Province Législature Session Type de discours Date du discours Locuteur Fonction du locuteur Parti politique
Terre- Neuve et Labrador 38e 3e Discours du Budget 14 avril 1981 John F. Collins Ministre des finances PC
INTRODUCTION
Mr. Speaker, it is for me a very real honour to present to this Honourable House of
Assembly today this, the third Budget of the Peckford Administration. It is only a little over
two years ago that this Administration came to office and in that relatively brief period of
time, a new and vigourous leadership has brought Newfoundland and Labrador into an
exciting phase of carefully-planned economic focus, clearly and distinctly delineated, which
is permeating practically every aspect of social and economic policy bearing on the Province
and its people. That focus is strategically fixed upon the management of all our resources in
a manner which assures the optimal longterm benefit to the people of Newfoundland and
Labiador, and in turn to all the people of Canada.
Mr. Speaker, the attention of the world-wide business community today, is converging
upon Newfoundland and Labrador as never before in our history. We see meetings and
conferences being held to discuss the vast economic prospects of the Province. Respected
business and financial journals and various resource periodicals frequently print indepth
reports on Newfoundland and Labrador representing a broadly based, genuine interest in this
Province. Our shores are visited in unprecedented numbers by representatives of powerful
and wealthy industrial organizations. All this interest is not inspired by Government
handouts or tax concessions. Those days of the fifties and sixties are all behind us. The new
found interest is based on sharply defined business judgements and the fundamental
attractions of our natural resource base.
This new attention has brought with it a particular challenge as Government prepared
this year’s Budget and, Mr. Speaker, before getting into some of the detailed aspects of the
Budget for 1981/82, I would like to elaborate on this challenge, because it constitutes a point
of fundamental importance that made the development of the Budget an intriguing, if
somewhat difficult exercise this year.
Mr. Speaker, all Newfoundlanders are aware that the level of public services in this
Province does not in any way approach that in other parts of Canada. Indeed, this deep-
rooted problem was recognized at the date of Confederation, and Term 29 of our Terms of
Union was evolved with the avowed intention of closing the gap, at least with the Maritime
Provinces. Unfortunately Term 29 proved inadequate for that considerable task and we are
today still very much behind our sister provinces, even in the Maritimes, with respect to the
scope and accessibility of public services, such as Education, Health and Social Services, as
well as other desirable government undertakings.
In addition, we are now faced with the development of major offshore oil and gas
resources which are already placing demands on our public purse and human resources in
order to provide on-land infrastructure to accommodate the direct and indirect impacts of
those developments. Also special social programs may be necessary to ensure that the
unfavourable aspects of offshore oil and gas are minimized. Then there are, and will
continue to be, the necessary extra expenditures of a planning nature. All these will place
further financial requirements on the Province over the next decade.
At the same time, as we strive to take full advantage of these offshore opportunities we
should ‘now’ be putting in place certain oil-related infrastructures to ensure, for instance,
that our workforce has the right type and level of skills to meet the advancing challenge and
opportunities. It is an inescapable reality which we must face, that many of these demands
must be met at an earlier date than the actual receipt of the first direct oil revenues which
likely will not flow to the Province until approximately 1987.
Confirmation of the Province’s ownership of offshore oil and gas would leave
Newfoundland and Labrador in the same position as Alberta and Saskatchewan with respect
to ownership and taxing powers over the resource. We believe that is only fair and equitable.
Such are the circumstances currently confronting this Province and which make our right to
a fair share of offshore oil and gas revenues so self-evident,
Mr. Speaker, it must be the determination of all Newfoundlanders that the financial
benefits of offshore oil and gas be brought forward in time, to the extent feasible and
prudent, so that the provision of public services will match the additional associated
demands and so that other necessary pre-oil investments still can be made. On the other
hand, Government is resolved not to borrow rashly against future revenues and thereby
mortgage our children’s future. In this matter, utmost care and meticulous planning must be
the watchwords.
With these factors in mind, Government carefully analysed the possible role of future
Hibernia and other oil and gas revenues with respect to this year’s budget. In doing so, we
came to the conclusion that it would be premature to undertake expenditure programs based
on future oil and gas revenues at this time. We do remain convinced that the prospects for a
major commercial oil and gas development at Hibernia are very high. In other words, any
risk to the future revenue generating capacity of that resource does not appear to be geologic
in nature. However, the current posture of the Federal Government makes this Province’s
share of Hibernia oil and gas revenues difficult to determine with the level of confidence
necessary for definitive financial planning.
For instance, we have no guarantee that this Province will be treated in a manner equal
to the other provinces having ownership rights in oil and gas resources. We have been
offered with federal jurisdictional control “100% of provincial-type revenues”, which is less
than 25% of total government revenues under the best assumptions. In addition, we do not
have an agreement with the Federal Government on the well-head price for Hibernia oil and
gas. Further, we do not know how the federal tax regime will impact on Hibernia oil and gas
revenues and we have no certain knowledge as to how our direct Provincial revenues will be
treated in the future under the equalization formula, which is up for review in 1982. Hence,
our conclusion is that it is premature to launch new expenditure programs and to upgrade the
services to our people at this point based on future oil and gas revenues. It can be seen that
the expansion of services to the people of this Province is being restrained as a result of
federally- imposed uncertainties and it is clear that the Province’s tight financial position
would be alleviated with the resolution of these matters.
It is Government’s sincere wish that the Federal Government will cease its current
unilateral and restrictive approach to Federal-Provincial relations and return to a policy of
dealing fully and fairly with issues critically important to the economic well-being of this
and other provinces. The sooner this is accomplished, the sooner will we begin to play our
proper role in the Canadian Confederation as befits the extent of our natural resources and
the inherent quality of the Newfoundland people.
While it is true that we should not attempt to finance new expenditure programs until
such political uncertainties are resolved, Government will not, in the meantime, remain idle
in its forward planning and research. We will need, in any event, some suitable mechanism,
whereby we can bring future oil and gas revenues forward in time to achieve those
objectives it would be irresponsible of us to ignore. We also need such a mechanism to
ensure that a major portion of future revenues from oil and gas exploitation is invested in the
development of our renewable resources, particularly the fishery.
Mr. Speaker, it is in the context of the foregoing that I say that this budgetary process
has been for me an encounter of mixed emotions. The financial results for 1980-81 were
unexpectedly gratifying. However, the fact that the projected 1981-82 expenditure pressures,
both those of an inflationary nature and those for new services, exceed normal revenue
growth patterns are a source of concern. Nevertheless, given an understanding of our basic
financial position, I am encouraged that the development strategy adopted by this
Government when implemented, has inherent in it the solution to those concerns.
Accordingly, this Budget, in my view, does prove to be a source of satisfaction in that it
encompasses a responsible financial plan which will contribute to the strengthening of the
Province immediately whilst preserving the long-term prospects of all Newfoundlanders.
ECONOMIC REVIEW 1980-81
An assessment of Newfoundland’s economic performance in the past year can best be
made in the context of the international economic climate. During 1980 all western
industrialized nations experienced slowdowns in economic growth because of rising energy
costs — International oil prices rose by approximately 150% from early i979 to the middle
of 1980. The direct effect was to curtail the growth in consumption in these countries,
particularly with respect to imported goods other than oil. The demand for certain exports of
the Province was reduced significantly and in fact the performance of the Provincial
economy was held back principally as a result of a downturn in the international markets for
iron ore and fish exports.
The effect of compressed world markets was augmented by strikes in certain key
sectors of the economy during the summer of 1980, It was largely due to these factors that
the Gross Domestic Product of the Province declined in real terms by 3.7%. Nevertheless,
the underlying economic strength of the Province was demonstrated by an overall increase
in employment of 9000 in 1980. Moreover, aside from the particular circumstances of the
fishing and mining industries, evidence of strong performance was demonstrated in many
other key areas. The third major export industry in the Province, newsprint, experienced
strong markets and produced at near-capacity levels during 1980. Furthermore, while there
was a decline in wholesale and retail trade, there was strong growth in the business services
and personal service industries. The financial and real, estate sectors also experienced
increased volumes of business and employment.
The continuation of strong employment growth in 1980 must rank as the most
encouraging economic indicator for the year. This improvement is reflected in a drop in the
annual unemployment rate to 13.5 % from 15.4 % in 1979. For the second successive year
the number of unemployed people has been held in check while the proportion of the adult
population who have jobs has risen. The greatest contribution to increased employment has
come from the fish processing industry which experienced a number of new plant openings
and expanded production levels at existing plants. The full impact of this increase was not
felt in 1980 due to the losses in wages during the Summer’s strikes; in 1981 wages in the
industry will receive a substantial boost from the increased level of employment.
One of the most encouraging aspects of the 1980 economic performance was the growth
in investment by the private sector which amounted to 6.6% in real terms. This was
concentrated in manufacturing and housing sectors as well as in exploration for minerals and
hydrocarbons. Much of the manufacturing investment represented improvements in
productive capacity which will enhance productivity and output in succeeding years.
While private sector construction investment improved moderately during 1980, helped
by expanded housing and industrial building activity in the St. John’s area, Government
sector construction expenditures declined as a contributor to construction activity. This was
largely a result of continued reductions in Federal Government spending on construction
related projects. In total, Government’s share of investment has fallen from 36% in 1976 to
25% in 1980.
FINANCIAL PERFORMANCE 1980-81
Mr. Speaker, this Administration is firmly committed to sound financial management
principles. Over the past few years we have kept control of our current account budget,
stabilized the level of new borrowings for capital projects and just last year, we instituted a
further important financial principle through the commencement of pension funding.
The results of the 1980-81 fiscal year indicate that Government was successful in
achieving its overall budgetary objectives. While the Budget projected a net contribution
from current account to capital account of just over $12,500,000,1 am pleased to report that
by our latest estimates we are now projecting a contribution in excess of $25,000,000. Table
1 summarizes the financial position for 1980-81.
The significant growth in current account revenues over budget was due primarily to
favourable revenue adjustments totalling some $19,200,000 on account of upward revisions
in equalization payments and personal income tax. Provincial mining taxes were up some
$7,000,000 over budget. These favourable variances were partly offset by retail sales tax
receipts which were almost $10,000,000 short of the budgeted amount caused mainly by the
strikes of last Summer.
Expenditure variances on current account were due to a number of factors including the
need during the year to make an $8,000,000 investment in Marystown Shipyard Limited
which was not anticipated when the budget was finalized. Operating expenditures of
unanticipated Royal Commissions exceeded our estimates by approximately $900,000 and a
number of areas in our health care system exceeded budgeted amounts as a result of
increased patient utilization and higher than expected operating costs. On the positive side,
the most significant variance was a $6,800,000 adjustment in the budgeted payments under
the Electrical Power Control Act which resulted from a number of factors including
Governments successful renegotiation of ERCO contract.
Our net capital account program for 1980 was about $23,000,000 below budget. Almost
$7,000,000 in savings accrued under our program of payments to the Fisheries Loan Fund
and various boat construction bounties as a result of a lower than expected level of demand
and late approval of federal subsidies. Savings in the transportation sector were also
significant as a result of lower than expected bids on some projects and various delays
associated with the calling of tenders for certain projects. Savings of over $4,000,000 in
capital grants to the Newfoundland and Labrador Housing Corporation resulted from late
commencement of certain programs and reduced requirements from the Provincial
Government due to increased revenues generated by the Corporation.
The increased current account contribution to capital account along with the savings
experienced in our capital account program resulted in an overall reduction of over
$40,000,000 in our borrowing requirement. We had budgeted for a borrowing requirement
of $289,700,000 but our actual requirements declined to some $249,300,000.
ECONOMIC PROSPECTS FOR 1981-82
The new fiscal year is forecasted to bring a continuation of employment growth in the
Province and a stabilization of output in the export industries. The economy is expected to
complete its recovery from the impacts of last year’s work stoppages and the decline in
export markets should end during 1981 with the beginning of economic recovery in the
United States and Canada. Newfoundland will lead most Canadian provinces in economic
growth with an increase in Gross Domestic Product of 3 percent in real terms. However, the
full growth potential of the economy will not be experienced in all sectors because of slow
growth in the international economy and the deterrents inherent in some of the present
economic policies of the Government of Canada, to which I have already alluded in my
introductory remarks.
Employment growth in 1981 is expected to continue in the fish processing industry
while the activation of the newsprint mill at Stephenville will generate over 700 jobs in the
mill and woodlands operations. The outlook for the mining industry is for a repeat of the
1980 level of output for iron ore, coupled with stable or rising prices and increased
production for most other minerals. Service industry growth and retail trade activity are
expected to accelerate in 1981 as a result of increasing incomes in other sectors, notably
fisheries, and because of continued activity in offshore oil related services. In view of these
factors, unemployment is expected to decline further in 1981 to an annual rate of just over
13%.
Fisheries
Mr. Speaker, the fishery is without question the element in the economy of
Newfoundland and Labrador which has the most pervasive impact on virtually every coastal
community in the Province. The long term endurance of the industry and its self
regenerating capability have been demonstrated over and over again throughout our history.
Over the past year the fishing industry in the Province has weathered the storm of uncertain
markets created by the United States recession and lost fishing time resulting from labour
disputes. The endurance of this vital industry was exemplified in the fact that although there
was a decline in total fish catches from 570,000 metric tons in 1979 to 490,000 metric tons
last year, the total catch value at $157,000,000 was just $2,000,000 short of the 1979 level.
The 1981 outlook is for increased landings, forecasted at 585,000 metric tons with a
value of approximately $200,000,000. Product prices are expected to stabilize somewhat
during the early part of the year and possibly increase later as the United States comes out of
recession. Even assuming a modest recovery in the U.S. market, the value of fish products
should exceed $500,000,000 in 1981, even without large price increases, compared to
$390,000,000 in 1980.
Government’s plans for the development and management of the fishing industry were
clearly articulated in the Five Year Plan released last Fall. I would like to highlight the five
fundamental thrusts which will constitute the focus of our efforts in the 1981-82 fiscal year:
(i) As a top priority, we will concentrate on the committment to the improvement in the
quality of Newfoundland produced fish products. In this connection we will proceed jointly
with industry on an intensive quality enhancement program, in cooperation with the Federal
Government. As part of this effort, a pilot project will be undertaken in 1981 to introduce a
“point of sale” fish grading system.
(ii) We will be actively encouraging further processing of Newfoundland fish
products in our local fish plants. This effort will be concentrated in particular on improving
the viability of the seasonal plants for extended periods, thereby promoting increased
employment.
(iii) The Report of the Royal Commission into the Inshore Fishery will be
received later this year. That report will contain an objective assessment of the costs of
harvesting and processing, and will deal with the fundamental fisheries policy issues
confronting the industry and Government. We anticipate that this report will form the basis
of a better understanding amongst all parties involved in the industry which in turn will lead
to an improved climate for labour/management relations in the future. Government will act
immediately to enhance the future of the inshore fishery on the basis of the report.
(iv) An intensive effort will be launched to bring about improvements in the
technology used to harvest, handle and transport fish. The Department of Fisheries utilizing
professional expertise, will work with the fishermen to bring about reductions in the actual
costs of catching fish and improved handling on board vessels.
(v) There will be a continuation of Government’s capital works program to provide the
necessary infrastructure to support local fishing activities. This will include the provision of
financial assistance for ice-making and cooling facilities at selected locations, as well as the
continuation of financial assistance towards the costs of the installation of three-phase
power.With respect to the leasing of those fish handling facilities owned by the Province,
we propose, in consultation with the Fishermen’s Committees and the industry, to introduce
a new standardized leasing policy designed to bring the use of these facilities more in line
with private sector operations.
A major step towards the enhancement of the inshore fishery in Labrador will be
accomplished with the signing of a new DREE Agreement providing funding for a Coastal
Labrador Fisheries Development Program. This Agreement, which is in the final approval
stage will provide financing for various production projects as well as the construction of
new facilities and the upgrading of existing facilities at various locations on the Labrador
Coast.
The major reorganization of the Fisheries Loan Board has now been completed making
the Board more flexible and responsive to the needs of the fishermen. A new and important
aspect of the Board’s policy is that qualified buyers of fishing boats will in future, subject to
an appraisal by the Board, be able to purchase boats that are already built in anticipation of
market requirements by local shipyards rather than having to arrange in advance for the
Board to approve specific construction plans before the keel is laid. This will considerably
speed-up transactions between prospective boat buyers and the Board.
In anticipation of the development of petroleum fields such as Hibernia, the Province
will leave no stone unturned in 1981 and future years to protect the fishery which is our
most important renewable resource. In this connection a detailed research project has been
mounted by expert consultants to the Department of Fisheries to identify for continuous
future updating, all relevant information with respect to inshore fishing operations extending
from Point May at the foot of the Burin Peninsula to Cape Bonavista. This is the coastal area
most likely affected in the event of the release of oil residues or any accidental spills of oil.
It is important that all of us realize that our great fishing resources will remain the bulwark
of our economy long after the oil has been extracted and the wells have been capped.
Hydro-Electric Energy
The overall management of the hydro-electric sector of our economy has become a
critical factor in the economic and financial well being of our Province. The short-sighted
rationale surrounding the development of Churchill Falls and the consequent economic
losses resulting from the power contract with Hydro-Quebec is a misjudgement of the past
which will not be repeated as we strive to develop other hydro-electric potential. We have a
comprehensive strategy in place for recapturing benefits from the Upper Churchill and for
developing in a planned, rational and long-term manner the potential of the Lower Churchill
at Gull Island and Muskrat Falls.
Our strategy includes:
(i) Obtaining our legal rights to the low cost Churchill Falls energy for use in Labrador
and on the Island, with the major action being the introduction of the Water Rights
Reversion Act passed by this Honourable House in December of last year;
(ii) Altering the terms of the Churchill Falls contract by increasing the purchase
price paid for power and energy by Hydro-Quebec to a more realistic value;
(iii) Confirming our constitutional rights to a power corridor through Quebec for
the export of surplus Labrador energy;
(iv) Developing the Lower Churchill potential to aid in our own and the Nation’s
energy self-sufficiency program, and to establish energy intensive industry in the Province;
and
(v) Obtaining Federal Government support and co-operation for financial backing of an
electrical interconnection between Labrador and the Island of Newfoundland, carrying
power from Churchill Falls, Gull Island or. Muskrat Falls.
Newfoundland and Labrador needs a fully adequate supply of stably- priced energy,
both for domestic purposes and for industrial growth. To meet our needs it is clear that we
must access the existing and potential energy resources of the Churchill River. Government
is concerned that already 30% of our electricity is being supplied from oil-fired thermal
plants.
The demand for electrical energy continues to grow and the cost of providing facilities
for our isolated Island system is constantly escalating as well. In 1980, Newfoundland and
Labrador Hydro completed the $85,000,000 Hinds Lake project and by the end of 1982, it
will have the $155,000,000 Upper Salmon hydro project onstream. Unfortunately, with the
continuing uncertainties surrounding the timing of a start on a transmission line from
Labrador carrying Upper or Lower Churchill power, it is clear that a new generation source
will be required in the mid-1980’s.
The need for stably priced and renewable hydro-electric energy becomes more apparent
each day. Electricity costs will rise as a result of required new capital expenditures and will
be further aggravated by the growing oil costs for Newfoundland and Labrador Hydro.
Hydro must maintain a responsible financial position to meet its rising costs and to finance
the new energy requirements. Furthermore, when Labrador power is to be brought to the
Island, as it must be, then it can only be done with the confidence of the financial
community that our electrical energy sector is being responsibly managed. Indeed, along
with the requirement for Federal Government support for a transmission link between
Labrador and the Island, goes the complementary requirement that Newfoundland Hydro
demonstrate its financial ability to sign a take or pay contract for power from the Lower
Churchill Development Corporation.
The immediate prospects for a project release on Gull Island and Muskrat Falls are
uncertain, particularly given the preference for Gull Island and the need for a power corridor
to enhance our ability to finance this Project.
Nevertheless, Government in co-operation with the Government of Canada is
proceeding in 1981 with a $12,000,000 capital program protecting the transmission line
schedule and its critical component related to crossing the Strait of Belle Isle. The scope of
activities of this program, comprises a marine boring program, seismic sub-bottom profiling
and detailed evaluation of cable trenching and laying equipment. The project will be
undertaken by the Lower Churchill Development Corporation, funded jointly with the
Government of Canada with a budgetary requirement from the Province this year of
$5,100,000 in the form of an equity contribution.
In addition, an expenditure of $2,500,000 will be made at the Muskrat Falls site to
stabilize the natural dam which is such an important part of the development. The stability
of this natural dam is critical to the feasibility, of Muskrat Falls and the best technical and
engineering advice is that the marine clays which predominate in the Lower Churchill River
Basin have caused instability in the dam and the best long term measure of protection would
be to proceed with remedial measures.
Hydro’s ongoing capital program during 1981, in addition to completion of the Upper
Salmon project, includes expenditures on rural electrification of over $10,000,000, including
$5,100,000 for connection of communities presently served by diesel power to the main
power grid. In.total, a capital works program approximating $130,000,000 will be
undertaken by Hydro, employing 1100 persons at the peak of construction.
In summary, Mr. Speaker, Government is moving forward towards the ultimate
achievement of an electrical infeed from the Churchill River, pur top priority for use within
the Province is Churchill Falls power but we continue to move with determination in our
dealings with the Government of Canada for the attainment of a power corridor through
Quebec to enhance pur ability to finance the Lower Churchill Projects. In the meantime, we
will meet our energy demands in a financially responsible fashion both on the Island and in
Labrador and we will continue to upgrade and maintain a reliable electrical system not only
in the major urban centers but in the smaller rural communities of our Province.
Petroleum
Mr. Speaker, during 1980 the Province experienced an acceleration in the tempo of
offshore oil and gas activities and with it came an enhancement of the level of knowledge of
our hydrocarbon resources. The central focus of attention was the Hibernia structure which
has generated intense and widespread interest both in the context of its potential impact
upon the Province, and its significance in the overall North American energy scene.
Although delineation of the Hibernia structure has not yet been completed most recent
projections estimate that the Hibernia field contains 1.85 Million barrels of recoverable oil,
1.5 trillion cubic feet of recoverable solution gas and an additional 0.5 trillion cubic feet of
recoverable associated and nonassociated gas. It is further estimated that peak production,
from the Hibernia structure would be in the range of 200,000 to 300,000 barrels of oil a day
and 160 to 240 million cubic feet of gas per day. These estimates make Hibernia a giant
discovery by world standards. It is currently estimated to be the largest known oil field in
Canada. Of the more thari thirty oil fields in the North Sea, only two are larger.
Quite apart from the delineation drilling at Hibernia, the drilling of new wells on three
separate geological structures during 1980 has indicated further presence of oil and gas on
the surrounding acreage. The Ben Nevis well, although abandoned, produced oil and gas on
test and the structure requires evaluation to determine its commercial potential. A well at
South Tempest which is currently being tested, has flowed oil at rates of up to 1250 barrels
per day and gas at 4.9 million cubic feet per day. Electric logs indicate some 95 feet of
hydrocarbon pay in the South Tempest well. Similarly on the Hebron structure early drilling
results indicate the presence of some 250 feet of hydrocarbon pay but the well has not yet
been tested.
The 1980 exploration program involved a total expenditure by oil companies estimated
at $275,000,000. The net impact of this expenditure on the Provincial Gross Domestic
Product is estimated to be some $35,000,000. Employment generated by the offshore is
estimated to be approximately 900 in
1981, up slightly from 1979. Indirect employment created as a result of oil and gas
related activities is difficult to estimate. Nevertheless, it is apparent that the positive surge in
service sector employment was partially attributable to increased oil induced activity. It is
also very evident that an expansion in the business community is underway. For example, a
cursory examination of records of the Registry of Companies indicates that 194 new
companies were set up in Newfoundland during 1980 as compared to 44 in 1979. Many of
these were oil related enterprises created to provide a wide range of services in
transportation, engineering, research, supply base and ancilliary industrial support.
While company plans last Fall indicated that up to 12 rigs would be drilling off the
coast of Newfoundland and Labrador in 1981, many of the planned programs have been
cancelled as a result of the National Energy Program. At this point, it now appears that
Mobil Oil and Petro Canada will be operating offshore this summer using six rigs with a
total expenditure estimated at $375,000,000. In addition, expenditures on seismic programs
for 1981 are expected to be in the order of $35,000,000.
Although total expenditures for 1981 are expected to be higher than 1980, this results
from fewer, deeper, more expensive wells with the major portion of costs attributed to rig
charters. Consequently, the level of local participation in the provision of goods, services
and support facilities will remain much the same as in 1980.
While exploration work has continued Government has systematically established a
sophisticated petroleum resource management capability in the Petroleum Directorate. The
Province now has in place a core of staff engaged in a variety of professional disciplines:
petroleum geologists, petroleum and ocean engineers, economists and social, environmental
and industry specialists. This is the nucleus of our petroleum management effort which will
be expanded as dictated by the level of offshore activity. We are developing the capability to
carry out strict surveillance of operations and to appraise offshore installations to ensure
they are structurally sound. We are in the process of setting down rules for the industry
covering the design and construction of offshore systems. We are also putting in place the
technical methodology required to assess proposed field development plans and their
conceivable alternatives.
Mr. Speaker, the question inevitably arises as to where does the whole process now
stand and what can we expect in terms of the potential development of Hibernia in the
months ahead.
The next key step in the process will be the submission to Government by the operator,
Mobil Oil Canada Limited, of a proposed development plan which will include an
Environmental Impact Statement. The development plan must be filed in accordance with
guidelines established by Government under the Newfoundland Petroleum Regulations, and
the Environmental Impact Statement must comply with guidelines prescribed under the
Environmental Assessment Act. Draft guidelines for the approval of the Hibernia
Development Plan were released to the public in January to encourage public participation
in the approval process well in advance of official public hearings which will take place
when the development plan is eventually submitted. Public scrutiny of these draft guidelines
will aid in identifying and dealing with the sensitive development issues in the early stages
of development planning.
I cannot over-emphasize the importance which this Government places upon the
Development Plan assessment and approval process. It is through these processes that the
ultimate implications of the development on the social structure and the economy of the
Province will be analyzed and assimilated. This procedure is fundamental to our policy of
providing a structured resource management program which will ensure the smoothest
possible integration of petroleum related developments into the fabric of society in this
Province.
Under provisions of the Newfoundland and Labrador Petroleum Regulations, the
Newfoundland and Labrador Petroleum Corporation was established in 1980 to hold the
40% participation rights of the Province in oil and gas developments. The Corporation will
play a key role in the orderly development of the Province’s petroleum industry. Petroleum
and natural gas rights to certain open Crown acreage offshore have been transferred to this
Crown Corporation. These rights are located on the Grand Banks and the Northeast
Newfoundland continental shelf in the vicinity of the Hibernia discovery and encompass
some 9.6 million acres. This direct involvement by NLPC will ensure Newfoundlanders are
active first-hand participants in the development of our petroleum resources.
Mr. Speaker, we are determined that, through our affirmative actions, our people will be
given the opportunity to gain employment in these new industries. We recognize that it will
be necessary to provide a trained labour force to meet the requirements of the industry and
under the Petroleum Regulations the oil companies are contributing to the cost of upgrading
our labour force. To date, over $5,000,000 has been spent by the companies in on- the-job
training, support for the University and research institute programs, as well as social
economic and environmental studies. Total expenditures by the industry on these programs
will be in excess of $15,000,000 over the next five years under existing permit obligations.
As I outlined in my introductory remarks, Government itself is actively reviewing the means
whereby additional infrastructure for educational, training and other purposes, can be put in
place to ensure maximum benefits to our people from our offshore natural resources.
Mr. Speaker, the issue of jurisdiction over the offshore still remains outstanding
between the Province and the Government of Canada. This Government takes the position
that the constitutional review process is the most appropriate mechanism to bring about a
resolution of this critical question.
While the jurisdictional issue remains outstanding, it is unrealistic to attempt to fix the
timing of full scale development. Furthermore, the introduction of the Federal Energy
Program also complicates the matter. The main implications of the Federal Programs are to
increase the environment of economic uncertainty which already existed generally in the
petroleum industry, to decrease profitability to the companies and to increase the revenue
flows to the Federal Government from the resource.
Let us be clear about this — the new federal policy significantly alters revenue sharing
between the Federal Government and the Province in favour of the Federal Government.
The latest offer to the Province by the Federal Government to ‘solve’ the ownership
question would leave the Provincial Government with 25% of the total government take
with the Federal Government receiving 75%. This proposal demonstrates further the gross
inequality of treatment of this province by the Federal Government within the Canadian
Confederation. Recognition of the Federal Government of Newfoundland’s ownership over
the offshore, would see our offshore mineral resources treated no differently than if they
were onshore in any of the provinces of Canada.
The issues related to petroleum development are weighty and far reaching. The
temptation to sacrifice legitimate long term objectives and give up the struggle for equitable
treatment is constantly placed before us and can be expected to intensify. The short term
benefits of acquiescence, while far short of our ultimate entitlement, may from time to time
appear relatively attractive. However, this Government is firm in its resolve to obtain our
fair share from our resources, to control development within our economy and indeed to
retain the abililty to manage our future. Accordingly, we will stand by our policies to ensure
that the pace of development is consistent with our strategy of planned resource
management.
Forest Resources
Mr. Speaker, while 1980 was a year of reckoning for the forest industries in this
Province, 1981 will be a year of corrective action with the launching of long range programs
carefully co-ordinated to provide an integrated approach to forest management and
protection.
Members of the Honourable House of Assembly will recall that in my
1980 Budget I made reference to the appointment of a Royal Commission to
investigate the problem of the spruce budworm infestation and other issues challenging the
future of our valuable forest resource. Over this past year, the Royal Commission conducted
an exhaustive analysis of the wood supply and demand situation and the consequences of
the spruce budworm devastation. All the analysis conclusively pointed toward the need for
intensive forest protection measures to secure the long term viability of our forest industries.
On the basis of the recommendations of the Royal Commission, Government has adopted a
new integrated approach to forest protection and management. Accordingly, to combat the
increasing devastation of the spruce budworm, this Budget provides funding for a spray
program using the chemical Matacil. The 1981 Spray Program will be focused on
approximately 900,000 acres of productive forest land at a total cost of $3,600,000. The
expenses of the program will be cost-shared with the pulp and paper industry and the net
cost to the Province will be 33% of the total.
As announced in the Speech from the Throne, the Department of Forest Resources and
Lands is now in the process of negotiating with the Abitibi Price Company Limited, 20-year
Forest Management Agreements. These Agreements will replace the present 99-year licence
tenure system in effect with the Company for timber areas under licence from the Crown.
The objective of the Forest Management Agreement form of tenure is to place on the
Company, an obligation for proper management of the forest resources assigned to them.
Also, under the Agreements for the first time, the Company will pay stumpage fees to the
Crown. This revenue source will contribute towards the funding required in the future for
the forest management and silvicultural programs. The introduction of this management-
oriented tenure system is a milestone in the utilization of the valuable forest resources of the
Province.
The Department will also, in the coming months, be pursuing negotiations with the
Bowater Company toward the implementation of a similar tenure system for the limits of the
Company under Crown licence. Bo waters, like Abitibi Price, is presently operating under
99-year timber licences from the Crown.
Other components of the forest management and protection program include investment
in reforestation and other silviculture activities. This program, assisted by funds from DREE
under the Forestry Subsidiary Agreement signed early this year, includes planting of 2.5
million seedlings this Summer and preparation of planting sites for a much larger program
in 1982. Major emphasis is being placed on expanding the production of tree seedlings at
the Wooddale Nursery near Grand Falls. A number of co-operative silviculture projects with
the pulp and paper industry are also included in the program.
After a lull in the forest access roads program in 1979 and 1980, this program is being
expanded to the level of approximately $3,500,000 for this year under the Forestry
Subsidiary Agreement. To offset the forecasted wood supply shortages from traditional
sources in the future, a program of introducing harvesting technology for low volume forest
stands is included to improve the utilization of the forest resource. A number of initiatives
on exploring the feasibility of forest industry development in Labrador, technical assistance
to the sawmills, export of surplus dead and dying wood, research and development in tree
improvement and the updating and refinement of forest inventories are also being continued.
Another important component of the 1981 program is an expenditure of $4,700,000
under the Forest Economic Stimulation Program which will be directed at harvesting dead
forest stands and rehabilitating the forest sites in areas of high unemployment for the
purpose of creating additional jobs as well as restoring the resource base. The aggregate
impact of all aspects of the 1981 forest management program at peak employment is
expected to total some 500 jobs beyond last year’s level.
With respect to the newsprint industry, the outlook for 1981 remains positive and the
two established mills have embarked upon a major upgrading and modernization program to
increase productivity and enhance their longer term viability. Capital expenditures of
roughly $50,000,000 are anticipated in 1981 alone.
Department of Development
In August, 1980, the Department of Development was formed with responsibility for
industrial development and services, tourism, and housing and with a renewed mandate with
regard to economic development in our Province. The Five Year Plan released last Fall
emphasized Government’s commitment to the promotion of economic development and
growth in a manner consistent with our resource strategy and this Budget reinforces that
commitment. During 1981-82, the Department will complete the organizational
restructuring necessary in order to meet the challenges before it and will embark upon a
number of the crucial initiatives identified in the Five Year Plan.
The Department of Development in consultation with other agencies of Government is
currently in the process of finalizing a science policy for Government’s consideration and,
during the year, will be pursuing various aspects of productivity improvement. For example,
the Department will be taking action aimed at establishing a climate favourable to increased
secondary processing of our resources. It is intended to implement fully the Local
Preference Policy with respect to procurement of goods and services by government
departments, agencies, and institutions. This policy will have a positive effect on the
viability of additional local processing of goods and on the development of our local base of
professional expertise.
Our policy for withdrawing from direct Government involvement in industrial
enterprises, where it is in the interest of our Province to do so, will continue to be an
important element of our strategy. In this regard, Government expects that the sale of
Burgeo Seafoods Limited to National Sea Products Limited will be concluded early in the
fiscal year.
Government was encouraged, as I am sure all Newfoundlanders were with the
successful probe of the bulk carrier ‘MV ARCTIC’ into Lake Melville in late February
/early March of this year. This has taken us a giant step closer to demonstrating the viability
of an extended shipping season into the Lake and to making industrial development in
central Labrador a reality. These efforts will continue during 1981-82 with an enlarged
program of ice management studies and other initiatives at a total cost of $800,000 aimed at
attracting industry to the area.
The development of offshore oil and gas will place considerable strain on our Province
both socially and economically. The Department of Development has already concluded a
preliminary analysis of potential sites considered appropriate for various shore-based
activities related to this development. This exercise will be refined as offshore activity
increases.
Marine Servicing Capability
Mr. Speaker, at a time when marine activity is increasing due to a rejuvenated fishery
and offshore oil and gas exploration, it is critical that the Province have the marine servicing
capability available to meet the demands of both industries. It is this Government’s view
that both the Newfoundland Dockyard in St. John’s and the Marystown Shipyard will be
complementary elements in providing this service and both must be strengthened to ensure
their viability to meet the demands.
Within the last month work has commenced on the design of a marine elevator and
related vessel repair and servicing facilities at the Newfoundland Dockyard in St. John’s.
This project had previously been approved by the Government of Canada to be financed
with Federal support. It was then shelved by the Federal authorities and a prolonged period
of procrastination ensued. In our view, the development of this facility is vital to the
enhancement of the port of St. John’s as a marine service center and this Administration also
considers the revitalization of the Newfoundland Dockyard to be an essential component to
complement our marine resource industries. It was for these reasons that the Province agreed
with CN to provide the necessary financial support to facilitate the development of the
project.
The new facility (the ‘Synchrolift’) will enable the Dockyard to increase its ship repair
capacity and flexibility and will create 150 to 200 new jobs, in addition to maintaining the
present work force, which otherwise would be in jeopardy. The design stage is now well
underway and provided the project cost is within the expected range, it will then continue
into the actual construction phase later this year. The Province has agreed to assist the
project financially by providing a loan of $6,500,000, by paying interest during
construction, and by subsidizing C.N.’s interest costs. The total cost to the Province is
expected to be approximately $10,000,000. A provision of $5,000,000 has been made in this
Budget to cover the expected outlay in 1981-82.1 must state that Government fully expects
to recover most, if not all, of its investments in the Synchrolift over a period of time. In the
meantime, of course, the economy will benefit significantly from the increased activity and
employment.
Government recently received the Report of the Royal Commission of Enquiry into the
Financial Losses of Marystown Shipyard Limited. The Report dealt in depth with the
internal and external problems associated with the Marystown Shipyard and, to some extent,
with the problems facing the shipbuilding industry in general.
The Report pointed out that the Shipyard has incurred cash operating losses since 1967
of $32,000,000 and has been supported by operating grants from the Province during that
period of $13,500,000 and an equity infusion by the Province in March 1981 of $8,000,000.
The March infusion, which helps to alleviate the under-capitalization mentioned in the
Report, has been coupled with a restructuring of the Company’s debt which more
appropriately secures its loans by its assets and establishes repayment more in line with the
life of the assets.
Other steps have been and are being taken by Government and the Shipyard to improve
the situation in Marystown. A four-pronged effort is being made to set the course for the
future activity of the Corporation. That effort includes:
(i) the development of a standard hull design for a trawler and an offshore supply
vessel;
(ii) the pursuit of possible divestiture of the Shipyard to a private sector concern
with marketing, research and development expertise; any such eventual divestiture to be
undertaken only if continued operation of the Shipyard is assured;
(iii) the evaluation of various shipbuilding financing packages by the Province;
and
(iv) an effort to convince the Federal Government to provide a more generous
subsidy program to Shipbuilders in Canada, which would be more in keeping with that
provided by other countries.
It is Government’s hope that these efforts will enable the Shipyard to continue its vital
activities as a shipbuilding and ship repair facility, contributing as it does to the economy of
the Burin Peninsula.
The Come By Chance Refinery
In my Budget Speech last year I spoke of the trying deliberations that this
Administration had undertaken in an effort to bring about a reactivation of the idle bankrupt
refinery at Come By Chance. I indicated at that time that, as the first positive step toward
reactivation of the Refinery, Petro-Canada had just signed a Letter of Intent with the
Refinery’s Receiver wherein Petro-Canada had agreed to undertake various economic and
technical feasibility studies in order to ascertain whether the purchase and repair of the
Refinery represented a viable venture.
Petro-Canada subsequently concluded various technical studies at an approximate cost
of $1,000,000 the results of which were very positive. In November 1980 the Corporation
waived a right which it had under the Letter of Agreement to terminate the Agreement if it
felt that it was not feasible or advisable to repair the Refinery. In addition the Trial Division
of the Supreme Court of Newfoundland and the Newfoundland Court of Appeal have now
given their consent to the proposed conditions of sale of the Refinery to Petro- Canada and
this obviously constitutes a further positive development,
Mr. Speaker, Government is, therefore, very encouraged by the progress which has been
made over the past year and we are receiving every good indication that Petro-Canada
continues to focus its efforts on finalizing the purchase of the Refinery with the objective of
eventual reactivation of the enterprise.
The Stephenville Newsprint Mill
The painful economic saga of Labrador Linerboard Limited at Stephenville will truly be
put to rest next month with the opening of the now converted newsprint mill owned by the
Abitibi Price Corporation. The reactivation of this modern newsprint facility by private
enterprise, and indeed one of the most respected corporations world wide in the industry,
will contribute to employment and serve to strengthen the economic base of the Province in
a very real way.
The Stephenville mill will add 150,000 metric tons to the Province’s annual newsprint
capacity. The mill itself will employ some 220 people while approximately 500 loggers will
be engaged in wood operations.
Industrial Power Contracts
In the past, one of the areas of weakness in assessing our management of the electrical
energy sector was the subsidy required from Government for industrial customers. This
subsidy was growing at an unacceptable rate and Government was determined to reduce the
trend. In November of 1980, an agreement was reached with Erco Industries to revamp the
remaining 12 years of their power contract with the result being that the power rates rose
from 2 mills per kilowatt hour in 1980 to 8 mills per kilowatt hour in 1981 and rising to in
excess of 30 mills per kilowatt hour by 1993. The upward trend in this subsidy has now
been reversed and in the years to come we expect it to be a smaller and smaller percentage
of the Provincial budget and a smaller percentage of Newfoundland Hydro’s operating
revenues. Discussions are underway with Price (Newfoundland) Pulp and Paper Limited and
Bowater Newfoundland Limited to modernize their existing power contracts as well. In the
1981-82 Budget the payment to Newfoundland and Labrador Hydro under the Electrical
Power Control Act is estimated at $18,000,000which is $4,500,000 less than it would have
been had the ERCO contract not been revised. It is estimated that the savings to the Province
over the remaining life of that particular contract will amount to in excess of $130,000,000
in reduced subsidies.
In summary, Mr. Speaker, from the foregoing, it can readily be appreciated that the
Peckford Administration has moved vigorously and innovatively forward to solve the more
serious defects in our Provincial industrial strategies inherited from past administrations. We
have every intent to continue solving what have been termed ‘generation issues*, Mr.
Speaker, not just the current, short term problems that arise day by day. We remain
determined in no uncertain terms to persist in these endeavours until at last our Province has
thrown off the restraining bonds which had held us back in the past and we achieve our due
as a full-fledged ‘have’ province within the Canadian Confederation.
BUDGETARY POSITION 1981-82
Overview of Position
Mr. Speaker, Government’s overriding commitment to the principles of responsible
financial management, forms the cornerstone of the financial measures contained in this
Budget. In pursuing this commitment, we were initially confronted with the constraining
forces of escalating inflation and a revenue growth pattern which lagged behind the increase
in ongoing expenditure requirements. While Government wrestled with the double barrelled
effect of these forces, it was also necessary to address the many legitimate priorities for the
expansion of public services. These factors formed the context for the challenging and
difficult decisions which comprise this Budget.
I am pleased to report Mr. Speaker, that notwithstanding the necessity for tough
decisions, we have successfully arrived at a sound budgetary position for the coming year,
in line with our overall financial objectives. In summary, we are projecting a net
contribution from current account to capital account of just over $10,400,000 while our net
capital account expenditure program is forecasted to total $156,507,000. Table II further
summarizes the 1981-82 budgetary position:
It was necessary, throughout the budgetary process, to review existing programs in
depth and to exercise restraint wherever possible to contain expenditure growth. Financial
constraints have also necessitated that certain of our desired new program initiatives must
await the expansion of our fiscal capacity. In budgeting for an expenditure growth rate of
11.8%, we are satisfied that we have provided for a responsible level of programs for 1981-
82 and that any further cut back in expenditures would result in unacceptable reductions in
the level of Government services.
Fiscal Measures
Mr. Speaker, the revenue base of the Province does not automatically escalate in direct
proportion to the rate of inflation and this was exemplified at the outset of this budgetary
exercise when we were projecting an overall growth in revenues for 1981-82 of 8.5%. It is
significant to note that around one half of our current account revenues come from federal
sources for which the rate of increase is largely influenced by general trends in the Canadian
economy. In this respect, I would point out that equalization revenues are forecast to grow
by 8.7% in 1981-82 over the adjusted level of payments received in 1980-81.
Various provincial revenues are also demonstrating relatively slow growth due in part to
the fact that many are based on fixed charges rather than percentage rates. Accordingly, it
has been necessary to institute the following fiscal measures to bring the revenue growth
rate up to an acceptable level:
(i) The tax on gasoline and diesel fuel will be changed from a fixed charge to
percentage rates. Effective immediately, the new tax rate for gasoline will be 22% which
will mean an immediate increase of approximately one cent a litre. The new tax rate for
diesel fuel will be 26% for an increase of approximately two cents a litre. Under this
arrangement the Province’s revenue base from this source will be adjusted periodically in
proportion to price changes. This measure is expected to bring in an additional $8,000,000
in 1981-82.
(ii) Tobacco tax will be increased immediately by one half cent per cigarette and
an equivalent amount on cigars and tobacco. In the future, this tax will be adjusted quarterly
on the basis of escalations in the Tobacco Products Price Index. These increases are
expected to yield approximately $7,000,000 in 1981-82.
(iii) Drivers’ licence fees will be increased by $2.00 a year. Registration fees for
domestic motor vehicles with a weight of less than 1814 kilograms will be increased by
$8.00 a year and those in excess of that weight will be increased by $15.00. There will be
varying increases, proportionate in nature, applied to the registration of commercial vehicles
and motor cycles. These increases will become effective May 1, 1981. These measures
together will yield an additional $4,000,000.
(iv) Government has requested the Newfoundland Liquor Corporation to generate
an additional $4,000,000 in revenue for the Province beyond their initial projections for the
year. This will result in immediate increases in the prices of wines, spirits and beer. The
actual price increases will vary between products, taking into account as well, the escalation
in manufacturers’ prices and the federal excise tax.
With these fiscal measures, Government will attain a revenue growth rate for the year of
slightly over 10%. Mr. Speaker, in accordance with the basic commitment of the Peckford
Administration, there will be no increase in the taxes levied under either the Retail Sales
Tax Act or the Personal Income Tax Act during the coming year.
Mr. Speaker, the primary function of Government is to provide public services.
Governments are elected by the people for this purpose and must remain conscious of their
responsibilities to provide the broadest possible spectrum of public services within the
available financial resources. Through the provision of these services in such areas as health,
education and the various social services, the Province is able to create and foster the
atmosphere in which the people of the Province can develop and prosper. This personal
growth can then spawn the attitudes and abilities needed to develop our non-human
resources in such a manner as to ultimately benefit the people and enrich the quality of life.
In fact, the Government recognizes that it is only with the ingredient of a strong, highly
motivated population that the development of our resources to their full potential can occur.
The Peckford Government has exhaustively reviewed our expenditure programs to
ensure that the maximum service is being provided. Accordingly, Mr. Speaker, it is with
great pride that I would like to announce now the outline of our new Human Resource
Development Plan comprised of the following major components.
Education
One of the most basic, but important, responsibilities of Government is the provision of
education services to the population. Through educational opportunities, each of us is
assisted in reaching his own individual potential and collectively, society as a whole is
likewise able to develop and prosper.
I am pleased to report that the planning and in-service training has now been completed
for the introduction of a reorganized high school program into the Province’s school system
in September of 1981. Government will be making provision for the initial implementation
phase this year, and for the additional phases in the years 1982 and 1983. The result of this
initiative will be a completely reorganized high school program with Grade XII as the new
graduating year for all high school students in the Province. This initiative can be considered
as one of the major improvements to take place in our education system in the past ten
years. The result of the introduction of this program will be an improved educational system
generally, and the graduation from our secondary school system of an individual much
better equipped to cope with life in the working world, or pursue further educational
opportunity.
Government will again be making improvement to overall teacher allocations for the
school year 1981-82, thus providing an additional 107 teachers beyond the number that
would have been provided under the previous allocation formula, even though the pupil
population has declined by approximately 2000 pupils since last year. Included are
allocations designed to enable the individual school boards which are experiencing the
greatest decline in enrollments to maintain adequate numbers of teachers for the programs
they offer. Government is fully committed to providing an adequate pupil/teacher ratio in
future years to enable school boards to cope with the demands of the reorganized high
school program.
In the area of operational grants to School Boards, Government is introducing
assistance to School Boards on a cost-shared basis for the implementation of energy-saving
initiatives in the operation of school facilities.
Government will be providing $10,800,000 in 1981 for ongoing school construction
needs. In addition, as a result of the reorganized high schlool program, a broadened program
of school facilities construction will be commenced. A program specifically designed to
improve our fac.Iities to the point where they will be fully adequate for the reorganized high
school program will be undertaken over the next three years at a total cost to Government of
$20,300,000. The addition of facilities to our system from this initiative will be of great
benefit to all areas of the primary and secondary system. In 1981, some $5,000,000 will be
provided to commence this program. This amount is in addition to the $10,800,000 being
provided for ongoing school construction needs and will bring the total Government
expenditure in this area to $37,000,000 in 1981, when coupled with existing school
construction commitments.
Mr. Speaker, I am. pleased to announce on behalf of Government that funding is
provided in the 1981 Budget in order to commence planning on a new School for the Deaf
to replace the facilities now in use. It is fitting indeed, that during this Year of the Disabled,
Government finds itself in a position to commence this very worthwhile project.
Government will also be continuing its efforts to encourage educational opportunities for the
handicapped and, accordingly, will provide additional funds to school boards this year for
the education of the handicapped.
The need for highly trained Newfoundlanders to meet the challenges of future
development efforts continues to be a priority of the Peckford Government, and funds for
the updating of training programs, and the expansion of programs put in place last year, will
be provided to support this most important endeavour. This funding is allowing more
Newfoundlanders to undertake training in such areas as computer technology and petroleum
technology which will enhance their opportunities for employment in offshore oil and gas
development. In addition to this, funding has been provided for the updating and broadening
of various marine related technologies. Initiatives are being taken to update and expand
electronics and communications courses at various training institutions throughout the
Province, and a special effort is underway to update and improve our training with respect to
helicopter servicing.
Social Services
Mr. Speaker, I am pleased to announce on behalf of Government that effective May 1st,
1981, Social Assistance rates will be increased by 10%. This increase is necessary in order
to assist with the increasing cost of living for those citizens who have no other means of
support. In addition, Government will be extending Social Assistance coverage for long
term assistance recipients to include the provision of eye glasses for those in need. This
represents a much needed improvement in our current system and this new program will be
introduced effective July 1, 1981.
Government is introducing a 15% increase in regular foster home rates and child
welfare allowances in 1981. In addition, the existing clothing allowances will be
significantly improved. Funding has also been provided for the establishment of four new
group homes in 1981-82. This initiative is consistent with Government’s policy of de-
institutionalization, and will provide a means of caring for children in a homelike setting.
The Budget also provides new funding aimed at improving the social and cultural
opportunities available to children in care of Government. The provision of this funding will
ensure that children in care are not deprived of opportunities available to children living in a
normal home setting. Mr. Speaker, Government is justly proud of the overall improvements
that are being made in this program.
An expanded program of community development projects will be undertaken by
Government this year. This program has the double-edged effect of providing useful
community facilities, while at the same time creating a vehicle through which chronic Social
Assistance recipients can be reintroduced to the workforce. Government is pleased with the
long-term success which has been achieved to date in this program.
Mr. Speaker, the provision of services to senior citizens continues to be an area of
concern to Government. The State has recognized responsibilities in this area and
Government is now engaged in a number of studies toward the development of an
appropriate long term plan for the provision of services to the senior citizens. These studies
will establish, in particular, the appropriate type and location of facilities that will be
required over the next several years to meet the increasing needs of our senior citizen
population. Government will continue to address this area with keen interest.
Additional funds are also provided in this Budget to assist in addressing problems
relating to alcohol and drug abuse and Government will be developing new initiatives with
respect to this important area of concern.
Health
Government’s previously announced program on hospital construction will continue in
1981, with funding for construction starts to be provided for the new clinic at Forteau and
the new Channel Hospital. Planning for these facilities is now virtually completed, and
construction will be underway this year. Funding has been provided in the 1981 Budget for
a start on the new hospital to serve the Clarenville area. This facility will have a total cost of
$15,000,000 and will be completed in 1985. These efforts are seen by Government as
critical to establishing an appropriate long term plan for the efficient delivery of health care
services to our people. Funding is also provided to continue with ongoing improvements to
existing hospitals. Government will be continuing with further hospital construction efforts
in future years.
Government is pleased to announce that during 1981, the coverage of MCP will be
extended to include optometry services provided by qualified optometrists. This program
will operate on the basis of one payment for each individual per annum, and will be of
significant benefit to the general population. At the present time, individuals who require
optometric examinations are required to pay the appropriate fees to the optometrist. The
extension of MCP coverage to this item will ensure that no individual requiring eye
examinations will be prevented from access to such examinations for financial reasons. This
program will be effective October 1st, 1981.
Last year, Government introduced a transportation assistance program to assist
residents, particularly residents of Labrador, with the very high cost of emergency air
transport to major medical centers. Under the existing program guidelines, Government
subsidizes the cost of emergency airlifts while patients are subject to a $50 co-payment fee.
Government has decided to extend this program to include non-emergency high users such
as dialysis patients. Under this very worthwhile program, Government will reimburse the
patient for 50% of transportation costs incurred in excess of $500 per annum.
Administration of Justice
There will be further advances in the administration of justice over the coming year,
especially in the corrections area. Phase I of Her Majesty’s Penitentiary will be completed
shortly and is scheduled to open early this Fall. This will permit the closing of the old
Centre Block. Funds have been allocated to permit the planning of renovations to the Centre
Block in order to provide for inmate rehabilitation programs.
The third floor of the West Coast Correctional Centre has recently been completed and
will be fully utilized this year. Construction will also be completed this Fall on the Women’s
Correctional Centre in Stephenville.
The regionalization of the correctional program of the Department of Justice will
continue this year, with the completion of the Clarenville Correctional Centre in the late
Fall. I am pleased to announce that the construction will commence this Fall on the Bishop’s
Falls Correctional Centre and that $100,000 has been allocated this year for planning and
site acquisition for a Labrador Correctional Centre to be located in Happy Valley/Goose
Bay.
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These steps will serve to eliminate the severe problem of overcrowding in many of our
lockups and will permit Government to close-out many of the old outport gaols. The result
will be a modern penal system providing a humane and rehabilitative approach to those
convicted of criminal activity and permitting many prisoners to serve their sentences in the
area of the Province where they reside.
The budget provides for the expansion of the Royal Newfoundland Constabulary into
the Mount Pearl area. Also, the program of training police recruits at Holland College in
Prince Edward Island will be continued. In addition, a formal training program for
correctional officers will commence shortly in St. John’s, again in consultation with Holland
College.
Consistent with the five year plan for the Department of Justice and the recent Supreme
Court decision, the regionalization program for Crown Prosecutors will be accelerated over
the coming year.
Government is also in the process of reviewing both the level of fees charged for the
registration of deeds and other documents as well as the level of fines imposed under the
Highway Traffic Act for various violations of that Act. It is our intention to introduce
increases in these respective areas, the exact details of which will be released later. It is
significant to note that these various fees and fines have been unchanged for a number of
years.
Municipal Affairs
In 1980-1981, the new Municipal Grants System was instituted to encourage
municipalities to foster local autonomy and a greater level of fiscal responsibility.
Government is pleased with the response from municipalities which has been most
encouraging, and the number of municipal councils requesting the implementation of
property tax is increasing.
During 1981, Government will continue its ongoing program of providing water and
sewer facilities in the St. John’s urban region. A total expenditures of $4,565,000 is planned.
There are approximately 4500 volunteer firefighters in Newfoundland and Labrador
who give freely of their time and services in the interest of their respective communities. In
1981, Government will honour its previous commitment to provide province-wide insurance
coverage for all volunteer firefighters. Under this program, all firefighters will be covered
by a basic amount of $100,000 in life insurance coverage while engaged in firefighting or
training activities. In addition, disability insurance will be provided, along with guaranteed
income benefits to dependents. This action on the part of Government will be a tangible
recognition of the contribution being made by volunteer firefighters throughout our
Province.
Transportation
Mr. Speaker, Government is providing additional funding in 1981 to improve the level
of maintenance activities now carried out on our Provincial highway system. We intend to
continue to provide additional funding in this area to the extent our financial resources will
permit. Last year’s Improvement and Construction Program, with respect to our provincial
roads system, will be expanded this year as well to an expenditure of $19,000,000. A new
surface replacement program will also be initiated, the purpose of which is to replace the
surface of existing roads before they become deteriorated to the point of needing complete
rebuilding. This program will add years of additional useful life to our roads, and reflects
Government’s interest in providing a proper transportation system at optimal long-run costs.
Mr. Speaker, I am pleased to announce that Government has included funding in the
1981-82 Budget to institute a passenger ferry service between the community of Gaultois
and the Newfoundland mainland. The introduction of this service will provide a permanent
transportation link between the residents of Gaultois and the mainland.
Mr. Speaker, the Province is continuing to negotiate with the Federal Government,
through Transport Canada, for a continuation of the three-year cost-sharing agreement that
saw some $60,000,000 spent on improvements to the Trans-Canada Highway. The need to
improve many sections of the Province’s Trans-Canada Highway has been accepted by the
Federal Government but to date no new agreement to continue the program has been
concluded.
Other Initiatives
Mr. Speaker, the 1981 Budget contains a number of other important initiatives which I
would like to highlight at this time.
An amount of $1,000,000 is included in the 1981 Budget to commence the new public
building in St. John’s, which will replace more costly rented accommodations now in use.
This new building will provide space for Government offices at a reduced long-run cost
from the rental or lease approach and, at the same time, will result in more convenient and
improved service to the general public.
Government has embarked on several fronts to improve the operational and financial
management of the Public Service and control costs wherever possible. I am pleased to
report that these efforts will be sustained and expanded in the coming year, and will include
the following:
(1) Pending the imminent passage of legislation, Government will be establishing an
Office of the Comptroller which heretofore was considered in the position of Deputy
Minister of Finance. The separation of these two roles will enhance Government’s ability to
practice sound financial management.
(2) Government’s budgeting system has experienced significant changes this year. A
pilot project using the zero-base budgeting approach was implemented in four departments.
While it is somewhat premature at this point to do a complete evaluation, it does appear that
our exposure to Zero Base Budgeting was highly successful and, as a result, Government
will be seriously considering continued involvement with this management tool.
(3) Financial restraint will continue to be applicable with respect to all aspects of
operation of the Public Service, including the provision of new positions, the allocations of
funds for public service travel, and other housekeeping expenditures.
The application fee for crown land applications is being increased from $1.00 to $10.00.
This change to the fee structure is necessary to discourage excessive applications that are
being made by some individuals. These applications tend to slow down the overall
processing of valid applications.
The fee applicable at the time that a crown land lease or grant is actually issued is being
increased from $10.00 to $100.00 in order to provide for a more reasonable recovery of the
costs associated with these transactions.
Financial Requirements
The total financial requirements for the 1981-82 fiscal year will be $259,017,000. By
comparison, the revised total financial requirement for 1980-81 is $249,333,000. As
indicated previously, the revised requirement for 1980-81 is considerably less than the
originally estimated $289,672,000. The following Table shows the total financial
requirements for both 1981-82 and 1980-81 (Revised):
The net requirement for capital account shows an increase of $26,412,000 over 1980-81
revised. Non-budgetary items, consisting mainly of debt repayment, are $31,860,000 lower
than last year, while the contribution from current account is $15,132,000 less than 1980-81.
The net effect is a financial requirement in 1981-82 of $259,017,000.
As in previous years, the Province plans to meet its financial requirements by
borrowing in the Candian and International capital markets and from the Canada Pension
Plan.
CONCLUSION
Mr. Speaker, while pursuing our long term development strategy, we have been forced
to struggle with the immediate budgetary pressures of inflation, requests for the expansion
of Government services and less than desirable revenue growth trends. The challenges have
been real and demanding - as they were in my previous Budgets. However, we have
successfully achieved the overall budgetary objectives established in my first two Budgets
and I am confident that we will again adhere to our Financial Plan in 1981-82. The
demonstrated budgetary control of this Government, coupled with the initiation of pension
funding and the stabilization in real terms of our borrowings for capital projects will all
contribute to the strengthening of the financial position of the Province.
We have wrestled with the mistakes of the past and achieved success. The ERCO
contract and the Stephenville Mill are clear examples of that success. While the problems of
the Upper Churchill are more complex, we are confident that Government’s recent initiative
on the Water Rights Reversion Act will, in due course, result in an equitable resolution of
that issue for the Province.
Mr. Speaker, it is clear that we have the resources and we have the interest of business
to develop them. The challenge to this Government is to ensure that they are developed and
managed for the optimal long term benefit of our people. The resources are massive and
hold within them the prosperity of generations of Newfoundlanders and Labradorians yet to
come. This Administration’s approach to our resources is premised upon the concept of
equitable treatment by the Government of Canada to that accorded to other provinces in
similar circumstances. The question of jurisdiction between the Province and the Federal
Government is critical to the design of our economic future. But, Mr. Speaker, it will be
resolved. The resolution may take a little longer than some of us would like in the short
term. However, given the life span of our resources and the magnitude of the development
implications, the pace of activity during the resolution process will, in the long term, be
regarded as a relatively brief but strategic pause in a carefully planned development policy.