"They wouldn't be at the cabinet table," Dunderdale told CBC News, responding to remarks that Penashue made while drumming up supporters at the official launch of his campaign headquarters in Happy Valley-Goose Bay.
"You cannot have that view and be at the cabinet table. You cannot," Dunderdale said in an interview to be broadcast Saturday on On Point with David Cochrane.
Penashue brought cheers out of a crowd when he said he "held up" an unspecified project on the island for six months while he successfully lobbied for $85 million in funding to help complete the Trans-Labrador Highway.
Penashue was Newfoundland and Labrador's cabinet representative for almost two years, until he resigned his seat last month amid an Elections Canada investigation into the financing of his 2011 election campaign. Prime Minister Stephen Harper has called a byelection for May 13.
'Shut out of halls of power'
Penashue has strongly defended his remarks, and in a statement said he was only doing what he was elected to do.
"I will make no apologies for putting Labrador first," Penashue, the former intergovernmental affairs minister, wrote in a statement to CBC News.
"We've been shut out of the halls of power for too long, and as my opponent in this race has said numerous times, it is incredibly important and beneficial to have a member of Parliament from Labrador sitting at the cabinet table," wrote Penashue, whose campaign supplied various comments made by Liberal candidate Yvonne Jones over the years about Labrador's under-representation.
Dunderdale said Penashue was supposed to have represented all of Newfoundland and Labrador, and not just his own riding.
"You're not just a minister for a certain region of the province. You're a minister for Newfoundland and Labrador, and you have to represent all of our interests fairly," she said.
Dunderdale said that as premier, she likes to have different points of view and representation from different geographic areas, but insisted that cabinet ministers must act with the best interests of the province at heart.
As well, she chided Penashue for a tactic that may play well in his own riding, but which plays on divisions.
"I think whoever thought this up as a great political strategy needs to revisit it," she said. "That responsibility is even greater in terms of a federal representative at the table."
Asked if she would fire one of her own ministers for making such comments, Dunderdale replied, "I wouldn't bring a minister to the table if that was their perspective."
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