As a Crown corporation, NLDC was able to form partnerships with community organizations and the federal government to plan and build the Enterprise Network service. In 1988 the Atlantic Canada Opportunities Agency supported the planning and initial pilot development of the Enterprise Network, and in 1991 a special Cooperation Agreement was signed by the federal and provincial governments to support the activities of the Enterprise Network.
Unfortunately, support for this initiative was later abandoned by the Wells administration. Nevertheless, the pioneering development work undertaken in Newfoundland and Labrador was followed closely by others and emulated in many other international jurisdictions.
There were other actions involving significant investments, including ongoing support for the Bay D’Espoir aquaculture program; support for our first gold mine at Hope Brook; tens of millions of dollars of federal-provincial money for technology upgrades to the two paper mills; support for the Sprung Greenhouse project; over $100 million in loan guarantees almost exclusively for the fish processing industry; tens of millions of dollars to a Rural Development Authority, which provided loans and grants for small rural-based businesses in forestry, farming, crafts; and leadership support through the establishment of Rural Development associations throughout the province.
Perhaps three major projects speak most dramatically to both “those immediate on-the-ground issues” and why through them we could see even more clearly why we had to push the big-three agenda, come what may.
COME BY CHANCE OIL REFINERY
THIS TROUBLED PROJECT CAME as a result of Joey Smallwood’s “industrialize or perish” philosophy. When I came to power it was mothballed, and I had said during the campaign that I would see if something could be done to get the project going again. At the time it was the largest bankruptcy in Canada’s history. I was able to get Petro-Canada, then a federal government–owned company, to pay for the mothballing costs. But this was for a finite time. I was trying to find someone who would take the place over and make it work. An almost impossible task! I am sure at the time there were very few who thought it was really possible, let alone probable. At least that was the information coming back to me. Additionally, the task was not made easier in the fact that most of the studies that had been done to assess the possibility of reopening the refinery all showed that it would take well over $100 million to rehabilitate the place. This has troubled me to this day, since it seems obvious that this was an inflated figure deliberately used to dissuade those who might have an interest in seeing Come By Chance reopen. The politics of refining oil in the Atlantic provinces during this time was very intense, showing as it does the lengths to which existing operators were prepared to go to protect their present position in the marketplace.
There had been some Middle Eastern interest with local Newfoundland business involvement, but this turned out to be a false attempt: while they professed private investment, with no public funds, subsequent meetings with them revealed a requirement for substantial public funds. But when all seemed lost on this venture and equipment was on site to begin dismantling (the mothballing time was at an end), there came an inquiry from a group in Boston who had read a news report in the Boston Globe about the refinery. This was Cumberland Farms, a company owned by the Haseotas family (of Greek extraction) who began with one farm and a cow and calf worth $84 in Cumberland, Rhode Island, in 1939.
The company had become successful in the convenience store business throughout New England and along the coastal states of the U. S. They had recently acquired additional convenience stores with Gulf gas stations, and hence were interested in a constant gas supply for their newly acquired assets. And thus was born a relationship between the provincial government and Cumberland Farms. Interestingly, and of great importance, was that although the company had no refinery experience or expertise, they were skeptical of the studies that showed that it would take well over $100 million to rehabilitate the refinery and were willing to hire independent experts in the field from Texas to examine the refinery and provide the company with estimates of how much it would cost to successfully restart the refinery.
Additionally, there was the cost of getting the large dock in shape and making it operational, an integral part of the whole operation. I remember well my conversations on this; the company and I agreed to do our own independent assessments and then compare our numbers. We went about doing our assessment in an unorthodox way.
We had recently appointed Tom Whelan as deputy minister of the Department of Public Works, an engineer and Newfoundlander who had spent many years working for the federal Department of Public Works supervising the construction of docks/wharves all over the province. Tom was a no-nonsense type of guy—ask him a question and you would get a straight answer—and not your typical federal bureaucrat. So I called Tom up and told him I had a special project I wanted him to do for me. I explained that we were in talks with a prospective buyer for the refinery and that both the company and I had agreed to do our own independent assessments on how much it would cost to make the refinery dock operational. He was interested. I told him that we did not have much time, that I was looking for a ballpark figure, that he could get whatever help he needed, and that I wanted an answer in a few weeks. Several weeks later, Cumberland had their figure and Whelan had submitted his figure. Surprisingly, both assessments said the wharf could be made operational for between $3 million and $5 million, a far cry from the $20 million that the other studies had determined.
Cumberland proceeded with the rehabilitation using, where possible, Newfoundland contractors, and almost all of the operational employees were from the province. And no government money or other government concessions were asked for or provided. Is there another project of its size in the history of Newfoundland’s industrial development up to that time (1986) that has come on stream without some sort of government assistance (and in this case after the project had gone bankrupt)?
The refinery has been going ever since, producing 115,000 barrels of refined product a day and employing 550 people, having pumped over $1 billion over the years in capital upgrades. It was also awarded a Top 25 Employer distinction in Atlantic Canada.
The one negative aspect of all this was that in the final talks with the federal government, we were forced to advise Cumberland that the federal government would only agree to the sale if no product was marketed in the rest of Canada. This was a tough pill to swallow. In other words, the refinery’s product could be sold in Newfoundland (a small market) or internationally, but nowhere else in Canada. I remember the evening Bill Marshall and I called Jim Haseotas (then president of Cumberland Farms) in Boston to inform him that we were unsuccessful in getting this condition waived and to see whether he would still proceed.
As we all know, Cumberland Farms went ahead with the project. But it always stuck in my craw that we had a buyer who did not want any money from any government and who was prepared to restart the refinery, and here was the federal government putting trade restrictions on the sale of the product from one province to another! In January, 2001, this restriction was finally lifted, fifteen years after the refinery reopened. One wonders if something like this could ever happen in any other part of the country.
Snatched from imminent destruction, the largest bankruptcy in Canadian history up to that time, responsible for bringing down one of Japan’s largest trading companies (Ataka), projected to have cost over $100 million to restart when it came in less than $30 million, and being in continuous operation ever since, qualifies the reopening of the refinery at Come By Chance as one of the unheralded economic success stories in the history of Newfoundland and Labrador.
CORNER BROOK PULP AND PAPER MILL
THE CORNER BROOK PAPER mill has a storied history—one of those enterprises of the 1920s much heralded by the prime minister of the time, Sir Richard Squires, as “putting the hum on the Humber (River),” a symbol of the exaggerated optimism and of the many riches that lay waiting to be developed in the h
interland of the island, which would make Newfoundland an exceedingly prosperous place. It became an economic mainstay of Corner Brook for over sixty years, notwithstanding the many concessions of trees and water necessary to get it going.
In 1984, Bowater Corporation, which had taken over the operation in 1938, announced that it was closing down and that it was no longer a viable operation, alleging that wood costs and transportation costs were too high. This came as a shock and a big blow to the economy of the west coast of the island. Of course, the province was on the front line to show the leadership needed to ensure that this tragic announcement would not happen and to allow some other company to take over the operation.
The early days after the announcement were difficult ones, since Bowater owners just seemed like they wanted to leave and that was that. They seemed disinterested in working with us to ensure an orderly transition where we would together seek other operators. Of course, the forests were provincial and the significant (110 MW) power plant in Deer Lake was also provincial. But I was not interested in looking at a provincial takeover for two reasons: I had a natural aversion to such actions (government trying to run a paper mill was not my way of developing the province, all the more given the abysmal record of government with a recent linerboard mill in Stephenville); and secondly, it was not at all clear, given the legislation under which the original deal was done, whether the province would be successful in any such effort. This did not stop me from using such an idea when I was frustrated with Bowater’s early unco-operative approach when I exclaimed to them: “I guess what the Lord giveth, the Lord could take away.”
However, co-operation improved and it was agreed that a divestiture committee would be struck to assemble all the needed information and to actively market the operation in the international marketplace. This was a massive undertaking and help would be needed. It was agreed that we would hire Woods Gordon, a well-known Canadian firm with expertise in this area. The late Len Delecat of the firm, a true gem of a man, competent and hard-working, was to head up the effort. All this hard work over many months culminated in us receiving several bids, with the final determination that Kruger Inc. of Montreal showed the most promise. Bowater was not entirely happy with this selection (I was told at the time that Kruger had snatched some markets from Bowater in the southern United States) but in the end complied with the decision.
Final negotiations then began with Kruger, the unions, and other interested groups. This process was a little more drawn out than the parties expected, with lawyers from both sides becoming so eager to impress their clients, that getting a final agreement seemed secondary. This came to a head one evening in the Cabinet room when both Kruger and the government agreed to have their respective lawyers leave the room, at which time Mr. Kruger and myself with a couple of advisers refocused the talks and highlighted key issues. Two big issues were that the government was looking for a commitment from the company of over $100 million over a number of years in capital upgrading of the mill, and they were also looking to employ a larger number of non-union contractors in the woods operations. At the end of the day, after tense talks with the unions and other parties, agreement was reached whereby these two big issues were incorporated into the agreement. Mr. Kruger was a wily negotiator and tried, right up to our press conference announcing the deal at the Sir Richard Squires Building (the government building in Corner Brook), to improve the deal for the company. Once signed, however, Kruger was committed to the agreement and has proven to be a very responsible employer in the province. At the time, the $100 million was seen as a substantial figure, and of course it was, but since 1984 the company has invested five times that amount and notwithstanding the significant downturn in the paper industry, the mill is still open and employs 600 in woods operations and 700 at the mill and the Deer Lake power plant.
THE FISHERY RESTRUCTURING AGREEMENT
THE OFFSHORE FISHERY HAS played a major role in the economic life of the province for decades. This was an offshore trawler-driven fishery and sustained several communities on the Burin Peninsula and other towns on the south coast. Each had fish plants where the trawlers landed the fish, and the plants employed hundreds of fish plant workers. When I was growing up in Marystown (before they had their own plant), communities farther along the peninsula were prospering from the offshore fishery: Grand Bank, Fortune, and Burin; in Fortune Bay, Harbour Breton, and Gaultois; and farther west along the south coast, Burgeo and Ramea.
The high interest rates of the early 1980s hit the offshore fishing companies hard. These companies—Fishery Products Ltd., Lake Group, John Penny, National Sea, and the Nickerson Group—who had in recent years expanded through bank financing, now found that they were unable to meet their bank obligations and turned to government for help. Protracted negotiation ensued, and through it all an agreement was reached among all the parties: the federal government, the provincial government, the fish companies, and the bank. It was called the Fishery Restructuring Agreement, signed in September, 1983. Through the agreement a new company was established, Fishery Products International, which absorbed the assets of the troubled companies, received an infusion of cash (over $100 million), and reflected a new ownership structure: the federal government 60%, the province 25%, the bank 12%, and 3% allocated for employee participation. Sadly, as will be mentioned later, this highly successful company was sold to private interests without the attendant accommodations (so much a part of the original agreement) necessary at least for some additional time to reflect the historically rural and sociological dimensions of this industry.
CONSTITUTIONAL CHANGE
I F T H I S W A S N ’ T E N O U G H , in the early 1980s the Constitution issue became a subject of endless meetings and arguments between the provinces and the federal government.
Various attempts had been made earlier to “bring the constitution home” (patriation) to Canada. In other words, that future constitutional amendment to the British North America Act (the major written part of the Constitution) was to be done in Canada, severing that last constitutional provision which saw our country having to seek ratification for such a change through London. Premiers, intergovernmental affairs specialists, constitutional lawyers, territorial leaders, and aboriginal organizations spent countless days absorbed in discussion.
One of the big stumbling blocks in the past was agreeing on an Amending Formula that would guide additional constitutional reform in the future. And this would prove to be difficult this time as well. But Prime Minister Trudeau had additional ideas: with this patriation he wanted to add a Charter of Rights and Freedoms.
While many of us were not opposed to such an idea, it was one that would have a significant impact on the nature of the country over time and needed to be thoroughly discussed and debated. This was not something that the prime minister was particularly interested in doing; rather, he wanted to forge ahead with great haste. He saw this as a golden opportunity to get some of his most cherished ideas to bear constitutional entrenchment.
The other factor that drove the process was that the recent May, 1980, sovereignty association referendum in Quebec, although lost, was assisted in being rejected by the prime minister’s timely, though vague, commitment to a “renewed federalism.”
But it was the Charter of Rights and Freedoms that many of the provinces were concerned about, especially how such a charter over time would affect the division of powers, property rights, the ongoing powers of Parliament and legislatures versus the judiciary. There were already many federal incursions into provincial areas of responsibility, and many premiers and their advisers were skeptical as to whether such charter changes could further erode provincial powers duly detailed in the British North America Act of 1867. Hence, the provinces began to insist on questioning whether certain existing provincial powers could be changed without reference to the province, and in having other issues added to the equation that had been bones of contention between the provinces and the federal government for some time
, such as strengthening the provinces’ jurisdiction over natural resources and shared cost programs.
In June, 1980, the premiers met with the prime minister concerning possible constitutional reform, at which time agreement was reached on twelve items to be considered for such reform: this agenda would be referred to a Continuing Committee of ministers on the Constitution who would further consider the twelve matters referred to them. In August, constitutional matters dominated a Premier’s Conference in Winnipeg and how the provinces would respond to various federal positions on the twelve issues agreed to in June. The pace was accelerating, and a major First Ministers Conference on the Constitution was held from September 7 to September 13, but no agreement was possible. There were many disagreements and a suspicion by some of the provinces (rumours were rampant) that the federal government was not dealing in good faith. The prime minister made it clear that our (Newfoundland’s) items of greater fisheries and offshore jurisdiction, for example, were non-starters, to which we vehemently disagreed. So, in this kind of federal intransigence compromise was impossible.
The fears and suspicions of the provinces were given credence (some of us continue to believe that this September conference was just a set-up) when, on October 2—only a few weeks after our meeting—instead of looking for compromise, the prime minister announced that it was his government’s intention to unilaterally patriate and amend the constitution with a Charter of Rights binding on the provinces. He proceeded to introduce a resolution in the House of Commons to this effect.
The provinces convened a meeting in Toronto on October 14, where five provinces (British Columbia, Alberta, Manitoba, Quebec, and Newfoundland) announced they would fight the federal resolution in the courts. And this we did with the Manitoba, Newfoundland, and Quebec courts hearing the matter. Later the provinces of Nova Scotia, PEI, and Saskatchewan were to join the opposition. Ontario and New Brunswick remained as supporters of the federal position.
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