create a new Hydro corporation and transfer assets to it. This way seems to be to change the corporation in such a way that we are only a simple step away from privatization, and you don't have to -

AN HON. MEMBER: (Inaudible).

MR. HARRIS: There are other ways to change the corporation in such a way that you can privatize it without having to come back to the House of Assembly. That is a second way. There may be many other ways. But let there be no mistake, Mr. Speaker, this is Hydro privatization, take two.

We have before us legislation that transforms all the basics of the Newfoundland and Labrador Hydro Corporation in such a way as to prepare it for privatization.

Now, the Leader of the Opposition talked about some hidden agenda that she thinks the government might have. I don't think there is any hidden agenda. I disagree with her. The agenda is not hidden at all. I think it is very transparent what the government is planning to do, when each and every section of this act is designed to facilitate the privatization of Hydro. Every single step is designed to facilitate the privatization of Hydro.

They are taking away the right of the Hydro Corporation to have first call on the hydro resource of the Province by repealing section 17 of the Hydro Corporation Act. By the repealing of section 17, no longer will the Hydro Corporation have the first right to develop and deliver hydro resources in this Province; just another company, the minister says. If the government wants them to do it, they will give them the rights; if they want to give it to someone else, they will give the rights to someone else, taking away the position of the Hydro Corporation as a public corporation acting in the public interest for the public benefit, the kinds of reasons why the people of this Province opposed this government when they tried to privatize Hydro last year. The very same reasons apply to this legislation here because all of the primary functions of a public Hydro Corporation are being ripped out of the guts of the Hydro Corporation Act. Every single primary function of a public corporation is being taken away.

The Lieutenant-Governor in Council is being replaced with a shareholder who is the Minister of Finance, one shareholder. Without coming back to this House, the Lieutenant-Governor in Council can issue directions as to how the Hydro Corporation shall raise any future financing, by issuing shares, and the Minister of Finance will be able to sell his shares. Perhaps the Public Utilities Board will have to have a look at it; I don't know exactly. We have not had time to analyze all the details of the legislation. But this is a set-up for one next step, which is to have the Minister of Finance and the Lieutenant-Governor in Council, or the Cabinet, make a decision to privatize Hydro. They are trying to accomplish by stealth what they were unable to do directly up front, open and when they said they were going to privatize Hydro the people said no. Now, they are going to do it. They are going to wait for an opportune moment, maybe they will wait for some trumped up financial crisis in the Spring of this year, to have another financial crisis that the Minister of Finance will orchestrate. We will say, Oh we have to lower our debt ratio. We have to have less reliance on debt, and since Hydro Corporation's debt is part of the public debt we can reduce that by unloading some of our debt and translating it to equity. We will issue a couple of hundred million dollars worth of shares. We will keep public control over it for now, but a couple of hundred million dollars will come into the public coffers and replace existing debt, and that will be the privatization of Hydro - the same way the Federal Government privatized Air Canada, a little bit at a time, CN the same way, a little bit at a time, 15 per cent, 20 per cent, another share offering just to soften people up for it, still in public control, except for the last time when they issue the final shares.

AN HON. MEMBER: (Inaudible).

MR. HARRIS: I have more to say.

AN HON. MEMBER: I doubt it.

MR. HARRIS: I have more to say, but I wanted to give members opposite a taste of what was to come. On that, Mr. Speaker, I will adjourn debate until tomorrow.

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

MR. ROBERTS: Thank you. I am glad my friend, the Member for St. John's East has more to say because he has not said anything yet.

We will now adjourn and I understand members, on all sides, are asked to join in a function which hopefully, not only will go more effectively than the House but will see us all in a little better humour then the hon. lady, the Member for Humber East, who we hope will be there, and even her learned soul mate, her fellow Scorpio, the Member for St. John's East.

Mr. Speaker, tomorrow we will carry on with this debate on the Electrical Power Control Act amendments. My friend, the Member for St. John's East can enthral us tomorrow afternoon at 2:30 p.m. or 3:00 p.m. and we will carry on from there. With that said, I move that the House adjourn until tomorrow Tuesday -

MR. TOBIN: At 2:00.

MR. ROBERTS: At two of the clock.

MR. TOBIN: At 2:00, in the p.m.

MR. ROBERTS: In the p.m. I keep waiting for my friend, the Member for Burin - Placentia West - once again he has let me down. It must be the fact that the gentleman from St. Barbe is sitting next to him.

I move that the House adjourn, Sir.

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