1983 Legislative Session: 1st Session, 33rd Parliament

Hansard

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

( Hansard )

THURSDAY, AUGUST 11, 1983

Morning Sitting

[ Page

753 ]

CONTENTS

Routine Proceedings

Motions and Adjourned Debates on Motions

Motion 2 (Hon. Alex Fraser) –– 753

Mr. Lea –– 756

Mr. Davis –– 757

Mrs. Wallace –– 760

Hon. Mr. Phillips –– 762

The House met at 10:05 a.m.

MR. REE: In the gallery today we have a number of visitors

from La Belle Province. They have been visiting the North Shore, and I

would ask this House to welcome this group of young gentlemen and

ladies from Quebec. They are under the guidance of Rob Robinson of the

Optimist Club from the North Shore, and Mr. Bruce Chartier, who has

come with them all the way from Quebec. The Optimists Club have an

exchange going on in Canada. I'd ask the House to welcome them.

Orders of the Day

HON. MR. GARDOM: I call Committee of Supply, and on behalf of

my colleague, the Minister of Consumer and Corporate Affairs (Hon. Mr.

Hewitt), I adjourn debate until later today.

Motion approved.

HON. MR. GARDOM: Mr. Speaker, I would call Motion 1, standing in my name on the order paper, and adjourn debate until the next sitting.

Motion approved.

HON. MR. GARDOM: Mr. Speaker, I would call Motion 2, standing on the order paper in the name of my colleague, the Hon. Alex Fraser.

HON. A. FRASER: The motion reads as follows:

"This House is of the opinion that changes in the

historic Crowsnest Pass grain freight rate will substantially benefit

the economic development and employment opportunities of Canada and

British Columbia, and,

"This House, accordingly, expresses its support for

action by the Parliament of Canada to deal expeditiously with the issue

of the statutory freight rate for export grain by passing the required

legislation."

And I so move.

Premier Bennett, at the first ministers' conference on the economy

in Ottawa in February 1982, made a statement to his colleagues at that

table calling for action in meeting the challenges in the western

Canadian transportation system. These challenges continue to exist. The

expansion plans of Canadian railways continue to be held back because

the revenues of the railways are below what they should be, because

export grain is transported below cost. If nothing is done, the

railways will put off their investments even further, and our economic

development may be slowed as we, once again, face rationing on a rail

capacity.

The first step in meeting the challenge is simple to state: change

the Crowsnest Pass freight rate for export grain. We're closer now than

at any time in the past ten years to getting on with this change, but

we're not there yet. The motion before you today calls on the

Parliament of Canada to deal with this issue and to deal with it now.

The day after Premier Bennett made his statement at the first ministers'

conference, the Minister of Transport for Canada, the Hon. Jean-Luc Pepin, announced

the beginning of this latest attempt to change the rate. Mr. Pepin recognized

that the Crow rate was holding back the development of the whole transportation

system in western Canada. His approach to the problem was to try to develop

a comprehensive solution. The February 1982 statement contained a statement

of guarantees to the farmers and the railways.

The hon. minister also named the Winnipeg farm economist, Clay

Gilson, to lead all the interests in the prairie provinces — the grain

farmers, the wheat pools, the livestock farmers and the railways — in a

series of consultations and negotiations to iron out some of the

details. The Gilson report was presented to the minister in June 1982

after an intensive time of study and meetings. The Gilson process was

open and fair, and every part of the agricultural industry on the

prairies had its chance to take

part in this exercise. The Gilson

report led eventually to the western transportation initiative

announced by Mr. Pepin in Winnipeg in February 1983.

Between the announcement in February and today, Mr. Pepin has

introduced the legislation he promised into the House of Commons and

has, after that, announced the amendments he has proposed to satisfy

continuing concerns. The bill recently passed second reading and was

referred to the standing committee of the House of Commons on

transport. As it now stands, if this bill passes without any further

amendment, the railways will receive an annual payment of $651.6

million to compensate them for their losses in carrying export grain.

In addition, the government will buy up to 3,840 hopper cars, and will

also spend another $670 million to rehabilitate railway branch-lines on

the prairies. So the people of Canada will continue to support the

grain industry. These contributions are substantial.

The grain farmer will have to participate in paying the increased

costs of moving his products to market. In addition to the Crowsnest

Rate he now pays, he will have to pay the first 6 percent of increase

caused by inflation after 1986. The prairie grain farmer is not without

protection, however. The most recent amendments proposed by Mr. Pepin

contained a provision that limits the freight rate to be paid on export

grain to no more than 10 percent of the price at which the grain is

sold. You can see what this kind of protection means. Transport Canada

has estimated that other bulk shippers pay substantially higher freight

rates as a proportion of the selling price of their product. A few

examples: potash pays 28 percent of the cost of their product; sulphur,

23 percent; coal, 28 percent; and lumber, 38 percent. So the grain

farmer has a substantial safety net.

Let me tell you a little bit about the rates for export grains so

that we will all have an understanding of this business. There is a

shipping point called Scott, Saskatchewan, which is famous in the grain

trade. Scott is about 100 miles west of Saskatoon and is famous because

it costs the same to send a bushel of wheat from there to Vancouver as

it does to send it to Thunder Bay. It costs about 14 cents. Just in

case you've forgotten, a bushel of wheat weighs 60 pounds. So it costs

14 cents to ship a bushel of wheat from Scott to Vancouver. If you are

closer than that to Vancouver it must cost less. So from Calgary it

would cost approximately 12 cents; from Winnipeg to Thunder Bay it's

about 8 1/2 cents. How should we compare that to other transportation

costs? The easiest way is to compare it to a letter which today costs

32 cents from any place to Vancouver or Thunder Bay. That rate has been

allowed to rise in an attempt to cover the costs of moving it. That

hasn't been the case with the bushel of wheat since 1925.

[ Page 754 ]

[10:15]

Another way is to compare the cost of handling and storing wheat in

the prairie grain elevators. The average cost of that was estimated by

the Canadian Grains Commission to be 35 cents a bushel. So it costs two

and a half times as much to unload the farm truck and lift the bushel

up into storage bins as it does to move it over 900 miles to Vancouver.

When we compare the rates for wheat and other export grains we have to

do it by the tonne. The average freight rate paid to export grain from

the whole prairie gathering region to any port is $4.89 per tonne. The

coal moved from southeast British Columbia to Roberts Bank pays a rate

of about $20 per tonne. This comparison is especially important to look

at because it shows so well why shippers other than those in the grain

business are calling for change. The coal moves in unit trains, and the

Canadian railways have responded in an excellent way to help our coal

reach world markets at a price at which we can compete. Those 100-car

trains never stop moving. They are loaded and unloaded without being

uncoupled.

The coal transportation system from southeast British Columbia is

the best in the world. It is also the lowest-cost. There is no more

efficient rail system in the world, so there is no lower-cost system,

but the rate per tonne is over five times as great as that paid by the

farmer. The coal rate includes the cost of maintaining all the track

and the cost of the rolling stock.

more covered hopper cars to carry grain, or when he hears about

continued prairie branch line rehabilitation, his belief that the time

has come for change certainly grows. When the coal shipper hears that

those hopper cars may be competing with his unit train for a rationed

track capacity, he starts to call for a change. Only 15 months ago we

were talking about the probability of rationing of track capacity

before 1990. The worldwide recession has given us some breathing space

deal with the Crow rate problem now, the railways won't have the money,

nor will they have the time, to build the added track they need to move

our exports.

The recognition that we are facing a crisis in railway capacity was

brought about by a paper prepared by Westac and published in 1981.

Westac is the Western Transportation Advisory Council, and the province

of British Columbia is a sustaining member, along with the other three

western provinces. Westac has strong industry sustaining members as

well as government: Saskatchewan Wheat Pool, Alberta Wheat Pool,

Sultran, Potash Corporation of Saskatchewan, as well as CN Rail, CP

Rail and many others. When Westac publishes a paper, you can be sure it

is factual, or some members would quickly stop it. In October 1981,

Westac showed a chart which predicted that by 1990 western Canada would

be shipping 88 million tonnes westbound. Since then we have had a

worldwide recession and some think our forecast would be down a great

deal. In July 1983, Westac published another chart showing this year's

forecast, and it predicts 76 million tonnes by 1990. Our shippers

believe that their marketing is delayed two years. Our exports still

need the added track that our railways want to build.

In recent months Roberts Banks has shipped record tonnage of coal;

more capacity is being added there to increase these records. The last

crop year, which ended July 31, saw a new export record for grain for

the second consecutive year.

The 29.5 million tonnes of grain and grain products were exported

from western Canada. The forecast numbers are based on reality: the

railway capacity is needed.

In February 1983 Canadian National and CP Rail announced that they

planned to spend $16.5 billion in the decade between 1983 and 1992.

That is, they plan to spend it if the Crowsnest Pass rate is reformed.

Of that $16.5 billion, Mr. Speaker, $5.5 billion will be spent in

British Columbia and will provide over 6,000 jobs in the province. A

little of that work is going on, but we want the real work — railway

construction — to begin. Rock-crushing for ballast, building railroad

grade and all of these will put people to work.

By far the largest project in British Columbia and, in fact, in

Canada in the railway plans is the CP Rail Rogers Pass tunnel project.

The project will include driving two tunnels for a total length of

about 10 miles, building 11 bridges and laying 21 miles of new mainline

track through the Rogers Pass area of the Selkirk Mountains in British

Columbia. It will take four years to complete at a cost of $800

million, and it will employ up to 800 workers.

[Mr. Strachan in the chair.]

The present Connaught tunnels are the major bottlenecks in the CP

Rail system. Only 15 westbound trains per day can be moved through this

piece of track. The Rogers Pass tunnel project will raise the capacity

to far beyond that number, and the line between Golden and Vancouver

will then be able to handle 19 westbound trains. CP Rail has plans to

raise that capacity as well, but there is no need to start until the

Rogers Pass tunnel is complete. That won't start until the railway

feels it is fully compensated for moving export grain. With the

announcement of the western transportation initiatives in February, the

Hon. Pepin announced that interim payments of $313 million would be

made to the railways for losses on grain transportation in the fiscal

year 1982-83 –– I think some of those payments have already been made.

These payments gave the railways some confidence with which to go

ahead with some spending and increased track capacity. CP Rail is

spending $20 million on some work at Rogers Pass. They hope to make an

$8 million start on yard expansion and a car repair shop at Golden.

That will provide over 100 full-time jobs in Golden. CP Rail will be

building an engine- and train-crew resthouse in Sparwood, as well as

starting on a new terminal operating building in Coquitlam. Microwave

installations and siding extensions are also going ahead this year, but

CP Rail will not go ahead with the Rogers Pass tunnel until some action

is taken on the Crow rate.

Speaking to the Standing Committee on Transport in Ottawa on July 27

this year, Bill Stinson, president of CP Rail, confirmed that position

and committed the company to start as soon as the federal bill is

passed.

Canadian National is continually ahead in both of its major

projects. They are moving ahead on their plan to doubletrack their main

line between Edmonton and Vancouver, and they are going full steam

ahead on the improvements to their north line from Prince George to

Prince Rupert.

Interjection.

HON. A. FRASER: Yes, they are.

That work on the north line is CN's rail participation in the

northeast coal project. It is worth looking at. The port of Prince

Rupert is at the west end of the rail line. The member

[ Page

755 ]

for Prince Rupert (Mr. Lea) agrees with that, I

think. The construction is now going on on world-scale development

there. The grain terminal will have a 200,000 tonne storage capacity.

The $275 million being invested there will provide a facility that will

increase export potential from the Pacific coast by 20 percent. Also

under construction at Prince Rupert is a terminal for coal from the

northeast. Coal will be shipped out of that terminal early next year.

The $220 million project is now over 60 percent complete. Between 900

and 1,000 construction workers are now building these terminals; the

port will have 700 to 900 full-time workers after completion.

CN Rail plans to spend $700 million to upgrade the north line over

the next ten years. This year they are spending $92 million on the line

between Red Pass and Prince Rupert. These expenditures will improve the

track by replacing bridges, lengthening sidings and upgrading terminals

at Prince George, Smithers, Terrace, Endako and Ridley Island. All this

work west of Prince George is now going ahead because CN Rail has the

assurance that the traffic will be there and that the cost of

improvements can be paid from revenues from that traffic.

If the government in Ottawa is able to take action on the Crow rate,

CN Rail will receive full compensation, and the grain traffic on the

north line will pay its share of the upgrading.

There are 300 cars of lumber a day moving east from Prince George on

the CN north line. That lumber comes from mills on the north line as

well as on the British Columbia Railway. Mr. Norris of B.C. Rail was

quoted in the Globe and Mail , in June of this year, as saying

that B.C. Rail had a lumber car shortage earlier this year. Our lumber

needs railway capacity, and our lumber pays its way. Already this year

CN and CP have negotiated a 5 percent rate increase with the Council of

Forest Industries.

CN Rail would increase its rate of investment on capacity

improvements on its main line from Valemount to Vancouver. They would

spend almost a billion dollars in the 1983 to 1987 period if full

compensation for grain transport were arranged: $700 million would go

to double-tracking; $75 million for the signal system; $250 million at

major terminals, and another $38 million at intermediate terminals; $18

million for equipment facilities. All of this would be in addition to

the continuing maintenance and track renewal work. So the railways

would create jobs during these huge construction projects. More

importantly, these jobs would create and maintain our opportunities to

deliver our export products.

In Ottawa, in February 1982, Premier Bennett said: "Canada's ability

to market aggressively in world markets is heavily dependent on the

cost and efficiency of our transportation system and our reputation as

a reliable supplier, which is directly linked to a transportation

system that can deliver the goods when and where they are needed.

Railway capacity and port development must be in place when needed.

Canada needs the railways to be ready. The railways have to be

adequately compensated for all their traffic. This will come closer

when the House of Commons' Parliament of Canada acts.

The motion before this House calls on the Parliament of Canada to deal with

the issue of the Crow rate by passing the necessary legislation now. Members

are aware that the House of Commons standing committee on transport is holding

public hearings on Bill C-155, the Western Grain Transportation

Act, which would make a start on addressing the situation. This bill contains

two aspects which require special comment from the province of British Columbia.

The first is the dominion coal block.

On May 20, 1983, my colleague Hon. Brian Smith, the then Minister of

Energy, Mines and Petroleum Resources, sent the following message to

the Minister of Transport for Canada:

"Your proposals to amend the grain rate established by

the Crowsnest Pass Act have received support from this province. We

continue to hope for an early resolution of this issue. Although we

have concerns with recent changes you have made to the subsidy

arrangement, we believe it desirable to pay the subsidy to the farmers

and not to the railways directly.

"We are troubled, moreover, by the language employed

section 62 of Bill C-155. The province of British Columbia has

always maintained an ownership claim on the subject coal lands;

moreover, it has regular requirements and land-use priorities which

must be met by all explorers and developers of coal. Accordingly, we

trust that the federal government will never attempt to dispose of

these coal lands unilaterally.

[10:30]

"I believe it is possible for our governments to take

a cooperative approach to resolve these outstanding issues in order to

facilitate the orderly development of the coal resources for the

benefit of British Columbia and all of Canada. I suggest we meet at an

early date, prior to any disposition of the lands, to hold discussions

on ownership, management and regulatory policy."

The response from the federal Minister of Energy, Mines and

Resources claimed the coal blocks as a legal federal responsibility.

British Columbia has no desire to see the issue of ownership of these

coal blocks tied up in legal proceedings in the courts for years.

Agreements between governments in which our mandated responsibilities

are respected would solve this problem. This we have offered to

discuss. British Columbia must seek proper recognition of its policies

and programs regarding leases, taxation arrangements, environmental

impact management, project proposal review, mines regulations and

planning and financing of road and municipal services. We should all

remember, however, that the development of the dominion coal blocks for

export would require railway capacity which will not be available if

enough for moving grain.

The other aspect of the bill presently before Parliament is dealing

with the British Columbia Railway. The BCR made presentation to Dr.

Clay Gilson during his consultations and will be making its statement

to the standing committee during the public hearing in Vancouver. No

doubt my colleague, the Minister of Industry and Small Business

Development (Hon. Mr. Phillips) and the MLA for part of the great and

growing Peace River, may add some words to this debate, but for my

part

let me say that Bill C-155 does not allow the BCR to participate in the

transport of export grain on an equal basis with CN Rail and CP Rail,

and that will have to be changed. If BCR cannot participate on an equal

basis, then grain producers who ship on BCR cannot be treated equally,

hold the same federal permit as shippers on the CN Rail and CP Rail.

These two British Columbia aspects do not override our desire to see

the bill pass and action begin on

[ Page 756 ]

building the needed railway capacity, This present

bill before the House of Commons is just the beginning, and we must

start now. As I said at the beginning, I take pleasure in moving this

motion and hearing the remarks that will follow.

MR. LEA: It's interesting to note that over the course of

time the Social Credit and Conservative parties always accuse the NDP

of being in bed with the federal Liberals. There's only one other time

in the last eight years that I can remember this government being in

bed with the Liberals, and that was over wanting to keep the interest

rates high in their industrial strategy paper in 1978. That was the

first time in the last eight years that the Social Credit has agreed

with the federal Liberals, to my knowledge. This is the second, and

isn't it interesting that the second time that they're in bed with the

federal Liberals is when they're going to have a handout to the CPR? I

suspect that it's two down and one to go, and if we ever get to the

motion on testing the cruise missile in this country, that will be the

third time in the last eight years that this party agrees with the

federal Liberals. I think it's interesting to note a great deal of what

this motion doesn't talk about. This motion was on the order paper

yesterday also, and it's different than the one today. Yesterday the

motion read:

"This House is of the opinion that changes in the

historic Crowsnest Pass grain freight rate will substantially benefit

the economic development and employment opportunities of Canada and

British Columbia. Investments planned by the railway will dwarf

expenditures on northeast coal infrastructure and are crucial to the

future of southeastern British Columbia and to job creation in our

province. This House expresses its support for action by the Parliament

of Canada to deal expeditiously with the issue of the statutory freight

rate for export grain by passing the required legislation."

It's interesting to note that that was yesterday's. Today it's not

exactly the same. What did they take out of today's? They took out what

Mr. Minister says is the most important part. They took out:

"Investments planned by the railway will dwarf expenditures on

northeast coal infrastructure and are crucial to the future of

southeastern British Columbia and to job creation in our province."

That's out of the one we're talking about today.

Interjection.

MR. LEA: We all know that it is.

First of all, there is a guarantee that the federal government makes

sure that money goes to the CPR, but there is no guarantee that the CPR

is going to spend that money as they have promised. The minister is

talking about the CNR and expenditures on the northern line. If the

minister will check, he'll find that the CNR has taken that money out

of this year's budget. It's no longer there. The work has not started,

and the budget money is gone. This is the first time that I've known

that a British Columbia government has believed the CPR about what

they're going to do for this province. There is no guarantee that the

CPR — or the CNR, for that matter — are going to spend the funds here.

Also interesting is what this motion does not say. One of the most

crucial issues surrounding transportation in western Canada, as it

relates to central Canada, is the freight rate on shipping the other

way — to eastern Canada. Mr. Speaker.

I'm sure that everyone in this House knows — and if they don't, they

should — that the freight rate for shipping goods from western Canada

to central Canada is not based on weight or volume; it's based on

whether the product is finished or unfinished. If you ship an

unfinished product from western Canada to central Canada, it's cheaper

than sending a finished product. What we do by that kind of freight

rate system is ship jobs out of western Canada to central Canada.

AN HON. MEMBER: Is that going to be changed?

MR. LEA: They don't even mention that. That kind of crazy

freight rate system stops economic development in western Canada dead

in its tracks. The government wants to give the CPR a handout, but they

do not take on the federal government about a freight rate structure

that ships jobs and economic development out of western Canada to

central Canada. I find that more than passing strange, Mr. Speaker.

Here we are in Canada talking about trying to compete in the world

market to sell our goods. When you look at the ludicrous freight rate

system.... You take the energy resource, and you transport it from

western Canada to central Canada. Then you take the raw resource and

transport it from western Canada to central Canada. The energy resource

and the raw product meet in central Canada, and then they produce goods

for the world market. How can that be a competitive system of

production? It cannot be.

We would much rather have a motion which deals with the kind of

crazy freight rate system that stops economic development in western

Canada. That's what it does. But there has not been one mention of that

freight rate system, during either the constitutional talks with the

federal government or the talks that are currently going on about

freight rates and the Crowsnest Pass changes. We can't support this

motion. We can't support it, because it's a handout to the CPR, with no

guarantees that the CPR is going to spend that money in British

Columbia. There are no guarantees that the CNR is going to spend the

money, and it's even worse in the case of the CNR: they've already

taken the money out of the budget for this year.

AN HON. MEMBER: They're a bunch of rubes.

MR. LEA: That's true. When this government deals with the

federal government, time and time again they get taken. This time they

are willing to be taken because it means a handout to the CPR. It's

incredible that this government would actually go along with that.

Mr. Speaker, as long as the freight rate system for finished and

unfinished products is in place, in terms of economic development we're

doomed.

Now the kinds of things that the CPR and the CNR say they'd like to

do, or are willing to do, would be good for British Columbia. There's

no doubt about that. We'd have the original construction money,

construction jobs and the economic activity surrounding that. That

would be good for British Columbia. But with no guarantee that it's

going to be spent, we on this side of the House are not going to

support giving the money to the CPR.

The other thing is that in the original deal made by the federal

government and the CPR, we gave them land as a federal Canadian entity.

Now what they're doing is what's called the old shuffle-duffle on the

bookkeeping system. The

[ Page 757 ]

CPR has broken their operation down into different

components. Land is a different component than their mining operations.

Mining operations are a different component than their transportation

system. They will show losses on the transportation system, but big

profits on their land holdings and mining holdings. There's no

cross-subsidization within that company, and they always show us the

losses on their transportation system, while on the other side of the

ledger they're making oodles of money. Does the CPR not owe the people

of British Columbia, and the people of Canada, something for the

original gifts? Surely they do. Surely the CPR, who was handed big

chunks of land and wealth by the federal government years ago, has some

obligation from that gift to participate with their profits from the

entire operation in economic development for western Canada. But

they've gone along....

In conclusion, Mr. Speaker, if you take a look at the freight rate

system in Canada, it is such a deck of cards that if you pull one out

you never know where anything will land. It's a hodgepodge of policy

built up over the years. There's very little rationale to it — in fact,

it's hard to find any. And that's why western Canada, and the federal

government, are always loath to touch any one part of it, because they

don't really know what's going to happen. If you take out one card, the

whole thing is liable to collapse, because, first of all, it doesn't

make any sense. We would much rather support a resolution asking for a

complete revamping of the freight rate system as it affects western

Canada.

When we were in government we suggested to the federal government

that we would like to see a western Canada transportation authority,

with the four western provinces having representation on that

authority, along with a single member from the federal government. If

we're ever going to have a rational transportation system that serves

economic development in western Canada, we in western Canada have to

decide our own transportation system. We're going to have to decide

whether a rail line is going to be abandoned or whether it isn't, and

where and when we're going to have expansion.

We cannot rely on Ottawa to lay out a transportation policy for us,

because we know dam well that the past has proved that they just aren't

capable of putting a transportation system policy in that will benefit

us. Really, we know why: it's called federal politics. As long as the

major population in this country lives in central Canada, all political

parties at the federal level, for political reasons, are going to curry

favour with that majority population where the votes are. If we ever

want to take our place in the sun in terms of putting a transportation

and an economic policy into place in western Canada, the first thing

that we should be concerned about is that unfinished-finished freight

rate system. That's what we need, because as we build up economic

development in western Canada, the population will grow. As the

population grows, we will have more votes. And as we have more votes,

we will take our place in Canada, because for the first time we will

have the number of votes that federal political parties will have to

listen to.

[10:45]

So to deal with this resolution asking for a gift to the CPR, with

no guarantee from the CPR that they're going to spend the money in

western Canada, is absolute folly. We would have been pleased to

support a motion out of this Legislature calling for a change in the

finished-unfinished freight rate system which ships resources and jobs

to central Canada, not only to the detriment of western Canada and our

economic development but to the detriment of Canada as a whole, because

that policy means that we are putting goods on the international

marketplace uncompetitively because of artificial impediments to

economic development through the federal transportation system. We

cannot support this motion, because of the gift to the CPR with no

guarantees, and for not taking on that freight rate system that stops

the goods, the jobs and economic development happening in western

Canada. We cannot support it, and we would not be doing our duty to the

citizens of this province or to the citizens of Canada if we were to

support this resolution. I ask that the provincial government take a

second look at this, because in the long run it will not be good for

western Canada and in the short run the provincial government thinks it

will be good for Social Credit. I ask you: are you here to support

Social Credit or British Columbia and Canada?

Interjection.

MR. LEA: Yes, we on this side of the House have been in bed

with the federal Liberals, but isn't it interesting that we are in bed

with the federal Liberals when it comes to protecting human rights; we

are in bed with the federal Liberals when it comes to protecting

medicare; but they're in bed with the federal Liberals when it comes to

handouts to the CPR. That's exactly what this is all about.

MR. DAVIS: I well remember a few years ago when the Hon. Jean

Marchand was the newly appointed Minister of Transport for Canada. He

said that the freight rate policy in Canada was a mess. I think he went

even further and said transportation policy in Canada was a mess. It is

a mess. It's in less of a mess than transportation policy in many other

parts of the world, but still it's very difficult to understand. It's

difficult to understand largely because transportation has been used as

one of the principal vehicles for industrial development across Canada.

It's been used as a way of favouring one region as opposed to other

regions of the country. Freight rates, in other words, have been a

political plaything. They certainly were a century ago, they were at

the time of Confederation and they were even more so in the 1880s when

the CPR and other railways were extended throughout the length and

breadth of the country.

The Crow rate is one of those special considerations. Often rates —

at the time, high rates — were agreed to if a railway company would

extend its lines into another, often undeveloped, part of the country.

The Crow rate was set before the turn of the century in order to

encourage the CPR to build the railway line through the Crowsnest Pass

and through the southern part of British Columbia to the coast. The

Crow rate was embedded in legislation in 1925 and it's been in effect

ever since. The Crow rate was set at prices which prevailed at the turn

of the century, and obviously inflation has made nonsense of that rate;

it's now more than 80 years old. The economy, generally speaking, has

moved with the times. It's had to move with the times, and therefore

that rate is nonsensical today. The Crow rate applies to several

qualities of grain which are exported from Canada — not grain used in

Canada but grain leaving the country. It's a rate applied to exports.

Naturally the wheat farmer who grows grain for export likes the Crow

rate and wants it retained. As late as 1960 the Crow rate was equal to

about 10 percent of the price of a bushel of grain. Today the Crow rate

[ Page 758 ]

is equivalent to about 2 percent of the value of

the grain. Naturally, if you or I, Mr. Speaker, were a farmer on the

Prairies and we were exporting most of our grain we'd want to retain

the Crow rate as is. Only 2 percent of the cost of delivering our grain

to world markets would be the rate paid to move that grain by rail

across Canada, either way, to the markets of the world.

So for a large segment of the prairie population — certainly for

political parties on the Prairies as well who attempt to represent the

prairie farmer — the Crow rate has become, if anything, sacred; it's an

advantage to the prairie farmer which has grown with time. As costs

generally have risen and prices have risen, this fixed, old-fashioned

rate has become more and more valuable, and naturally there's a great

resistance to changing the Crow rate.

[Mr. Pelton in the chair.]

The NDP, as I understand it, in Ottawa certainly has taken the view

that the Crow rate, though anomalous, really mustn't be changed until

everything is changed; until all the rates are changed, and the

rate-setting problems involved in the transportation side are somehow

made perfect. Perfection or the Crow rate — nothing in between, and

really, that's what we heard from the last speaker this morning: until

you can produce a perfect policy, please stand firm on the Crow rate as

it is.

Let's look at the interests of Canadians generally, and particularly

the interests of British Columbians. The Crow rate is of no help or

advantage to the people of British Columbia. What it does, essentially,

is require the products of British Columbia industries — indeed the

products of other industries across the country — to bear more than

their share of railway costs. The railways lose money on the Crow rate

and make it up by charging more on lumber and minerals being exported,

petrochemicals being moved by tank car, manufactured goods or whatever.

Indeed products not only moving for export but all products moving on

the CNR and the CPR help to subsidize the prairie farmer, and that is

the length and breadth of it. There has been no taxpayer subsidy to the

railways directly to offset the Crow rate. The Crow rate has been low

and has become lower relative to other costs, and therefore rates have

had to go up on all other commodities moving in Canada to compensate

for the railway losses on the Crow rate.

Why has the federal government had to build hopper cars? Why do the

railways not build the hopper cars? Because the CNR didn't want to

carry grain and always tried to push it onto the CPR; the CPR didn't

want to carry grain and always pushed it toward the CNR. Nobody wanted

to move grain, at least in the railway business. The equipment was not

beginning around 1970, got into the business of building new, modern

hopper cars for carrying grain and giving them to the railways. So

we've had lash-up methods like this evolving in order to help offset an

incredibly low rate which doesn't in any way cover costs; indeed, the

rate covers about 20 percent or one-fifth of costs today, and that's

wrong.

If one assumes or argues that the prairie farmer must continue to be

supported, there are other ways of supporting him than having a freight

rate system whereby the railways are not compensated, so they take the

deficit on wheat, for example, being exported, and recover by charging

more on everything else. The present legislation, which has received

second reading in Ottawa — the legislation which is now being discussed

by a committee of the House of Commons which will be in Vancouver

tomorrow, listening to submissions from B.C. — says: "We will release

the railways from their problem by making a grant to the railways." For

the first time Canadian federal taxpayers' money will be paid to the

railways in order to benefit....

MR. LAUK: The first time? Are you out of your mind?

MR. DAVIS: For the first time in relation to the movement of

wheat. The hon. member knows there are many other situations in which

taxpayers' money has been involved.

For the first time, Canadian taxpayers' money will be used to help

move export grain, and the amount of money is considerable. In the

first few years in the order of $600 million a year will be paid to the

railways in order to maintain a low rate for the farmers, but a rate

which over time will rise. The farmers will have protection in that the

rate will never be allowed to be more than 10 percent of the price of

grain. I said that right now the Crow rate only uses 2 percent of the

price of grain, so prospectively the farmer will be paying more over

time.

The money to go to the railway is money that is earmarked: policed

moneys which will go into construction of new facilities,

doubletracking, better equipment, better grain handling from one end to

the other. As those facilities are completed in B.C. and elsewhere, the

railways will become more efficient and their costs will go down.

Somewhere, with the falling costs on the one hand, and rationalization

of this whole situation on the other, the better interests of the whole

of the country will be met. The farmers will in some measure continue

to be protected, but they will not be subsidized to the same extent,

and certainly not in the same way, as they've been subsidized in the

past.

British Columbia is taking a narrower view. We have to welcome this

new construction that is in the order of a northeast coal development

investment every year for the next six or eight years. In other words,

the big investments in northeast coal that are financed by the

provincial government will continue, at least in monetary terms, but

moneys essentially spent by the transcontinental railways, principally

the CNR and the CPR in this province.... I'm not talking about other

moneys spent elsewhere in Canada, but in the order of $6 billion over

the next six years, $1 billion a year, to tunnel through the Rockies,

for example; lowering the grades, improving the efficiency of our

transcontinental railway.

AN HON. MEMBER: Those are all real jobs.

MR. DAVIS: These are jobs for the next half dozen years, year

after year; not just for a year or two but for a considerable period,

continuing to employ many of the same people who are working on the

northeast coal development this year, and out through the rest of the

1980s. That's certainly to be welcomed. More importantly and certainly

more important for the longer term, we will have a more efficient

railway system through the west and certainly through British Columbia,

not only to Vancouver and Vancouver area ports but also to the Prince

Rupert area. Two windows on the Pacific rather than one; two very

efficient railways. Two railway companies with a real incentive to move

from the old-fashioned hopper-car system to unit trains, to highly

efficient

[ Page 759 ]

scheduled operations which will effectively reduce

the cost of moving everything through British Columbia, and indeed from

B.C. sources to the coast and elsewhere. We'll have a more efficient

transportation system not just for grain but for all commodities: for

forest products, mineral products and manufactured goods coming and

going or passing through the province. We benefit in terms of

construction jobs and a more efficient transportation system through

this province to our ports for products originating in British

Columbia, the Prairies, eastern Canada; indeed, from around the world.

So we're benefiting several ways, in both the short and long terms.

[11:00]

We have to vote for this resolution, which is for our advantage. I would argue that it's also a resolution.... Certainly

the bill before the House of Commons is to the advantage of Canadians

generally. Where we may well be divided is on the consideration as to

whether the subsidy should be paid to the railways or in another form

to the farmers. That's where the remaining debate really rests. The

hon. members opposite have to agree that the jobs are to our advantage,

that a more efficient railway system has to be to our advantage. They

can't vote against that. They surely won't stick with the idea that

you've got to stick with the old Crow rate because no one has yet

thought up perfection. Where I would respect their differing is on how

the subsidy is paid, and to whom.

Twelve months ago the government in Ottawa, the federal Liberal

government, set up their legislation to pay the farmers. Opposition

developed, principally in eastern Canada — largely in Quebec — to

paying the prairie farmer the $600 million a year, and changes were

made. Eventually the federal cabinet did a flip-flop and made a major

change. It decided that instead of paying the prairie farmers the $600

million a year, which is a declining amount over time, they would pay

it to the railways and require the railways to meet a certain

construction schedule. Why did they make that change? They made the

change largely, if not entirely, because the processors, the users of

grain in the east — whether they used it for milling and making bread

and other wheat products, or whether they were feeding it to animals

and building up their livestock industry — wanted low-cost grain

transported at a low, subsidized rate: i.e., subsidize the railways.

They didn't want the benefit to go to the farmer. The farmer, if he or

she got the benefit, would then use more of the grain on the prairies —

processing it, feeding livestock and so on. So those who would generate

more industry on the prairies lost; those who would maintain the wheat

and other grain-using industries in eastern Canada won. That battle,

I'm sure, will be revived. But at the moment the legislation in Ottawa,

Bill C-155, says the subsidy will be paid to the railways. The railways

will be relieved of a very low rate, which has meant they've had to

squeeze other industries. The railways will have an incentive from now

on to modernize their lines and upgrade their equipment. So the

railways will get on with it. But the battle, which for the moment has

apparently been lost, means that the processors on the prairies won't

have an advantage, if you like, and the advantage the processors have

had in the wings of Canada, particularly in eastern Canada, will be

maintained. To put it in the crudest political terms, Quebec won and

the Prairies lost.

In British Columbia we can't look at that issue without some

concern, but it doesn't impact anything like as directly on us as it

does on the prairie farmer. It certainly doesn't as long as the

subsidies, etc., don't apply to the B.C. Railway. As many of you know,

B.C. Rail has not benefited from the Crow rate. "Benefited from" is a

questionable term because the Crow rate certainly hurt the railways,

not helped them. But the subsidy now designed to go to the CNR and CPR

will not also be going to B.C. Rail to carry export or other grain. And

that has to be of particular concern to us here. But it's not the big

issue, not the major issue.

I understand that the province will be, if not formally filing,

otherwise presenting a brief to the House of Commons committee on

transportation appearing in Vancouver tomorrow. I understand that the

brief will essentially say: "Get on with it. Pass Bill C-155. We would

have preferred that the subsidy go to the farmers and not the railways,

but so be it. We want to see this thing resolved, at least in stages."

I'd like to back off and take a more general run at this whole

issue. First, the geography. The lowest-cost transportation anywhere is

water-borne transport. Transport by sea is far cheaper, far more

efficient than transport by land. It's a fraction of the cost of moving

a commodity by rail. Therefore land-locked areas are at a disadvantage,

have always been at a big disadvantage. Saskatchewan has been at a big

disadvantage relative to B.C. or Nova Scotia, particularly B.C. because

we've got year-round ports. So we've always had a transportation

advantage over the Prairies. The prairie farmer has naturally wanted

subsidies in one form or another to overcome the fact that they're in

the centre of the continent, that they're land-locked, that they have

to move their products over creaky old railways that are not very

efficient — certainly not as efficient as they could be. And so they

have wanted to retain the Crow rate, even if it meant sucking out the

substance of other industries in other parts of the country.

Traditionally, British Columbia, without thinking its way through

this matter — I'll include the W.A.C. Bennett government; certainly the

NDP — has always joined forces with the Prairies and said: "Oh, what's

in their interest is in our interest." That's nonsense from a

transportation point of view, and British Columbia should always have

taken a different tack. Therefore we should have said in the past, as

well as be saying now: "The Crow must go. The Crow rate is not to our

advantage. The Crow rate is not helpful to British Columbia. And we're

glad to see it go even if it has to go by subsidizing the railways —

the railways under strict supervision — as opposed to subsidizing the

farmers."

I'll say one thing in favour of subsidizing the railways as opposed

to subsidizing the farmers. Anyone who's been in politics any length of

time knows that it's easier to withdraw a subsidy to the railways than

it is to withdraw a subsidy to the farmer. It's easier to phase out a

subsidy to the railways once their construction period is over than to

withdraw a subsidy to the farmer. So if one wants to take a cynical,

political approach to this whole question and take a view looking into

the 1990s, one can say: "Maybe this, after all, is the best way to go.

Pay the railways who, under strict supervision, will build what they

say they're going to build, will equip in the manner they should equip

the railway, and once that's all done, the subsidy ends." To go the

other route, which the prairie people certainly want — that is, pay the

$600 million a year to the farmers ad infinitum, probably escalating as

the price of everything else goes up....

Again, the Crow rate has to he seen in the context of protectionism. The conventional wisdom has always been

[ Page 760 ]

that the prairie people got some help from the

federal government. Manufacturing industry in central Canada was

defended from foreign competition by high tariffs, the prairie people

got help through a reduced rate for the export of their grain. The

reduced rate for the export of grain has become ridiculously low. It's

being eliminated. There have to be other quid pro quos against

protectionism in the east, and hopefully the protectionism will be

reduced. Those are old battles and considerations. We've moved decades

away from a time when protectionism was all that important in

manufacturing and in the Canadian economy. So the bias in favour of the

east is perhaps not as great as it used to be, and surely we can find

other ways of helping the western provinces than continuing to charge a

ridiculously low rate: 2 percent of the price of a bushel of wheat to

move grain all the way from the prairies to our ports east and west.

The railways will become more efficient, the costs of carrying will go

down. If they get above 5 percent of the price of a bushel of wheat

I'll be surprised. At worst, the prairie farmer has to give up 2 or 3

cents on every dollar in order for this to happen. Surely the federal

government will think up some other ways of offsetting the advantages

of central Canada through transportation or other kinds of assistance

out here in the west.

To sum up, B.C. narrowly has everything to gain and very little to

lose by seeing Bill C-155 pass in Ottawa, the railways committed to a

major construction program over most of the next decade, a program

which will benefit us in terms of jobs — tens of thousands of jobs each

year — and benefit us with more efficient transportation systems which

will carry our products more cheaply from place to place for export

throughout the world.

In 1967 the federal Parliament passed the new transportation act,

which basically removed regulation from most forms of transport in

Canda, including the railways. The railways were free to set their own

rates, bargaining with the shippers whose products they carried. The

only exceptions were where there was no alternative transportation

anywhere around to act in a competitive way and set a competitive

price. So the railways in large measure since 1967 have been

deregulated in Canada. They've been the envy of American railways until

very recently. If you talked to American railroaders anytime in the

last 15 years they'd say: "My God, I wish we had something like you

have up in Canada with deregulated rates." But there was always one

rate that was there. It was the Crow rate, and it was basically

established in contract in 1897. So we've got a rate still in effect

today which was set some 85 years ago. The prices have gone up ten and

twenty fold in that time along with everything else, salaries and wages

included. Yet that rate has remained there, and it's now 2 percent of

the price of a bushel. It could go up to five cents. That's the worst

that could happen for the prairie farmer.

In this chamber we don't need to be playing prairie politics. We

don't need to be fighting the battle for the prairie farmer. The

prairie farmer will look after himself. We have to be fighting for our

own interest, which I happen to think is coincidental with that of most

Canadians in the rest of the country anyway. We should support this

resolution. I can't see how the NDP can possibly say: "Let's stay with

the old Crow rate because you haven't thought up anything better,

Ottawa hasn't thought up anything better. There isn't a consensus in

the country on something better, so let's stick with the old Crow

rate." They're certainly not being British Columbians if they say that,

and they're not being good Canadians. They may be trying to win or hold

on to a couple of federal NDP seats on the prairies, but that's what

it's all about. I urge them to vote for this resolution as good

Canadians and good British Columbians.

[Mr. Strachan in the chair.]

MRS. WALLACE: It's interesting to note that the government

members have finally found their tongues. We have sat here through one

bill after the other, drafted by that government, without one person

getting up and speaking in support of it, and now suddenly we've got a

motion for support of a piece of federal Liberal legislation and the

government has finally found its tongue. That's very interesting.

I just cannot believe that the member who has just taken his seat

could get up and tell this House that there had never been any

subsidies paid to the railway companies in relation to grain transport.

Did he never read the Snavely report, for goodness' sake? In the year

that report was put out, the railways were claiming that they had lost

$335 million in hauling grain. Well, the facts were that the actual

costs according to Snavely were $540 million, less the rates of $131

million that the farmers paid, less the branchline subsidies of $131

million, which were paid in relation to transportation of grain, less

pure subsidies paid to the railways, and also less branchline

rehabilitation of $70 million, which was not carried out. We have no

more assurance now than we had then that it will be carried out.

The railway companies refused to supply hopper cars. This was their

way of attempting to avoid transporting grain. We had backups in the

elevators — bushels and bushels of grain. The taxpayers went out and

bought their own hopper cars, which was a saving in interest alone to

the railway companies of $127 million. In addition to that they paid

subsidies of $4 million to the railway companies for hopper cars that

they didn't even provide — which really amounted on both CNR and CPR to

a shortfall of $15 million instead of $335 million. That's the kind of

statistics that the government has come up with in their studies and

reports, and that indicates to me the kind of statistics and the kind

of misinformation that the railway companies are feeding this

government, this province and the federal government, which has talked

them into the idea of getting rid of the Crow rate.

We have continually seen the railway company siphoning its resources

and its returns out of its transportation system. In 1980, for example,

21 percent of all of CPR's enterprises and profits were realized on

their transportation system, but what did they put back into that

railway? Only 15 percent. They haven't been doing their job. They've

been creaming us, and this move of the federal government, which this

province is prepared to support, is doing nothing but allowing that

creaming to continue.

We as taxpayers have continually been subsidizing the railway

companies. When we think back to what those companies, in particular

CPR, received in return for a promise that they were going to provide a

continuing service: $25 million to the CPR for the main line, which

doesn't sound like much to us in today's dollars but was a fair bit at

the time it was given; 25 million acres of land, which didn't sound

like much in those days but at today's prices represents a horrendous

return. When we think of the timber that was on that land

[ Page 761 ]

here in British Columbia and the value of the

timber alone, we as taxpayers have given away our heritage to the CPR.

We've given them land for rights-of-way and stations, and we've given

them sections and sections of land across the whole prairie.

HON. MR. CHABOT: I've given them my life.

MRS. WALLACE: Yes, that's right.

When the Crowsnest itself was built, they got 3.8 million acres of

land from the B.C. government and acquired, of course, the smelter and

the nucleus of the Cominco subsidiary, plus dividends to CPR.

The story goes on. We have been continually subsidizing the railway,

and now we are going to subsidize them even more. We are going to

remove from them an obligation which they undertook at the time that

Crowsnest line was built. That obligation — almost in the terms of

Confederation — was that that would continue to exist. They attempt to

tell us that they are losing all this money because of the

transportation of grain. In fact the grain hauling represents something

like 20 percent of the total freight load, and that is expected to be

reduced within a few years to less than 14 percent. At the same time

that CP and CN are trying to tell us that they have lost $335 million

in grain transport — and I think the figures I have given you indicate

that in reality that loss was more like $15 million between the two

railways — that same year CP netted a profit, according to their books,

of $583 million on all their enterprises. They had a $15 million loss

on their railways at the same time that they are making a profit of

$583 million. Twenty-one percent of that $583 million was contributed

by CP Rail, and that was paid out as dividends to the shareholders,

rather than being reinvested to ensure that we had branch lines, double

tracking and the required hopper cars.

There is no assurance that by increasing the

subsidy anything different is going to happen. Anybody who will take at

face value what the railways tell us must have not been following what

has happened in history in this country and in this province. Certainly

when that Crowsnest went in, with all those grants of $25 million and

the $25 million acres of land — all those things they got for putting

in the main line — the condition was that the company "shall thereafter

and forever efficiently maintain, work and run the Canadian Pacific

Railway." It is not efficient to return your profits to your

shareholders as dividends at the same time that you are forcing the

taxpayers to buy their own hopper cars, at the same time that you are

closing branch lines and at the same time that you are refusing to

double track when that double track is so badly needed. That is not in

the terms of the contract that we as Canadian people have with the CPR.

That was a commitment thereafter and forever to efficiently maintain,

work and run the Canadian Pacific Railway. I submit that they have not

done that. To simply give them a greater subsidy and say "go to it,

boys" is absolutely ridiculous.

They agreed to maintain those freight rates. It was in 1881 that

they agreed to the Crowsnest rate; almost immediately they tried to

renege and get out of it. Finally, in 1925, the Crow rate was enshrined

in legislation, and now we want to get rid of it. What will happen?

Exactly the same thing. There is absolutely no assurance in any of the

verbiage we've seen that those branch lines will be rehabilitated or

maintained. The CPR will continue to do exactly what it has done in the

past: it will do as it pleases.

Because of the clever operations of that company, we're left in a

position where even if we were to take over the operation of the

railway, which is a major undertaking, we would have no access to

Marathon Realty, Pacific Logging and all those subsidiaries that have

been set up and into which all the lucrative assets have been

transferred — assets which that company received from us in return for

that promise to maintain and operate forever an efficient rail service

in Canada.

Instead of dishing out further subsidies, what we should be doing is

ensuring that any tax dollars that go into getting the railway built up

go in as equity capital, so that we have something to say about what

happens with that railway, not leave it to the whim of the directorate

of CPR.

The point has been made that the only people affected are the

prairie farmers. The Premier tried to make that point a year ago. In

February he was quoted as saying that the Crow rate discriminates

against B.C. farmers because they've never enjoyed the subsidy. Well,

it just showed all the things he didn't know about what's been

happening in British Columbia. Certainly the farmers in the northern

part of British Columbia who transport their grain — or in the southern

part — over CN-CP, did enjoy the Crow rate. It's true, B.C. Rail was

not bound by law to the Crow rate. It was a decision of the former

Premier that he didn't want that under federal control; he wanted to be

able to set his own rate on that particular railway. But grain was

always transported on B.C. Rail at a rate equivalent to the Crow rate.

Also, because of the Crow rate there is a feed-grain subsidy for

bringing feed into B.C. If the Crow rate grows, there is no assurance

that either of those things will be maintained. In fact, there is

almost absolute assurance that they won't be maintained. The B.C. Rail

rate will go up, and that's going to affect the farmers in the northern

part of B.C. very drastically. Those farmers have suffered a drop in

income of something like 22 percent over the last year, and they

believe quite honestly that if they are faced with this kind of

increase.... You should know something about this, Mr. Speaker, coming

from the part of the province which you come from; certainly the

Minister of Industry and Small Business Development (Hon. Mr. Phillips)

should know about this, and the Minister of Lands, Parks and Housing

and Minister of Environment (Hon. Mr. Brummet) — he's not in his

place.... They must be aware of the kind of effect the loss of the Crow

rate is going to have on the people who live in their constituencies.

MR. LAUK: The Peace River area.

MRS. WALLACE: That's right. The farmers in the Peace River

area are facing a great number of bankruptcies if they're forced to pay

this additional cost of transporting the grain. It's a very difficult

situation for those people and a very unknowing or uncaring Premier who

would say that the Crow rate was working a disadvantage on B.C.

farmers; it's a very callous attitude toward a great number of people

who are going to be in the economic crunch if this piece of federal

Liberal legislation is passed.

[11:30]

It seems strange to me that this House and these members are

suddenly finding their tongues to support this, because they think that

somehow it's politically popular out there, that mining companies and

manufacturers are somehow going to find this very important to them.

They somehow think that

[ Page 762 ]

their transportation costs are going to

be reduced. The member for North Vancouver–Seymour (Mr. Davis) said it;

we have an unregulated system here. The railways will set their own

price. They've done it in the past and they will continue to do it in

the future, and that price will be all the traffic can bear. Anybody

who thinks that reducing the Crow rate on a commodity that represents

something like 14 percent of the total freight handled by those

companies is going to do anything to help the mining, forest or any

other industry certainly doesn't have a very great knowledge of how the

railway transportation system, and the CPR in particular, operate in

this country.

This is the most unusual thing — that we are here in this

Legislature trying to give some kind of support to a piece of

legislation that, according to the member for North Vancouver–Seymour,

is only relevant to prairie farmers. Here we are debating this piece of

legislation, and suddenly all the government members want to speak on

it, because they think it's politically popular and because they've

been on the hotseat for so long that they want to get off it. Without

any notice and without going in the order of the motions on the book,

this motion is called this morning. We don't even know what’s coming up

until we get into the House. We're told that something else is coming

up.

It shows the desperation of that government, Mr. Speaker. It shows

what they'll stoop to to try and gain a few political points at the

long-term expense of no one but the farmers — but everyone, really.

It's an immediate expense to the farmers of British Columbia, and in

the long run it's a disaster for transportation generally, because

whatever little vestige of control.... The last vestige of control

that we have on the CPR is that Crow rate. It's down the tube when it's

gone, and the subsidies will be poured in and we'll get exactly what we

got before.

HON. MR. PHILLIPS: I rise to lend support to this motion.

Before I do, I just have to say that I find it practically very

difficult to understand the position of the opposition, who, as you

know, Mr. Speaker, have continually stated that this government hasn't

done anything for jobs, that we're not interested in the working

people, that we're not doing things to improve the economy in the long

run — when, if the truth were known, if the Crow rate stays the way it

has, it will mean basically the demise of the Canadian transportation

system in western Canada. It's impossible to have industry, to provide

jobs, or to get our goods and services to the export market without a

transportation system.

I happen to be very proud of the transportation system that we have

built up in Canada. The very fact that we can indeed, with one of the

largest countries in the world, develop a transportation system which

is effective and can get our goods and services from central and

eastern Canada to the ports on the west coast in such a manner and at

such a price that they can compete in the world markets.... The

very fact that our coal-mines in the southeast part of the province are

about three times — some more, some less — further away from tidewater

than are those in Australia and yet are still able to compete is

certainly a tribute to the transportation system that we have built up

in western Canada.

However, that system cannot continue to function and lose money hauling one

commodity, because what we have seen happen is that the railways are not interested

in hauling that product. They were not providing the grain cars, so the Canadian

Wheat Board and the governments of Saskatchewan and Alberta had to go out and

purchase the wheat cars in order to assist the railway with the transportation

of grain. That has been an ad hoc system. Without the transportation system

the farmers in the northeast part of British Columbia and in all parts of western

Canada will indeed suffer.

I listened with a great deal of interest to the socialist

agricultural critic talk about the farmers in the Peace River country.

I talk to the farmers in my constituency. The majority of them realize

that they're going to have to pay more to get their grain to market one

way or another, that if we don't have an efficient transportation

system they will indeed not be able to get their grain to market, and

that therefore it's better to have the changes made now than to have

the system fail. They also realize that it has cost Canada, and the

western grain farmers, literally hundreds and hundreds of millions of

dollars over the past decade to pay demurrage on ships sitting in the

port of Vancouver. The NDP fail to take that into consideration. Not

having the capacity on our railway and not being able to get our grain

to market has cost us customers. With the changes that are proposed

under the western Canadian transportation act, which is before the

federal House, that will indeed change.

The only opposition that I've listened to from the farmers' union in

my own riding seems to be some gut feeling, a great hate for the

Canadian Pacific Railway. I have stood in my constituency — and will

continue to do so — and said: "Listen, you know, up here in the great

Peace River country you're not even affected by the....

MR. LEA: What about Oberle? What did Oberle say?

HON. MR. PHILLIPS: I'll talk about Oberle in just a moment. I'm glad you brought that up.

Interjection.

HON. MR. PHILLIPS: If you want to yack, young member — I know

you're new in the House — get in your own seat and heckle from there.

You don't do it from somebody else's seat. You think you're so smart;

you should learn the rules of the House, and you might as well do it in

the beginning.

I listened to the Agriculture critic from the opposite side talk

about the CPR. The grain farmers in the great Peace River country are

not affected by the Canadian Pacific Railway. They've got this great

NDP socialist theory going that we should buy up the CPR and that the

Canadian people should own it — that's in their craw. Yet they like

everything the CPR has done. One minute they don't like the CPR, yet

they wanted to keep the Marguerite . That was an old CPR boat; they're

in love with it and they've got it here to preserve the history. They

bought up the Royal Hudson , which is an old CPR train, and they

restored that; they're in love with that. They love the old CPR hotels.

As a matter of fact, so do I. I love all the old railway hotels. I

think they're part of our heritage and I think they should be preserved

forever. They also love the Crow rate because they want to keep it.

They don't want to change it. So they're in love with the CPR. Although

they may stand on the floor of this Legislature and condemn the CPR,

deep down in their hearts they really love it.

The problem is, you see, that they want to stay in bed with the

socialists in Saskatchewan and Manitoba because their numbers are

dwindling, and their popularity in Canada is

[ Page 763 ]

dwindling. They have now united and said: "We must stick together

whether it's right or wrong. Whether or not it's good for British

Columbians or for future generations in British Columbia matters not to

them, because they're tied to the philosophy of hating the CPR. I guess

that's why they're so much in love with all the things they've tried to

preserve.

[Mr. Speaker in the chair.]

The last speaker — the official agricultural critic in the

opposition — stated that we were supporting this just because it's

politically popular to do so. As early as 1976, in Winnipeg — and I

remember attending on behalf of the government, as Minister of

Agriculture — this government stated the position that we wanted to see

the Crow rate changed. The position of this government has not changed.

It didn't change in 1977, 1978, 1979, 1980, 1981 or 1982, and indeed,

it hasn't changed in 1983. How they can stand up here and say that

we're just taking a political position.... Do you know why it

hasn't changed? Because it's right and it's good for future

generations and for the workers in this province; because the

investment that will come from this will provide long-term jobs. That's

what we're all about and that's why we're government and they're

opposition.

AN HON. MEMBER: Why don't you tell the truth for a change?

HON. MR. PHILLIPS: Well, if you have any indication, young

fellow — and get back to your own seat — that I'm not telling the

truth, I would suggest that you put your mouth in gear and stand up to

a microphone and tell me where I'm not telling the truth, instead of

sitting over there yacking from somebody else's seat.

MR. SPEAKER: Order, please. I would ask the second member for

Victoria (Mr. Blencoe) to return to his chair, from where he can make

the odd interjection, or to remain absolutely silent, or he will be

asked to leave the chamber. I will ask the minister to address the

Chair, so we can continue with a parliamentary debate in this chamber.

HON. MR. PHILLIPS: I was making the point, Mr. Speaker, that

the position of this government with regard to the Crow rate has not

changed since 1976. We recognized early that changes must be made in

the Crow rate to preserve the transportation system of western Canada.

We have heard a lot said about the number of dollars that are going to

be spent by the railways in upgrading their system and their plant.

Those are great construction jobs. But this investment in the future of

Canada through upgrading the plant of the major railway systems is not

the most important part. The most important

part is that a modern,

up-to-date transportation system will ensure the long-term viability of

the other industries. That's where the long-term benefits from these

changes come into being. That is why I cannot possibly understand the

position of the socialists opposite.

[11:45]

I remember when we were talking with the Alberta government about

building additional facilities at Prince Rupert for the grain companies

so that we would upgrade that portion of our transportation facilities

— mainly port and storage facilities — which would ensure the long-term

viability of the western Canadian farmer; because I have seen the

projections of increased production of grain in western Canada, and we

didn't have the facilities. Without the construction of those new

facilities at Prince Rupert, we would be suffering a similar problem in

not having the facilities on the west coast to hold our production. So

this forward-thinking government got together with the province of

Alberta and said: "Look, we would like to see that facility built at

Prince Rupert. We recognize that down in the port of Vancouver there is

such a maze of railways and bridges and interchanges that it is

hindering and harming the operation and the efficiency of our grain

transportation operation." So we got together with the Alberta

government and we said, "Look, we want to ensure that these facilities

are built on Ridley Island," knowing full well that if the grain

facilities went on Ridley Island it would, at a future date — and I'm

taking you back in history now — facilitate that great coal port on

Ridley Island. So we made an offer to assist, because we knew what was

going to happen.

This government had the foresight, courage and vision to see how the

total plan for that great port of Prince Rupert would fit together.

That's why this government went out and started building a road access

to Ridley Island under our great Minister of Highways. That is why the

highway was almost complete when the port started.

MR. LEA: Who paid for it?

HON. MR. PHILLIPS: Sure, it was paid for partly by the

federal government. Yes, and that member for Prince Rupert stood on the

floor of the Legislature yesterday and said: "Oh, they have never

negotiated anything with the federal government. The federal government

takes them every time." I want to tell you that we had the federal

government's commitment and we were building that road even before the

decisions on either one were going to go ahead. I'll tell you, that's

why we're government and they are opposition.

I am disappointed that we have not been able to make a deal with the

federal government with regard to the great British Columbia Railway,

but that does not preclude the fact that we will continue to try, and

someday we will probably make a deal with them. Whether you know it or

not, in my constituency we have the second-largest grain shipping area

in western Canada. Out of Dawson Creek there were 171.8 million tonnes

of coal shipped last year. That is second only to Weyburn,

Saskatchewan, who shipped more.

I am very proud of my great constituency. Dawson Creek at one time

was the largest grain shipping point in the British Empire. It still

would have been today had it not been for the British Columbia Railway

extending a branch line into Fort St. John. Fort St. John today is the

eighth largest grain shipping point in western Canada.

I am pointing this out because that great Peace River area, which

supplies power, coal, grain, lumber, gas and oil to the rest of the

province, is a very very important agricultural area in this great

province. I want to tell you that the combined land available for the

growing of grains in the Peace River block of British Columbia and

Alberta combined is twice the size of that available in the province of

Manitoba.

You know, Mr. Speaker, people don't think of the great Peace River

area as being a great grain producing area, but when the land is

cleared and that land is under production,

[ Page 764 ]

that great Peace River area of British Columbia and Alberta will

produce twice as much grain as is presently produced in the province of

Manitoba. I want to tell you that the great British Columbia Railway,

then known as the Pacific Great Eastern Railway, was built by the

Social Credit government, under W.A.C. Bennett, into the great Peace

River country in 1958 to open up that great area, to tap those

resources for the benefit of the rest of the people in British Columbia

and, indeed, for all of Canada and to provide opportunities and jobs

for our young and growing population. It is continuing to play that

role, as more sawmills and pulp mills are in the planning stages —

coal, oil and gas, and the rest of it. It certainly has fulfilled its

function and its role in opening up that last great hinterland of

western Canada.

The reason I bring up this point is that the railway was also built

in the Peace River area to serve the fanning community in that area. It

was through the British Columbia Railway that our farmers in that area

were the best off of any farmer in western Canada in the early sixties.

The British Columbia Railway opened up to the farmers the internal

markets of British Columbia without going through the Wheat Board. My

friend Mr. Ritchie could speak at great length on that, because he was

certainly one of the buyers who purchased wheat in the great Peace

River country and brought it down to the lower mainland for processing

and sale to other agricultural communities. The point I'm making is

that the British Columbia Railway has in the past played a great role

in facilitating the agricultural community in British Columbia and

indeed in the great Peace River area.

If you draw a line from the Peace River country to the new huge

grain storage and loading facilities being built at Prince Rupert, you

will notice that the British Columbia Railway, in terms of efficiency,

should move that grain from Dawson Creek to Chetwynd, and through to

Prince Rupert where it will connect with the Canadian National Railway,

which is being upgraded to haul coal. Grain will move over those new

facilities. The upgrading is really being paid for by the coal

companies. That will certainly facilitate the farmers in the Peace

River area. That's the way grain should move across the northern part

of the province.

Without the federal government looking at that situation and

assisting the British Columbia Railway to upgrade its line from

Chetwynd to Dawson Creek, they will continue to move grain

inefficiently on what is now the CN line, but used to be the Northern

Alberta Railway, which was 50 percent owned by Canadian Pacific and 50

percent by Canadian National. They will move that in a longer area over

other lines down through Grande Prairie, and connect up with the Red

Pass line from Edmonton to Prince George and back again. That's a very

long, inefficient way of moving the grain from the great Peace River

area. That's why....

MR. LAUK: On a point of order, I hesitate to interrupt the

hon. minister's little lecture, showing us how much he knows about

these matters he is speaking of, but it has nothing to do with the

resolution. His speech has not, in the past 12 or 15 minutes, touched

upon the Crow rate or the resolution, and I have hesitated to interrupt

for that length of time. I think he should be drawn to order and asked

to speak to the issue involved in the resolution.

MR. SPEAKER: Hon. members, the Chair has some difficulty in

determining that the comments are not in keeping with the resolution.

However, I would ask all members, when addressing a particular motion,

to bear in mind that they must be relevant.

HON. MR. PHILLIPS: I was pointing out, when I was so rudely

interrupted by the second member for Vancouver Centre — who stood up

and didn't make a point at all — how the Crow rate and the great Peace

River area and the British Columbia Railway will all be affected by the

decisions made by the new transportation act in western Canada.

I have a number of other points which I wish to make; therefore I

would like to move adjournment of this debate until the next sitting of

the House.

Motion approved.

HON. MR. PHILLIPS: Mr. Speaker, I rise on a point of personal

privilege. This is the first opportunity I've had to do so. Yesterday

afternoon, when the leader of the opposition was speaking in the debate

on the bill to do away with the British Columbia Harbours Board, he got

somewhat carried away and made the following statement referring to me.

He said this: "He's turned back more odometers than anyone else I know

in the business."

Mr. Speaker, I value very highly my reputation as a businessman. I

have a very good reputation as an honest automobile dealer. I do not

appreciate the Leader of the Opposition making an untrue statement in

this Legislature which is against my character and reflects on my past

reputation as an automobile dealer. I am going to ask you to have the

Leader of the Opposition either apologize to me or withdraw that

statement.

MR. NICOLSON: Mr. Speaker, on that point of order, Speakers

have ruled numerous times that such matters must be brought up

immediately. This is not a question of personal privilege, but the

member was in the House at the time, and he had the opportunity at that

time. He's had opportunity all this day. Even if it were a question of

privilege, the first opportunity must be taken. That has been so

interpreted as even to interrupt His Majesty King George III, I

believe, when he was giving the Speech from the Throne. It was given

precedence because it was the first opportunity. Mr. Speaker, I could

give you the citation from the ninth edition of Sir Erskine May, if

you'd like.

MR. SPEAKER: Thank you, hon. member, we're familiar with it.

HON. MR. PHILLIPS: On the same point of order, Mr. Speaker, I

heard partially what the Leader of the Opposition said yesterday

afternoon. There was a lot of bantering, if you will recall, and that's

why I didn't at the time fully understand what.... However, if the

member for Nelson-Creston wishes to condone what his lame-duck leader

has said, then no action will be taken.

[ Page 765 ]

MR. SPEAKER: The Chair will take the matter under advisement.

MR. LAUK: On the point of order, Mr. Speaker, in considering

this matter it should be pointed out that there are no grounds for a

point of privilege. If there is a dispute between one hon. member and

another, there is a way in which to resolve that dispute in the course

of debate. Under standing order 42 the minister can stand up. He's

already done so; he's corrected the record.

MR. SPEAKER: Hon. members, clearly at this stage we're

entering into a debate. The Chair has undertaken to take the matter

under advisement and will report back.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 11:59 a.m.

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