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Lethbridge Herald, The (Newspaper) - November 20, 1974, Lethbridge, Alberta The LetHbrtdge Herald LETHBRIDGE, ALBERTA, WEDNESDAY, NOVEMBER 20, 1974 15 Cents Ottawa moves on two fronts in oil struggle OTTAWA (CP) The rederal government has mov- jd on two fronts to strengthen its hand in the power struggle' with the province over taxation rights. The initiatives, one outlined in the new budget and one taken afterward by Finance Minister John Turner, rein- force the federal claim to part of the wealth generated by- growing oil and natural gas revenues. The resource question, a battleground for more than a year, is the latest episode in the continuing federal- provincial struggle over con- stitutional rights and powers. Premier Peter Lougheed of Alberta is the man at the centre for the provinces while Mr. Turner, taking over from Energy Minister Donald Macdonald, has assumed the central federal role. The outcome will determine who benefits from resource revenues and how much Canadians pay in the long-run for vital commodities such as gasoline, heating oil and natural gas. The first new step taken by Ottawa this week came in a little-noticed ways and means motion tabled by Mr. Turner when he brought down his budget. Boards blocked It would prevent the prov- nces from setting up boards to circum- vent the effect of contentious new federal tax policies. to the motion, which .ook effect when it was tabled, ,he provinces could have alunted the impact of federal .axes on resource companies jy using marketing boards to auy oil and gas at an irtificially-low price. In theory, this would have et them claim much of the noney Ottawa wants by sell- ng the products at full market value and pocketing the profits. Ottawa would be left vith only the tax money ivailable from the under- valued market board price. The motion closes this loop- nole by applying federal taxes the full market value for oil ind gas, regardless of the irice charged by marketing wards. Saskatchewan already has a board for oil. the Saskatchewan Petroleum Co. t buys oil from private >roducers and resells it at a profit for the province. There are provincial natural gas companies in Alberta and British Columbia. The motion does not prevent marketing boards from oper- ating but it rules them out as a dodge in practical terms. The companies could not sell their products at an unrealistic price and continue to pay tax- es based on actual market value. T.C. Douglas, federal New Democratic energy critic and a former Saskatchewan premier, said he has not ex- amined the motion but it appears likely to provoke a storm of protest. The second new federal move came following the budget when Mr. Turner was asked at a news conference what the federal government will do if the provinces nationalize oil and gas com- panies and leave nothing for Ottawa to tax. Under nationalization, oil companies would be taken over by Crown corporations which are not subject to tax- ation. Mr. Turner warned the provinces in blunt language to think carefully before trying to frustrate federal aims through nationalization. He did not say so directly but he left the clear impres- sion that Ottawa would attempt to tax Crown cor- porations. No precedent Mr. Douglas said the out- "ome of such a move would be ar from clear. "No precedent or taxing Crown corporations las been established. "It would have to be tested n the courts and he Turner) wouid have a fight m his hands." The budget announcement and subsequent warning by dr. Turner follow two irevious measures that critics iescribe as a massive federal ssauit on provincial resource -ights. The first was introduction of he proposed petroleum idministration act. now under Tlause-by-clause study in the "ommons. If approved un- amended. it will give Ottawa final authority to set oil and gas prices. Until now. the provinces have held the primary power to set prices by adjusting royalty charges. Their manoeuvring room for royalties will be limited if the federal act passes un- changed. The second, and most criti- cized, earlier measure taken by Ottawa is disallowance of provincial royalty payments as a deduction in calculating corporate income taxes. Removal of this privilege was first proposed in the May 6 budget that was defeated in the Commons. BILL GROENEN photo Putting an end to putting Carl Gustavson, Henderson Lake Golf Club employee, spreads branches on a green in preparation for winter. The branches will hold the snow on the green, providing more moisture for the grass. It could make things a little difficult for golf addicts trying to sneak in an occasional winter game. Israel contines shelling of Arab guerrilla bases THE CANADIAN PRESS Israel shelled suspected Arab guerrilla bases in Lebanon through the night after a terrorist suicide raid left four Israelis dead at the border town of Beit Shean. However, the shelling was not considered a direct Purnell returns to work as deputy ag minister Glen Purnell is back in his jost as Alberta's deputy minister of agriculture after in unsuccessful bid Vo enter he provincial political arena Whf's the Dr Purnell. was on leave of absence io contest the Progressive Conser- vative nomination. He was defeated in the race bv John Inside 72 Pages Classified ......32-35 run-ii'-s........ 30 Comment ..........4 Loral District .13-15 Family..........37-40 Markets..........31 Sports...........25-27 Theatres.........7 TV" ...............6 Wrather 3 LOW TONIGHT 30; HIGH THl RS 35: rLovm. COOL Thompson, a Spring Coulee farmer. "I am appreciative to the government's policy which permits civil servants to par- ticipate freely in the democratic process. Dr. Purnell said today in a telephone interview from Ed- monton. He returned to his desk Monday after discussions with his family and Agriculture Minister Hugh Homer as to whether he should resign or carry in One of his first duties will be 1o accompany Dr. Homer to Ottawa Sunday tor talks on the Canadian Egg Marketing Agency occasioned by the rolling of millions of cgps in the agency's rare. O'Donoghue. art ing depuly TT.iTnsler. has returned 1o his post as assistant deputy minister in charge of produc- tion. reprisal for the raid. Military sources and border residents said Israeli guns have been pumping shells nightly into southern Lebanon in an attempt to pin down bases there of the Palestinian guer- rillas. Lebanese government sources said their army was on the alert for retaliatory- Israeli raids across the border. Premier Rashid Solh said: "Israel always invents pretexts to attack Lebanon, although we have repeatedly declared that we are not responsible for guerrilla raids." Solh said his government had taken "defensive measures to protect Lebanon and all residents." including the 38 Palestinian refugee camps in the country. Israel and the Palestinian guerrillas traded threats of new attacks on each other in the wake of the Tuesday raid at Beit Shean, in which the three Palestinian raiders also were killed. "We are determined to re- move the guerrilla policy with force wherever and whenever we can find the terrorists... in Israel, in the Arab states and all over the Israeli In- formation Minister Aharon Yariv told a news conference in Jerusalem. The Marxist Popular Demo- cratic Front, which announc- ed in Damascus that it was responsible for the raid on Beit Shean. said it wouid con- tinue to attack "where the enemy least expects until Israel recognizes our rights and existence, and until a secular democratic Palestine state is established." Alberta won't hike oil price Whelan seeking talks with U.S. Herald Ottawa Bureau OTTAWA Canadians won't be paying more for crude oil this winter, despite threats by Alberta Premier Peter Lougheed that his province is pulling out of the March domestic oil price agreement. Alberta has decided to continue to "honor" the existing wellhead domestic price for oil it sells to Canadians in other provinces through the winter months, Mr. Lougheed's office revealed Tuesday. This despite the fact that Mr. Lougheed, in reaction to the Turner "replacement" budget on Monday, had said that Al- berta is no longer bound by the domestic oil pricing agreement reached by federal and provincial first ministers last March. The voluntary accord was scheduled to last until next July, and tentative arrange- ments were already being made for a meeting of first ministers late next spring to start working out a replace- ment oil pricing agreement. Federal Eergy Minister Donald Macdonald said Tues- day outside the Commons that as far as the Liberal govern- ment is concerned, the federal subsidy program to keep im- ported oil in Eastern Canada at the frozen domestic price will continue in effect, unless Alberta does something drastic to change the domestic oil price situation. And that threat'of such a change now seems to have passed at least until after this winter. Mr. Lougheed, according to his office, is definitely pulling out of the March oil agreement, even though the domestic price that is the es- sence of that agreement will continue to be honored through the winter months by Alberta. In effect. Alberta is threat- ening to push up domestic oil prices early in the spring, in- stead of waiting for a new oil price agreement to be nego- tiated to replace the now- defunct existing agreement in July, unless disagreements with Ottawa are patched up. But while Energy Minister Macdonald says that Ottawa now does not have any legisla- tive power to prevent Alberta from pulling out of the "volun- tary" oil price agreement and from pushing up the price for its oil. by the end of this year the Liberal government will almost certainly have the power it needs. The Petroleum Adminis- tration Bill, still being consid- ered in Parliament but prob- ably only a matter of a week of additional debate away from third and final reading, would give Ottawa the power to set oil prices outside an oil- producing province such as Alberta in the event the March oil price agreement has fallen through. The bill, if passed, would also give the federal govern- ment power over the pricing of another of Alberta's impor- tant resources: natural gas. Again, it would be the power to set prices nationally outside the gas-producing province, as well as to set the export price. Mr. Lougheed has told reporters he would be agreeable to meet with Prime Minister Trudeau and discuss the problems associated with the oil price agreement and the controversial federal Sax measures aimed at the resource industries in Finance Minister John Turner's Mon- day budget. OTTAWA (CP) The gov- ernment began marshalling its response to United States import restrictions on Cana- dian beef and pork Tuesday as agriculture held centre stage on Parliament Hill. Agriculture Minister Eugene Whelan said he had sent a note to Washington protesting the restrictions and asking for "immediate con- sultations" on agricultural trade between the two countries. The Commons, meanwhile, gave second reading to a bill that would increase cash ad- vances to grain growers. While a string of Progressive Conservative MPs expressed their support for the bill in prin- it was John Die- fenbaker's Conservative government that first introduced such cash ad- used the debate to criticize government agricultural policies. The Commons also gave third and final reading to two other bills turning its attention today to debate on Finance Minister John Turner's budget. Mr. Whelan said either he or Trade Minister Alastair Gil- lespie will visit Washington, perhaps Friday, as a follow-up to the note sent Tuesday. But in Washington, state de- partment officials said a meeting between cabinet-rank officials would depend on the schedules of those involved. It was too early to say whether a Friday meeting was possible. The officials also said they still were studying the Cana- dian note. One United States official said he is surprised the note seeks discussion of farm questions beyond the issue of livestock and meat quotas. The U.S. imposed the restrictions Monday in retaliation against Canadian quotas imposed last August. Mr. Whelan said the Cana- dian quotas are fair. They restrict imports of U.S. beef and cattle to levels equal to average imports over the last five years. The U.S. controls, which in- clude Canadian beef, cattle, hogs and pork, break trading arrangements for the two countries under the General Agreement on Tariffs and Trade (GATTi, he said. He did not think he was prepared to drop the Canadian quotas despite a promise that the U.S. would drop its restric- tions if Canada did likewise. Nairobi plane crash kills 55 NAIROBI (API A Luft- hansa jumbo jetliner crashed and burned today on take off from Nairobi airport and offi- cials for the West German air- line said 55 persons were dead and six missing. It was the first fatal crash of a Boeing 747. The airline's Nairobi man- ager. Helmuth Wolff, said 96 of the 157 persons aboard sur- vived the crash. Fifty of these, he said, were virtually unhurt. At least two Americans were among the survivors. Lufthansa's Frankfurt office reported. They were iden- tified as Susan Mary Seaholm of San Pedro. Calif and Thomas Scott, whose home town was not immediately known. Wolff said there were 139 passengers aboard, most of them Germans, and 18 crew members. He said previous death figures announced by Kenya's Communications Minister. Omolo Okero, were incorrect. Lufthansa said they had no immediate indication of the cause of the crash, but added thai the jumbo jet's flight recorder had been recovered Witnesses said ihe plane ap- parently lost power shortly after takeoff on the final leg of a Frankfurt-to-Johannesburg. South Africa, flight and its tail section struck an em- bankment, breaking the plane into a dozen pieces. A policemsn said the Luft- hansa pilot emerged from the cockpit saying: "It has hap- pened." He said a stewardess in shock kept tearing her hair and screaming. Official sources said five members of the crew survived, including the pilot and co-pilot. Seen and heard About town Lynn Anderson. New Davion. saying he would donate some antiques a museum if only hr didn't need" them for spring planting Shirley Teshima unable to report for work Monday morn- ing because she missed her bus in Calgary Sunday riight Tax removal to save city firms The removal Monday of the 12 per cent sales tax on tran- sportation equipment in Canada could mean total savings of more than to local transportation firms. John Turner, federal finance minister, announced the tax removal on such items as buses, large trucks and commercial aircraft in the government budget. Stubb Ross, president of Time Air. said today if the tax is left off equipment for two years the airline stands to save more than in new planes. The airline will be purchas- ing three new planes in 1976 at a total cost of about million, be said. "3 just hope it Mhc government i doesn't put the tax back on in the next budget." he said. Time Air recently bought a new aircraft but the tax removal will not affect that purchase. Bus purchases by Northern Bus Lines and the Lethbridge Transit System should also benefit from the tax removal Steve Kotch, president of Northern Bus Lines, said to- day 1he removal will save his company about during the next few months The company if investing than in new buses 'and 12 per cent off is really going to help." Mr Kotch said "It's bound to have a tremendous effect on everyone because of the skyrocketing costs oi equipment." be added. "It will ensure not only the smaller operators but larger 'transportation i operators as well Jo have first class ser- vice Cily Findlay. said he does not know il the lax removal will have a bearing on equip- ment purchases by the city. "We just havcn'1 any idea yet he said The city has derided to purchase two buses dunnp the coming year ar.d the tax removal rould mean a total saving? of 7Tiore ihsn J 10.000 on th'ic-f pieces nf equipment ;