Introduction

Almost a year ago, on February 22, 1996, the people of Newfoundland and Labrador gave this government a mandate to represent and manage their interests.

As we enter the second year of our mandate, it is appropriate to review what has been achieved during year one, and to indicate where we are headed in 1997 and beyond.

In the course of the campaign for the February 22 general election, we made three basic commitments.

• Firstly, we said we would promote and encourage economic growth. The challenge at this critical point in our history is to develop an integrated approach - one in which we maximize the returns to the people from our natural resources, both renewable and non-renewable and at the same time develop new expertise in emerging areas such as advanced technologies

  Secondly, we said we would renew our social policies and programs to deliver them effectively and assist those who most need help. One of government's most basic responsibilities is to provide education, health care and social services. These services are essential to our sense of well-being as a society.

  Thirdly, we said we would manage our finances effectively and restore fiscal stability. Today, all citizens of this province are collectively in debt by some $9 billion dollars. We said we would work hard to restore fiscal stability in the province .... to get us on the right track on spending and borrowing, and keep us there.

You can look at each of these commitments individually - to see how we are doing on each count. But the fact is that all three are intertwined, and they must be seen in that light. Take health care and education ... which are probably the most important services provided to citizens by the government.

The reality is that we will not be able to provide the quality and level of services that people want, over the long term, unless we also grow the economy, and keep the cost of government within a range that we can afford. It is not possible to make progress in one part of the agenda in isolation from progress in the other parts.

Let's look at the first part of the agenda...

Promoting Economic Growth

Petroleum
One of our major efforts this past year was to push forward in building the oil industry in our province. I emphasize here the notion of building an industry. Hibernia has been a great success, but one project does not make an industry. So we made a commitment, in the campaign, to secure the other projects and infrastructure necessary to build this industry.

In the spring we consulted with the petroleum industry, and in June, we announced a generic offshore royalty regime which lays out the rules of the game for exploration and development.

These rules ensure a fair return for both the industry and the people of the province; and provide the stability necessary to encourage more exploration and development activity.

Amoco's decision to renew its exploration activities on the Grand Banks ... with two wells valued at $50 million ... and Husky's announced desire to proceed with extended production testing at Whiterose, are sure signs that the generic royalty regime is doing its job.

Add to these developments the results of the recent call for bids issued by the Canada/Newfoundland Offshore Petroleum Board on four parcels, which yielded an additional $125 million in exploration expenditure commitments, and it tells me we are taking the right steps to build an oil industry in this province.

Yes, it is important to have an attractive generic regime, but it also important to make sure bottom lines are understood on occasion.

This was the case last February on the Hibernia transshipment facility. We said it had to be located in Newfoundland and Labrador. In September, the Hibernia consortium announced Whiffen Head in Placentia Bay as their proposed site for the facility. This facility did not go to Nova Scotia, as some had speculated it would during last winter. As a result, an additional $500 million in net economic benefits are expected for Newfoundland and Labrador during production from both the Hibernia and Terra Nova oil fields.

There has also been tremendous progress on the Terra Nova project during 1996. In August, we announced a fiscal and benefits agreement between the government and the Terra Nova partners, which cleared the way for the filing of a Development Plan Application.

In the fall, we streamlined the environmental assessment process, by cooperating with the Offshore Petroleum Board and the federal government to conclude a Memorandum of Understanding for a joint environmental assessment of the project. Now, instead of having several assessment processes, there will be only one....and that must be completed within 270 days. The three member review panel was appointed in November 22, 1996, and is chaired by Dr. Leslie Harris.

Just before Christmas, solid progress on Terra Nova was made when the consortium announced the selection of a floating steel monohull production system; and the choice of a prime contractor - the Grand Banks Alliance, (a company with significant international and local content) - to construct and assemble the platform. There are between 500 and 800 jobs in the construction phase for Newfoundlanders and Labradorians - possibly more if we continue to demonstrate the will to compete and win that was evident during the Hibernia construction phase.

There will be another 400-500 jobs during production. As a result the Terra Nova project is surging forward on a fast track towards early production by the end of 1999.

Along the way Petro Canada has strengthened its commitment to Newfoundland and Labrador, first by announcing last summer that it is focusing all of its offshore interests in Canada on the Jeanne d'Arc Basin of the Grand Banks; and more recently, with the December announcement that they have established a new Offshore Development and Operations Strategic Business Office in St. John's ... headed by Vice-President Gary Bruce. This office will manage Petro-Canada's east coast development, operations and joint venture production activities.

And of course, Petro-Canada has also brought in a strong partner in Norsk Hydro, one of the most significant players in the North Sea oil industry, which in my view, provides yet another sign of the growing importance of Newfoundland and Labrador in the international oil industry.

All these new offshore projects are being developed without the expenditure of public funds. Hibernia was developed in the manner it was, in part, because billions of dollars of public funds were invested in it. The federal and provincial governments had a say. And their goal at the time was to ensure that Newfoundlanders and Labradorians - and indeed all Canadians - had a chance to participate, to learn, and to seed the offshore industry in this country.

Hibernia has served its purpose, and served it well. But there is no more public money for oil and gas megaprojects. Today, the secret to building a sustainable oil industry is to create a good climate for business, and to let the companies develop these fields based on their merits.

During the past year, we have made it quite clear to the oil industry that we are open for business, and as result, we face the prospect today of having three fields - Hibernia, Terra Nova, and White Rose - in various phases of production, producing as many as 340,000 barrels of oil per day by the end of 1999.

Mining Industry
We have taken exactly the same business-like, bottom line approach, to promote the development of our mineral resources in Newfoundland and Labrador. Obviously the Voisey's Bay discovery has been the focal point. When you include the mine/mill at Voisey's Bay, and the smelter/refinery complex for Argentia, the project is massive. I'm sure you already know the numbers - 3500 jobs between the two sites, both direct and spinoff; processing of 270 million pounds of nickel, and seven million pounds of cobalt, plus another 36 million pounds of copper byproduct at Argentia - all based on a current reserve estimate of 150 million tonnes total production from the mine.

These are big numbers representing great potential for this province. But again, it might not have turned out this way if the government had not taken a hard line and insisted that the smelter/refinery be built in this province.

We did not tell the company where to build the smelter/refinery complex: they had to decide that based on their technical, engineering and environmental requirements. But we were able to secure the complex and the jobs for this province, rather than see the value-added processing activity take place somewhere else. When built, the smelter/refinery will be the largest and the most modern of its kind. It will be the cleanest in the world.

Fisheries
As you know, too much of the news about the fishery in our province, over the past few years, has been bad -- particularly the failure of the once great codfishery. However, I firmly believe that the kinds of sound resource management practices which have been implemented over the past few years, combined with continued vigilance on foreign overfishing, and a greater effort to prosecute the seal fishery, will eventually see the cod fishery - and indeed the ground fishery generally - restored to its previous place of importance in the province's economy.

But the revived fishery must be a different one - supporting fewer people, and managed with an overriding emphasis on preservation of the stocks for future generations. We must never again allow destructive fishing practices, either our own or those of foreign nations, to put the fishery at risk.

The preliminary numbers for 1996 show that already there have been significant improvements in the fishery. Groundfish landings up to the end of October 1996 were up by 40 per cent over the landings for all of 1995. Shellfish continued to dominate in 1996, as in 1995, accounting for more about 70 per cent of the total production value.

Landings of crab were at record levels, higher in the first ten months of 1996, at over 36,000 tonnes, than they were for all of 1995. Likewise, capelin landings for the same period, at 32,000 tonnes, skyrocketed compared to total landings of only 156 tonnes in 1995. And the seal industry saw about 245,000 animals harvested, compared with only 50,000 in 1995.

We have a market for seals in China, and we must work hard to serve it, not only so seals can be a cash crop for our coastal communities, but also as a conservation measure for the revitalization of the cod stocks.

Forestry
In the forestry sector, we know we have to address a pending shortage in the wood supply. To that end, in 1997 we will launch a 20 year forest management plan. In the meantime, during 1996 the government invested - in cooperation with the federal government and the pulp and paper industry - nearly $45 million in forest renewal activities such as thinning, planting and development of forest access roads. In total, these new programs are creating over 1700 jobs in our province, and will begin to address the fibre shortage. The forestry sector itself creates about 10,000 jobs in Newfoundland and Labrador.

IT Sector
The resource industries that I just mentioned are very important to us, and we must continue to support and enhance them. But I believe it would be a mistake to view major resource projects - by themselves - as our salvation. We've been down that road before, and we know it just does not work.

What the mineral sector and the offshore oil and gas sector give us is a foundation for economic and social development in this province. But if we don't diversify the economy-- If we put all of our eggs in one or two baskets again, then we are going to be disappointed once again.

Instead, we have to embrace the new economy, we have to be innovative; we have to grow, for example, the information technology sector. We have to grow the tourism sector. We have to grow the aquaculture sector in this province. We have to continue to build on our existing manufacturing sector, we have to pick some winners and get out there and sell, to the world, the goods, products and services that we produce. Because the success or failure of the province will depend, in large part, on whether or not we can create additional economic value from our resources based on our capacity to compete and to win in these other sectors. This is what the new economy is all about.

I know we can succeed in the new economy. Take advanced technology, for example. We are already strong in this area, and getting stronger every year. Last year, approximately 450 companies in the local technology sector accounted for about $470 million in business in this province and employed 6400 people. Those workers are part of a sector that is growing at an average rate of 16% per year.

Manufacturing
We are also making great strides in manufacturing. In the first eight months of 1996, the growth trend established in 1995 has held, with the value of shipments increasing by about 4%. Our EDGE program has been a factor in encouraging growth in this sector, levering investments of about $22.7 million by 23 companies and creating about 450 jobs since 1995.

Tourism
In tourism, 1997 will offer the best draw we have ever had - the celebration of 500 years of history since the discovery by John Cabot in 1497. Numerous events are planned all over the province, as people will see when they receive the new events calendar, due out in a couple of weeks. Many of these events have been organized by volunteers. I want to thank the thousands of volunteers who I know will make the Cabot Celebrations a success.

The highlight of our 500th anniversary celebrations will be the 46-day visit by the Matthew, the modern-day replica of the vessel sailed by John Cabot during his voyage of exploration in 1497. The Matthew will arrive in Bonavista on June 24, 1997 where it will be joined by a North American flotilla comprising more than 100 yachts and sailing ships. While here, the Matthew will visit 17 ports of call in the province, and at each port, there will be a landfall reenactment, as well as local events.

Her Majesty the Queen will be in attendance for the festivities in Bonavista on June 24, and we are most pleased that she has selected this event in our province as one of the major activities in her 1997 itinerary. In addition to the Queen, the Prime Minister of Ireland and the Prime Minister of Canada will also join us at Bonavista.

Also as part of the celebration, Newfoundland and Labrador will host an international symposium on sustainable development of ocean resources - the Summit of the Sea; an international choral festival - the Festival 500, bringing together the voices of more than 1500 people from all over the world; and a symposium focusing on the historical significance of Cabot's voyages - Cabot and His World.

As a result of these events, we expect an additional 60,000 non-resident tourists and an additional $25-$30 million in tourism revenues. These numbers include more than 80 conventions ... the largest number ever in the province.

The Cabot 500 Celebrations have generated tremendous interest. The American Bus Association has named them the number one tourism event in Canada for 1997. The British Travel Writers presented the Cabot 500 celebrations with the Silver Otter award, an honourable mention for a new tourism product in 1997.

On January 4th, in the travel section of the Globe and Mail, the Cabot Celebrations were listed as number one in the "World Top Happenings" of 1997. That is, number one out of fourteen events world wide.

The New York Times has recently run a front page article in the travel section highlighting St. John's specifically, but the coverage from such a prestigious American newspaper will undoubtedly attract visitors to our province during the Cabot Celebrations in 1997.

And we have secured several major corporate sponsorships from companies like: Labatt, NewTel Enterprises, CIBC and Air Canada/Air Nova.

New Investment in the Province
We have also taken a number of significant steps during the past year to promote the development of local, national and international partnerships. For example, we signed a deal with the federal government and the provinces of New Brunswick and Nova Scotia for a harmonized 15 per cent sales tax, which goes into effect April 1 of this year.

I and the other members of Cabinet plan to continue aggressively promoting the benefits of doing business in partnership with this province. We have a number of companies who are successfully tackling the global marketplace, and a number of others who are on the threshold of important developments. Our job is to assist them where we can - by opening doors, promoting Newfoundland and Labrador businesses, and creating a climate in which they can excel.

This is why I went to Ireland in November with a group of Newfoundland and Labrador companies, and signed a Memorandum of Understanding with the Irish government which will serve to strengthen linkages between the business and cultural sectors of Newfoundland and Labrador and the Republic of Ireland.

It is also why I am going with the Prime Minister and the other Premiers this week on the Team Canada mission to Asia, and then on to China. There are important business opportunities for Newfoundlanders and Labradorians in that part of the world, and we must avail of them.

Now, let's take a look at the second major part of our agenda..

Renewing Social Programs

As I said at the start, economic growth is not isolated from provision of social programs. In fact, you have to have growth in order to sustain social programs, given that 66 per cent of government expenditures go to providing social programs.

Last year, for the first time ever, the government consulted with the people of the province before bringing down the first budget of my administration. Not surprisingly, one of the important messages coming from the pre-budget consultations was that people wanted vital services such as health care, education and social programs supported and improved.

We responded to some of those concerns, for example, by confirming health budgets at their existing levels for three years, and by broadening the coverage of some social programs to the greatest possible number of people having the most critical needs.

Since the last Budget, we have begun to move forward on social program renewal. We asked Penny Rowe to lead a public consultation process, which she did over the course of the fall. We expect to receive a final report from her committee shortly, and we intend to integrate the lessons learned into an overall Strategic Social Plan, which I expect we will begin immediately after the 1997 Budget in the spring.

In education, we already have a plan for reform. And with the passage of Term 17 in the House of Commons in December - and the passage of our new Education Act and Schools Act - we are ready to move ahead. Education reform has been an area of considerable controversy, but we have stayed the course. At the end of the reform process, we will have a considerably improved education system, focused on quality, that will cost less to deliver and that will be absolutely consistent with what people voted for in the education referendum of September 1995.

The final part of our agenda is ...

Restoring Fiscal Stability

In 1996, one of our major challenges was to maintain control of public spending and the deficit. We opened up the budget process for public input, we listened to people's concerns, and then we made the decisions that were necessary. We didn't raise taxes. We didn't borrow more money. We set a course to reduce public expenditures and we stayed on it. As a result there were no mid-year mini-budgets in 1996; no pre-Christmas surprises; and no fiscal crises.

In 1997, our job will be to hold the line and stay on track. Last year, we forecasted two years of declining growth - in 1996 and in 1997. I think that will prove accurate. You have to remember that we still have not recovered from the collapse of the fishery in 1992. And this year, we are going to feel the impact of the end of construction of Hibernia.

Yes, there are many positive developments waiting in the wings - Voisey's Bay, Terra Nova, Whiterose and so on. But they have to go through environmental reviews and, in some cases, capital construction processes, before revenues will begin to flow.

In a couple of years, economic recovery and growth as a result of those projects will have taken hold. In fact, the Atlantic Provinces Economic Council has predicted we could lead the country in economic growth in 1998 and 1999. But in the meantime, we have to be prudent, and take care of our finances.

This is where the Program Review process I announced last summer fits in. You see, there are two ways in which we can manage our fiscal situation. One is the traditional approach, where we deal with problems a piece at a time, each and every year ... a "peek-a-boo" approach to fiscal management, or we can do a comprehensive review of everything that government does. We can set priorities, determine what we can afford, and then set out a plan that looks ahead three years ... and allows us to manage change.

I understand that the Program Review process has some employees worried about their jobs. And I won't deny there will be some downsizing. I think we can address those concerns however, by being up front and honest in laying out a three year budget plan.

Whatever the outcome of program review, the reality is that the vast majority of public servants will not be affected at all. Those people need to know who they are, so they can get on with being effective, productive public employees. And by the same token, those who may be affected need to know who they are, so they can make their plans.

And there is another benefit of this approach. By planning ahead, we can schedule reductions so that those who are eligible and ready for retirement can move out of the system by natural attrition. This allows us to maintain greater numbers of younger employees, whom we will rely upon in the future.

Program Review is necessary and I believe will prove to be a positive process. By going through this review, we will be able to develop a workable long term plan. Paul Dicks will take the broad outline of that plan to the public in the pre-budget consultations. Then we will develop a budget that reflects our priorities as a community.

I am convinced that this is the only way to go - to change the way government does business and to reduce costs permanently, rather than on a piecemeal, crisis-driven basis year by year. Otherwise, even when the benefits of resource projects begin to flow, we will not be able to take full advantage of these because we will be burdened with the cost of managing the public debt.

Conclusion

When I last spoke to the Board of Trade in July, I spoke of my belief that Newfoundland and Labrador can and will rise above the problems which have burdened us in the past.

The successes of 1996 tell me that we are now on the right path to achieve economic growth and social stability. I believe we are on the threshold of major change - and I find it interesting that this change is occurring at precisely the time that we are celebrating 500 years of history as a people and a society.

I believe that 1997 will be seen as an important point of departure for us as Newfoundlanders and Labradorians... the beginning of fundamental change.

A year ago, at about this time, I announced I was seeking the leadership of my party and the premiership of this province. I did so because of my confidence in the future of this province. That confidence has never been shaken in the last 12 months... Not once, and you know, even my old friends, Dr. Doom and Dr. Gloom, are looking a little sunnier these days.

Happy New Year to everyone.