Penashue alleged during the debate Tuesday night in Happy Valley-Goose Bay that he recently found out Yvonne Jones had been double-dipping and her salary was garnisheed as a result.
"What she did was, she double-dipped," Penashue said at the end of the one-hour debate moderated by VOCM News and broadcast throughout the province. He accused Jones of refusing to repay "tens of thousands of dollars" and that money was garnisheed from her paycheques.
"Lies! Absolute lies!" Jones bellowed as a live audience at the Lawrence O'Brien Centre for the Arts hooted and clapped. "I'm not going to stand here and let him tell lies."
Penashue didn't immediately offer details but said during Tuesday's debate that his allegation is backed up by the "public record."
"It is not on the public record and I demand you prove it to me," Jones, a 17-year veteran of the legislature and a former provincial Liberal leader, yelled in response. Moreover, she said she sat on the legislature's audit committee and oversaw spending of several offices up until her resignation to run to replace Penashue — duties that she said vouch for her own clean record.
A spokesman for Penashue later said in an email that he was referring to a previous provincial auditor general's report that said Jones double-billed the legislature $12,167 and had an outstanding balance at the end of September 2008. The same report said Jones repaid the amount in full by January 2009.
Penashue stressed during the debate that voters have a choice on May 13: support his return as a cabinet minister or settle for an opposition member who's outside the circle of power looking in.
The byelection was called over Penashue's own spending irregularities. He resigned after blaming his former official agent for mistakenly accepting 28 separate illegal donations during the 2011 campaign.
They included cash from 16 listed corporations and non-monetary contributions from two airlines that flew Penashue around the vast riding.
Penashue beat former Liberal incumbent Todd Russell by just 79 votes to win the only Conservative seat in the province. Russell decided not to run again.
Penashue faced off in the debate against Jones and NDP candidate Harry Borlase. The rhetorical sparring also intensified over funding to the 5 Wing Goose Bay military base.
Penashue said it's important that he be at the cabinet table when a proposal for a new rapid reaction army battalion and a new long-range unmanned aerial vehicle squadron — first promised by the Conservatives in 2006 — are discussed.
"They'll be looking in when this issue is discussed," Penashue said of Jones and Borlase, who would be in opposition if either were elected under the current majority Conservative government.
Jones shot back at what she described as fear mongering and "false promises."
The Conservatives made the same unfulfilled commitments in 2006 and 2011, she said as her voice rose in anger.
"This is the thing that frustrates me as a Labradorian."
Penashue also repeated and expanded contentious claims that, as intergovernmental affairs minister, he put off Newfoundland's interests to advance those of his Labrador constituents. Penashue kicked off his campaign by saying that he delayed undisclosed projects in Newfoundland to speed up $85 million in funding to pave a section of the Trans-Labrador Highway.
Premier Kathy Dunderdale has said she doesn't know what projects he's referring to and that she would not accept such tactics in a provincial cabinet minister.
Penashue went farther during Tuesday's debate, saying that he acted to save federal Coast Guard and Human Resources jobs in Labrador at Newfoundland's expense.
"Let me tell you: Newfoundland has been very upset with me because I've only lost two jobs in Labrador, two federal jobs that I know of," Penashue said.
Coast Guard services were to move from Labrador to St. Anthony in Newfoundland "and I put a stop to it," he said. "HRDC people that were concerned about their jobs, they called me. I went to see them. I went to see (Human Resources) Minister Diane Finley, had it dealt with, no cuts."
Penashue and Jones also clashed over what he described as her flip-flopping position on the $7.7-billion Muskrat Falls hydro project.
Jones responded that she is not satisfied with benefits for Labradorians, who should not have to grovel at the feet of corporations for contracts, she said. Jones, who is of Inuit descent, said she also supports the efforts of the NunatuKavut Community Council to advance a 22-year-old land claim in Ottawa.
The group has protested its exclusion from Muskrat Falls benefits because its land claim has not been federally recognized.
Borlase said the NDP managed in two weeks to pass a resolution in support of the NunatuKavut land claim and said he would keep up pressure on Ottawa to act.
Penashue said the 22-year-old land claim is now being reviewed by the Department of Justice and he would accept its conclusion.
Jones said she's running to offer stronger leadership than what Penashue provided.
Penashue, a soft-spoken former Innu leader, has been criticized for letting others defend his election spending in the House of Commons and for dodging media at the height of the controversy.
"I believe that we can demand more of governments," Jones said. "And we can achieve more with the right representation, with people that are fair and ethical and genuine and speaking for the people of Labrador."
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