THE CORMIER'S ARE LAUNCHING A LAWSUIT...

I just learned that the Cormier's have begun their civil lawsuit against the Province and who can blame them?

SECOND TRANSCRIPT OF THE LNG DEBATE IN THE LEGISLATURE!!!

OK...THIS IS THE SECOND TRANSCRIPT AND I'M GOING TO RECEIVE THE FINAL ONE SHORTLY!!!
Be warned in advance...over 27,000 words!!!!!

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Debate on Bill 70
Mr. Chairman: Is the Minister of the Environment and Local Government ready to go?




Mr. Jamieson: I certainly want to start my remarks today by welcoming the people from Irving Oil
who have joined us today and who have concerns with the LNG tax bill. First of all, I want to
reiterate a few comments by our leader that were in his speech a few days ago, when he opened this
debate. We have had several speakers who have spoken in this House prior to today. Of course, my
colleagues from Saint John Champlain and Saint John Lancaster have already spoken in the debate,
and I am following up on what they have said.
I do want to mention one opening comment that was made by our leader while he was here giving
his speech:
I want to be clear on our support for the LNG terminal itself. We recognize the significant economic
benefits that the LNG project would bring to the Saint John region, but there is an important
distinction between agreeing upon a goal and agreeing upon the best course of action to achieve
that goal. This government has chosen to cut the city loose to deal with the economic development
incentives on its own. This is the latest episode from a government whose economic development
agenda and relationships with municipalities have been marked by inconsistency and a piecemeal
approach.
Let me get right to the point on this issue: The city of Saint John would be the first municipality
since Equal Opportunity to be allowed to give a tax concession to any industry or any company of
this magnitude. This goes against the principles of Equal Opportunity on which the Liberal
government is based—the principles that were brought to this province. The principles that were
brought in before by Louis J. Robichaud had a lot to do with cities not being allowed to do this type
of thing. What happened in the past is very well known and very well documented.
I want to read a few statements concerning that issue, because I have a manuscript here: The
Provincial-Municipal Government Revolution in New Brunswick, which was at the start of Equal
Opportunity in the province. It points out a few facts of which I Think this Legislature should be
made aware:
Assessments and Taxation
Constitutionally, the power to levy taxes, other than those in the federal domain, lies with the
provincial governments. In Canada, the general practice has been for the province to delegate the
power of real and personal property taxes to the municipalities so that they can raise the money
required to meet the service responsibilities also delegated to municipalities. However, the
provincial government cannot abdicate ultimate responsibility and authority in the tax field.
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In New Brunswick, the provincial government retained only a bare minimum of control and
authority over municipal assessment and taxation. The municipalities were allowed very wide
discretion in their delegated powers, and the provincial government made changes freely in the
Assessment Act, at the request of individual municipalities. In one case (Town of Woodstock) by
1962, there were 260 special acts relating to assessments, in addition to the eleven general acts. It
is not surprising that the 1951 Royal Commission on Taxation commented: “So many modifications
have been made in the original act . . . that only those working in the field in each area know what
the law is and what special arrangements apply; the whole field is a maze, often of conflicting and
inconsistent laws . . . ”
In summary, in this bill, prior to the program for Equal Opportunity, the municipal taxation situation
in New Brunswick was, indeed, in bad shape. There was a jungle of assessment and tax laws.
041 14:15
The decentralization of assessment procedures led to a great variety of interpretations of existing
laws. There were serious tax inequities across the province, and even within municipalities. Almost
one-third of all taxes due were in arrears. Moreover, at a time when there was ongoing concern
about economic disparities within the province, municipal taxes were highest in the economically
depressed areas where the people could least afford to pay them.
In 1962, the New Brunswick appointed the Byrne Morrell commission to examine and recommend
solutions to the many problems of provincial and municipal finance and taxation. In its report,
submitted in 1963, the Byrne commission concluded that New Brunswick’s provincial municipal
problems were not just a matter of allocation of tax deals, but were basically problems of
governmental organizations and structures.
Very briefly, the Byrne commission made the following package of proposals: that all general
services to people, such as education, justice, health, and welfare be financed and administered by
the provincial government; that all local services associated with property, such as fire protection,
garbage collection, sewerage, water, parks, and community planning be provided by local
governments; that the provincial government take over all assessment and tax collection and pay
equalization grants to municipalities; that county governments be abolished; and that provincial
administration commissions be established. These, indeed, were revolutionary proposals in a
province where there had been no major overhaul of provincial/municipal relations and local
government structure for about 100 years.
The major changes effected by the program for Equal Opportunity were summarized in the
introduction to this paper. This section decides the new program in more detail and under the
headings of Education, Service to People, Assessment and Taxation, and Local Government. I just
want to read a small portion of the Byrne commission report that is largely based on what Louis
Robichaud did in the province of New Brunswick, and why we have a problem with this tax
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concession being made in the city of Saint John. It is not against the LNG terminal, it is against what
is happening in new Brunswick with the deal this government is trying to pass. It is the wedge that
drives into the Equal Opportunity bill that many of us in the Liberal Party stand for today.
It means more to us than just letting Saint John have this tax deal and letting the LNG have this
concession. It has a lot to do . . . I will read:
An important aspect of the tax reform was the elimination of tax concessions to industries in the first
draft of legislation, tax concession to industries were to be completely abolished. After considerable
discussions and political pressure, it was decided to honour existing concessions and special
agreements until their expiry. However, new concessions were prohibited after 1967, and they have
never taken place since for any industry or any company in the province of New Brunswick have
they been allowed to do this.
This is what our stand is about. It has more to do with what is happening with this government in
its abdication of its responsibility in helping out a business or an enterprise in a municipality or in
any part of the province of New Brunswick. Just as it did with Molsons in Moncton. it gave money
to that company so that it could go ahead with what it was going to do in the city of Moncton.
This government should be doing the same thing in the city of Saint John. It should not be put on
the backs of the citizens of Saint John to have their tax assessments frozen. If you and I were
taxpayers in the city of Saint John, as some of us are, let me tell you, people would pay their taxes.
They would not have those taxes frozen. Everyone of us would like to have our assessments
stopped—no more increases in our assessments. However, the problem is that this bill sets the tax
at a certain amount and freezes it for 25 years.
This is a government that has abdicated its responsibility of due diligence on this wonderful LNG
project. Let me tell you, this project has a lot to do . . .
(Interjections.)
Mr. Chairman: Order. Let’s have some order here.
Mr. Jamieson: It is an important energy project to the city of Saint John. We realize that.
(Interjections.)
042 14:20
Mr. Jamieson: We did not see you at the environmental impact assessment. The member for Grand
Bay was not there, but we were. We have followed the environmental impact assessment of this
project for two years. We agreed with the project through the EIA, and we come to this Legislature
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today to debate what this government is doing in abdicating its responsibility and not funding this
project.
The problem with this government is that it did not do due diligence on this project. It does not know
the economic benefit or the economic spinoffs of the project. It has no idea of what it will do for
Saint John or New Brunswick, only what it has been told.
I have been in Cabinet. I have been in government. I can tell you that when any project came before
the government of New Brunswick when I was a member of Cabinet, we did due diligence. We
studied it. We had the different departments of government look at the project and assess whether
it was worthy of financial consideration by the Cabinet and by the government. That has not
happened here.
We know the benefits: for a $750-million investment, an economic impact of $1.5 billion; creation
of up to 700 jobs during construction, and 20 permanent jobs; direct labour income of approximately
$26 million; and indirect expenditures of $14 million. This project will generate over $15 million
a year in taxes for New Brunswick. That is why we ask the province why it is not at the table on this
project.
Why are you foisting this only on the citizens of the city of Saint John? Why are you allowing this
to happen just to the citizens of Saint John? Why is this the only industrial, commercial project in
the province’s history, since the Equal Opportunity bill was passed, to which you are going to allow
this to happen? I will tell you why. It is because you were involved in the negotiations for this
project, and you felt this was the best way to get in under the radar and put it on the shoulders of the
citizens of Saint John.
Let me tell you this. If this were just a benefit for the people of Saint John, then what do you say
about people who live elsewhere who will work on this project, who will be a part of this project?
Should they not be part of the benefit? Should they not pay part of the taxes?
(Interjections.)
Mr. Chairman: Let’s have some order here, on both sides of the House.
Mr. Jamieson: I will start by asking the minister why this was not an economic, industrial incentive
project for the government. Why is this only an incentive project for the city of Saint John?
Hon. Ms. Fowlie: I am not going to go on a long tirade. The member opposite is well aware of the
facts. He may keep referring to this meeting or this deal that we have been in on from the start. This
is a decision that was made by the duly elected council of the city of Saint John. They felt that the
economic spinoffs more than warranted putting on a freeze or giving a tax concession to the LNG
facility. The province does not collect provincial property taxes from this facility because it is
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referred to as a major cargo port. What will be exempt, under the existing legislation that is in place
for taxation of a major cargo port for the municipality, are the offloading facility and the storage
tanks for the LNG. I would say that there will not be economic benefits to the city of Saint John if
there is no regasification of that project. From the regasification unit on to anything else that is
utilized, it is fully taxed.
If the member opposite wants to get into a debate on Equal Opportunity, then so be it. I know what
it was like living in New Brunswick before Equal Opportunity.
043 14:25
I have gone through this before. Growing up in rural New Brunswick and going to a one-room
schoolhouse, we had hot and cold running outhouses and no running water in the place. Equal
Opportunity ensured that we had access to an equal education system in this province.
(Interjection.)
Hon. Ms. Fowlie: I have the floor, thank you.
It also meant that we had the same type of access to social programs. Before Equal Opportunity,
what happened in this province was that the richer part of the province could afford to pay for social
programs, education, and health care—all the things that we need for our daily survival. That is what
Louis Robichaud did for New Brunswick. He brought in Equal Opportunity, and I have no problem
or hesitation, in any way, shape, or form, saying that my family supported Louis Robichaud and
what he wanted to do with Equal Opportunity in this province. I was very pleased that the Hatfield
government in this province continued on with the great programs that were taking place under
Equal Opportunity.
That means that no matter where you go to school in this province, you have the right to the same
type of education. Whether you live in northern New Brunswick, southern New Brunswick, central
New Brunswick, in urban or rural areas, or whether you are rich or poor, you have the right to the
same education. You have the right to the same health care system in this province. You have access
to health care when needed. You have access to ensure that the social programs are there. If you
need government assistance in rural or urban New Brunswick, you are treated the same throughout
the province. That is what Equal Opportunity does.
To say that a tax concession that the city of Saint John wants to give an LNG facility has the same
impact as going back before Equal Opportunity is totally ridiculous. It may mean that they may not
be able to pave the same number of streets or put in a new sidewalk here and there, but it will not
take back Equal Opportunity.
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One of the things that we recognize around this province is that there are other things around the
province that do get tax relief. We do it for woodlands and farmland. We do it for farm woodlots,
and even golf courses get special tax concessions. It was done for regulations on pipelines.
Charitable nonprofit organizations get tax concessions. When we look at housing for low-income
persons, there are tax concessions on that. We just put an Act in place for heritage properties, so that
if you want to redo a heritage property, you get a tax abatement for X number of years. It has also
been put in place for cargo ports, because you recognize that cargo ports are where you can have
development coming in or the transfer of goods that is impacting the province positively. Tax
concessions have been put in place for airports. To say that there have been no tax concessions put
in place . . .
What is really annoying the member for Saint John-Fundy is the fact that he cannot prove that this
was a behind-the-scenes deal that we were all involved in. It is really interesting to see how the
members opposite flip-flop from one week to the next. The member for Saint John Lancaster at least
was honest last week. He stood up and said: I hate LNG. I do not want the facility. I am speaking
totally differently than my caucus.
At least he was honest. He said he did not even want the LNG facility anywhere near the city. He
does not believe in LNG. At least the man has to be credited for being honest in that respect. I
cannot say that I really approved of all the name-calling and the things he said about the mayors and
councils and industry in the city, but at least he was honest. He said he did not support LNG.
Point of Order
Mr. Paulin: Mr. Chairman, in this House, certain parliamentary language can be used. I would like
a clarification from the honourable member. When she suggests that a member is honest in making
a statement in this House, is she, at the same time, suggesting that every other member on this side
is dishonest?
Mr. Chairman: The Minister of Transportation, on the point of order.
Hon. P. Robichaud, after receiving permission to speak from a seat other than his own: I do not
believe this is a point of order. The Minister of the Environment and Local Government was making
a statement. If the truth hurts, I am sorry, but this is not a point of order.
Mr. Chairman: I will caution the minister and all members in terms of using words that may
indicate that a member of this House is dishonest. I will just put that word of caution out to the
minister, and she can carry on.
044 14:30
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Ms. Fowlie: Thank you, Mr. Chairman. I actually said that the member was honest. If that causes
a problem for the member, then I would totally withdraw the comment about the member being
honest.
I think what is really, really bothering the members opposite is the fact that they are trying to say
that there was a behind-the-scene deal that took place. We keep being accused of all these ministers
and deputies meeting with the Irvings. Numerous times, the members opposite have been challenged
to put their seats on the line if they can show proof that this happened. None of them have stepped
forth, so we still await their showing any type of evidence that there was any behind-the-scene deal
cut.
This deal was struck purely between the city of Saint John and the LNG facility. The province does
not collect taxes on this facility. The city of Saint John, the duly elected mayor and council, made
the decision that it would forego an amount of property taxes in order to ensure that the facility is
in Saint John.
One of the things we did, as a government, keeping in mind the respect we have for our duly elected
councils and mayors in this province and our municipalities, was to agree that we would implement
legislation to allow them to do this. That is why we introduced An Act to Comply with the Request
of the City of Saint John on Taxation of the LNG Terminal. Thank you.
Mr. Chairman: Just before the member asks his next question, I want to speak to the decorum here
in the House. There is a bit of heckling going on from both sides. It could be spread equally
throughout the Chamber in terms of blame. I am asking the Chamber to get things under control. I
will not hesitate to name specific members and the consequences that follow.
Mr. Jamieson: I guess the difference in what the minister keeps claiming, that she is in favour of
equal opportunity and she lives by it and breathes by it and is saved by it—she wants to expound
on it all day long—is that this is the driving wedge that gives us a problem with equal opportunity.
Not only are you supporting what the city of Saint John has requested, but also, we believe you were
part of what this whole thing is about. As a matter of fact, when I look through the bill, it indicates
quite clearly that you had a lot to do with this. This bill that you have brought in has a lot to do with
changing the bills in New Brunswick and bringing in changes that will definitely change equal
opportunity in New Brunswick in the municipal forum.
I remember that the minister was asked this question in the Legislature, during question period, one
time: If another community had another business of a similar type, would she allow that community
to bring in the same type of tax bill, to allow it to have a forgiving type of tax deal with that
company? She said: Yes, I would definitely allow another community to do the same thing if it was
a business of a similar type, meaning that maybe it is only one business that could come into a
community in New Brunswick and not go into any other community in New Brunswick.
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Let me ask the minister this question, because I think there is a similarity. The minister states that
she would allow other communities to do this same type of tax deal, yet she says that this would not
interfere with the provisions of equal opportunity. What if the Port of Belledune has a liquified
natural gas terminal planned? Would the minister allow the Port of Belledune to make the same tax
concessions?
Hon. Ms. Fowlie: I think we have been abundantly clear on that. If there is another municipality in
the province that wishes to construct an LNG facility and make the same type of tax concessions to
that LNG facility, yes, we would give it the same authority to do that.
There is one thing I want to clear up that the member opposite said. We are not amending a group
of Acts. We made the decision that we would not be going to amend different Acts. That is why we
put this in place as a standalone Act. It is a standalone piece of legislation.
045 14:35
As I said, it is a unique project, it is a unique request, and this a unique piece of legislation to comply
with the request of the city of Saint John on the taxation of the LNG terminal.
Mr. Jamieson: The only thing that is unique about it is your “niqueing up” on it. I am going to tell
you, I am going to look into this bill right now, and I will show you where you are changing other
bills in New Brunswick to conform to what you want to do in the city of Saint John. You have had
to change a number of bills. As a matter of fact, let’s look at your bill. We are looking at Bill 70, and
we are on the third page: Referrals and Appeals under the Assessment Act, section 5:
Sections 25, 27, 28 and 37 of the Assessment Act do not apply to the amount of the assessment on
the LNG terminal determined under subsection 3(1).
It says in these sections 25, 27, 28 and 37, no appeal by any community can now be made on this
bill. Does that not make a change to the Assessment Act of the province? Are you telling me that it
does not?
Hon. Ms. Fowlie: No, that does not make a change to the Assessment Act. It just makes parts of the
Assessment Act not applicable to this Act. Yesterday—and I can ask the researchers to do it. It
should not take too long—I do believe there was another amendment made to a piece of legislation
that the Justice Minister introduced to make a certain section of another Act not applicable to that.
That was on the request from the member for, I believe, Fredericton North. I might ask staff outside
to give me more of that information in case members opposite do not recall what was done
yesterday.
Mr. Jamieson: Never mind what was done yesterday. Let’s just look at section 3(1) of this Act. it
says:
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Notwithstanding any private or special Act, where no other provision is made under this Act or the
Real Property Tax Act, all provincial taxes or rates on real property shall be calculated and levied
upon the whole of the assessment or assessments made under this Act.
Your section 5 says:
Sections 25, 27, 28 and 37 of the Assessment Act do not apply to the amount of the assessment on
the LNG terminal determined under subsection 3(1).
That is a change to the Act. You have changed the Act. This Act says that the LNG terminal is not
part of this Act. You have added to the Act. If this does not go into the Act, you have changed the
Act by putting this in that Act.
Hon. Ms. Fowlie: The only thing that was changed is a reference that has to go in the Assessment
Act to refer to this piece of legislation for the taxation purposes of the LNG. The Assessment Act in
itself was not changed. This was a consequential amendment that needs to be put in place so that
when people are doing assessments of these properties, they know they have to refer to this piece
of legislation in regard to the assessment of the LNG facility.
046 14:40
Mr. Jamieson: Let me tell you what it does. I am not going to read all the things covered under
sections 25, 27, 28, and 37 of the Assessment Act. There are about three pages of this that now do
not apply to the LNG terminal. Somewhere, something has changed. It goes from section 25(1) to
section 25(8). I will just read section 25(1).
25(1) Any person who receives an assessment and tax notice under section 21 or 22.1 or an
amended assessment and tax notice under section 22 may, by a notice of reference of assessment,
refer any assessment to the Director within thirty days after the mailing of the assessment and tax
notice or the amended assessment and tax notice.
In other words, the people who own this can appeal. I will go on to section 25(2).
25(2) The Director shall maintain a register of every notice of reference of assessment received
under subsection (1).
25(3) Every person who refers an assessment to the Director under subsection (1) shall set out in
the notice of reference of assessment his full name, address . . .
These are all part of a bill whereby the LNG terminal does not have to put in any assessments,
because you have frozen the assessments. There will be no further assessments, so you have taken
them out of the bill in this part. This is the first company in the history of New Brunswick that has
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had this type of allowance taken out of the Assessment Act. Yes, you have changed something here
by taking it out of the assessments.
Hon. Ms. Fowlie: What is referred to in this section is the notice of appeal, for the appealing of this
tax assessment. This refers to the fact that when you have an assessment that is set by regulation,
it is not appealable, because it would be a moot point, in that the courts could not overturn that piece
of legislation.
This was also used before when the province was looking at the assessments for heavy industry. The
phasing in of the way that would become applicable was set in the legislation. That also referred to
the fact that that could not be appealed because it was a phased-in assessment. It has been done
before. These are consequential amendments that needed to be done in order to make reference to
this facility.
Mr. Jamieson: Will you do an assessment on the property? Will an assessment be done by the
province of New Brunswick to determine the value of the assessment of this property?
047 14:45
Hon. Ms. Fowlie: The answer to that is yes.
Mr. Jamieson: Will it be reassessed every year, as properties in the province are assessed?
Hon. Ms. Fowlie: There will be a reassessment done each year. There would not be an inspection
of the premises done each year, unless there was a new addition or some other construction that took
place under the issuance of a building permit. Then there would be an inspection of the property.
Mr. Jamieson: Do you have any idea what the assessment would be, at this time, of the facility to
which you are allowing the city of Saint John to give the tax concession? Do you have any idea? We
heard a figure of $3 million to $5 million from Service New Brunswick, that that could be the
assessed tax—not the assessment but the tax on the assessment.
Hon. Ms. Fowlie: There, of course, has been no official assessment on this facility, since it has not
been constructed. What Service New Brunswick does is, using basically the information that it
gathers through the environmental impact assessment process, put a rough assessment on the facility
in the area of $200 million to $225 million.
Mr. Jamieson: What SNB has said is that the payment on that assessment for taxes would be in the
vicinity of $3 million to $5 million?
Hon. Ms. Fowlie: Under the taxation level of the city of Saint John, a facility, if it was assessed at
$200 million, would have brought in about $3.6 million in municipal property taxes.
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Mr. Jamieson: That is where our problem lies, regarding what the province is doing with this tax
concession. The province is going to pick up $15 million in tax revenue from this facility, per year,
and the city of Saint John is going to pick up $500 000. In the real scheme of things, a facility of this
size and character should pick up anywhere from $3 million to $3.5 million, as the minister has
stated. The loss is not to the province of New Brunswick as much as it is to the city of Saint John.
048 14:50
I represent a portion of the city of Saint John, and, let me tell you, this city is not doing well
financially. The Minister of Finance can confirm that. It has a lot of problems in its infrastructure.
It has a lot of problems meeting the bills of its fire and police departments. This type of concession
is something the province of New Brunswick should be doing, not the city of Saint John. This is the
first time in the history of the New Brunswick that this type of thing has been allowed to happen,
and it has been allowed to happen by this government.
If you are going to make $15 million per year in tax revenue, why do you not turn this around and
say to the city of Saint John: Listen, you are losing $3 million. You should be making $3.5 million.
We are going to be part of this program. We are going to assure the city of Saint John that we will
help it in the financial problems it is having, with meeting its obligations.
People in Saint John compare the deal cut by the city council with one offered by the United Statesbased
Anadarko to build the similar-sized but less expensive Bear Head LNG terminal in Cape
Breton. Initial expectations are that the project could cost $450 million. Anadarko agreed to pay
annual taxes of $3 million to the local government, although if the project ends up costing $600
million, as expected, the tax rate would be prorated to about $4 million per year. By comparison,
Irving’s Canaport facility is expected to cost $750 million per year. In addition, Anadarko recently
agreed to pay $7.5 million over a 10-year period to fund industrial development along its proposed
LNG terminal. Anadarko also wanted to contribute $2.5 million toward a civic centre that would
contain a hockey rink.
I am a hockey player. I go to Saint John once or twice a week during the winter and play in its rinks.
One of the rinks I play in is called the Stewart Hurley Arena, and the shape that it is in is a disgrace,
because the city of Saint John cannot afford to keep it up to par. Also, it cannot afford to keep any
other rinks in the city of Saint John up to par.
What we are saying to the government of New Brunswick is: If you are so interested in this
development, as we are . . . I will tell you the difference. The government I belong to would have
been at the table, not ducking its responsibility and hiding from its responsibility and blaming the
city of Saint John, saying to the city of Saint John: This is your deal. We have nothing to do with
it. We are abdicating our responsibility. We are going to run away from it. It is your problem. Go
deal with it.
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The mayor of the city of Saint John is then left in tatters, along with his council, over this type of
thing, and so are the MLAs from the city of Saint John. This government has ducked its
responsibility. The ministers in this Cabinet know better. They know how to deal with industrial
problems in the province of New Brunswick, and they should deal with it as they have dealt with
other projects all over the province. It should not be just the people in Saint John paying the bill on
this.
Hon. Ms. Fowlie: While I recognize what he is saying, I totally disagree with him. This was a
decision that was made by the council of the city of Saint John. Council felt that, instead of getting
next to nothing for property taxes out there for the property as it currently exists, because there is
no development on it, it would be well satisfied with receiving $500 000 per year in municipal
property taxes. That was a decision that the city of Saint John, the council, made. It was not a
provincial decision. We were not asked for our input on it. They made a decision at their council
meeting and then asked for enabling legislation to be put in place to allow them to do this. They feel
that they knew enough about the economic benefits and spinoffs for the city of Saint John that they
were fully happy with realizing, instead of nothing for the property, now, $500 000 per year for
municipal property taxes.
049 14:55
I do understand that the member for Saint John-Fundy is trying to walk a fine line between
supporting the project and not supporting the project. He is trying to be on both sides of the fence,
saying: I support the project, but it should be the province that is giving this tax concession. The
province is not collecting property taxes on this. If it were, maybe it would have been asked to give
a tax concession to the facility, which is a major cargo port.
We can talk about projects all over the world and about how taxation is done for those facilities. In
the city of Saint John, the duly elected mayor and council made a motion and passed a resolution
that they wanted to do this. They needed the legislation to be able to do it. What we are doing here
today is debating that exact legislation, which is what I have said all along. If any regulation or Act
in this province needed to be amended to support this facility, it would be duly debated on the floor
of this Legislature.
I have also said all along that I am in support of the LNG facility in Saint John. If I were on the
council in Saint John, I would applaud having the facility come to the city. They have made their
decision on what they would be expecting from municipal property taxes. Instead of realizing zero
from the property now, they felt they would be quite happy with $500 000 in municipal property
taxes, plus the economic spin-offs for Saint John.
Mr. Jamieson: The difference is this: If I were in government, as I was in the past, and if something
like this came to my Cabinet table, I would say that I was not prepared for Saint John to take a loss
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of $3 million per year. I would want the province to be involved in the project or to take it back
home, because that is the way government should work.
The economic spin-off for New Brunswick is estimated at $375 million over 25 years; that is just
the economic spin-off of the project. The province is the big benefactor of this project, and the
people in the province are the big benefactors of this project and of the spin-off projects around it.
It is not only for the people who live in Saint John. If that were the case, we could put up a border
around Saint John, and nobody who lived outside the city would work on the project or have
anything to do with the project. That is not the case, because people from Quispamsis will work on
the project.
No wonder you are not concerned about it, Madam Minister. If it were your own community, you
might be concerned that it was going to lose $3 million per year. That is what the people in Saint
John have a problem with. Why should they have to be the ones footing the bill when the province
has a responsibility for economic development?
This changes the whole character of what Louis J. Robichaud stood up in this Legislature and fought
to defend—Equal Opportunity throughout New Brunswick. This company is not a not-for-profit
organization. The minister says we give tax concessions to not-for-profit organizations or to heritage
sites. We give those people tax concessions. Why not this big company? Why not give it a tax
concession, just like we do for not-for-profit housing or not-for-profit charitable organizations?
This is not a charity that we are talking about, and that is the problem that we have, as Liberals. This
is not a charity to which we are giving money. This is a business that is going to make a profit—a
big profit—and it should pay its way in Saint John. I, as a member for Saint John, will defend that.
Hon. Ms. Fowlie: I found the comments from the member for Saint John-Fundy quite interesting.
He made reference to the fact that when he was at the Cabinet table, if this deal had come before
them, they would have sent it back. They would not have dealt with it. They would not have done
it. That is the fundamental difference between a Liberal and a Conservative.
Under this government, we believe that local decisions should be made on these issues. When the
members across were in government, they were centralizing all power in the province. That was why
they eliminated school boards.
050 15:00
I know about the elimination of school boards. I was a school board trustee, not during the year it
was eliminated, but just after my last term, which was in 1995. I was there from 1989 to 1995. I
believe it was 1996 that they turfed school boards. They did not want decision- making at the local
level in regard to education.
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The same thing happened with hospital boards. Hospital boards were set up around he province to
deal with the situation of health care in the province. What did they do? The eliminated them. They
did not want local decision-making. The Liberal government knew how to control it all, and that is
what they were doing.
We can talk about amalgamation—forced amalgamation. That is when areas in the province were
told: You are going to join here, here and here. Miramichi . . . I do not think that was something that
was readily accepted. Edmundston. Even in my area, forced amalgamations. That is the difference
between a Conservative government and a Liberal government. We believe in local decisionmaking.
We believe that it should be the decision of the people in the area how best to address these
things.
We can also talk about policing. Let’s talk about policing in and around Moncton. The Liberal
government decided it knew what was best in policing in the Moncton area. It made the decision that
it would be done by the RCMP. We brought legislation back in to put that decision-making back into
the hands of duly-elected municipal councils in those areas. They can make the decision if they want
their own municipal police force or want to use the RCMP. These are things that we had to do.
We also brought back hospital boards and district education councils. There is a whole litany of
things. I am sure we could spend many hours talking about them here. I think the fundamental
problem that the members opposite have with this piece of legislation is that the decision was made
by locally elected people—the mayor and council—that this is what they wished to do in regard to
the LNG facility.
The member opposite keeps saying: It is not impacting my community. People will work there. We
should put up boundaries and not let anybody work there unless they live in Saint John. I probably
would not have made this decision if it had impacted my community. You see, you never know, do
you? The decision was made that it had to be in the city of Saint John. This is the type of location
an LNG facility goes into. I would think that I would give serious consideration to whether I would
be accepting of having $500 000 a year in municipal property taxes and an LNG facility with all the
offshoots and all the economic development in the area or get zero for the property as exists now.
I was not at the council table, but I would hope that I would be able to give that serious
consideration. I am saying it was the mayor and council in the city of Saint John that made this
decision. What we are dealing with here today is a piece of legislation that allows them to implement
that decision.
Mr. Jamieson: That is the problem. When you ask questions to this government, they want to go
back to the past and relate what happened in the past and bring up the Moncton police or what
happened to the hospital boards that now only have to answer directly the deputy minister and
nobody else. They want to talk about hospital problems in the city of Moncton when, in reality, the
council in Moncton came to us, as a government, and asked us to step into a problem they could not
solve. When we got into it, they all disappeared.
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I can answer those questions, if she wants to get into that, because if the answer to this LNG
problem is to attack us and the past, then I have answers to the minister if she wants to go there. The
reality of this is that in the Real Property Tax Act, the changes are being made by this bill also. That
is why I refer to this bill. If we look in section 9, on page 3 of An Act to Comply With the Request
of the City of Saint John on Taxation of the LNG Terminal . . .
051 15:05
9(1) Section 23 of the Real Property Tax Act, chapter R-2 of the Revised Statutes, 1973, is
amended
(a) by renumbering the section as subsection 23(1);
(b) by adding after subsection (1) the following:
23(2) Subsection (1) does not apply in respect of the LNG terminal referred to in An Act to Comply
with the Request of The City of Saint John on Taxation of the LNG Terminal.
Let me read section 23 of this bill, because this is what we are giving the LNG terminal. Section 23
of the Real Property Tax Act was set up by a Liberal government that was concerned about fair
representation in New Brunswick and Equal Opportunity. Section 23 says:
23 Notwithstanding the provisions of any public or private Act, no municipality shall impose or
collect any tax not provided for in this Act.
This is the first time in the history of New Brunswick that this has been applied to a municipality
in New Brunswick. We are now changing the rules in New Brunswick so that a municipality can
change Equal Opportunity, as far as we on this side of the House are concerned. This says that this
is one company and one project that can change the rules. However, the Act states that,
notwithstanding the provisions of any public or private Act, no municipality shall impose or collect
any tax not provided for in the Act. Your bill is a simple, two-page bill. It does not look like much.
It is what it does to the other bills, the foundation of Equal Opportunity in New Brunswick.
Hon. Ms. Fowlie: Basically, that provision is now putting into that the ability . . . I guess it is now
provided for by this Act. So, the municipality will be collecting a tax provided for by this Act.
Mr. Jamieson: That is what I am saying. It is in there. It is not allowed for in the Real Property Tax
Act. No municipality is allowed to do that. You are changing the bill so that this one municipality
is allowed to do that.
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Hon. Ms. Fowlie: Yes. For the purpose of this facility, the municipality can do this. That does not
give carte blanche to municipalities around the province to do these things. For the purpose of the
LNG facility, it now can be done under this Act.
Mr. Jamieson: It is the precedent you are setting. That is the precedent of Equal Opportunity that
we are talking about, by allowing this to open the floodgate by one point, by one municipality, by
one tax deal here. The fact that you are allowing this to happen is the point that we are trying to
make as the Liberal Party. You are going to allow municipalities in New Brunswick to start opening
up to allow businesses in their communities to set up shop to do that.
Hon. Ms. Fowlie: Before Equal Opportunity in the province, municipalities did their own
assessments, set their own taxes, and collected their own taxes. There was an inequality around the
province with regard to the assessments being done, the taxes themselves, and, I guess, the value
of the property. Nothing is being changed in that regard.
052 15:10
The member opposite brought up the discussion of what if the Port of Belledune wanted to put in
an LNG facility. Before equal opportunity in this province, the assessed value of an LNG facility
in the city of Saint John and the assessed value of a potential LNG facility in the Port of Belledune
could be widely different because the municipalities would set the assessed value. One could make
the decision that the assessed value on that property was going to be $200 million, and one could
make the decision that the property in another area was going to be valued at $10 000. Nothing has
changed in the regard that these two properties, if located in different areas of the province, would
be assessed very similarly.
Mr. Jamieson: It not going back to the province of New Brunswick right now. It is not what is
happening right now. What you have allowed is the city of Saint John to set a tax rate of $500 000
on a facility that is valued at $3.5 million. What has happened in the city of Saint John is exactly
what equal opportunity and the tax changes that we made in New Brunswick would not allow a
municipality to do. What you are doing with this bill is allowing the city of Saint John to make a
$500 000 tax deal where it should be making $3.5 million. You are opening the door. You are
defeating the purpose of equal opportunity that the Liberal government stood for in the past and
stands for today.
Hon. Ms. Fowlie: Previous to equal opportunity, taxes were collected throughout the province
individually to operate education, health, and social programs and the other programs that currently
exist in the province that the province does look after. That is not being impacted.
The city of Saint John is not foregoing property taxes that will impact the social conditions in its
area, its education system, and so forth. This, fundamentally, is what equal opportunity was about.
It was to ensure that people in all areas of the province had the same access to these things. Equal
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opportunity meant equal access to these things. This is not being impacted by allowing the city of
Saint John to collect $500 000 on a property on which it is currently collecting zero, because there
is nothing on the property. There is in no way any impact on how hospitals are going to be run,
whether a school has to be closed, or so forth. It can impact on whether the Stewart Hurley Arena
gets an upgrade, because that is a municipal decision. That is recreation.
However, that was a decision that the duly elected mayor and council in the city of Saint John made.
We did not make it on their behalf. They made it for themselves. That is why we are here today
discussing, on the floor of this Legislature, An Act to Comply with the Request of the City of Saint
John on Taxation of the LNG Terminal. That is fundamentally it. It will have no implications
elsewhere. Other municipalities will not be setting assessments to receive a certain tax rate. Even
in this, it is the province that has to set the assessment for them to help them realize the $500 000.
That will be an artificial assessment that is put on the facility in order to realize the $500 000 for the
city of Saint John. There will also be a real assessment attached to the facility, one that gives the true
property value of the LNG facility.
Mr. Jamieson: But there is a difference in what is happening in the city of Saint John, just as there
would be in any community if you allowed this to happen, that a community could say: Here is what
we are going to give you for a tax deal. You have to pay us only $500 000 when, in reality, you
should pay us $3.5 million. That could happen anywhere in the province, the way you are headed.
That a city, a municipality, could do this is a mistake in New Brunswick. That is what we are saying
here today: That you are allowing this to happen is a mistake by our provincial government.
053 15:15
Let me ask you this, Madam Minister: Could you stop this bill from happening, realizing that the
mistake you are making today is a mistake that should not be allowed to happen in municipalities?
They should not be allowed to make these types of concessions. Would you change that? Do you
think that that would be a move that you would make?
Hon. Ms. Fowlie: I fundamentally disagree with what the member opposite says. He says, with
regard to what we are doing here today, that we are recognizing that we have made a mistake. No,
he is saying that we have made a mistake. We are saying that the city of Saint John made a decision.
That is what we are here today to discuss. This is not allowing municipalities to go out and say:
Okay, you come here, and I will collect this property tax. It has to go through the provincial
Legislature. We are not going to have competitions for Sobey’s or for Wal-Mart, because that would
be totally ridiculous. This is for an LNG facility. We are not going to be building one in downtown
Fredericton, although if they found a way to get one here . . . I guess if Fredericton wanted its own
LNG facility, if it went through its two-year environmental impact assessment and felt it could get
the tankers to Fredericton, I guess we would have to take a look at that. If Fredericton decided that
it wanted to give a tax concession to an LNG facility, we could look at that.
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What we are saying here is that this is a unique type of project. This is something that is not a
competition between Belledune, Fredericton, and Saint John for this facility. This is competition
throughout the world. This is competition involving New Brunswick, Nova Scotia, all along the
Eastern Seaboard, Quebec, and places like that. This is not a north-south thing that is happening in
New Brunswick. That was what Equal Opportunity was addressing, so that we would not have rich
parts of the province and poor parts of the province. This is a competition among LNG facilities
throughout the world. If, down the road, there is another type of business or industry that wants to
come to the province, that is in a global competition, we will be willing to look at what a
municipality wants to do in order to ensure that that globally competitive facility will come to the
area.
This is not allowing municipalities to decide all of a sudden to do this. If they had the authority to
do that, we would not be here discussing this. It would have been similar to what was done prior to
Equal Opportunity. To say that this flies in the face of Equal Opportunity, I think, is a way of
spending a lot of time when this has no impact on it. People who look at Equal Opportunity closely
recognize that this is not having an impact on Equal Opportunity.
Mr. Jamieson: This has an impact on Equal Opportunity. This has an impact on what this
government should be doing. This government should turn something like this around and say: No,
this flies in the face of the Real Property Tax Act. This is not what the Real Property Tax Act is
about. We will set the assessment on every facility in New Brunswick. We are not going to make
any changes. We are not going to say that municipalities can give these concessions. They cannot
set up a peanut butter factory and give it a concession by saying that although it should pay $1
million, it will be allowed to pay only $500 000. We are not going to allow that simply because there
is only one peanut butter factory coming to New Brunswick, or there is only one car factory, or there
is only one this or that. You are opening the floodgates.
You made a statement before that this LNG terminal would not have an impact on Saint John. Let
me tell you about the impact of the LNG terminal in Saint John on the road to Red Head and the
upgrade that is needed there. The money that is needed to upgrade the Red Head Road is in the
vicinity of $10 million, and at $500 000 per year, it is going to be a long time before we can get that
road upgraded to the state it should be in to support this type of facility. What about the property
values of the people who live around the LNG terminal. Do you not think that it would affect them?
Do you not think that the city of Saint John or the province of New Brunswick should consider those
people at all? Should we not consider what is needed in Saint John to upgrade the harbour
firefighting equipment, or what is needed in different facilities throughout the city, to meet the safety
concerns at that terminal?
054 15:20
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What you are saying today is that the city of Saint John should be happy to get $500 000 from this
facility. That is what you are telling the people in the city of Saint John. You are saying: You should
be happy. You are not getting any money now. We are going to give you $500 000 a year. Yes, we
have assessed the facility. It is worth $3.5 million. However, you should be happy. You are getting
$500 000, and we are going to help you get that. That is what the province of New Brunswick is
saying.
Yes, the province is going to make $15 million a year on taxes, but it is not going to help the city
of Saint John with any of that money. It has not come forward and said: We are going to make up
the difference to you. Here is the $3 million that you are losing. It is not saying that. It is saying: We
are going to change the Real Property Tax Act, so that municipalities will lose money trying to get
businesses in their area. That is what you, as minister, are saying. You are allowing the changing
of the Real Property Tax Act. That is something with which, fundamentally, we have a problem.
What you should have said to the city of Saint John is: No, we will do the bargaining. You are
saying you had nothing to do with LNG terminal as far as negotiations. We will take you word on
that, but you should have. That is the problem. You are saying you had nothing to do with the
negotiations. Let me tell you something: The difference in the province of New Brunswick is, as a
government, the Liberals would have been at the table long ago, and they would have negotiated the
help the terminal needed. That is the problem.
What you are saying to the city of Saint John is: Listen, you are going to get ripped off for $3
million, because you will not be doing the assessment and charging the proper tax on the terminal.
An official in Service New Brunswick said that it was worth $3.5 million a year—yes, you are the
minister—to the city of Saint John, if you did the assessment. What does it end up being? It is
$500 000. That is the problem we have.
Hon. Mr. Fitch: I am entirely aware of the problem they have. They have a problem with the city
of Saint John making a decision. That is what the big problem is. They have a problem with the fact
that the city of Saint John made a decision that they would be happy with $500 000 municipal
property taxes, because that is not the way they are used to operating. They made all the decisions
for the people. I have never said that the LNG facility would have no impact on the city of Saint
John. I think it is going to be an economic boon for the city of Saint John.
There are two ways to look at the impact. He wants to look at the negative. I think we look at the
positive side. The economic spin-off from this project for the city of Saint John could be
phenomenal. However, you have to get a facility there in the first place. The mayor and council in
the city of Saint John recognized that, in order to get any economic spin-off from an LNG facility,
you have to get one to locate in your area. To say there is no impact on the city—I am hoping it will
be a phenomenal financial boost and gain for Saint John.
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That way we will not have MLAs, who represent the city of Saint John saying: Oh, they are in real
bad shape. That not be great. Send that person out as an ambassador around the world to get business
to come to the city. If they are asked: What is your city like? They would say: Oh, they are not doing
that well. They are really not doing that well. I like it there, but I do not like the decisions the mayor
and council make. The city is not doing that well. They are in real deep financial trouble. That will
bring a lot of business into the area, I can tell you that. Doom and gloom.
I think the other thing that is upsetting the member opposite, the member for Saint John Fundy,
when he spews forth that we were in on these negotiations, is that he really cannot believe that, in
this day and age, a municipal council and mayor can make a decision without government’s
interference, because he never operated that way.
I think there will be an impact on the city of Saint John. I think it will be a good impact. I really
think that this can be a major attraction to draw other industry into the city. That is the impact. We
can have a person being negative or we can say positive things about the areas we live in.
055 15:25
You are not going to see me, as the MLA for Kennebecasis, standing on the floor of this Legislature,
talking negatively about the riding I represent, as the member for Saint John-Fundy has been doing.
Mr. Jamieson: You can certainly applaud, but I am not talking negatively about the city of Saint
John. What I am talking about is a government that is allowing the city of Saint John to lose $3
million a year. That, to me, is a problem. There are no concessions on the part of this government.
To tell the people of New Brunswick that you had no part in the negotiations with the LNG terminal
is one thing. It is similar to your “no negotiations” with Coleson Cove. You were not involved with
Coleson Cove. You had nothing to do with Coleson Cove. You did not get a signed contract,
because you knew nothing about Coleson Cove. Well, I will tell you that you lost $750 million in
retrofit money that you threw away at Coleson Cove, and you lost $2 billion in lost fuel because you
did not get a signed contract. Do not tell me that you know what you are doing. Do not tell me that
you think everything is favourable about Saint John. The last time I heard the minister make a
comment about Saint John, she said she did not like Saint John. She said this in the middle of the
city of Saint John: I do not like Saint John.
Do not come on to me about the city of Saint John. I will tell the minister that this government has
done a great deal of losing of money. There is the loss of money on the toll highway. Do not tell me
how much you lost. Do you know something? You lost $10 million a year in profit that was built
into that.
(Interjections.)
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Mr. Jamieson: Do you know something? I do get it. This government should have been at the bat
when it came to the LNG terminal. This government should have been in negotiations with respect
to this development, and it should not be the city of Saint John that is losing money on it. Everybody
would like to have their taxes cut by a third and then frozen for 25 years. Everybody would like that.
Do you know what happened in the city of Saint John? Taxes went up by about 12% last year. That
is the difference. People are not looking for a 25-year tax freeze. They are looking for fairness at the
table. The fairness is not being dealt out by this government. This government is abdicating its
responsibility.
Hon. Ms. Fowlie: I guess we can still see the continuing difference between a Conservative
government and a Liberal government. From where I sit, we are looking pretty good over here. The
member opposite wants to get into Coleson Cove and toll highways. I am not going to do that today.
Some members over here were saying that toll highways flew in the face of Equal Opportunity. We
could debate that some other time. You talk about Coleson Cove and the waste of money. Talk to
the people again in and around the city of Saint John who look forward to the cleaner air that is
coming from Coleson Cove because of the pollution control equipment that has been put on that
facility. They are not talking about a waste of money.
We can stand all day and discuss whether this is or is not Equal Opportunity. I would still say to the
member opposite: If you have any proof that this government was sitting in on these negotiations
that you say were behind the scenes . . . First of all, we are accused of being there and doing this.
We say that they should prove it. Now we hear from over there: Well, you should have been there.
We believe in local government and local decisions, and we support the mayor and council of the
city of Saint John with this Act, An Act to Comply with the Request of The City of Saint John on
Taxation of the LNG Terminal. That is what this piece of legislation is about.
(Interjections.)
Mr. MacIntyre: The member for Madawaska-la-Vallée has not been the same since Belinda crossed
the floor, and I do not blame him. I would be insulted too.
056 15:30
You fly up in a big corporate jet, and you buy her a bucket of chicken. Now she has crossed the
floor, and we are feeding her steak. I cannot believe it.
Mr. Chairman: It is starting slowly. I do not know if it is the warm air in here . . . Excuse me, I
have the floor. It is starting slowly, we are having other members talking. It was going well for about
an hour or so. The member for Saint John-Champlain has the floor and he is asking questions of the
minister. I caution the members on both sides who are slowly starting to heat up. Quiet down, and
listen to the speaker. Thank you.
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Mr. MacIntyre: I am sorry that I reacted to the member for Madawaska-la Vallée. He is such a nice
fellow, but I was concerned. Those big corporate jets were flying in for his annual party, and now
he has a hot air balloon. I do not know what else to say.
I think that I should be left to answer. Do you know what is really amazing? Even with this around,
the federal Liberals are so far ahead of the Tories that it is unbelievable. They are back to where they
were before the inquiry. Now having said that, we are not here to debate that today.
I appreciate what the member is saying, but he should really—I do not know how to say it—fermez
la bouche, or something like that. Is that a bad word? That is right. Fermez la bouche. He knows
nothing.
My question for the minister—I appreciate the comments in the House—is about the motion that
came from the city. There are two motions, but only one motion came forward. That motion asked
this government to provide amending legislation, but you did the exact opposite of the original
motion. It is interesting that at city council the other day, the mayor indicated that he did not even
recall a second motion. The second motion said that the city would like the government to do
amending legislation, if it had the authority to do so. When you look at your bill, you did the exact
opposite. When you say that you had no involvement in the bill, why would you do the exact
opposite that you were requested to do? You were not requested to write a bill like this, you were
requested to provide amending legislation if you had the authority to do so.
Hon. Ms. Fowlie: I am not quite sure what he is referring to when he says that I stood up and said
that we have no involvement in the bill. I brought the bill forward, and it was staff within the
departments who wrote on it. What I said was that we had no involvement in the negotiations. There
is a big difference between the word “negotiation” and the word “bill”. The other one has a lot more
syllables. Maybe that was why it was difficult to retain the word.
(Interjections.)
Hon. Ms. Fowlie: I have the floor. I have the floor. When I stop, I will sit down.
Mr. Chairman: The minister has the floor.
Hon. Ms. Fowlie: The member for Saint John-Champlain likes to start out with a lot of political
partisan digs. I guess that he might be finding it a little warm with that comment.
What I am going to read, for the benefit of the members opposite, is the letter that came from the
city of Saint John. If they wish it to be tabled, we can do so. It is addressed to me, at the address in
Fredericton. It says:
Dear Minister;
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At a meeting of Common Council of the City of Saint John held on March 14, 2005 Council adopted
two resolutions regarding the construction of an LNG Terminal in Saint John. The Terminal is a
joint project costing approximately $750 million, and will be owned by Spanish Company Repsol
and Irving Oil.
057 15:35
Common Council of the City of Saint John agreed to establish a specific tax zone for the terminal
fixing the amount due to the City from this zone at $500,000 per annum for 25 years. The resolution
reads:
RESOLVED that:
Whereas the development of this project is dependent on the taxation levels on this property
being set at a level competitive with similar existing and proposed terminals in Atlantic
Canada and North Eastern United States and existing terminals in North America,
Whereas the proposed project will create between 500 and 600 jobs during construction,
result in an approximate direct injection of $26 million into the local economy and create 20
permanent jobs,
Whereas the location of the terminal at the most eastern extremity of the municipal boundary
will not impose any additional costs to the existing property owners of this community,
Be it resolved that Common Council establish, insofar as it is within the City’s authority, a
specific, LNG tax zone to comprise only those lands on which the actual LNG terminal,
unloading facility and docks for the purposes of unloading LNG will be located and further
that
The municipal tax rate as otherwise determined under paragraph 87(c) of the Municipalities
Act be adjusted annually so as to fix the amount due to the City of Saint John from this
specific zone at $500,000. per annum for a period of 25 years.
At the same meeting, Common Council adopted a second resolution as follows:
RESOLVED that Common Council request the Provincial Government enact amending
legislation which would enable The City of Saint John to alter the Municipal real property tax
otherwise payable upon a liquefied natural gas facility to be located in the City, upon such terms and
conditions as the Council deems appropriate.
On behalf of Common Council of the City of Saint John, I respectfully request your support in
securing the appropriate legislative amendments.
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Yours truly,
J. Patrick Woods
Deputy City Manager/Common Clerk
It is very clear. What we have done, with this piece of legislation, will facilitate the city of Saint
John’s proposed municipal taxation treatment of the LNG terminal. It is a stand-alone statute,
specific to the Saint John LNG terminal. Okay? This will also foster the agreement that the duly
elected council of the city of Saint John has made while leaving overall assessment and taxation
system of this province intact.
Therefore, it is very important to understand that we are complying with the request from the city
of Saint John, no more, no less, the duly elected mayor and council of the city of Saint John.
Mr. MacIntyre: Are you finished? I hate to start. I would not want to be rude.
Our issue on this file is that this deal was made by the mayor alone at the time. We support the
mayor and council, because this deal was pawned off on the city of Saint John by this government.
You made the deal. You absolutely made the deal. No city council would ever make a deal like this,
unless it had the support of the provincial government. It had the support. Do you know what the
Premier said? He said: I support our municipal council. That is probably where the minister got it.
I support our municipal council.
Here is what you supported: The deal had to be done by midnight. Here we are, almost July 1, and
it is still not done. It had to be done by midnight. City council was not involved in it, not a bit. The
employees and senior staff were not involved in it. Senior staff . . .
(Interjection.)
Mr. MacIntyre: Skidder, just leave me alone for a while, will you? I am going to have to call Lois
again.
Senior staff were not involved in it. The night that this vote was taken, the vote was 7 to 4. It did not
have unanimous support. Even those who voted in favour of it said: We would have liked to have
more information. Did you have any information on this file? What is the reason for the $500 000?
I do not even know.
058 15:40
If the province wanted to give a financial deal, I would support it. This province should be providing
financial incentives. The minister is sitting there. I do not understand why he did not do it in the first
place. Then we will support it. Do some due diligence on the deal, and let’s do it.
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The LNG project itself is in my riding. We have said all along that we support the LNG project as
long as the . . .
(Interjections.)
Mr. MacIntyre: Go back to your bunker, will you. Belinda was right, she should have crossed the
floor.
Mr. Chairman: Let’s have some order.
Mr. MacIntyre: Mr. Chairman, I know that if we were rowdy over here, you would be calling for
order, so I am doing my best to ask a question of the minister.
I cannot remember where we were going. I am doing my best. I can tell you that any time you do
a large deal, you do some due diligence. So many things are wrong here. When we were dealing
with the Minister of Service New Brunswick, he said that the assessment, based on the information
the government had, was $5 million. I have heard the minister say today that it is $3.4 million. I
really do not know how much it is. The day the letter that was sent to the company was made public,
the company spokesman said that they thought it was high. What is the real assessment?
Our concern with this deal is the impact it will have on Saint John over 25 years. To argue about
who else would want an LNG site, you had better check that out, because LNG sites are hard to
come by. It is the fuel of the future. There will be a major supply within 10 years. There is no doubt
about it. This particular type of fuel has a very strong future. I know it does, and so do you guys.
When the minister says that they support the municipality, why would she put this tax burden on the
citizens of New Brunswick? Over 12 000 names of people who are opposed to the tax deal appeared
here on petitions. They did not say that they are opposed to the LNG deal. It is the tax deal, and that
is why I am here today. They are opposed to the tax deal. It should have been the province. Why
would you mortgage the future base of tax assessment in Saint John? Why would you, as the
government that is supposed to protect the people of New Brunswick, allow this to happen?
Hon. Ms. Fowlie: I think we can go around and around in this circle for a long period of time. If that
is what the member opposite wishes to do, then we can do that. I do think that the fundamental issue
they have is the fact that this was a decision of the mayor and council of the city of Saint John. The
member opposite referred to it as a 7-4 vote. That is still a majority vote of council. If everything
in this province had to be run on a unanimous vote of council, then there probably would not be a
lot happening in a lot of our municipalities. That is what democracy is about. It is the majority vote
of council.
I recognize that the members who voted for this have their reasons, and the members who voted
against it have their reasons. It is not up to me to be the judge on why they voted one way or another.
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It was their decision. There was no pressure put on the council members of the city of Saint John
to give a municipal tax concession to this facility. It was their decision. I think that is what really
bothers the member for Saint John Champlain, to think that he actually has a council in the city in
which he lives that will make its own decisions. That is the fundamental problem he is having with
this. He feels that only government can make these decisions.
That is not how we operate. It is not how this government operates. We will never operate that way.
Locally elected bodies can make local decisions. Council members felt, apparently, that $500 000
a year was sufficient municipal property tax to collect on this facility. That is why they made the
resolutions that they put forth.
059 15:45
I recognize that a petition came here from people who do not like the tax concession, but it was the
city’s decision. What we are doing here today is putting enabling legislation in place to allow them
to implement the $500 000-per-year property taxes that they are collecting on that facility. That is
as simple as it gets. It was their decision. They asked to be able to do it. They asked to have
legislation amended to allow them to do it. That is what we are doing here today. As for getting into
whether they should have been allowed to give up X number of dollars in property taxes, that is their
decision. They were elected by the people who live in the municipality of Saint John to make these
decisions on their behalf. If the people of Saint John appreciate these decisions, I am sure they
applaud them. If they are opposed, I am sure they let the officials know. This is a municipal
decision.
(Mr. C. LeBlanc took the chair.)
Mr. MacIntyre: I was involved in this long before the tax issue came up. I attended most of the
public hearings that occurred. I attended all of the meetings on Orimulsion in the riding. I was very
much involved in the issue of NB Power expropriating a pipeline—in favour of the company, which
was unusual.
At present, the people in the area do have some serious safety concerns. I asked many questions the
other day about safety. Communication is a huge issue there. There was a variance request before
city council last night that was deferred for a week. It seems that different people, attending different
meetings, have different concerns. The one thing we see that they have in common is the tax issue.
When we look at the tax issue itself, I was not surprised that you came up with the LNG bill. As you
may remember, I was saying in the House that when you tamper with the Municipalities Act, with
the Assessment Act and perhaps with the Real Property Tax Act, you will have a bundle of trouble
on your hands, that is for sure. When we look at the LNG bill, the only thing that surprises me is the
wording of the bill itself. It is a very simple bill, an Act to comply with the request from Saint John
to give a tax deal to the LNG project. It is a very simple bill.
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From Day One, the issue was that the mayor negotiated a deal alone, and it was clearly against the
intent of the Municipalities Act. That is why there is a common council that meets. This appeared
on the common council agenda all of a sudden. It had to be passed by midnight. You say that the
province put no pressure on the municipal government to approve this, but there was pressure to
approve the deal at the local level. The deal had to be done by midnight or it might have an impact
on the deal. I never really believed that. Through due process, they should have had better
information. They should have taken the time to review that better information. We would probably
have had a better deal, and we would not be into what we are into here today.
It has been our position that it is up to the province to protect municipalities. They had no legal
authority to make this deal. We have never said that we were against incentives, although we talked
about it earlier, and as a former Minister of Economic Development and Tourism, I do not recall a
provincial government ever giving a tax incentive to a private company. I know that this government
did it for heavy industry at one point. I do not recall ever doing it. I do not recall a municipality
having any authority to do this.
I am not going to get into the debate on Equal Opportunity. They did not have any authority when
this original legislation was brought forward, so this has been flawed from Day One. If the
provincial government is receiving $15 million per year in tax incentives and other related taxes,
that is $375 million that the province will reap from this bill. Why would the province not offer . . .
How can you blame a company? If you go to somebody who offers you a deal, you take the deal.
060 15:50
The province is going to make $375 million in other types of taxes—not the assessment, but other
types of taxes. So when you say that you have no municipal taxes to give them, you have $375
million in other types of taxes. Why would this government not have initiated negotiations with this
company, offered it an incentive, and take this off the hands of the municipality? Why would you
have not rescued this deal by taking some of the income that you are going to reap from this deal?
This deal benefits the whole province. Why did you not consider that?
Hon. Ms. Fowlie: Again, it gets back to the same fundamental principle. The government of New
Brunswick was not involved in this negotiation, this tax concession, however one wishes to refer
to it. It is our position, and it will always be our position, that it is a local decision and we respect
local decisions. I know the member opposite feels that the province should step in with major
incentives to attract this facility to the Saint John area. You see, if there were provincial taxes on this
facility, then maybe we would have taken a look at them, but there are no provincial taxes payable
on this facility.
In 1997 or 1998, the government of the day here in New Brunswick brought in—Oh, I thought they
said that they did not give tax concessions—legislation that removed provincial tax concessions
from ports. Dalhousie benefited from that—but the province lost money—Belledune, Bayside,
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Miramichi, Saint John are all considered major cargo ports. Provincial taxes were taken off airports,
and provincial taxes were taken off railways. So you see, the company that was looking at setting
up the LNG facility in Saint John, recognized that this was a major cargo port. There were no
provincial taxes payable, so they went to the municipality and had discussions with it. We were not
involved in it.
I am pleased that the member opposite is talking about all of the monies that were coming into the
province, and that we should be turning them over to the city. We do turn things over, maybe not
directly to the municipality, but we put more money into health care, we did not cut, we did not
freeze like the members opposite. There were more monies for universities, we did not cut or freeze
the funding for them like the members opposite.
I am pleased that there are going to be revenues coming into the province to help support the
programs that currently exist in New Brunswick to make New Brunswick a better place, to ensure
that we have quality health care, quality education systems, and that we can provide the social
programs that are so needed in the province.
This company did not ask the province to come in with any economic development initiatives. It
approached the municipality, and the municipality made that decision. Whether it contacted the
mayor and the mayor took it to council is something that the municipality needs to deal with. It is
not something that the province is involved in.
061 15:55
What I have in front of me is a resolution that came forth from a majority vote of the council in the
city of Saint John. I know that there are members there who do not support this motion that came
forth. That is what democracy is all about. They do not have to support it. Nobody is forcing them
to support it. They have their reasons why they did not; others have their reasons why they did. That
is a part of democracy.
I know, too, that it is very difficult to sit on a municipal council if you do not support something that
the council is doing. However, fundamentally, when the vote is taken, you have to support the
decision of that council. I know that is very difficult. You can speak against it, but, fundamentally,
it is a majority vote of the council in the city of Saint John that put this resolution forth.
Yes, what we have here today is a very short bill—a couple of pages—but it is doing exactly as
requested. It is an act to comply with the request of the city of Saint John on taxation on the LNG
terminal.
Mr. MacIntyre: You were talking about port facilities and airports. Most of those properties were
federal properties. They were not privately owned. You did not mention one private organization
that you ever gave a tax incentive to, although you did do it in the last two or three years for major
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industry. I do not recall ever giving that type of tax incentive to the private sector. I do not, but
maybe you do. My point is such a simple point. He who reaps should pay. He who reaps the benefits
should pay. What you are saying is that Saint John will reap the benefits. Saint John will get
$500 000 a year, the province of New Brunswick will get $15 million. Those are your figures. If you
took the $3 million from the $15 million, you would still get $12 million a year, times 25 years.
You say that you are just accommodating the city of Saint John. We are mortgaging the future
assessment base. I have never seen an assessment base mortgaged before, with no escalation clause,
for 25 years. That is my concern. It is the future generations we are concerned about. The province
had the capability, from the revenue, to support this project. That is what I am saying. I do not
understand why you did not consider it. You are the minister, but if I were an official of the
Department of the Environment and Local Government, I would be concerned if I saw something
like this coming forward. As a matter of fact, what you indicated to the Legislature changed very
fast. On a Monday, you said it could be next year, and the next day you introduced the bill. They
must have been working on the bill for some time.
The city council was elected, and it was moving forward really well. Things were going well, and
progress was being made. I supported city council. I know most of them, if not all of them. I guess
that I know all of them. Not only has this bill divided them, but I am concerned about the future. If
this bill passes here, it will go back to the city of Saint John, and this will continue. That is why I
felt that this government had an opportunity to get involved in this issue, to correct the deal. If you
are taking in $15 million and you have to give back $3 million as some sort of incentive . . . We
have done it. I think of Atlantic Yarns in the north. The minister is not here, but I would bet that we
put $75 million into that company. We did, and we are recovering it over a period of time. Why
would you not have done the same thing? That is what I am saying. Why a tax initiative?
Hon. Ms. Fowlie: I assume that the $15 million is the number of the member opposite. We have not
done calculations over here. As I listen to the member for Saint John Champlain talk, his issue
seems to be with the mayor and council of the city of Saint John. I would suggest that he take his
issues up with that duly elected body. He talks about any type of escalator clause. There was none
requested. If the mayor and council of the city of Saint John wish this to be put into legislation, then
request it.
062 16:00
What we have done with this bill is just exactly what was requested, no more, no less. It is putting
enabling legislation in place to allow the city of Saint John to collect $500 000 a year in property
taxes. That was what was requested, that was what was given.
If the member for Saint John-Champlain has issues his duly elected representation in the area, then
he should contact them. What we are doing on the floor of this Legislature is debating a bill that
merely allows the city of Saint John to comply with a commitment that it made.
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Mr. MacIntyre: I will make it clear . . .
(The committee recessed at 4:02 p.m.
The committee resumed at 4:14 p.m.)
063-064
Mr. MacIntyre: That part I could agree with. The point I was trying to make earlier about the
resolution that came to the province is this: I understood it was the only legal resolution, and that
was:
RESOLVED that Common Council request the Provincial Government enact amending legislation
which would enable The City of Saint John to alter the Municipal real property tax otherwise
payable upon a liquefied natural gas facility to be located in the City . . .
It did not request that you put in the legislation the terms and conditions. According to the solicitors,
this was the legal motion that went forward from the city. I will ask the question again, because what
you do with the bill ties their hands, totally, for all future councillors. It can never be amended, it
can never be changed. You have tied their hands totally.
065 16:15
If this bill is passed, it would allow city council to review the deal again and make sure that
everything is in order, and practice due diligence on the deal. That is what I was trying to say earlier.
Hon. Ms. Fowlie: What the member is saying might be quite accurate, if just the one resolution that
he is reading had come to the province, but there were two resolutions. I read them in their entirety.
The sections of the first resolution set the terms and conditions that the city of Saint John wanted
on the LNG facility. That is what this Act does. It complies with that resolution that came forth from
the city of Saint John.
Mr. MacIntyre: Did you consult with the legal staff and the mayor of Saint John before you
prepared the bill? You are saying that you are doing exactly what you were asked to do. Did you
write the bill, consult with the city of Saint John, and then ask if this was what they wanted you to
do?
Hon. Ms. Fowlie: We used the resolution that was passed by a majority vote of the council in the
city of Saint John to compile the legislation that you see before you today.
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Mr. MacIntyre: You developed this bill at the provincial level, and consulted with your staff, but
there was no consultation about the final terms and conditions of the bill prior to bringing it to the
Legislature. Did you not have any consultation at all with the city?
Hon. Ms. Fowlie: Part of the document that came from the city of Saint John was signed by J.
Patrick Woods, the Deputy City Manager and Common Clerk. It says: “On behalf of Common
Council of the City of Saint John, I respectfully request your support in securing the appropriate
legislative amendments.”
They set forth the terms and conditions that they wish to have in the legislative amendments. We
have complied with that request from the city of Saint John in this Act, which is duly entitled An Act
to Comply with the Request of The City of Saint John on Taxation of the LNG Terminal.
Mr. MacIntyre: This is my final question for this time. One of the concerns that is not directly
addressed in the bill is the fact that the actual site of Canaport is on the Red Head Road. I say that
it is a billion-dollar project on a 10¢ road. The road is really in poor condition. As a matter of fact,
with respect to the variance that was requested by the company for the tanks, the stack, and a couple
of lots, the comments by the city policy and the comments by the staff of the city of Saint John were
that this road is not in good condition.
We have said that all along. There is no secondary access road at all, but a document was prepared
that indicated that close to $7 million would be required to build a road that would accommodate
the needs of that area. Some of the people in Red Head support the LNG project, some are
concerned about safety, but almost all of them are concerned about the condition of the road. It
cannot be a win-lose situation, it has to be a win-win situation.
I just want to leave that comment with you. There is still no decision, no information, no money or
anything for what is probably one of the worst roads in the province leading to a major industrial
site.
066 16:20
Hon. Ms. Fowlie: The Red Head Road was part of the environmental impact assessment that was
done. What was being looked at was whether the movement of the materials for the construction of
the LNG facility would in any way speed up the degradation of that road. That was looked at by an
engineer, and the conclusion was that the movement of materials over that road for the construction
of the LNG facility would in no way expedite the deterioration of that road.
The member’s point is well taken. It is the city of Saint John that looks after that road. If the people
there feel they need to do some upgrades, that is definitely within their municipal purview.
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Mr. MacIntyre: This is my final comment to you, Madam Minister. I also looked at the
environmental impact study. You have serious erosion along that road. There are bridges there that
need to be repaired. It goes right through a 700-person subdivision. The traffic is heavy, the
equipment going there is heavy, and until the docking facility is built, there is no other way of
bringing it in. I will leave that thought with you. I think the people of Red Head should benefit from
this project as well, and I am not seeing that.
I am not asking for a response. I will sit down. Thank you very much.
Ms. Weir: I appreciate the opportunity to join in the process of questioning this very complicated
piece of legislation that the minister has tabled, just as my other colleagues in this House have
questioned it.
I note that Bill 70 is entitled An Act to Comply with the Request of The City of Saint John on
Taxation of the LNG Terminal. While I think that there are a number of other apt and appropriate
titles, such as the Irving Oil $100-million tax break bill or, as the National Post . . . I know many
colleagues on the government side clutch the National Post under their pillows every night. Of
course, when there are editorials that refer to the Irving oil tax Act scandal, they feel betrayed, but
not as betrayed as the Minister of Intergovernmental and International Relations felt when he saw
his beloved leadership candidate bolt for the Liberals. I think it has also affected his memory on a
number of important issues related to this bill, and we will deal with those.
I have been very clear in my opposition to this legislation. My opposition to this bill is based on the
way it totally destroys the principle of equity that has been the backbone of the property tax regime
in the province since the Byrne Commission and since its implementation through the Equal
Opportunity Program. We will be able to explore this in some depth, I think, because this bill
represents, without question, a pervasive attack on the principle of tax equity which, as I said to the
minister, provided the financial blueprint for Equal Opportunity.
I will begin with a few questions for the minister. I have been listening carefully to her discussions
with my colleagues from Saint John Fundy and Saint John Champlain. I have listened to her
assertion that this bill simply represents an agreement by the province to respect the wish of
common council in Saint John. I would like to ask the minister: If Saint John Common Council had
the legislative authority to make this decision, would Bill 70 be on the floor of the legislature?
067 16:25
Hon. Ms. Fowlie: If the legislation already existed to allow the city of Saint John to give the tax
concession that it was looking at, then this bill would not have had to be introduced.
Ms. Weir: I am a little puzzled because the minister has asserted continually on the floor this
afternoon that all her Cabinet colleagues and her government caucus colleagues are doing is
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respecting the wishes of the common council of Saint John. She refers to the two resolutions that
were forwarded to this government, and to the minister specifically. I am puzzled, and I sure that
the minister will be able to enlighten me, with the help of her officials. It seems to me that there
were indeed two resolutions, but she said yes to only one of those resolutions.
Indeed, the second resolution requested amending legislation to “ . . . enable The City of Saint John
to alter the municipal real property tax otherwise payable upon a liquified natural gas facility to be
located in the City, upon such terms and conditions as Council deems appropriate.” You did not say
yes to that. This bill is a fundamental refusal of that request. Is that not the case?
Hon. Ms. Fowlie: As I said when introducing the bill, it is important to understand that a separate
Act was needed because the existing legislation with respect to municipalities, assessment, and real
property tax Acts is provincial legislation of general application. The LNG terminal is an industry
unique to Saint John. That is why this proposal made a one-time exemption without giving all
municipalities extended powers or transforming the property assessment and taxation system in the
province.
As I have said before, if other similar requests are presented to the province, they will be looked at
on a case-by-case basis. This is not a facility that New Brunswickers are competing to have in
different parts of the province. We are not prepared to amend any legislation that just unilaterally
allowed municipalities to give tax concessions to all properties within their municipality.
Ms. Weir: We are well aware of the unique demands of siting an LNG terminal. One of those
unique demands is that there be a body of water to get the ships in to the terminal. We also know
that this site was not the preferred site of the Saint John harbour pilots who had, in fact, in 1976,
designated Tiner Point near Coleson Cove. To my colleague from Charlotte, I think I am correct on
that. That provided a better siting for an LNG terminal. This is the site that was recommended
because it has the unique aspect of actually having some water attached that will allow the ships to
get in.
In addition to that, there is the LNG jetty. Through the botched, bungled Orimulsion deal, NB Power
paid Irving about $42 million to assist with the construction of the LNG jetty. The LNG jetty was
a certain incentive as well. I am not sure that they could drag the LNG jetty up to Madawaska-la-
Vallée. There are clearly limited sites in New Brunswick that would, in any way, be able to apply
for this facility, aside from the expropriation work that had already been done as a result of the
botched, bungled Orimulsion deal.
068 16:30
The minister has indicated, in identifying the Acts, that they are of general application. Does the
minister, with the advice of her officials, not also agree that the reason we needed this legislation
was that the Acts to which we have referred—the Assessment Act, the Real Property Tax Act—were
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the essentials of the Equal Opportunity regime flowing out of the Byrne Commission? One of the
primary recommendations of that commission was that there would never be any municipal property
tax concessions in the future. Is that not the case?
Hon. Ms. Fowlie: With regard to the Assessment Act and the Real Property Tax Act, and to some
extent the Municipalities Act, you are right. They did flow from the Byrne Commission. The issue
of tax concessions seemed to come up primarily in the context of debating the introduction of the
Assessment Act in 1965, not when the new Municipalities Act was introduced. It did come up during
discussion of the Assessment Act. The Municipalities Act was drafted in the context of Equal
Opportunity, which was basically abolishing county governments and so on. I am sure the member
opposite is well aware of that. As for the Act itself, as you know, the Municipalities Act did not
address the matter of tax concessions.
When we were looking at this request from Saint John, we felt that in order to address this request
from Saint John, it should have been a stand-alone piece of legislation rather than amendments to
these Acts, because if we started amending and changing these Acts, one could see it as possibly
undermining the integrity of the provincial property tax system which flowed from Equal
Opportunity. We felt that we did not want to amend those pieces of legislation, but that this was a
one-off type of situation. The city of Saint John wanted us to bring this in, to allow it to comply with
the commitment that it had made. That was why a stand-alone piece of legislation was introduced.
Ms. Weir: The minister and I operate in altered states of consciousness, because I do not know how
a $100-million property tax break is anything less than a complete contravention of both the
principles and the language that we had incorporated into those statutes which provided the principle
of equity in taxation between individuals and corporations and that assessments were to be on the
basis of the real and true value of property.
069 16:35
I know the minister and her colleagues are, I would hope—I am not referring to officials but to
government colleagues—keenly aware that your government’s handling of this issue and, of course,
the decision by common council, has produced, regrettably, a set of winners and losers in this issue.
Obviously, the Irvings are the winners with $100 million plus to the good. The loser is the common
council.
We had elected a new common council, a large majority of first-time members which is remarkable
in a system where you do not have wards but members are elected at large. I think that no matter
what side of the House, my colleagues from Saint John would agree that there was an enormous
amount of good will invested in this new council. There was so much good will invested in this
council, in fact, that council was able to impose a property tax increase on residential property
owners that had a broad consensus in the community.
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I attended several of the public forums, town hall meetings that the mayor and councillors held.
They talked about the need for revenue for the city, because we have the oldest infrastructure in the
province. We had another water main problem yesterday. We had, last year, boil orders for the city.
We have an aging road system. For all those reasons, and the need for municipal fire and police
protection, again in an aging city that has, as the minister knows very well, a very large geographic
area to cover. I was truly, truly impressed by the consensus in the community to support that tax
increase. Citizens believe that that money was need to provide these essential services in the
community.
Literally, the very same week that they are opening up their tax bills, council took this decision. I
agree that it was taken by a democratic vote, but I am sure that the minister is aware as well that part
of what is fuelling the citizen fury at this decision . . . I cannot describe it in any other way. We had
a meeting of the Planning Advisory Committee last night in Saint John. How much more routine and
boring can something be than Planning Advisory Committee, and there were almost a riot there. I
think one of my colleagues, perhaps my colleague from Saint John Lancaster, talked about the doorro-
door survey that was done in the member for Saint John Portland’s riding, and the results that that
brought.
I simply have never seen the level of anger in the community at the decision—and I would say at
how the decision was forced on council. To have a leading corporate citizen walk in and tell our
elected council they had to make up their minds by midnight or the deal was done. What they should
have done—and I know that there is a councillor here and that there were several councillors who
believed that—was to say: Fine. Give us your request, and we will take a look at it. However, the
good will that had been invested in our common council is gone, and that council has several years
left in its mandate. It is going to be very difficult to mobilize people to move forward in the future
when we have this legacy.
I am trying to get back to the ministers argument: Well, gosh, they asked for it, so we agreed that
we would do it. I am thinking: Okay, they asked for something that they do not have the lawful
authority to do. Will you say yes to any request that common council puts forward to you that they
do not have the lawful authority to do, because they asked for it?
070 16:40
In a situation where you are required to amend long-standing pieces of legislation that involve the
principle of equitable taxation, that is done in an atmosphere where citizens literally have no
information on the real finances of this project, did you not contemplate for a moment, as the
minister responsible for municipalities, that maybe there was time for sober second thought, that you
did not have to literally jump to the request?
I am still, and I think my colleagues here, too, are still a little taken aback at how this complicated
piece of legislation has arrived here.
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On June 7, 2005, 10:07 a.m., ADT, the CBC reports that the New Brunswick minister responsible
for local government, Brenda Fowlie, says it could be months before the province makes a decision
to approve a special law to allow Saint John to give a tax break to a new $750-million liquid natural
gas plant. On June 8, 2005, 1:34 p.m., the New Brunswick government introduces a special law that
will allow Saint John to give a large tax break to Irving Oil as an incentive to build the new LNG
terminal. In New Brunswick, apparently a month is not as long as it used to be.
I would ask the minister, because we have had a number of figures batted about here this afternoon,
just to confirm . . . There was a letter dated March 10 where the president of Service New
Brunswick—I know that he is a very close personal friend of my colleague from Saint John-
Champlain.
(Interjections.)
Ms. Weir: Yes, it is a very good letter. I am glad that you are here.
He said that without Saint John’s tax concession, the annual municipal property taxes for a proposed
LNG terminal would have been in the $5-million range.
The $5-million dollar estimate for the local facility was calculated using the current municipal tax
rate, and the estimated total property assessment of the LNG facility, to be in between $220 million
and $225 million, including land, site improvements, pipelines, and buildings.
Confirmed.
Jerry Carroll,
Manager of Valuation for Service New Brunswick
I would like to ask the minister to confirm that the $5-million figure is, in fact, the figure that we
should be using in this debate.
Hon. Ms. Fowlie: There is some difficulty in putting a number on this for the list of things that the
member opposite talked about. I do want to amend or correct something that was said earlier.
071 16:45
When I was looking at it, I had to do some very fast calculations when this discussion came up
previously with . . . I am not sure which members opposite. I said it would be around $3.6 million.
I had asked them about a $200-million assessment, but when you look at an industrial assessment,
it is like one-and-a-half times. That would be based on a tax base, if you were to say it was $300
million, you take the $200 million, one-and-a-half, $300 million, it would be around $5.4 million
on the property taxes.
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However, with respect to the list of things that the member opposite has read off in regard to
buildings and so forth, it is difficult to say what the LNG facility in itself will be assessed at. This
tax incentive that the municipality is offering, is on the dock. It is going to be only for . . .
The definition that we are using for LNG terminal is the marine terminal for the receiving and
containment of liquefied natural gas. Basically, it is going to be for the offloading facility and the
storage tanks. Any accessory buildings or regasification unit, will be fully taxed. It is hard to put a
number on it at this time until the actual facility is sitting there.
Ms. Weir: I appreciate that. However, I am quite taken, because we are not dealing with a letter here
to Joe Public. Here we have the president of Service New Brunswick writing Kenneth Irving about
the valuation of that terminal. Either Mr. Dubé lied to him, or Mr. Dubé is used to just picking
figures out of the air.
This is not a casual piece of correspondence. You have the president of Service New Brunswick and
the manager of valuation for Service New Brunswick. I do not think that they are sitting there,
scratching on the back of a pad when they are actually putting down on paper to the owner of this
project, clearly what will be critical information in their decision-making.
Is that how public servants work in your government? I do not think so for a minute. I think this was
a very serious valuation by the two highest civil servants. It is a clear commitment of information
to Mr. Irving and not just idle speculation. How could you categorize that as idle speculation or
some kind of preliminary calculation? I would astounded if that is how business was done at this
level. If it is, we are in worse trouble than we thought.
Hon. Ms. Fowlie: The calculations that you are referring to are based on everything that was
included in the Environmental Impact Assessment for the LNG facility, whether it was a
regasification unit, or any type of gas lines, administration buildings, and these types of things.
Those were included in the Environmental Impact Assessment and therefore, in you calculation list
that you have.
For the purpose of this piece of legislation, all that will be included, for the purpose of this
municipal tax, is going to be the facility for the offloading of the LNG, and the storage tanks. Within
the EIA, there can be up to three storage tanks. The numbers that you are looking at there from the
staff in Service New Brunswick was based on the maximum according to what was put in the EIA.
For the purpose of this legislation here, the only thing that will receive the municipal tax concession
that the city of Saint John committed to, is the offloading facility and the storage tanks.
Ms. Weir: Are we not already at the maximum that was in the EIA? Was that not announced? You
said several times on the floor to me recently that the EIA contemplated the maximum, and that is
where we are going to be in terms of tanker volume, production.
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072 16:50
That was part of that announcement just the day after the legislation was introduced, and gosh, that
agreement got signed with Repsol, and all of a sudden we are going to be doubling production, at
the very least. Surely Mr. Dubé was aware of that in making that valuation. That is exactly where
we are.
Hon. Ms. Fowlie: Within the EIA, as I said, that calculation was done based on the maximum
allowable in the EIA. Right now, the plant in itself is proposing that it does build the maximum of
three tanks that were referred to in the EIA. As I am saying, that calculation was also done on the
other facilities that may need to be attached to it, such as a regasification unit, administration
buildings, and so forth. They are not included in this piece of legislation.
The other thing that I note the member . . . One thing she pointed out was that the PAC meeting in
Saint John was routine and boring. I had an opportunity to sit on the PA committee in the town of
Quispamsis for four years. I thought it was quite interesting. It was a fascinating meeting to be at.
The other thing you are referring to in regard to a couple of newspaper articles from June 7 and June
8 in which I talked about the legislation, that it could be months—well, it could have been. Actually,
that interview was done the morning of June 6, and as I have stated to the media since that, it could
have been a lot longer. I was not prepared to bring forth any legislation until we knew that the
company had signed a contract for an LNG supplier. Later that day, I was informed that the
company had, in fact, signed a contract with the supplier, so I was prepared to introduce the
legislation on behalf of the city of Saint John. I made that very clear to the media. I am not sure if
they have reported it in any of their articles, but I thought I would have that on the record.
With the numbers that we are referring to here, it is very, very difficult to put the actual numbers on
what the LNG offloading facility and storage tanks are going to be valued at. We do know that the
maximum there that you indicate is somewhere in the are of $5.4 million for everything.
Ms. Weir: In that case, could perhaps the minister explain to me if they do not know the details of
the valuation, or the final estimates on the valuation, why are they prepared at this point to limit the
amount to be paid to $500 000 a year?
Hon. Ms. Fowlie: We are well aware of the fact that the facility in itself will be valued at an amount
higher than what they would normally . . . I guess $500 000 would not be the normal taxes received
on the facility. We are well aware that there will be a tax incentive there that the city of Saint John
has given to the company in order to set up in the area. There will also be municipal taxes paid on
portions of this facility.
What we are not aware of right now, is what the municipal taxes will be that will be collected
associated with this facility for any auxiliary buildings regasification units, and so forth. Above and
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beyond the $500 000, there will still be municipal taxes that the city will collect outside of the
offloading facilities and the storage tanks. I do not have a number for those at this time.
Ms. Weir: I want to thank the minister for that answer. Of course, this is also a kind of double
whammy where you have the pitiful contribution from this lucrative project to the municipality of
Saint John. If I seem irked by this, it is because of the amount of time I have spent on the floor of
the Legislature arguing that the needs of the city of Saint John have not been fairly reflected over
the years in terms of unconditional grants, or other funding.
073 16:55
Of course, the previous decision by this government to cut a special property tax deal for heavy
industry particularly hit Saint John because of the location, and the concentration of heavy industry
in this city. At a time when we are doing everything we can to grow, both the residential tax
component as well as the commercial and industrial tax base, to unilaterally set a precedent by
literally giving away this revenue is more than a little frustrating.
I know that in the previous go round, when the minister of Business New Brunswick was involved
with the then-Minister of Finance, our good friend, the former Minister of Finance who had a
penchant for $97 cheeseburgers, when we had the debate at that time, I was quite baffled by the
logic that this tax break was specifically designated for struggling industries. Of course, there were
a number of industries in the logging sector, and, as we know, some of the pulp mills in the province
and sawmills have been going through some difficulty.
Inexplicably, the Irving Oil refinery got slid into that mix. We all know the tough times that the oil
industry has been having over the last few years. We know the sacrifices that it has made to ensure
that there are fair energy prices.
In fact, another request that was put to you from the city of Saint John was for an investigation into
the prices that Irving Oil charges for home heating fuel, and for gasoline, because of the
investigative work that CBC had done comparing heating prices in the other provinces, particularly
in P.E.I., which has a regulated market. I am looking forward to your agreement to put in place that
investigation. That is something the city of Saint John council did ask for. Maybe I missed the
announcement.
Tied into that, of course, is the position that this government has taken, that because Canaport and
the LNG facility beside Canaport that would fall under . . . That would be exempt from provincial
property taxes because, of course, it is a major cargo port. I know the minister has her officials there.
I have asked about this because I am acutely aware of the regulation as it is drafted.
I am also acutely aware, as is my colleague from Saint John-Lancaster, of the strenuous efforts that
the oil industry has made to escape this kind of designation. The language of our regulation is that
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this is a major cargo port involved in the longshoring industry. The oil industry in Canada, including
Irving Oil, has gone to great lengths to not be captured by this definition. The great lengths it has
gone to have included the Supreme Court of Canada.
The oil industry has fought tooth and nail, and been able to argue successfully that the loading or
unloading of petroleum product bulk vessels is not part of the longshoring industry. The precedents
confirm that in order to be part of the longshoring industry, there is a requirement for the
commercial marine transportation of goods and merchandise.
The Canada Labour Board and at the Supreme Court of Canada most recently, in a 2002 decision
now known as Wood Chips, Irving Oil in fact argued that their operations do not involve the loading
or discharging of seagoing commercial cargo, that they are not involved in the longshoring industry.
In order to be part of the longshoring industry, there is a requirement for the commercial marine
transportation of goods and merchandise.
074 17:00
In the Halifax Offshore Terminal Services decision, the Canada Labour Board found that oil and gas
companies who were transporting their goods to and from exploration sites by vessel—which did
require some loading and unloading and some related dock work—did not constitute employees
performing tasks employed in the longshoring industry.
I would put it to the minister that not only should this company be paying more to the municipality
in terms of its property tax assessments, but I would like to hear her argument for how it can be
exempt from provincial property taxes. I simply do not understand how you can appear before the
Supreme Court of Canada and argue that you are not involved in commercial cargo, you are not
involved in the longshoring industry as part of a commercial port facility, and then come before the
province and say: Oh, oh well, now. If we do not have to pay property taxes, then by gosh, we sure
are part of the longshoring industry, and we are involved in the commercial transportation of cargo.
I would like the minister to make a clear and definitive statement on how the Supreme Court of
Canada’s decisions can apply in one aspect, and somehow not be applicable to this clear and specific
definition that requires this industry to be part of the longshoring industry in order to escape
provincial property taxes. It is not part of the longshoring industry. It has spent hundreds of
thousands of dollars in legal fees, I am sure, to make sure that it is not part of the longshoring
industry. So, if it is not part of the longshoring industry for the purposes of the people that it
employs to do the work, it cannot have it both ways.
Hon. Ms. Fowlie: Under our property assessment Act, we have a definition of major cargo ports,
to which this does apply. It falls under there, under the definition. What the member opposite is
referring to is different labour laws in regard to port facilities. It does not in any way have any
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impact or implication on our property tax assessment for cargo ports. You are talking about two
different things. You are talking about labour laws and property tax assessments. We feel that this
is not applicable in this case.
Ms. Weir: I did not think you did that very often, in front of the Supreme Court of Canada. I thought
that when it came down with the definition of what a major cargo port is, and what it is to be
involved in the longshoring industry, it does not . . . I have a colleague here, I think, who can speak
to it very well.
You cannot walk away from definitions that the Supreme Court of Canada rules on. For the minister
to argue that somehow what the Supreme Court of Canada says only applies in this narrow situation,
I think flies in the face of jurisprudence. Actually, I would love to hear a few Supreme Court judges
hear her take that position. They would be very charmed to have your representatives in the
Department of Justice up in front of them arguing that point, that their definition . . . we are not
talking about one court case, we are talking about court case, after court case, after court case. My
colleague from Saint John-Lancaster probably has the list. I have some of them.
075 17:05
What I am saying is that I do not buy the minister’s argument at all. I do not buy it. We have clear
jurisprudence on what a major cargo port is, and even your regulation talks about being involved
in the longshoring industry. The Supreme Court has said what it is to be part of the longshoring
industry, and the oil and gas industry ain’t part of it.
I would urge this government and the Cabinet colleagues to maybe just try to find a better argument
than what they have been coming out with. They have taken—as odious as that $500 000 a year
insult to the city of Saint John is in terms of the municipal property taxes—what is even more odious
for this government . . . and that is where the backroom deal was, my friends, that is where the back
room deal was to come up with this construction that somehow provincial property taxes that this
facility is exempt, at least part of it, from provincial property taxes.
I would like to ask the minister, for the benefit of members, to make it clear to us when exactly was
the ruling made that this facility was exempt from provincial property taxes.
Hon. Ms. Fowlie: It was in 1997-98 that the major cargo ports were included under the legislation.
It was early this year, the winter of this year, that the province was asked the question with regard
to an LNG facility whether it would be included under the major cargo port exemption. The staff
in the department looked at all of the criteria that was associated with a major cargo port, and did
feel that the LNG facility qualified under the major cargo port.
Ms. Weir: I know that in the letter of March 10, Mr. Dubé also confirmed that assertion that it
would be exempt. I want to ask, because I have read that 1997-98 regulation.
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076 17:10
I know what it was intended to deal with, and that was the devolution of federal port lands after the
port authorities, the independent port authorities were established. I would like the minister to
confirm that Canaport and those LNG terminal lands where that project is were never part of those
federal port lands. That has always been a private oil terminal. Is that not correct?
Hon. Ms. Fowlie: The Canaport facility did not pay provincial property taxes. It was exempt from
provincial property taxes. I guess when the changes came in with regard to major cargo ports,
Canaport facility at that time was not paying provincial property taxes. Service New Brunswick
looked at it to define the boundaries, to define that as a major cargo port. I think those boundaries
were actually defined in 2003. There were no provincial taxes being paid on that facility at that time.
Ms. Weir: I would ask the minister to clarify . . . a bit arcane. Certainly, property tax law is not my
area. I would like the minister to confirm that Canaport has never paid provincial property taxes in
all its years of operation.
Hon. Ms. Fowlie: I do not know if we can get into that question. I do not know when the Canaport
facility was constructed.
077 17:15
We do not have a year. Under section 4(4) of the Assessment Act, which came into effect in 1981,
it says:
Notwithstanding subsection 3(1), and not withstanding subsection 5(1) of the Real Property Tax Act,
provincial taxes or rates shall not be calculated of levied on crude oil storage tanks connected with
an oil refinery or on pipe lines connecting such tanks to the refinery when such crude oil storage
tanks or pipe lines are used solely for supplying crude oil to the oil refinery for the sole purpose of
manufacturing or producing petroleum products.
We know there was an exemption given in 1981, but whether there were property taxes previous to
that, I cannot answer that.
Ms. Weir: Thank you. I am just getting a little dry. It is not the minister`s responses, it is just the
air in here.
We do have more information, that in fact there was confirmation given, that the LNG
facility—from this government`s point of view, and this was a decision of this government—would
be exempt from provincial property taxes. Mr. Dubé reflects that in his letter to Kenneth Irving.
Consequently, I would submit that this is a classic case of two wrongs not making a right. I have
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actually a couple of amendments that I will be making to this bill. In the course of that, I will
continue to talk about why I believe this is just such fundamentally bad public policy.
It is important for members of the Legislature, and I know my colleague, the Minister for
International Relations and Intergovernmental Affairs will remember this very well, and I listened
to the minister just talk about her support of Equal Opportunity because of what that meant in the
provision of services for people in rural . . .
(Interjections.)
Ms. Weir: I am getting there, my friend. I will tell you, that after the bad decisions you have made
about who you support for leadership, you want to listen to a little bit of history. It was 1963. I am
sorry Mr. Chairman, I cannot resist. I know the minister is nurturing a broken heart.
In the course of this, to remember that as I pointed out to the minister, that Equal Opportunity was
not simply about the provision of services. It was about a revolutionary restructuring of property,
of how we tax property in New Brunswick. It was revolutionary in North America. It is also
instructive to remember who the principal foe of Equal Opportunity at the time was. It was K.C.
Irving. It is instructive to go back to those debates. The reason why K.C. Irving so vociferously
fought the principles of Equal Opportunity and the new property tax regime was because it
eliminated the property tax concessions that he had so successfully wrought from municipalities,
and local councils, around the province. I read some of them in a previous debate, at the end of the
Byrne Commission report where you unfold those long schedules that listed all the existing property
tax concessions.
At the time, this was not any kind of polite debate. This was a debate where you had one opponent
who owned all the media outlets, virtually, in the province and who used the Daily Gleaner to incite
people in the community. To think that we had a Premier of this province who received death
threats, whose children went to school with armed guards, a Premier who, I have to say, was a man
of extraordinary social vision.
078 17:20
All members of this House, we spoke, we rose in our places and spoke about the legacy of Louis
Robichaud to New Brunswick when he passed away.
I would put it to my colleagues in the Liberal opposition that you have an obligation to defend the
legacy of Louis Robichaud when, once again, we have another Irving interest coming to this
Legislature to do exactly what Louis Robichaud abolished, and that is to secure favourable tax
concessions that set the scenario in the future for eroding the scheme of equitable taxation that we
developed.
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(Interjections.)
Ms. Weir: I have already told the minister that I will take no guidance from him on the issue of
leadership since his judgment is so deeply flawed, and he is nursing that broken heart today.
I would submit that there is nothing that can actually cure this bill other than its defeat. That is the
only thing that can cure it. However, we have an obligation as legislators to try to protect the
interests of the members of our constituencies, and the members of the public by ensuring that if we
participate in the adoption of legislative change, that in fact it will be public policy that is in the
interest of the broader public. Clearly, this piece of legislation fails on all those criteria.
In an effort to be eternally helpful, I prepared a few amendments to the bill, and I am sure my
colleagues on the other side will want to give them careful consideration. The first amendment that
I would introduce to Bill 70 amends section 2, subsection 2 by the addition of paragraph (a) as
follows:
Proposed Amendment
Ms. Weir proposed the following amendment:
Paragraph (a)
There shall be an annual independent review by the Auditor General of the amount of municipal tax
payable of $500 000 to determine if that rate reflects the real and true value of the property.
(Interjections.)
Ms. Weir: Percy, would you go and get tutored in the rules for once. How many years have you sat
here, how many years?
(Mr. Chairman read the proposed amendment, and the following debate ensued.)
Debate on Proposed Amendment
Ms. Weir: Thank you. I think what this amendment clearly contemplates is to provide a safeguard
for the interests of the ratepayers of the city of Saint John by ensuring that the real and true value
of the property, which is the principle that we have used to value property in New Brunswick, is the
basis for evaluation.
079 17:25
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Of course, as was pointed out in debate today, the fact that we are losing our Auditor General will
not impede in any way the capacity of this office to conduct this review, because, we were told,
there are 25 auditors, in fact, at work in the department. As they periodically review, using the new
accounting principles to determine what kind of cost-benefits there are as a result of the delivery of
services to the public, clearly the Auditor General`s office is one in which we have the confidence
to conduct this kind of independent review.
I would also put it to government that if it is so committed, and so convinced, that this is an
equitable deal, a good deal for the residents of the city of Saint John, that it will have no problem
whatsoever in supporting this amendment. What this will do, is clearly permit citizens to have the
kind of information that they have been denied throughout this debate. As a result, this afternoon
there is new information that we now know.
This whole decision around exempting provincial property taxes, is one that is just about as fresh
as that letter from Jacques Dubé to Kenneth Irving. The one thing we know the Auditor General will
not be doing is looking into Kenneth Irving`s eyes when he conducts his review.
It is clear that the intent of this amendment is to provide clear information to the citizens of Saint
John, and to citizens of New Brunswick. That would be accomplished by way of the review by the
Auditor General on an annual basis. Consequently, citizens could then make their decisions.
The amendment I think is self-evident. It indeed approves a bill that desperately needs improvement.
I would urge my colleagues in the Legislature to support this amendment. They may even wish to
speak on the amendment because of its wisdom, and assistance to government.
Hon. Ms. Fowlie: I will speak briefly on the amendment. The point of the amendment is actually
moot. We already refer in our legislation to the $500 000 being based on an artificially set
assessment for that property. By adding that to the piece of legislation, basically what the member
for Saint John Harbour is trying to say is that in the first year after the LNG facility starts coming
in under this $500 000 a year, the Auditor General takes a look at it and says that it is not based on
your true assessed value of that property, and turns it down.
That is what she is trying to do here, but what we are already saying in the legislation, is:
Notwithstanding the Assessment Act, the LNG terminal shall be assessed for any year referred to
in subsection 2(2) at a value that will realize $500 000 as the amount of the municipal tax for that
year.
We are also saying, which shows that we recognize that that will be an artificial assessment,
Notwithstanding subsection 1, the tax imposed on the LNG terminal under subsection 5(2.01) of the
Real Property Tax Act shall be calculated for any year referred to in subsection 2(2) on the real and
true value of the terminal for that year.
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We recognize that it would be an artificial value that is being set on it for the $500 000.
Members on this side of the House will not be supporting that amendment.
080 17:30
Mr. Lamrock: Let me say very quickly on behalf of the official opposition, that we will certainly
be supporting the amendment. I do want to make a couple of quick comments about the legacy of
Equal Opportunity. Certainly, we on this side of the House, all of us who stand today under the
banner that Louis Robichaud once stood under, need no reminders from members of any other party
about the vital legacy of Equal Opportunity.
Let`s be very clear. The way to be true to the legacy of Equal Opportunity is to defeat this bill, not
amend it, not tinker with it, not change it, but defeat it. The legacy of Equal Opportunity went out
the window the minute the government decided that it was time for municipalities to get back into
the business of negotiating their own tax breaks. You cannot tinker with that, you cannot play with
it. It is fine with us if the Auditor General wants to look at it. It will be a standing monument to the
folly of this approach.
Let`s not kid ourselves that this amendment is the ultimate litmus test of feasance to the legacy of
Equal Opportunity. The feasance to the legacy of Equal Opportunity will be acknowledging that the
defeat of this bill says very clearly that it is the province that is charged with promoting all areas of
the province equally, whether rural or urban, Anglophone or Francophone, north or south. That is
the principle we will stand up for.
If the Auditor General wants to look at it, if he has the resources, that is great. Monitoring what has
happened is not the way we protect Equal Opportunity. We protect Equal Opportunity by saying:
Sorry, folks, go back to the drawing board.
The provincial government should do the job it always should have done and be a player at the table
for all New Brunswickers and all communities equally.
Proposed Amendment Defeated
(Mr. Chairman put the question, and the proposed amendment was defeated.)
Ms. Weir: Again, I would like the minister to take the opportunity to clarify and get on the record
the impact of this bill in terms of the tax concession for the LNG terminal. The city of Saint John
gets an unconditional grant of around $18 million a year from the province. The calculation behind
it includes the tax base or the totalled assessed value of all properties within city limits as an
indicator of the city’s ability to collect revenue.
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In theory, the higher tax base per capita, the better a municipality’s ability to raise tax revenue, and
the less money it should need from the province. If the tax base goes up, generally the grant goes
down.
We do not know, yet, all of the information clearly in terms of what the Irving Oil-Repsol LNG
terminal is going to be assessed at, although clearly the department has been working on some
ballpark figures. I want to ask the minister to confirm that there will be no impact, in terms of the
funding formula, for the city of Saint John as a result of this bill.
Mr. Sherwood: May we revert to the Introduction of Guests while we wait for an answer?
Hon. Members: Agreed.
Introduction of Guests
Mr. Sherwood: I would like to introduce a hockey legend from Saint John. His name is Ivan
Vautour, and he is in the audience today. Ivan played in the NHL for a few years. He was assistant
coach of the Saint John Flames for a number of years, and he also coached Midget AAA hockey in
Saint John. Ivan has been a long-standing citizen of Saint John. I am sure that Ivan is here, looking
forward to seeing the result of this vote. It probably will not happen today, unfortunately, but I
would certainly like to introduce to this proud House a hockey legend from Saint John, Ivan
Vautour.
081 17:35
Debate on Bill 70
Hon. Ms. Fowlie: For the purpose of the unconditional grant, you are right, there is a formula in
place, and that formula is in place for the next four years. To say what impact this will make on the
unconditional grant for the city of Saint John, for four years there will be no impact. At the end of
that four years, a new formula will have to be agreed to, and a new system, I guess, of unconditional
grant. It would be looked at at that time, but right now, there will be no impact on its unconditional
grant.
Ms. Weir: Perhaps the minister can confirm that we are really looking at 2009 and beyond. My
question to the minister is not for the immediate situation, but for the future if the LNG facility is
factored into the tax base for the city. The existing tax base of the city is $4.2 billion. If that gets
factored into it, in 2009 and beyond, clearly will that not impact the funding formula, or the potential
funding formula, for the city of Saint John?
Hon. Ms. Fowlie: The member opposite is quite right, referring to the unconditional grant for 2009.
What can be done in 2009 is . . . there are many components that make up the unconditional grant
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for different municipalities throughout the province. Right now, of course, we work on the one that
expires in 2009. We fully believe that there will always be a component of the property tax, the tax
base, that will be included in an unconditional grant. So what can be done in 2009—or late in 2008,
whenever the legislation is looked at for the unconditional grant—is that you can include that in
there, as part of that tax base for the purpose of calculating Saint John’s unconditional grant, the
artificially assessed rate for the LNG facility. That would not impact . . .
I know what the member is trying to say. If it were in there at the true assessed value, it would have
a major impact on the unconditional grant, but the artificial assessed rate could be put in there each
year. You could put that as part of your formula so that impact would not happen.
Ms. Weir: The minister has picked my point quite clearly. The reason I am raising it is because of
the comments from the executive director of the Fiscal Policy Division for the Department of
Finance, who, in referring to this project, said it is a unique issue, that the city has revenue-raising
ability, it is just not choosing to use it. Can I ask the minister, is this government prepared to make
a commitment, a legislative commitment that will ensure that the artificial $500 000 rate is in fact
what is included in the tax base, and not the real value?
082 17:40
Hon. Ms. Fowlie: There is some difficulty in responding to that question. As we know, currently,
within the province under the unconditional grant, we have set the amounts for the next four years.
We do not know at this time if, going forward, if it will be a basic grant or if there will be a formula
that devises a new unconditional grant. It could be that the grant that currently exists continues on
with some increases.
So it is very, very difficult to say whether that, even with that tax base, is going to be something that
is included and it will go forward in that time frame . . . it is whatever happens in 2008 in regard to
the unconditional grant. This can be looked at. If a property tax base were utilized as part of that goforward
grant, then we can definitely look at the artificial assessment for that facility.
The monies involved in that probably would not be of great financial impact. We have no guarantees
on a go-forward basis that that is going to be part of a formula, or even that there is going to be a
formula.
Ms. Weir: I am aware of this being a fluid issue, but it has been clear that officials have been
prepared to do some ballparking on other things. I am raising this because there was an analysis
done on this based on the current formula. It was an independent review, based on the current
formula. That calculation, done by a former UNB Saint John professor who taught business and
government policy. He ran the analysis, and based on the 2004 formula, his conclusion is that the
city of Saint John would lose $500 000 a year in terms of the unconditional grant.
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So, $500 000 comes in from the artificially set municipal property tax, and $500 000 gets chopped
off in terms of money coming from the province. We knew we were falling behind, but now we are
falling behind even more. Obviously, your officials have looked at this to some extent. If they would
indicate that this is what we are in the range of looking at . . .
Hon. Ms. Fowlie: The difficulty with this is that currently, what we have in New Brunswick is a
funding mechanism. There is no formula, specifically attached to it. Under the formula that was put
in place, and that was supposed to roll into place, the city of Saint John was losing money. We had
to freeze that, and we have actually given some increases.
Under the current unconditional grant, the city of Saint John gets approximately 28% of that
unconditional grant, and its populations is somewhere around 15% of the total municipal population.
There is no formula, per se, that has been put in place. If there were, and if it were allowed to roll
out, we knew that there were so many municipalities in this province that were big winners, and
others were losers, that it created a financial hardship on some of the municipalities. Others could
pave their streets twice a year, if they wanted to. Well, that might be bit of an exaggeration, but there
are some.
That is why there is no specific funding formula.
083 17:45
What would also be looked at on the go-forward basis, is the needs of the municipalities also.
I would like to be optimistic, and I would like to be able to say that in 2009, when a new
unconditional grant funding mechanism or whichever is put in place, that the city of Saint John may
be more economically viable, and it may be that it is the city on the move in the province. It may
be the place where everybody is coming to instead of the Moncton area. We know it is going to be
Saint John. I think it is a city on the verge of great things. I think that is one of the reasons why I do
support the LNG facility coming to the city of Saint John. I think that there can be such economic
benefits to the area.
As I said, it is very difficult on a go-forward basis to say what would be included in a funding
mechanism.
Ms. Weir: I appreciate the minister’s answer, but I am also putting it to her that quite clearly, a
problem has been identified, and I am asking the minister what she can suggest to make sure that
the funding for the city will not be unduly impacted by the economic assessment of this facility in
our tax base when we are not getting the property tax revenue.
I understand the comments that the minister has made about the current funding situation, but I am
putting it to the minister that this analysis was run. Admittedly, and I am being very clear about that,
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it was run on the 2004 calculations, but what it demonstrated was if that scenario took place, there
would be a $500 000 annual cut in what the city of Saint John receives.
I am asking the minister if perhaps her officials could provide some suggestions, and I absolutely
agree with the minister, as do my other colleagues. You know, we live in the city of Saint John, and
we know the immense potential that that city has. You only have to look at the commitment of
people to this community, the generosity. Look at the Harbour Lights Campaign at Christmas, and
the amount of money that individuals contribute, whether to Harbour Lights or to the other
fundraising initiatives.
At the same time, I think it is fair to say that citizens want to be partners in some of these crucial
decisions. When we have les faits accomplis presented with no information, in a way very offensive
to democratically elected officials, it has gotten peoples’ backs up.
I am simply saying that I think there is an obligation, if there is a potential problem identified, that
the department is clearly prepared to make a commitment that the city will not be disadvantaged
financially in any way because of your decision to bring forward this legislation. That is what I am
looking for. What is it that you are prepared to propose today that will provide a guarantee that the
city will not be financially disadvantaged? I give you that $500 000 figure because that is the
amount that came as a result of the calculation on the current formula. It could be more, it could be
less, but clearly the potential is there. What are you going to do to make sure that it does not happen?
Hon. Ms. Fowlie: Look at what we have already done in regard to an unconditional grant for the
city of Saint John.
084 17:50
Under the new funding mechanism, the city received $767 000 more, so that it was not going to be
losing its unconditional grant.
By bringing this bill forward, it shows that we do actually listen to our municipalities. If there were
a time when another unconditional grant formula were being put together, we would be conferring
with our municipalities. Any type of request that they bring forward, or the fact that they want this
addressed, if their tax bases were being utilized as part of their funding formula, we listen to
municipalities. We will sit down and discuss with them, and then you could have more of a concrete
answer in regard to what would be happening there.
It is a few years down the road, and the city of Saint John, I am sure, will be moving forward in
many areas. We cannot guarantee that this is even going to be portion of any type of a funding
mechanism that is put in place for the next unconditional grant. I guess we listen to the
municipalities and work with them, and develop what needs to be done to ensure that they are
viable.
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Ms. Weir: In terms of the review that was conducted by the department of this request by the city
of Saint John, I would like to ask the minister to report on the due diligence that was done by the
department, specifically with respect to the question of whether this tax concession may break
NAFTA rules on the level playing field for investment.
Could the minister please indicate what review was conducted by the department to confirm that this
tax concession, in fact, does not violate the NAFTA prohibitions on preferential investment?
Hon. Ms. Fowlie: That was looked at under this whole situation. In this situation, it was felt that the
NAFTA implications were not an issue, because the U.S. has its own domestic trade remedy law that
is designed to protect domestic industries from imports that unfairly benefit from subsidies provided
by foreign countries. So, since it already has its own set of rules and regulations that it follows,
NAFTA would not be applicable here.
Ms. Weir: Would the minister be prepared to release that review?
Hon. Ms. Fowlie: There is no document to release, just advice to myself from staff, and I will not
be releasing that.
085 17:55
Mr. Chairman: I will now call Mr. Speaker.
(Mr. Speaker resumed the chair when the committee rose.)
Committee Reports
(Mr. Holder, after requesting that the Speaker revert to the order of Presentations of Committee
Reports, reported some progress.)
Mr. Speaker, pursuant to Standing Rule 78.1, put the question on the motion deemed to be before
the House that the report be concurred in, and the motions was carried.)
(The House adjourned a 5:58 p.m.)