Mr. Speaker, it gives me great pleasure to enter the debate on Bill C-36.
I would like to discuss a specific aspect of the legislation which perhaps many members have not mentioned. It has to do with the authorization in the act to allow the Canada Development Investment Corporation to dispose and transfer its assets and liabilities including the Canada Hibernia Holding Corporation.
All Canadians have been interested in the Hibernia oilfields for many years. It was back in 1965 that the initial investigative work was done in the oilfields to see whether this would have a significant potential for some of our poorer provinces.
Some people may wonder why the member for Durham is talking today about the Hibernia oilfields. My wife's family has deep roots in the province of Newfoundland. This is also something which all Canadians want to share and rejoice in. I do not think people realize that if the government disposed of its financial interest in the Hibernia oilfields, currently it would be about $2.5 billion. We can imagine what a positive impact that would have in hopefully increasing a surplus in future years.
The Hibernia project represents a partnership of Canadians for Canadians. I was in Newfoundland a couple of years ago and I discussed a number of the financial aspects with legislators there. They were very concerned about some of the cutbacks in the CHST and how they were going to be able to maintain some of their basic services through the CHST and also through the equalization payments system.
During various periods in the history of Newfoundland a depopulation has occurred. That has been a benefit to ridings like mine. A great number of people from Newfoundland are now residing in parts of Ontario. They had to leave Newfoundland because there was no employment. Unemployment levels in Newfoundland are still unacceptable. With the economic activity that is going to be generated by Hibernia, unemployment levels are going to decline.
A substantial investment in capital has already occurred in the Hibernia oilfields. Most of this money has been spent in Canada. Capital expenditures of over $5 billion have already gone into this project and 55% to 60% of these capital expenditures were Canadian. Sixty-six per cent of all employment was Canadian. Today as we speak there are over 250 jobs on that rig. Of course that money goes back into the economy of Newfoundland.
They are currently projecting to increase the production up to 20,000 barrels a day. As the entire platform is developed they are talking about 135,000 barrels of oil a day. That is a significant and major oil discovery on our east coast. It is going to have a tremendous impact on the economy of Newfoundland.
That is good. We all benefit. The federal government taxes these people when they make profits. The province of Newfoundland will get royalties from this and it also will get the spin-off jobs. This is very positive for increasing the economy of Newfoundland.
I should mention the recent discovery at Voisey's Bay. This is a long term project. When it gets going, Newfoundland will also be able to reap some benefits in the mining sector. The mining and resource sector is anticipated in 1998 by the Conference Board of Canada to increase its revenues by over 80% in the province of Newfoundland. Unemployment rates will decline due to this to 17.9%, which is still unacceptably high but is significantly lower than it has been in the past.
In St. John's and other communities in Newfoundland there has already been a tremendous increase in residential construction. The Conference Board of Canada estimates that in 1998 the renewal of the housing sector will increase 14.8%.
Some foresighted government years ago which saw the need to put in that seed capital to get the Hibernia project going was very wise indeed. This is a great opportunity for the people of Newfoundland to acquire economic benefits and to build a truly indigenous economy for themselves.
A concern I have about this issue is from time to time I hear people especially in resource based economies challenge the equalization payments system. The equalization payments system is based on certain income levels that exist within a provincial jurisdiction and then it tries to equate them with the three wealthier provinces. Through that process there have been payments to provinces to help raise their standards so that we all have equality.
That is what is so great about this country. As Canadians we agree that we have to have basic standards, standards in health care, standards in social services, standards in unemployment insurance benefits, et cetera. That is what makes this a great country.
If people were to sit down and ask what it is that Canadians understand, it is that we have over the years created these sharing arrangements. The people of Ontario and the wealthier provinces like Alberta and British Columbia from time to time have realized the importance of sharing in this way.
I have heard people argue from time to time that the resources from a resource based economy should be excluded from the equalization formula. This means we would exclude the resource sector from the calculations. The equalization payments would be skewed to allow the provinces that are utilizing their resources not to have to include them in the calculations.
I do not have to tell anyone that the province of Alberta for years and years has been a net contributor to the equalization payments system and an economy very heavily dependent on the resource sector.
Those people were able to buy into the argument. It seems that the new provinces, those now coming on with a higher resource sector must do so as well.
I understand the arguments I have often heard members speak about. They say that Newfoundland's infrastructure has deteriorated over the years, that they need time to build it up. They do not think they should be penalized by seeing their equalization payments decline at the same time that this is occurring. They want to be given some breathing room, to be given a chance to catch up.
I understand the merits of that having been to Newfoundland and having understood that its infrastructure certainly is in need of significant capital injection. However the reality is that we must as a country all live with common standards. For that reason, I believe it would be unwise for us to pursue that.
Right now the province of Newfoundland receives equalization payments of somewhere around $1.4 billion. We should all be rejoicing, including the people of Newfoundland, and saying that those equalization payments are going to come down.
Maybe one day Newfoundland will be a net contributor to the equalization payments system. That is great. Once again it shows how Canadians care and that in good times and bad times we can live together.
I also want to touch on one aspect of this legislation which I think perhaps a lot of members have overlooked. It is the ability to allow the government at any time to dispose of Hibernia by orders in council without bringing further legislation to this House.
It is a very significant time. Clearly somebody is thinking of doing just that. As we talk, international oil prices are fluctuating. It is clear that the government is going to be prudent in selecting a timeframe in which to undertake this.
We should know that our investment in Hibernia is really twofold. We have a direct investment via the Canada Hibernia Holding Corporation. That is an 8.5% interest in the entire operations. Some of the bigger players are Mobil Oil, Chevron and Petro-Canada. Interestingly enough we still own 8.3% of Petro-Canada so indirectly Petro-Canada also has an interest in the Hibernia oilfields.
I just wanted to intervene at this time to talk about the equalization payments system, about how the rest of Canada, including the people of Durham, are very thankful that this has been a success for the people of Newfoundland. At the same time I want to give them a little reminder that we are all in this club together. We are all going to play by the same rules. When things get a little better for Newfoundland, it will also have to play by the same rules. I am sure most people of Newfoundland believe that.
In closing, I wish the people in Newfoundland well. I was very happy the other day to see the first tanker shipment of oil leave the Hibernia oilfields. It marks a new day for the people of Newfoundland.