1975 Legislative Session: 5th Session, 30th 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)

TUESDAY, JUNE 10, 1975

Afternoon Sitting

[ Page

3287 ]

CONTENTS

Correction of statement by Mr. Gibson. Hon. Mr. Macdonald — 3287

Meetings of public accounts committee. Mr. McGeer — 3288

An Act to Relieve Persons From Liability in Respect of Voluntary Emergency

Medical and First Aid Services (Bill 134). Mr. D.A. Anderson. Introduction and

first reading — 3290

Small Claims Amendment Act, 1975 (Bill 111). Hon. Mr. Macdonald. Introduction

and first reading — 3290

Islands Trust Amendment Act, 1975 (Bill 97). Hon. Mr. Lorimer. Introduction

and first reading — 3290

Florist for Dawson Creek opening. Mr. Phillips — 3290

Casa Loma investigation. Mr. D.A. Anderson — 3292

ICBC strike. Mr. Gardom — 3292

Bus fare passes. Mr. Wallace — 3292

Disbursement of funds by debt counselling service. Mrs. Jordan —

DREE programmes for northern B.C. Mr. Smith — 3293

Coal Mines Regulation Amendment Act, 1975 (Bill 94). Second reading. Hon. Mr.

Nimsick — 3293

Petroleum and Natural Gas Amendment Act, 1975 (Bill 107). Second reading Hon.

Mr. Nimsick — 3294

Mines Regulation Amendment Act, 1975 (Bill 125). Second reading. Hon. Mr. Nimsick

— 3298

British Columbia Railway Company Construction Loan Amendment Act, 1975 (Bill

27). Second reading. Mr. Fraser — 3300

The House met at 2 p.m.

Prayers.

MR. D.E. LEWIS (Shuswap): Mr. Speaker, today we have a

visitor from the beautiful Shuswap, Mr. Steve Ingles, from the

City of Armstrong. In past years Mr. Ingles boarded with a

Member of this House, Mr. Hartley Dent, and I think that he

must have been a good influence on Hartley; he joined the

cloth. I would like the House to welcome Mr. Ingles.

MS. R. BROWN (Vancouver-Burrard): Mr. Speaker, sitting in

the gallery are 75 Girl Guides between the ages of 10 and 14

from the Kitsilano district. They are accompanied by

Commissioner Alice Block and Miss Faith Chang. I would

appreciate it if the House would bid them welcome and be on

their best behaviour today.

HON. A.B. MACDONALD (Attorney-General): Mr. Speaker, I'm

rising on a point of privilege. Yesterday the Hon. Member for

North Vancouver–Capilano (Mr. Gibson) roundly abused the ear

and the patience of the Legislature and breached its privileges

by a manifest and a totally false statement about

section 88 of

the federal Corporations Act.

The Hon. Member informed the House, quite wrongly, and asked

whether the Member for Esquimalt (Mr. Gorst) was aware of

section 88 of the Canada Corporations Act, which says that to

exercise the power of a director one must own the shares

absolutely in their own right. That statement is totally wrong,

and was either made recklessly wrong or deliberately falsely

made.

There is no exclusion or exception that affects the validity

in respect to the company that you were speaking of. As I say,

this is a breach of privilege of the Legislature that this kind

of a statement should be made without really reading the

section.

MR. SPEAKER: I take it that the Hon. Member was reading a

section from a statute to the House.

HON. MR. MACDONALD: In saying the effect of it, he was

totally wrong.

MR. SPEAKER: I would like to look at the matter but.... I'd

like to get the facts straight.

MR. G.F. GIBSON (North Vancouver–Capilano): I'd gladly read

the

section into the record if that would be helpful.

MR. SPEAKER: Would you be so kind, so I know don't have to look it up?

MR. GIBSON: It's

section 88(

l) of the Canada Corporations

Act — Qualification of Directors Elected:

"Subject to subsection (2), no person shall be elected as a

director of a company, or appointed as a director to fill any

vacancy, unless he and any other company of which he is an

officer or director is a shareholder and, if the bylaws of the

company so provide, owning shares of the company absolutely in

his own right, or in the right of such other company to an

amount required by the bylaws of the company, and not in

arrears in respect of any calls thereon."

Then subsection (2), which is longer and I'll read it too,

if you wish, provides for certain exclusions of persons holding

shares in trust which, though we haven't been access to the

document of trust, would not appear to apply to the directors

of this particular company.

HON. MR. MACDONALD: Mr. Speaker, had the Member taken the

trouble to read that

section yesterday, instead of misinforming

the House, it says in effect that you can hold shares in trust

in a federal company unless the bylaws otherwise apply.

The statement was totally wrong — what can you say about it?

It's a breach of privilege that that kind of homework should be

done in this House.

MR. D.A. ANDERSON (Victoria): You haven't read the Act

yourself.

MR. SPEAKER: I'm sure the Hon. Member did not intend to

deliberately mislead the House.

MR. GIBSON: I certainly didn't, Mr. Speaker. Indeed, the

thing was part of a question. The question was being raised to

the director concerned. And this seems to me a curious

statement from an Attorney-General whose department has been

part and parcel of making illegal expenditures.

HON. MR. MACDONALD: Mr. Speaker, that's the kind of thing

we've been getting from that opposition over the past few

months. I repeat: that without changing the subject, the Hon.

Member was either recklessly wrong or deliberately misleading

the House yesterday.

MR. SPEAKER: I'll look at the matter. But I point out to the

Hon. Members, before we proceed any further on that question,

that it's always the duty of the Member who is putting a

question to the House to be responsible for the facts that are

stated. I'm sure that every Member will take that seriously

[ Page 3288 ]

the future because it does involve your own standing in the

House.

MR. P.L. McGEER (Vancouver–Point Grey): Mr. Speaker, I too

rise on a matter of privilege involving a different

subject.

I draw your attention to Sir Erskine May, the eighteenth

edition, page 132, which says: "It may be stated generally,

that any act or omission which obstructs or impedes either

House of Parliament in the performance of its functions, or

which obstructs or impedes any member or officer from such

House in the discharge of his duty..." is in contempt of

the House.

This morning, Mr. Speaker, in the public accounts committee,

we had a meeting of the committee called by the Chair, with

notice and not during regular sittings of the House, where an

adjournment was moved before an opportunity was granted for

some Members to ask questions, and in particular, myself to

make inquiries about the Columbia River treaty — something which

had been promised by the Premier of the province in statements

he's made before this House.

The adjournment of the committee, in my view, constituted a

breach of privilege in the sense that it obstructed my

responsibility to discharge my duties to the public by making

inquiries of the Crown corporation officials.

Now, Mr. Speaker, in order to avoid a question of the kind

occurring again, since in the adjournment motion the question

was raised that the committee had sat illegally during hours

when the House itself was sitting, I would like unanimous leave

of the House to move the following motion:

That the Select Standing Committee on Public Accounts and

Economic Affairs be empowered to sit at the call of the

chairman during regular sitting hours of the House for the

remainder of the session, except for recesses of the committee

which may be called in order that Members may vote on questions

placed before the Legislature...

Interjections.

MR. SPEAKER: Order, please.

MR. McGEER: ...by Committee of the Whole House.

MR. SPEAKER: The Hon. Member has sort of branched off from

his complaint of a breach of privilege to what amounts to a

substantive matter that would require notice on the order

paper. Therefore I can't take both in one gulp. I would ask the

Hon. Member to deal with these matters separately. Is that

agreed — that we deal with them separately?

The first question on that point of privilege: I'd like to

look at that. But I do point out to the Hon. Member, as he

obviously knows from his statement, that it's not permitted,

under our rules as they still exist here, to meet while the

House is in session, and the House met at 10. Consequently,

there would have to be some separate matter on that.

On the question of whether your complaint is well founded,

I'd have to look at that in more detail, and I'll be glad to do

so.

MR. McGEER: Mr. Speaker, may I just answer to that for one

moment? There has been precedent in the House for committees to

sit during the regular sitting hours. Indeed, I've been a

member of such committees.

But that question aside. In order to deal with the matter of

privilege, it would be taken care of simply by passing this

motion. Then there would be no question at all raised about the

appropriate hours for that committee to sit. I've asked for

leave of the House for the motion to be put. If unanimous leave

isn't granted, then, of course, it will just have to be a

substantive motion.

MR. SPEAKER: May I deal with one thing at a time, please?

The first point that you've made was answered upon the

complaint of the Hon. Member for North Okanagan (Mrs. Jordan)

on March 29, 1973, at page 193 of the Journals , where the whole

situation in our House in regard to rules was set out. On page

195, I pointed out in that decision that standing committees

would not be empowered to sit unless they had obtained the

prior assent of the House and authority from the House to sit.

Our rules differ and remain as they always have been in that

regard. I quoted there from the Commons Journals of the British

House, which we followed as our usage. Therefore we didn't have

a standing order as they now have in the British House or in

the Canadian House of Commons. Consequently, if you look at

that, you will see all the authorities of the subject.

On the second point, if you are asking the House to suspend

the rules so that a motion may be put without notice.... I

presume that is your request.

HON. R.M. STRACHAN (Minister of Transport and

Communications): On a point of order, I suggest that the

proprieties are such that only a request from the committee

itself should be accepted by this House for such a motion.

MR. SPEAKER: I do point out that a committee cannot report by any Member

to this House without instruction from the committee. Therefore the matter is

not known to the House except from a communication from the committee.

[ Page

3289 ]

HON. E. HALL (Provincial Secretary): Mr. Speaker, I am

concerned about what has happened already in 20 minutes of this

House, when a Member, seizing on what I consider to be a

spurious point of order, establishes some sort of order of

business in this House, when we have an order paper and a way

of doing things in this House. To suggest to this House that

any motion to adjourn any committee, whether of this House or a

special committee or standing committee, is at any time out of

order, is obviously a spurious point of order, Mr. Speaker.

Secondly, to seize that point of order itself to try and use

the time to convey some of his own wishes, which may or may not

receive the support of this House, is in my view, an abuse of

the order paper. There is no way this government is going to

put up with that kind of abuse of the rules of the House. If

the Member was here this morning, as he should have been, he

would have heard the government itself express some concern

over what was going on. We asked you, Mr. Speaker, to report to

us.

So here we have somebody wandering in and seizing a spurious

point to lecture the rest of the House. I reject that course of

action.

MR. SPEAKER: I may say I have done my duty in having

reported on that decision, page 193 of the 1973 Journals .

MR. McGEER: On a point of order, the Provincial Secretary is

quite welcome to deny unanimous leave. The reason for putting

it....

MR. SPEAKER: Then the matter is concluded and there will be

no further debate.

Interjections.

MR. SPEAKER: There will be no further debate since there is

no motion before the House.

MR. McGEER: Mr. Speaker, may I point out the reason for

putting forward a motion at this time....

MR. SPEAKER: Order, please. The Hon. Member....

MR. D.M. PHILLIPS (South Peace River): Sit down!

MR. SPEAKER: The Hon. Member knows that you can only found a

debate upon a motion. The motion has been denied

acceptance.

Interjections.

HON. MR. HALL: Anarchy! Anarchy! That's what you want.

[Mr. Speaker rises.]

MR. SPEAKER: I thought the Hon. Provincial Secretary had

stated to us just now that they were not prepared to accept

this method of doing business.

AN HON. MEMBER: Ask for leave.

MR. SPEAKER: I will be very glad to. Shall leave be

granted?

Leave not granted.

Interjections.

MR. SPEAKER: Order, please. The Hon. Member for North Peace

River.

[Mr. Speaker resumes his seat.]

MR. SMITH: Mr. Speaker, I would ask your consideration of the fact that the morning sessions, which

are constituted now from 10 to 12 with leave of the House....

MR. SPEAKER: By order, actually.

MR. SMITH: Well, they do not appear on our orders of the

day. Our orders of the day start at 2 o'clock in the afternoon,

Mr. Speaker, and they cover the prayers, the introduction of

bills, the full orders of the day from 2 o'clock till the House

adjourns at 6 and then from the evening session. So I suggest,

Mr. Speaker, that you consider the fact that if we have no

orders of the day printed for the morning sessions from 10 to

12, there can be no breach of the privilege of the House when a

committee is sitting during that particular time.

MR. SPEAKER: I think the Hon. Member forgets that when we

met last prior to this morning, the motion was that the House

at its rising stand adjourned till 10 a.m., which means the

House met at 10 a.m. The point is that the House is meeting for

a specific purpose upon sessional order adopted recently to sit

between 10 and 12 and go into Committee of Supply.

MR. SMITH: Mr. Speaker, then will you tell me why we have no

orders of the day printed for these sessions?

MR. SPEAKER: Because the sessional orders told the House

what they proposed to do when they met at 10 o'clock. Therefore

the House was meeting. The House was adjourned from yesterday

until 10 a.m. this morning as a House, if you will consult

Hansard , and you will recall last night. Therefore it

follows

[ Page 3290 ]

that the House is meeting, but it is meeting for a specified

purpose between 10 a.m. and 12 noon and not for other purposes.

Therefore orders of the day are not necessary between 10 a.m.

and 12.

MR. SMITH: It would seem to me, then, Mr. Speaker, that the

orders of the day should be published on the basis of meeting

from 10 to 12 and the business of the House, instead of

prayers, introduction of bills, and so on, will be Committee of

Supply.

MR. SPEAKER: May I inform that House that it became almost

impossible without additionally laying on quite a bit of staff

to print up that morning orders of the day as well as the one

at noon. It is difficult enough for the printers to get ready

by noon. For that reason, we were reluctant to make that

additional printing simply to put on each one: "Orders of the

day — Committee of Supply between 10 and 12 a.m."

We thought that we could do that without any objection. But

if the Members really want that put down each day, I think it

would be a waste of print.

Introduction of bills.

AN ACT TO RELIEVE PERSONS FROM

LIABILITY IN RESPECT OF VOLUNTARY

EMERGENCY MEDICAL AND FIRST AID

SERVICES

On a motion by D.A. Anderson, Bill 134,

An Act to Relieve

Persons From Liability in Respect of Voluntary Emergency

Medical and First Aid Services, introduced, read a first time

and ordered to be placed on orders of the day for second

reading at the next sitting of the House after today.

SMALL CLAIMS AMENDMENT ACT, 1975

Hon. Mr. Macdonald presents a message from His Honour the

Lieutenant-Governor: a bill intituled Small Claims Amendment

Act, 1975.

Bill 111 Introduced, read a first time and ordered to be

placed on orders of the day for second reading at the next

sitting of the House after today.

ISLANDS TRUST AMENDMENT ACT, 1975

Hon. Mr. Lorimer presents a message from His Honour the

Lieutenant-Governor: a bill intituled Islands Trust Amendment

Act, 1975.

Bill 97 introduced, read a first time and ordered to be

placed on orders of the day for second reading at the next

sitting of the House after today.

Oral questions.

FLORIST FOR DAWSON CREEK OPENING

MR. PHILLIPS: I'd like to direct my question to the Minister

of Public Works. With regard to the provincial government

building opening in Dawson Creek last fall, would the Minister

advise why a florist was flown into the area to look after the

arrangements when there were florists in the area?

HON. W.L. HARTLEY (Minister of Public Works): I've been

waiting for this question for quite some time now, Mr. Speaker.

I'm surprised that the Member hasn't asked this much earlier.

He did write about it. I had it researched and I found that for

the first time in the history of public works in this province

we used a local florist. I'm shocked that before you get up and

ask a question like that you don't research your problem more

thoroughly.

MR. SPEAKER: The Hon. Member for Oak Bay.

MR. PHILLIPS: Well, I have a supplementary question.

MR. SPEAKER: After that?

MR. PHILLIPS: Yes. (Laughter.)

As usual, Mr. Speaker, the Minister of Public Works is all

mixed up.

[Mr. Speaker rises.]

MR. SPEAKER: Order, please. I think I'm being unbiased by

asking if he wants another question after his first question

was apparently demonstrated to be totally unfounded. Now maybe

the Hon. Minister of Public Works is unfounded, I don't know.

(Laughter.) But I point out that, prima facie , the Hon. Member

seems to have made a mistake.

[Mr. Speaker resumes his seat.]

MR. PHILLIPS: It's a simple, innocuous question to the

Minister. I certainly didn't intend to disrupt the House or

disrupt....

MR. SPEAKER: Well, you didn't do it, I'm sure. It wasn't

your fault.

MR. PHILLIPS: No. My question is very well founded and, as

usual, the Minister of Public Works is entirely wrong. He's all

mixed up. He did fly a florist into the area to look after the

arrangements when there were local florists there who didn't

have the opportunity to bid. I'm just wondering why this extra

cost.

[ Page 3291 ]

Yes, I wrote the Minister, Mr. Speaker. I wrote the Minister

on December 31, 1974, and he hasn't given me the courtesy of a

reply in five months.

Interjection.

MR. PHILLIPS: My question is as originally stated — and the

reason the question period gets mucked up here is because this

Minister uses the time of the House giving misinformation.

MR. SPEAKER: Order, please!

HON. MR. HARTLEY: Last time he said I didn't answer

questions. This time he says I take too much time answering

questions. You're very, very inconsistent, my friend.

MR. SPEAKER: Order, please! Will you get on with business,

please?

HON. MR. HARTLEY: Yes. He's asked a further question. He's

tried to insert a certain amount of innuendo and falsehood. We

purchased the flowers locally from a local florist. The reason

I didn't answer his question or answer his letter was that I

thought he was pulling my leg. I thought if he was really

serious he would raise the matter under my estimates. He didn't

raise it under the estimates. Now, many months later, he raises

it.

There is absolutely no basis to the inference that we did

not buy our flowers from the local florist. It's the first time

in the history of the Department of Public Works, either under

the previous administration or this administration, that we've

patronized a local florist.

Interjections.

MR. PHILLIPS: A further supplementary question, Mr. Speaker.

I would like to ask the Minister once again — I'll say this

very clearly: why did the Department of Public Works fly a

florist in from the lower mainland...

Interjection.

MR. PHILLIPS: A florist is a person, not flowers.

...to make arrangements for all the floral arrangements

during the opening of the provincial government building in

Dawson Creek when there were local florists there who could

have done the same job with as much expertise as any florist

being flown in at extra cost to the taxpayers of this province?

It's a very simple question.

HON. MR. HARTLEY: Mr. Speaker, the Department of Public

Works has gardeners and florists, and we have a person who specializes in these openings. She

attends all these openings, looks after the floral arrangements

and puts on a first-class job for you. I'd like to say this,

Mr. Speaker. These people like to imply political....

SOME HON. MEMBERS: Order!

MR. SPEAKER: I think the Hon. Minister is going beyond the

question and answer.

HON. MR. HARTLEY: Up in Dawson Creek the mayor said: "This

is the second occasion that I have been able to preside on this

site with the Member." "The first time," he said, "Mr.

Phillips stood with me in 1972 before the election as the MLA

for the area." He wasn't the MLA for the area — Don Marshall

was the MLA for the area!

MR. SPEAKER: Order, please.

HON. MR. HARTLEY: That was the way the old Social Credit

Party used to play politics. They'd put their candidates in

there instead of the sitting Member.

Interjections.

MR. SPEAKER: Order, please! Would Hon. Members please direct

themselves to the answer to the question and not roam around in

their speeches?

MR. PHILLIPS: In all fairness, Mr. Speaker, I think you

should demand that the Minister of Public Works apologize to me

because first of all he got up and said he didn't fly a florist

in, and he just finished stating that he did. I think, in all

fairness to your Grace, that you should ask that Minister of

Public Works to apologize because he said that I lied to him. I

did not lie; I had my facts straight. He said I didn't do my

research. In all fairness, your Grace, you should ask the

Minister of Public Works for an apology.

MR. SPEAKER: Order, please! You leave me alone! I can't run

a House this way with you attacking me all the time. It just

can't be done!

Interjection.

HON. MR. HARTLEY: From a local florist. If he wants to twist that around,

I guess that's up to him. In the past, we have not only flown in the person

to display the flowers and to decorate, but we've also flown in the flowers.

In this particular case last year when we opened the court house in Dawson Creek

we bought the flowers locally from one of his businesspersons. I thought he

would have appreciated

[ Page

3292 ]

that. I thought he would have researched that a little better. When I read

it in the letter, I thought he was trying to put me on. If he's really serious,

he'll raise it during my estimates. But if he didn't raise it during the estimates,

he's raised it now.

MR. SPEAKER: Order, please. I would like to recognize the

Second Member for Victoria (Mr. D.A. Anderson).

CASA LOMA INVESTIGATION

MR. D.A. ANDERSON: Mr. Speaker, I am pleased that the 75

Girl Guides introduced earlier have had the advantage of a

typical day in the Legislature.

I would like to ask the Attorney-General whether he could

inform the House whether the RCMP fraud squad which looked into

certain aspects of the Casa Loma affair has yet reported.

HON. MR. MACDONALD: There's no report to date, Mr.

Speaker.

MR. D.A. ANDERSON: A supplementary question, Mr. Speaker.

May I ask the Attorney-General in view of the date that is past

due for the government to take over the Casa Loma complex, if

he has asked that certain government moneys which should be

paid to the developers be held back so that in case the fraud

squad comes up with any evidence that the subcontractors are

entitled to more money there will be money available?

HON. MR. MACDONALD: Mr. Speaker, I would think that what

you're asking now is a civil matter governed by the civil laws

and the contract in question. My investigation was to see if

there was commercial fraud. I couldn't intervene and change a

court order. That would be subject to court.

ICBC STRIKE

MR. G.B. GARDOM (Vancouver–Point Grey): A question to the

Minister of Transport in his capacity of major domo for ICBC,

Mr. Speaker. Since the automobile insurance is compulsorily

imposed in this province, but is not being effectively

processed, and since the employees of ICBC have indicated that

they are desirous of bringing pressures to bear in certain

spin-off services in the private sector, which could result in

considerable, and I'd say unnecessary and very unfair

hardship, is the Minister now prepared to recommend compulsory

arbitration to end this work stoppage and bring this monopoly

back into operation?

HON. MR. STRACHAN: I think the Member is fully aware that there are

laws governing labour relations in the Province of British Columbia.

MR. GARDOM: Supplementary to the Hon. Minister. If there is

to be ICBC picketing of spin-off services — say repair shops or

insurance agents — is the government prepared to intervene and

prevent that occasioning?

HON. MR. STRACHAN: As I indicated earlier, there are laws

governing labour relations and those affected by them in the

Province of British Columbia — passed by this Legislative

Assembly.

BUS FARE PASSES

MR. G.S. WALLACE (Oak Bay): To the Minister of Municipal

Affairs. With regard to recent changes in the busing

arrangements between Victoria and Sooke, particularly, where

B.C. Hydro buses have taken over from the services of Southwest

Coach Lines, and with regard to the fact that monthly passes of

$34 were previously available to passengers who are now being

charged $1.30 each way, has any decision been made to

reintroduce the monthly pass for $34?

HON. J.G. LORIMER (Minister of Municipal Affairs): The whole

question is under review. The problem is that we are operating

a provincial system of transit. If we are to supply a pass at

possibly half-price for the people in Sooke, it would seem only

reasonable that those in Sidney and those in White Rock and

every other area of the province could ask for the same thing.

The only area that did have this privilege under the original

operator was in the Sooke area.

Now the rate that we are charging at the present time may be

a little higher than it will be when we can review the whole

thing completely, because per mile they are a little higher, I

think, than they are to, say, Sidney or Saanich. So there might

be some relief there. But as far as the continuing with the

pass system that they did have, I think it is a very difficult

thing to do under a provincial scheme.

MR. WALLACE: A supplementary, Mr. Speaker. On that point

about it being a provincial service, I would like the Minister

to confirm that federal employees, such as the Members of the

work force of the Canadian Post Office, travel free on the

buses. I wonder if the Minister could tell us what arrangement

the provincial government has with the federal government to be

reimbursed for this service, or, in fact, is the provincial

taxpayer subsidizing services provided by the federal

government?

HON. MR. LORIMER: I'll take that as notice.

[ Page 3293 ]

DISBURSEMENT OF FUNDS

BY DEBT COUNSELLING SERVICE

MRS. P.J. JORDAN (North Okanagan): Mr. Speaker, my question

is to the Minister of Consumer Services regarding the B.C. debt

counselling service. Could the Minister advise the House just

what becomes of the funds that are collected monthly by this

service from consumers on behalf of creditors? It would appear

they are handling approximately $100,000 per month around the

province, which would make approximately $102 million per

year.

HON. P.F. YOUNG (Minister of Consumer Services): Mr.

Speaker, I am very pleased the Hon. Member asked that question.

They are distributed to the creditors of the debtors and we are

thereby putting back into the economy of the province about $1

million per year that would not otherwise go back into the

economy.

MRS. JORDAN: A supplementary. I appreciate this fact, Madam

Minister. I think you misunderstood. What process is utilized

in the handling of the money? Does it come directly to the debt

counselling officer? Is it deposited in a bank? Or is it paid

directly to the creditor? This is what I would like to

know.

HON. MS. YOUNG: Mr. Speaker, it's done in several ways. In

some cases it is done voluntarily by the debtors themselves,

and they distribute a portion on a percentage basis to each

creditor. In other cases it is paid into our debt counselling

service, into an account. We have a computer that is programmed

to write cheques and these funds are then disbursed to the

creditors on a percentage basis.

MRS. JORDAN: A further supplementary. Could the Minister

advise the House if there is a fee charged from the creditors

who receive the benefit of this counselling service to help

their business?

HON. MS. YOUNG: There is no fee.

MR. PHILLIPS: I would like to ask the Minister if the funds

are discharged on the same basis to secured debtors as well as

unsecured?

HON. MS. YOUNG: They are distributed according to an

agreement reached between the creditors and the debtors and our

debt counselling people, or where the court is involved, as the

court so directs.

MR. PHILLIPS: Am I to take it that all creditors or debtors, whichever

side you are on, are treated equally? Or are secured claims paid out on 100

cents on the dollar while unsecured claims are not?

DREE PROGRAMMES

FOR NORTHERN B.C.

MR. SMITH: My question is to the Minister of Economic

Development. Has the Minister finalized the renewal of the DREE

agreement between the Province of British Columbia and the

federal government relative to specified programmes in northern

B.C. as yet?

HON. G.V. LAUK (Minister of Economic Development): Mr.

Speaker, it is not a question of renewal. These are totally

different agreements from the old Incentives Act, which is

still in force in the Kootenay region and other designated

areas of the province and has been in force continually. As far

as the other agreements are concerned, I hope to have

announcements in due course, within the next several weeks.

Orders of the day.

HON. E. HALL (Provincial Secretary): Mr. Speaker, I would

like to advise the House that we will be doing second reading

of bills 94, 107 and 125 for the Department of Mines. That will

be followed by either Attorney-General's bills, second reading

of 96, 99, 100, adjourned second reading on 93, or, if the

Premier returns from the lower mainland, we will be going

instead to Finance, to second reading of Bill 129, continued

debate on 27. I'm not entirely certain which of those will come

first.

In the case of the Attorney-General, he has just indicated

to me that he would prefer to go into 93 first. It was

adjourned and he'd like to go into it.

So I call then, Mr. Speaker, second reading of Bill 94.

COAL MINES REGULATION

AMENDMENT ACT, 1975

HON. LT. NIMSICK (Minister of Mines and Petroleum Resources): Mr. Speaker,

in moving second reading of this bill, it's going to be a very few words because

the bill involves, really, just two principles. One is safety and the other

one is reclamation.

In regard to safety, we deal with certain metal alloys —

light metal alloys of aluminum, magnesium, titanium — that have

got to be kept away from the face so any chance for a spark

might not create an explosion. We also increase the power of an

inspector to require a plan of what is going on in the mine,

and a notice to the inspector before driving a new shaft stope

or an adit.

In regard to reclamation, we're changing the maximum amount

you can ask for in a bond from

[ Page 3294 ]

$500 per acre to $1,000 per acre.

There is also training in survival and rescue for all

underground workers.

That's the gist of the whole bill. As I said, it's two

principles: safety and reclamation.

MR. G.F. GIBSON (North Vancouver–Capilano): This bill will

be better dealt with in committee to a certain extent. I can't

quite agree with the Minister that there are only two

principles in it, those of safety and reclamation. Certainly

those two principles are embodied in this bill, and naturally

everyone is going to be in favour of greater safety and greater

reclamation. I'd ask the Minister when he closes the debate if

he could give us a little further justification for the

increase from $500 to $1,000. How much does he believe in

ordinary circumstances it costs to reclaim an acre in various

areas around the province? What will be the practice? Will the

new limit of $1,000 habitually be asked for, or will something

less be asked for when the terrain so justifies?

After that we move to another principle of the bill, which

the Minister didn't speak of, and that is the principle which

suggests that the Mines department will henceforth have much

greater control over the way a mine is developed and operated.

You will find that, Mr. Speaker, in sections 3(4) and 3(5),

which, in fact, change

section 7 of the Act that is being

amended. Those sections commence to bring into British Columbia

law the husbandry concept, which has been experimented with in

Manitoba in a particularly strong form in the bill which was

advanced last year and withdrawn and replaced by their current

Bill 16.

This, in effect, gives the chief inspector, and through him

other officials of the department and, presumably, the

Minister, the rule to dictate in very precise ways the manner

in which a particular deposit shall be developed and exploited,

ways which may not necessarily have any strong connection with

economics, though I would suggest it's probably easier in the

coal area than in the hard rock mineral area. We'll be getting

on to that in a later bill we'll be discussing today.

I'll simply ask the Minister, before he sits down, to

explain to the House why this important new power is felt

necessary for his department. I suggest to him that subsections

(4) and (5) are not powers related either to safety or to

reclamation. I would like to hear more from the Minister on

that.

MR. SPEAKER: The Hon. Minister closes the debate.

HON. MR. NIMSICK: Mr. Speaker, I don't know whether it's

section 4 he's talking about, or subsections (4) and (5).

MR. GIBSON: Subsections (4) and (5) of

section 3.

HON. MR. NIMSICK: Subsections (4) and (5): the only

connection we've got with the mine is the inspector. He's the

one man that has the right to go into the mine and inspect the

mine. If there are any changes necessary, he's going to make

them. As far as the maximum recovery of the coal is concerned,

if he should see that the mining is not done in a proper

manner, then he could inform the company or report to the

department.

The safety question is predominant now. In regard to the

$500 and the $1,000, I doubt very much in many cases that you

could really reclaim for $1,000. The $500 has remained since

1968. It doesn't necessarily mean that we will request $1,000

in every case. In some places it may be quite easy to reclaim;

it wouldn't cost $1,000 and they wouldn't be bonded for that

amount. That is the maximum amount that is asked for. I hope

that answers the question.

MR. SPEAKER: Do you move second reading?.

HON. MR. NIMSICK: I move second reading of the bill.

Motion approved.

Bill 94, Coal Mines Regulation Amendment Act, 1975, read a

second time and referred to Committee of the Whole House for

consideration at the next sitting after today.

HON. MR. HALL: Mr. Speaker, second reading of Bill 107.

PETROLEUM AND NATURAL GAS

AMENDMENT ACT, 1975

HON. MR. NIMSICK: In moving second reading of this bill, it

has a few principles in it. We expand the definition of

"petroleum" to include "oil sand and oil shale." It is

considered that the previous definition may have been

interpreted to include that, but we wanted to make sure that it

included oil sand and oil shale.

Then there are some housekeeping amendments. The plan for

drilling and the reclamation clause are part of these. In

regard to reclamation, they have got to have a permit and an

application for resuming. If they shut down their drilling,

they have got to make application to resume after a certain

length of time.

I move second reading now.

MR. D.M. PHILLIPS (South Peace River): There are some far-reaching principles

involved in this bill, but they are under specific sections. I think we will

[ Page 3295 ]

spend most of our time on it in committee stage.

MR. GIBSON: Mr. Speaker, there are indeed some far-reaching

changes in this bill. The Minister mentioned the redefinition

of oil shales. I think that is a useful addition to our mining

law. I would ask him if, in closing second reading, he might

outline to the House what shale deposits in what parts of the

province would be particularly covered by this section. I know

there is something up in the Queen Charlotte Islands — perhaps

the Minister could describe that property and anything else

there may be around the province to which this would apply.

Far more importantly, Mr. Speaker, a

section of this bill,

section 7, which I don't intend to debate at length now but

must be debated at great length in committee stage, gives the

Minister the power to withdraw Crown lands from the ordinary

process of disposition, and thereafter deal with them pretty

well as he sees fit.

I don't want to misquote the Minister on this, but I think

he was asked at the time this bill was first introduced if this

would not, one way or another, allow Crown drilling, or

facilitate Crown drilling. It seems to me that it

unquestionably would. It would make it very simple for the

Minister to select any parcel of land in the province, remove

it from the ordinary competitive process of getting permission

to drill, and have a Crown company such as B.C. Petroleum

Corporation go ahead and do any exploration work they might

wish.

Now Mr. Speaker, it very well may be that because of the

economic philosophy of the present government, ordinary

drilling, drilling by private companies, is not going on in

this province to the extent that the government might wish.

Interjection.

MR. GIBSON: The Attorney-General says that is not so. But

clearly, were it not so, would the B.C. Energy Commission be

holding the hearings they are right now as to whether the

returns to natural gas producers are sufficient to encourage

the kinds of drilling that we think are required? So the

Attorney-General is going off a little half-cocked again. He

seems to be in that mood this afternoon, going off a little

half-cocked, and he is still at it. This

section does give the

Crown that power. It is an important departure, Mr. Speaker, an

important departure of principle in our mineral resource policy

in this province.

Ordinarily, the economic development of hydrocarbon

resources proceeds on the basis that economics are respected.

If the driller or would-be producer feels that a particular

area is of great value, he pays a high price to the Crown to

acquire that. Because he pays that high price, he goes out and

he drills it as expeditiously as he can and he puts a lot of

work into it.

Now if a Crown corporation is to have the benefit of Crown

lands for exploration virtually gratis, that removes an

important economic incentive for efficient exploration. If this

Crown agency, whatever it may be, has available to it virtually

all of the potential drilling lands of British Columbia, it may

not feel constrained to pursue drilling activity as quickly as

private companies might have done. This may particularly be the

case if there are budgetary problems in any given year, when

the government might find that one of the easier things to cut

back on is, not established social programmes, but rather

drilling programmes — things which are essentially postponable

in the budget of the government, but which would not be

postponed were they being done in private hands.

It strikes me as bad economics, Mr. Speaker, unless the

Minister has some formula to provide whereby any Crown

corporation engaged in exploration activity could somehow be

made to answer to the same kind of incentives for the wise and

effective use of capital as private companies are automatically

constrained to do by the marketplace.

As I say, I hope to discuss this further at committee stage,

but when the Minister closes second reading, I hope he will

have something to say about this very important departure in

resource management in British Columbia.

MR. D.E. SMITH (North Peace River): I just want to say a few

brief comments on this particular bill, and I agree that it can

best be debated in the specific sections that are included.

It would seem to me that one of the intentions of the bill

is to define oil-bearing shale as the same type of mineral as

any other in the Province of British Columbia. It's a

petroleum, yes — a petroleum-producing shale. That was probably

included at this particular time with the intent of

circumventing, or at least cutting off, some of the people who

have exploration rights on the only known shale deposits in

British Columbia at the present time — in the Queen Charlotte

Islands.

It will probably effectively retard any programme of

exploration and development they may have had in mind until

they find out exactly what the Minister is going to do in this

respect. It may, Mr. Speaker, retard indefinitely and for many

years any development of the shale deposits in the Province of

British Columbia.

There's also a reference been made to

section 7 by the two

previous speakers. I'm concerned about

section 7. I think the

Minister should really reconsider what he's doing, because I

say that if he enacts

section 7 as it is written, he will

effectively scuttle the exploration for petroleum resources by

anyone other than a Crown corporation in the Province of

British Columbia in the same manner that we've seen the mining

exploration die in this province.

[ Page 3296 ]

You can shake your head all you like, Mr. Minister, but

that's exactly what's going to happen because what you have

done is reserve to the Crown, whenever they shall desire or

whenever the Minister shall say, any potential area for

exploration.

Now no company seriously concerned about exploring for

natural gas in the Province of British Columbia, or oil —

because you can't really explore for one without the other; you

don't know what you will find, if you find anything — will even

be able to raise one dime's worth of finance to finance the

exploration, which is costly, and the drilling, which is

costly, if it is known by the market generally that the

Minister reserves the right to move in whenever he desires.

That's exactly what you're doing in this particular

section of

the bill.

HON. A.B. MACDONALD (Attorney-General): You haven't read

the bill.

MR. SMITH: Yes I have, Mr. Minister. I've read the bill.

It's very plain, and it will be very plain to the industry what

you have in mind, and that is that if we find a new wildcat

area in British Columbia which seems to have potential for

development, the Crown can move in in that particular area. The

Crown can reserve it out for themselves.

Interjection.

MR. SMITH: Yes, either way you are scuttling the exploration

business and you're going to high-grade the petroleum industry

the same way that you have accused other people of highgrading

the mining industry. That's exactly what you're involved in,

and it will be to the detriment of the continued exploration

for natural gas and petroleum resources in the Province of

British Columbia. It's ridiculous, it's ludicrous, at a time

when we need petroleum resources more than we've ever needed

them before in Canada, that you should introduce this type of

bill into the House.

We have the Energy Commission presently meeting in the

Province of British Columbia, discussing some of the problems

of exploration and production of petroleum. And what do you do?

You effectively cut off anything that they might have

productively been able to do through these hearings before the

hearings have ever been completed. You've emasculated any

effect the Energy Commission will have. And you might as well

forget about any report they'll introduce, even though they

suggest that there could be and should be an increase in the

wellhead price for new and perhaps for old natural gas —

whatever their recommendations might be. I'm not going to

speculate on that.

We're in intense competition for exploration with the Province of Alberta.

And I mean intense, Mr. Minister. The facts of the matter are that in a like

zone — and I'm talking about northeastern British Columbia as compared to northwestern

Alberta — the costs of exploration are lower by a substantial degree because,

first of all, the reef-formation where you find gas and oil is substantially

shallower in the west as compared to the eastern area next to the mountains.

So they can explore there much more cheaply than we can in British Columbia.

The rate of return to the Crown is more equitable in that province. So that's

an incentive to go out and drill. And all I've got to suggest to the Minister

is to look at the reports of the continual increase since 1972 in exploration

and development and drilling in northwestern Alberta.

In a comparable area, acre for acre comparable to

northeastern British Columbia, their graph has gone up like

this.

AN HON. MEMBER: No, it hasn't.

MR. SMITH: It has! It has, Mr. Minister, it has. Take a look

at the report. And our graph has gone down like this. Take a

look at the number of feet of actual drilling that has taken

place. I'm telling you what's going on. Take a look at it. Take

a look at the figures.

Mr. Minister, talking to you is really a waste of time. I

appreciate and acknowledge the number of years you have spent

in this Legislature as a Member. But I tell you this: as long

as you take your instructions from Hart Horn, this province is

in serious trouble.

HON. MR. NIMSICK: I take my instructions from this

House.

MR. SMITH: I'd like to believe that, Mr. Minister.

Unfortunately, I can't. There's one man who runs the department

for you...

HON. MR. NIMSICK: You told me the other day Bob Williams is

telling me what to do.

MR. SMITH: ...and his name is Hart Horn, unfortunately for

the people in the Province of British Columbia. Unfortunately

for the people in the Province of British Columbia. It would be

much better, with as little knowledge as you do have of the

petroleum business, if you ran your own department. It would

be much better for the people in the Province of British

Columbia.

But this bill we have before us will result in exactly the

same trend and the same pattern that we see and have seen

develop in the last two years in the mining exploration

business in this province. What you're doing is guaranteeing

that the private companies will not drill in British Columbia.

You're

[ Page 3297 ]

guaranteeing it with this bill. As much as I had hopes for

the hearings of the Energy Commission, those hopes have been

shattered with this bill before this House, at a time before

those hearings have been completed and before that Energy

Commission has even had an opportunity to report to the

government their findings and their recommendations.

It's a disgrace, Mr. Speaker, that this bill could be before

us at this time. If you had one ounce of concern for the people

in this province and their revenue and the potential

development of that resource, you would have at least waited

until the findings of that commission were complete and we had

a report back before the House as to how to proceed in the

Province of British Columbia. This is part and parcel of a

programme that will scuttle northeastern British Columbia.

Believe me, the people who live there look with great

disfavour at this particular type of legislation. They know

what it means to many hundreds of small businessmen,

contractors and people who have for 20 years made their

livelihood by working in extreme conditions in an area of

British Columbia where the work year is compressed into three

to three and a half months of weather conditions of anywhere

between zero to 60 below. They go out and work in those

conditions because they have an opportunity to not only produce

the natural gas that we need for this province and for export

and give the Province of British Columbia the opportunity of

rip-off profits, but they do it because they can make a living

for themselves and their family. They're proud to do it;

they're an elite group of people, not the namby-pamby types who

won't take a job unless all the t's are crossed and the i's are

dotted and the contract is that long. They work because they

take pride in what they do and what they know and what they've

learned from experience garnered over 20 years in an extremely

difficult type of business. Yet they have to live with a

government that is so greedy that they won't even wait till

they get a report from their own Energy Commission before they

take another big bite. To me, Mr. Speaker, it's ludicrous, because it's obvious the

government does not understand the economics of any developing

industry in the Province of British Columbia. That's a sorry

comment; I hate to have to make it on the floor of this House.

It's a sorry comment, because that's exactly the position of

this government today. No one in the Province of British

Columbia should be deceived as to the true intent of the

government: it's complete takeover of the industry. When that

happens, we won't even have enough gas produced in British

Columbia for our own consumption, let alone windfall profits

from the sale of gas to the United States.

HON. MR. MACDONALD: Mr. Speaker, the Hon. Member is all wrong about this

section because the

section is consistent with the government listening to the

recommendations of the Energy Commission, both as to price or

method of exploration, drilling and development of properties.

It does allow the government to reserve from the option system

parcels of land — not to invade the existing leases. If the

government considers that a private company won't develop an

area that has a rich potential, then perhaps it might be done

under this

section by that not being put up to auction. It can

be contracted out to a private drilling company. It can be

managed or disposed of on contract, on incentive or even by

direct drilling. But it doesn't have to be.

The government, of course, is listening to the Energy

Commission and awaiting its report, which, I hope, should be

available about the month of August.

Nor should the Hon. Members be so gloomy about the natural

gas potential in the drilling of the past year. Our success

ratio in new wells drilled has been higher than that of

Alberta. Admittedly, it's easier to explore in Alberta and they

have a bigger potential. But at the present time in history,

our success rate is better. The fall-off in drilling — and

there was some fall-off along with a general depression....

MR. SMITH: Why has it gone down?

HON. MR. MACDONALD: We have not gone down as much as either

Alberta or Saskatchewan in terms of drilling. There has been

some fall-off — of course there has.

MR. SMITH: That's not true.

HON. MR. MACDONALD: Well, it is. I gave the figures some

time ago and I'd be glad to repeat them for the Hon. Member.

But what you are doing is....

Interjection.

HON. MR. MACDONALD: You're a crépe-hanger.

MR. SMITH: Compare it.

HON. MR. MACDONALD: You're a crépe-hanger. I'll give you the

exact figures on a....

Interjection.

HON. MR. MACDONALD: If I'm here at the committee stage of

this bill, I'll be glad to give you the exact figures. I

thought I already gave them to the Legislature in my estimates.

Look in Hansard . Our record is pretty good. We've piped another

40 million cubic feet per day of gas in the first quarter of

this year into the system — not as good as it might be, but not

bad either.

[ Page 3298 ]

So we can under this

section listen to what Dr. Thompson

will recommend as a result of his hearings. It does give the

government and Dr. Thompson an additional method and option in

terms of and accordance with the best conservation practices in

developing our oil and natural gas reserves.

MR. SPEAKER: The Hon. Minister of Mines closes the

debate.

HON. MR. NIMSICK: Mr. Speaker, listening to the Hon. Member

for North Peace River (Mr. Smith)...they always say that if

you don't know your subject very good, shout loud.

Interjection.

HON. MR. NIMSICK: That's exactly what happened in this case,

because I don't think he understood what we are aiming at.

First I will reply to the Hon. Member for North

Vancouver–Capilano (Mr. Gibson), who spoke about the shale. The

only oil shale we're short of is in Queen Charlotte area. We

wanted to make positive that it came under the same

requirements as all other oil; that's the reason we brought

that amendment in.

In regard to

section 7 that the Hon. Member for North Peace

(Mr. Smith) was so concerned about, first I would like to state

that I've got some of the finest men working under me of any

department in the government. You just got through telling me

that somebody else was making the policy, but I do. This was

the first thing when I first became Minister — I had a big

discussion about this question of drilling, and somebody said

that the Crown should not have the right to drill on their own

property unless they put it up for option and paid in the same

way as the other parties.

Now this seems rather ludicrous to me — to pay to drill on

your own land. When Shell Oil or Imperial Oil or Pacific Pete

bids at these sales, they get hundreds of hundreds of acres

under their control. They don't do the drilling; they farm the

drilling out to some private drilling company. They contract it

out for 50 per cent....

Interjection.

HON. MR. NIMSICK: No, they don't pay a thing. The drilling

company goes in on their own for 50 per cent of the oil. If

they find anything 50 per cent goes to the drilling outfit.

Quasar will tell you. If you ever sit down with Quasar and talk

it over, they'll tell you how Shell people and these other

people farm out their property to them to drill. If they strike

anything, Shell gets 50 per cent of the return.

Now why shouldn't, if it was necessary.... I don't know whether this

section

will ever be used because I think that the private industry will continue to

do the job the way we expect them to do it, for the simple reason that if it

was necessary to use it, we can use it. If the Crown wants to do their own drilling,

or if they want to contract it out, they should have the same right as any private

oil company in the country.

It surprises me to hear the opposition so many times say

that the Crown, the people who own the property, haven't got

the same right to do with that property as a private company

has when you give the property over to them. To me, it is a

rather ridiculous situation. I'm sure that, although this is in

there, it probably will not be used, as I say. Nevertheless, if

the opportunity comes, or the time comes that we should do it

ourselves or contract it out to some drilling outfit, we can do

it.

I move second reading of this bill.

Motion approved.

Bill 107, Petroleum and Natural Gas Amendment Act, 1975,

read a second time and referred to Committee of the Whole House

for consideration at the next sitting after today.

HON. MR. HALL: Mr. Speaker, second reading of Bill 125. This

will be followed by adjourned debate on second reading of Bill

MINES REGULATION

AMENDMENT ACT, 1975

HON. MR. NIMSICK: This is a companion bill to the Coal Mine

Regulation Act, except that the question of the light metal

alloys and the chance of an explosion is not in this bill. But

the inspector has the same powers; the increase in security for

reclamation is the same; and the principle of safety is quite

evident in it. Also, placer mining will come under the

inspector who will have the power to look after placer mining

in the province as well as hardrock mining.

MR. F.X. RICHTER (Boundary-Similkameen): Bill 125, as the

Minister says, is a companion bill to the Coal Mines Regulation

Amendments. In studying the bill, outside of one or two points

in which fees have been increased — and this can be more

properly debated in committee — I would say that the powers

within this bill have already been at the disposal of the

Minister through Bill 44 and other amendments to the Coal Mines

Regulation Act. The thumbscrews are turned down a little

tighter. It can be a little more difficult for small mines to

comply with some of the provisions within this particular

amendment to the Mines Regulation statute.

I'm just wondering if these types of bills are really

[ Page 3299 ]

necessary when the power

is already there within the hands of the Minister, and that merely by bringing

his inspection procedures up to a little higher standard, these things can be

accomplished in that fashion.

I have no objection to legislation, but I wonder sometimes

when broad legislation is drafted and promulgated, put before

the House and passed, why the broad sense of the legislation is

not used without fuzzing up the whole issue by bringing in

measures such as we have had brought in here in Bill 94 and

There is really nothing in here that we haven't had before.

We don't intend to oppose this Act, but I question the wisdom

of bringing these measures in, particularly those measures that

are going to make it more difficult for the small mines, the

people who are trying to start up, and also those who are going

to find a great difficulty because of their economic returns

from the mines in light of other legislation. I wonder whether

or not this would not have been better left as it was, because

we have plenty of protection as far as health conditions under

other legislation, safety regulations (and goodness knows we

want safety as far as mines are concerned), and as far as the

additional imposts that are going to be brought about by this

particular set of amendments. Really, I don't know where any

encouragement could be evident within this bill that would make

the mining industry more efficient, more interested in

development. We will have more to say about it at the committee

stage.

MR. GIBSON: Mr. Speaker, I take a rather serious view of

this bill, in particular the new power which is granted which

would allow the department to require that the mining system

adopted should not be departed from in any substantial manner

unless the operator should receive the approval of the chief

inspector, and further that the plan of assistance should

provide for the maximum possible recovery of the natural

resource.

The second part of that is in direct conflict with the province's own royalty

policy, as I will outline in a minute, but just let me talk about the first

part for a moment. Let us assume that a mining operation has commenced. You

could use most any metal, but let's talk about copper for example. Let's suppose

a copper operation is commenced at a time when the price of copper is expected

to be, let's say, 70 cents. A mining plan is filed according to this law from

which the operator is not to depart in any substantial manner. Then let us say

that the price of copper changes substantially — be it up or down, it doesn't

really matter. If the price changes substantially, the mining plan should be

changed as well. The grades that will be economic to take out with the price

change will either go up or down according to the price of that metal. You can't

go changing your mining plans every day. That is for sure. You get into an open

pit structure when that is the way you are going through, and it is hard to

change. But sometimes there are changes required for economic reasons to get

the maximum possible ore out of the ground that is economic. This is must another

restriction and another imposition of arbitrary, discretionary control on the

mining operator by the Minister and his department.

Mr. Speaker, the discretionary features of the existing

mining legislation have been one of the two things which have

virtually brought an end to mining exploration and development

in this province, and with them, several thousand jobs. Here is

another piece of discretion. To that extent, it is another nail

in the coffin of mining employment in British Columbia. There

is just no question about it, Mr. Speaker: here is another way

in which any mining operator will see his hands potentially

tied by this government. It is another piece of "trust us"

legislation. Anyone who wants to be productive in the mining

business has no reason to trust this government and the

judgment of this government. I will tell you that, Mr.

Speaker.

The other thing to which I take exception is the conflict

between the government's royalty policy and the requirement

here that: "The plan of the system shall provide for the

maximum possible recovery of the mineral resource in the

location to be mined, having due regard for good engineering

practice and the safety of the operation." Mr. Speaker, leave

aside the safety of the operation — we are all in favour of

that. Let's talk about the economics of the operation.

The royalty pattern imposed by this government is an

off-the-top impost. If the Minister will have reference to any

mining text, if he will have reference to the extensive debate

that took place on Bill 31 in this House last year that

apparently he had a deaf ear to, if the Minister will have

reference to the mining department out at the University of

British Columbia, if he will have reference to the B.C. and

Yukon Chamber of Mines, if he will have reference to anyone who

knows anything about mining they will tell him that a royalty

is in direct contradiction to this

section because the most

efficient recovery of a resource will not take place when the

tax on it is by royalty rather than by a tax on profits.

So, Mr. Minister, it's another proof that you and your

department don't understand the industry. This very question of

a royalty was covered by none other than Dr. Peter Pearse, who

was rumoured as the new commissioner for forests — to look into

the forest industry. When he was doing a report for the

Minister of Lands, Forests and Water Resources (Hon. R.A.

Williams) last year, he came out very clearly on this question

of royalties, and how it leads to high grading of resources,

inadequate and wasteful production, and bad conservation

practices.

[ Page 3300 ]

I would have thought that Members of this government would be for

good conservation practices, and would be for the maximum extraction of

ore from the ground. They claim to be for it here in this very bill,

and yet it contradicts the fundamental taxation practice they're

following.

So there's an internal contradiction as point No. 2, and I

return to point No. 1. It is an additional and important item

of arbitrary discretion in the hands of the Minister which will

simply go a little bit further to make it difficult for the

advancement of mining employment in British Columbia. It's a

little harder to slide further back than zero, to slide further

back than drilling activity being down 99 per cent in the first

quarter of 1975 over the first quarter of 1974, but this bill

will just make it a little bit harder to pick back up again.

It's a bad bill; I'm going to oppose it.

HON. MR. NIMSICK: I'm amused at the Hon. Member for North

Vancouver–Capilano because I like him very much, and I don't

know how he mixes up the royalty bill with this bill. I don't

hear him criticizing the private industry for collecting

royalties from each other, and telling them that they're not

carrying on good conservation policies. I don't think that that

is the best, but the inspector is the one who will have a

little more power, because safety depends upon the inspectors.

I think the Hon. Member for Boundary-Similkameen (Mr. Richter)

knew when he was a Minister that the regulations were changed

from time to time in order to improve the safety situation in a

mine. I'm sure that he will recognize that fact.

In regard to reclamation, we've had problems with people

exploring and ripping up the side of a mountain with a Cat

without a permit. We say here that if he hasn't got a permit,

it's an offence against the Act because now a person that

explores for minerals with machines must have a permit to do

so. This is something that I think the environmentalists at

least would be very pleased with.

I move second reading of the bill, Mr. Speaker.

Motion approved.

Bill 125, Mines Regulation Amendment Act, 1975, read a

second time and referred to Committee of the Whole House for

consideration at the next sitting after today.

HON. MR. HALL: Adjourned debate on the second reading of

Bill 27.

BRITISH COLUMBIA RAILWAY COMPANY

CONSTRUCTION LOAN AMENDMENT ACT, 1975

HON. D. BARRETT (Premier): Although I adjourned the debate.

I'd like to yield my place to the Member for Cariboo (Mr.

Fraser).

MR. A.V. FRASER (Cariboo): We're debating Bill 27, which

raises the borrowing power of the British Columbia Railway from

$450 million to $600 million.

To say the least, I was quite shocked about the speech that

the Premier made on Friday in this House and the revelations

that he made about the BCR. I can assure you, Mr. Speaker, that

wherever that railway has served in the past, and where it

serves today, they were equally as shocked.

I want to give a little history about this railway, and

answer some of the accusations made by the Premier as president

of the railway.

First of all, I have lived in Quesnel all my life and the

BCR has serviced that community for that length of time. So I

feel that I have a little knowledge about the workings of the

railroad, I might say, Mr. Speaker, extending over a period of

40-odd years. I have actually witnessed a lot of the

development of that railroad, because it has happened, a great

deal of it, in the interior of the Province of British

Columbia, although it has happened other places as well.

The railroad originally commenced in 1912 and was

incorporated as the Pacific Great Eastern Railway. We always

had many names that the initials stood for. The initials were

PGE and we had many names for it: "Pigs Going East — Prince

George Eventually," and so on.

HON. MR. BARRETT: "Please Go Easy."

MR. FRASER: "Please Go Easy," right. I've forgotten

them all now, but it was for some time quite the laughing stock

of the entire province, and the interior was no exception. It

was incorporated in 1912 to be a branch line to the Pacific

Grand Trunk which was the line running from Winnipeg to Prince

Rupert, which later became part of the Canadian National

system. The incorporation included the B.C. government

legislation to guarantee the railway and also provide a

development grant. Builders of the railway were Stewart, Foley

and Welsh, all Americans. Most of the initial financing came

from Britain, which gave birth to the name Pacific Great

Eastern. The British had a railway called the Great Eastern.

Most of the British financing of the day was a spin-off to the

greater sums of money which went into the Pacific Grand

Trunk.

The railway was a political white elephant from the start.

The main problem and reaction and the basis for the change in

development theory in later years was the lack of freight to

market the business. Both the PGE and the Grand Trunk went

bankrupt in 1917. The Grand Trunk became part of the CN and the

Pacific Great Eastern came under the ownership of the B.C.

government; since then it's been the guarantor. The PGE had

failed in its initial objective of connecting with the CN to

run into Prince Rupert.

[ Page 3301 ]

Following the government takeover, the chief business of the

PGE was passenger traffic from White Cliff to the area of the

Lions Gate, and it participated in opening up this area with

commuter transportation. In 1922 the PGE was completed into

Quesnel, linking it with Squamish and creating the first

opportunity for any real freight traffic, even though freight

revenue at that point was still under $1 million a year.

Passenger freight were taken up Howe Sound by Union Steamships

to Squamish, where they picked up the railway for the trip to

Quesnel. Mr. Speaker, I made many trips on that boat.

An eventual backhaul business developed hauling wood down to

the coast for use at Woodfibre and Port Mellon. This freight

business disappeared during World War II.

In 1949 the extension between Quesnel and Prince George was

begun and completed in 1953. The Squamish to North Vancouver

extension was begun in 1954 and completed in 1956. In 1955 the

Prince George to Dawson Creek–Fort St. John extension was begun

and completed in 1958. The latter construction of the

O'Dell–Fort St. James extension and the Fort St. James–Leo

Creek extension were both developed as branch feeder lines,

mainly to provide service to the developing forest industry in

the area.

A few observations, Mr. Speaker. Considerable attention has

been given to the manner of accounting on the British Columbia

railroad. When the government acquired the railway in 1917, it

found the railway constructed in the cheapest possible fashion,

and this was essentially the same case until the extension from

Quesnel to Prince George was completed.

I'd like to comment here, Mr. Speaker, that of all the

moneys from the public of British Columbia that have been put

in there, and referred to by the Premier in his speech the

other day, a great amount of this money went into the upgrading

of the railroad from North Vancouver and Squamish through to

Quesnel, because, in fact, it was a substandard grade and

substandard steel and so on, and many millions of dollars have

gone into the right-of-way that did exist, and that money has

been put in since the 1950s, up until.... Well, even today

it's still going on.

The original quality of the railway was 60-lb. steel and

spikes that could be pulled by hand from the ties. In terms of

what the B.C. government bought, its history with the railway

has been of rebuilding the line from Squamish north.

For this reason, such things as labour and track laying have

been associated with a capital cost rather than operating

expenses. The upgrading has been synonymous with building.

Similarly, when new extensions were built, such as the O'Dell extension or

the extension from Prince George to Fort St. John, they were initially built

to specification of quality which related to anticipated traffic costs. At a

future time when more traffic demanded a better rail line, the improvements

were made and charged to capital costs.

When you analyse the development of the railway in terms of

this programme, you can see that it makes sense.

This is now the system that the president of the railroad,

the Premier, has decided to depart from — that is, the

accounting.

He referred to the poor quality of the line between O'Dell

and Fort St. James. It was built as a branch line, never

anticipating the Dease Lake extension. It would have been only

logical to the former manager of the railway that as revenues

on that part of the line increased, the line would have to be

upgraded.

I'd like to say here, Mr. Speaker, that even the CNR and CPR

right today are continually upgrading their main lines,

particularly in the Fraser Canyon and all the B.C. sections of

the system.

MR. J.R. CHABOT (Columbia River): They never quit.

MR. FRASER: They never stop upgrading their main lines and

branch lines.

MR. W.R. BENNETT (Leader of the Opposition): They abide by

the CTC, too.

MR. FRASER: Yes, and I might say in regard to that remark,

Mr. Speaker, this railroad, which was referred to by the

Premier as not complying with the accounting procedures of the

Canadian Transport Commission.... He didn't say that they did

not have to comply, while the CNR and the CPR have to

comply.

HON. MR. BARRETT: But they signed their audited report

saying that they did.

MR. FRASER: They did not have to comply with the Canadian

Transport Commission regulations.

HON. MR. BARRETT: But they signed the report saying that

they did.

Interjections.

HON. MR. BARRETT: What do you make of that, Alex?

MR. FRASER: The Premier referred to the poor quality of the

line between O'Dell and Fort St. James, and, as I said before,

it was built as a branch line.

We understand that the new vice-president is

[ Page 3302 ]

advancing the argument to BCR customers that the philosophy

of the railway under NDP is to provide a first-class railway to

customers, and it is the responsibility of the government to

subsidize the losses that will be created. The former

government believed in providing the service of a development

railway, but on a pay-as-you-go basis, so we certainly have a

division of opinion there.

HON. MR. BARRETT: Why did they say in the annual reports

that they were following the CTC regulations?

MR. FRASER: In the terms of the terrain that this railroad

traverses, no railway in North America has had to face similar

challenges. The grade climbing out of Squamish to Pemberton is

the steepest encountered by any railroad in North America —

just take a ride on it someday and look out of a window down to

the Fraser River. The construction of the Squamish–North

Vancouver

section was considered the most difficult ever

undertaken in North America.

I might say, in regard to that section, that while the

Premier, as president, ran down everything that has happened to

this railroad, he didn't mention some of the benefits that are

accruing even today. I refer to his pride and joy and that of

the ex-vice president of the railroad whom the president fired,

the Minister of Labour (Hon. Mr. King). I refer to the Royal

Hudson train.

I say to you, Mr. Speaker, that this is a very popular new

venture for the railroad, and I congratulate the government for

this. But I would remind them that it runs on the BCR tracks,

and if that road had not been built and upgraded, the Royal

Hudson train certainly could not have operated under the setup

they used to have.

The other thing I would like to point out about the

development of this railroad from 1952 to 1972 is the fact that

it was the cornerstone of resource development. Resource

development in the interior of the province grew by investment

of millions of dollars, mainly in forestry and mining. I might

say that if it wasn't for the policies of this government, the

advancement would still be going on in these basic

industries.

Referring to the extension up in the Dease Lake country,

where the railroad is now presently under construction, it is

quite right that it probably won't be a viable extension now

because of the policies of this government discouraging mining,

and to a great degree, forestry, because we have had no

investment in the forest

section to any degree other than what

the government has invested since they were elected in

HON. MR. BARRETT: We ordered the trees not to grow, Alex?

There's not enough timber up there.

MR. FRASER: Well, that isn't the information I got. The

impression I got was that there was all kinds of timber up

there. To add further insult to injury, the railroad is not

even operating up there today where they have the track

laid.

HON. MR. BARRETT: Yes, because you didn't try to negotiate

with the Indians.

MR. FRASER: That is laying off hundreds of men, and that

again is the management of the railroad. They haven't done

anything about it and this has been going on for four or five

weeks and there are hardships developing more every day.

HON. MR. BARRETT: Whose property is the railroad on? Did you

negotiate with them before you bulldozed your way across

it?

MR. CHABOT: Yes.

HON. MR. BARRETT: You did not.

MR. CHABOT: Yes.

HON. MR. BARRETT: There were no negotiations.

MR. CHABOT: Yes.

HON. MR. BARRETT: None.

MR. SPEAKER: Order, please.

MR. FRASER: Certainly it is my understanding that there were

negotiations...

HON. MR. BARRETT: There were none.

MR. FRASER: ...but there wasn't a signature received.

HON. MR. BARRETT: You fumbled. So you built it without a

signature, eh? Is that your excuse?

MR. FRASER: The BCR, Mr. Speaker, made its big step towards

viability with the decision to extend from Quesnel to Prince

George...

HON. MR. BARRETT: You are making a bigger mess out of

it.

MR. FRASER: ...to create a connection which it did not

previously have. The commitment was made under the coalition

government but did not become a factor until the early 1950s.

As a matter of fact, this was completed, as I said, in, I

believe, 1953. Development then began in the Prince George

area

[ Page 3303 ]

when lumber men realized the potential of the area...

MR. CHABOT: You've never been on a railroad.

would offer in its competition to the CNR.

HON. MR. BARRETT: I worked my way up on the BCR — on a

caboose, not on a luxury car like the former Premier.

MR. FRASER: I might say, Mr. Speaker, in relation to this,

that prior to that the good people of Prince George and their

industry and everything had only the CNR, and they had been

gouged to death by high freight rates. But as soon as the BCR

made the connection so that they had another route to water for

their particular shipments of forest products, the CNR rates

fell and the BCR — the PGE in those days — was the cause of a

great expansion in that area.

There are a lot of communities that certainly became viable

communities and weren't so prior to the era of 1952-72. I will

refer to all the communities in the Cariboo, 100 Mile House,

Williams Lake, Quesnel, Prince George, with a big increase in

activity in their area. Then, of course, as we go north, new

communities were created and new jobs for the people in them. I

refer to the communities of Mackenzie, Chetwynd, and so On.

Everything wasn't bad that happened between 1952-72 as the

Premier tried to make out the other day.

HON. MR. BARRETT: You didn't tell the truth, that's all.

MR. CHABOT: Oh, look who's talking. Look who's talking.

HON. MR. BARRETT: Ohhh, yes!

MR. SPEAKER: Order, please. That's unparliamentary.

MR. FRASER: Because of these extensions and a decent

railroad, and I refer particularly to Prince George south to

water, which the communities along that line had never had

before.... For the knowledge of people who don't know anything

about the railroad — and I think this applies to the Premier as

president — they had to barge all their freight from Squamish

to North Vancouver and change it from the rail line to barges

to finally get it to the world markets. This was costly. When

the railroad was completed, this all ended and the trains could

run directly down to seaboard to load on for the world

markets.

I don't know how many millions of dollars were involved in

this investment in the central and northern part of the

interior, but the catalyst of all this was the BCR. Without it

they had no way to get their products to market. There is

probably an investment in excess of a billion dollars created

because of the expansion of this railroad — which today are

viable industries paying taxes, creating large payrolls. As an

example, about 15 years ago the City of Prince George had a

population of around 20,000. Today it has 60,000 people, all

very gainfully employed. The same difference has happened to

communities like Quesnel, Williams Lake, 100 Mile House and, of

course, thousands of people in Mackenzie, and so on, and the

new community of Chetwynd.

The other extension that had some discussion from the

president and Premier on Friday was the extension into the

Peace River. I don't have to relate that, Mr. Speaker, because

there are other Members here who can relate it better. But I do

know the only railroad they had was a railroad that ran to

Alberta. They had no connection with the rest of British

Columbia until the railroad was pushed north from Prince George

into Dawson Creek and Fort St. John. This again gave

competition to that railroad. For the first time, Peace River

was hooked to the rest of British Columbia by rail. It made it

so that those grain farmers could ship their grain down through

the province. They had a market for it instead of feeding it to

the pigs they had at home — which had been the only opportunity

they had to getting rid of it before.

The refinery at Taylor was made a viable unit because of the

extension of the railroad between 1952 and 1972. Really, in the

20 years involved, Mr. Speaker, this railroad did a lot to open

up a frontier that was untapped until that time. It's still

going on, but at a slower pace for the reasons I gave

earlier.

It was done on a pay-as-you-go basis, rather than taking the

position of this government that there are areas of service to

industry which must be subsidized.

Another thing I would like to talk about for a minute is the

operation that has been going on in that railroad since 1972,

and which greatly disturbs all the interior people. One action

alone by this government has caused problems. I refer to a bill

put forward by the Premier and president — the bill that put a

5 per cent sales tax on all railcars.

This created an enormous headache for other railroads which

interchange cars all the time with the BCR. Once a railcar

leaves B.C., it must run on four roads before it gets back

here. The imposition of the 5 per cent sales tax made it

necessary for those other carriers to keep track of the cars

and who owed how much sales tax on the out of province, et

cetera. It was so confusing and created so much work that it

became the reason why other carriers did not want to let their

cars to get mixed up with the BCR cars.

[ Page 3304 ]

Consequently, Mr. Speaker, we continually have a shortage of

cars on this railroad when we need them. When we need them the

most in the interior is when the forest product market is good.

This railroad never has any cars any more when the market is

good and the demand is heavy on the world markets, more

particularly the United States market. This, I feel, is one of

the causes of the shortage. Their own system cars show up when

there is a lessening of the market in the forest products like

there is today. But as soon as....

I would say there will be another huge shortage in this

railroad next spring, Mr. Speaker, because no doubt, the lumber

market and the pulp market will improve because of it being a

presidential election year next year. It has always happened; I

have no reason to believe it won't come back. Then again they

won't be able to get their product to market because of the

shortage of cars.

Mr. Speaker, the other day the president made the following

basic charges against the former government: accounting

procedures which did not reflect the true operating procedures;

lack of free engineering on the Dease Lake extension; no

shake-up in management as charged. There is a considerable

amount of evidence that Barrett's charges of scandal are not

correct. Many of his statements are incorrect. He really

recreated a smokescreen to cover up a $32 million operating

loss in 1974, based on $48 million worth of business.

The matter of accounting procedures and capitalization of

cost, as well as the depreciation formula, is a management

decision. The Peat Marwick report clearly refers to this

decision to change these procedures as a management

decision.

HON. MR. BARRETT: Were the former methods acceptable?

MR. FRASER: As an example of the foregoing is the fact that

the former administration charged track laying and labour to

capital costs where the present government is charging it

against operating expense. That's quite a change, Mr.

Speaker.

If you examine back the records of this railroad, what the

former government did is what was done in accounting practices

right back to the start of the railroad. I would say that I

think any one of us could hire another accounting firm and come

up with the answers that we want if we're giving those kind of

directions to them.

HON. MR. BARRETT: Would Peat Marwick be suspended by the

accounting association?

MR. FRASER: No, but on the subject of Peat Marwick, I think they've

got their difficulties right now in view of a problem they've had in the United

States on a railroad audit. I think you should check into

that, Mr. Premier.

HON. MR. BARRETT: Are you questioning theirs?

MR. FRASER: I'm not questioning yours. I'm just telling you

that you're questioning the other auditors, and I'm telling you

that maybe Peat Marwick have some difficulties as well.

HON. MR. BARRETT: I'm not questioning the auditor; I just

quoted from his own association, that's all.

MR. FRASER: Of all the reports attached and referred to by

the Premier, I would refer to the Wakely report where he was

asked to make a report. By the way, Mr. Wakely was the engineer

of the railway — the civil engineer. He was asked to make a

report about the goings-on, although he had never been there

when the action was taking place. I refer to 1963 to 1970. So

in haste — in three months time, I believe — he made a report,

and referred in his report to the fact that he had only had a

short time available to him. So I'm not so sure of just how

much accuracy is in the Wakely report, in view of the time he

had and the fact that he was not connected with the railroad

when the real action was going on.

HON. MR. BARRETT: Was there more than centre-line

survey?

MR. FRASER: Mr. Speaker, this railroad now, I believe, is

operational at around 1,500 miles of line into varying sections

of the coast and on into the interior and the north of the

province. In 1952 all it had was a railroad operating from

Squamish to Quesnel, a distance of some 300-odd miles. I

realize that it is a political issue, but I would suggest that

this railroad has brought untold benefits to the people of

British Columbia, not only in the interior of the north but

also at the coast. Ask any businessman how much industry would

have been there that he could service if it had not been for

the expansion of the railroad.

I'm not clear, even after looking over these reports, just

how much money we are talking about here. There's one figure of

a deficit of $98 million, another operating loss of $40 million

and so on. In any case this is over a period — as the Premier

referred, if I recall — of 15 years, from 1957 to 1972.

Mr. Speaker, this government had an overrun of $103 million in the Department

of Human Resources in the first four months of operation of their budget. You

know, you want to smear people who try to do a good job; I think we'd better

face up to the facts that we have before us now — not only Human Resources,

[ Page

3305 ]

but also ICBC. We have a loss of $36 million, looking at

$100 million. How do they add up?

HON. P.F. YOUNG (Minister of Consumer Services): They didn't

try to bury it.

MR. FRASER . How do they add up? I suggest that they really add up to

a lot of money.

I might say that any money that has been put into this

railroad...whereas they have a loss, and they have nothing

to show for it. I refer to Human Resources and ICBC. There is

something to show for the investment and loss in the operation

of the BCR — they have track of 1,500-odd miles built and owned

by the Province of British Columbia. You can go and look at it

today if you wish. It's there. The money wasn't spent and

nothing accomplished. Don't try to give us that guff. You can

certainly find that out any time.

Before I sit down, Mr. Speaker, I'd like to mention a little

about the existing operation of that railroad, about which I've

talked many times, and about which I'm still quite concerned. I

really don't know who's operating the railroad, and I want to

tell you on behalf of their many thousands of employees, I

don't think they know either.

The morale is not good on the railroad. I've said this

before. I repeat: it is still the case. I imagine the cause of

it is because of senior management leaving this railroad. And

when I refer to senior management, I particularly think of Mr.

Trask, the general manager. I understand that he doesn't want

to talk, and I'm not going to say why. But I think we should

ask ourselves questions: where is he, and why has he gone? He

worked through the system of that railroad from an office boy

to the general manager, and was probably one of the best men we

ever had in that organization. Mr. Wakeley, the chief engineer,

has gone. The thing that is concerning the people whom that

line services is the fact that they don't know who is running

that railroad. They are very concerned.

In other words, have these people been replaced? Are they

going to be replaced? When are they going to be replaced? It is

of grave concern to the people who rely on that railroad, which

is their lifeline to the world markets. If the railroad keeps

on operating on its own, which it seems to, there are going to

be difficulties ahead.

I want to just mention one thing in closing. The Premier and

president of the railroad made a great deal about derailments.

Well, I'll tell you an example of derailments and mismanagement

on that line right today. The railroad is recovering 31 log

cars that went off the line in a derailment in the area of

Kelly Lake below Clinton, some two and a half months ago.

It's my information that they called the tender to recover these 31 cars loaded

with logs. The bidder came in at $98,000 for this job. The supervision of the

railroad, rather than do that, decided they'd take the logs out themselves.

To this day, I think they're working there, Mr. Speaker. This is what's going

on on this line, and this concerns the employees. Instead of lifting these 31

loaded log cars by a crane and putting them on the tracks back to the coast,

they are building a road down through a valley, and hauling the logs and the

cars, then putting them on the track.

The point I'm trying to make is: where is the management in

that railroad when these sort of things are going on? There's

no wonder that the railroad can't make money when these kind of

management decisions are being made.

We will ever know what that derailment will finally cost?

I'm sure that the executive vice-president doesn't even know

anything about it going on, but I tell you, the citizens of the

interior know when there's difficulty with that railway, and

they don't like to see these things happen.

I'd just like to say that we're all proud of the BCR and we

were very upset last Friday when the Premier, as president, got

up and tried to make political hay out of this railway, which

is a vital source of transportation to thousands of people in

the interior of the province. I don't think the lower mainland

really understands that without the railway there wouldn't be

any interior British Columbia today.

He's changed audits and that, and that's his right, but he's

also changed the guidelines for the auditors, changed the

guidelines for the types of roadbeds to be built, and the type

of track to be laid. Certainly all these decisions cost a lot

of money. I would remind you, in closing, that there will be

upgrading going on on that railway long after this president

and Premier is gone, as it is going on with the CNR and CPR

today throughout all their sections in the Province of British

Columbia.

MR. R.T. CUMMINGS (Vancouver–Little Mountain): I am pleased

to rise to support Bill 27, the B.C. Railway construction loan

Act. I felt a great shock when I realized that there is so much

more money required for this railway.

We have to pass judgment on the railway's sordid past. The

comptroller-general found little or no internal audit. There

was no check on millions of dollars spent on construction. The

CPR was built over 100 years with better bookkeeping and

engineering practice. I am deeply shocked that chartered

accountants wanted no records, civil engineers wanted no

records, surveyors wanted no records, lawyers wanted no

records, experienced businessmen should and would take

part in

building of a railway or anything. It will prove very dangerous

to reputations. It was a form of cost plus — plus begging to

the president of the railway.

No wonder W.A.C. Bennett coined the phrase "What is cheaper

than free, my friends?" Friends of

[ Page 3306 ]

the Social Credit Party. Now you know why they compared him

to Duplessis of Quebec.

J.S. Broadbent, vice-president, said he surveyed the route

by helicopter personally. I can only guess the fairline profile

was done probably after clearing. This procedure would be

absolutely useless without cross-sectioning to determine

quantities of soil to be moved, and a mass-haul chart to

determine where the materials should be placed. This is

elementary engineering.

I wonder why they wanted no records or plans? Why would

civil engineers do this? They were trained and educated to

build railways and roads the cheapest way possible. Why would

they do this? Why would a contractor bid on such a job unless

he had an understanding? Maybe this type of construction should

be called blank cheque.

Now you know why the former Premier believed in the mushroom

theory of government: keep the people in the dark and give them

lots of manure.

A survey from the air would not determine the type of soil.

For example, gravel is much in demand in the north and

sometimes in the construction of a railway the road should be

routed, if possible, to hit a large deposit of gravel, This

would determine the quality and the cost of your roadbed.

Again, I can only stress to you the question: why would

responsible contractors and engineers enter into such a

business arrangement?

If a survey is done from the air, you cannot determine the

size of a culvert, or the size of the watershed this culvert is

required for. This is probably the most important thing in

construction of a railway or a road: that the water can pass

through without destroying the roadbed. You just can't do this

from the air; you have to reconnoiter the whole area to see how

this is done. The type of footings the culvert should be placed

in: sometimes it is necessary, with clay, that you have to take

the clay out and put gravel in so the culvert won't break and

the water destroy the road. Failure of proper installation of

culverts will result in washouts, derailments and, later, costs

beyond belief — years of re-grading and ballasting of this

track.

The constant nagging thought that I have is: why should

millions of dollars have been wasted by the former government?

I cannot hold the contractors on these projects completely

innocent. They should have known it was wrong to build a

railway like this — or steal candy from kids. It will prove

dangerous to their reputations, if they have any left.

There could be no estimation of quantity without preliminary cross-sectioning.

You have got to know where the ground was before you can determine what was

moved. Without cross-sectioning, which the railroad engineering management failed

to do, nobody could figure out the true yardage. Why this was done only Mr.

W.A.C. Bennett, the former Premier, knows. This fact alone should make all responsible

people shudder at such engineering practice.

Mr. Bennett allowed too many people near the open till. The

president of the railway, which he was, condoned it and hid it.

He alone knows why he did this. Mr. Speaker, engineering

reports have shown culverts were placed without collars to

connect the sections. Mr. Speaker, there was no supervision at

the installation of these culverts; probably the most important

part of the construction was left unsupervised. For what

reason? Why? Hundreds of washouts and derailments have been

caused by this, and millions of dollars will be wasted.

Mr. Speaker, I have asked constantly through my speech: why? The only conclusion

I can come to was that it was a Social Credit pork barrel, done with the knowledge

of W.A.C. Bennett, who was not a financial genius or a wizard, but guilty of

gross stupidity or worse. I would like to suggest to the government that a royal

commission or a public inquiry into this scandal be made. For over 20 years

that government was in power managing that railway.

MR. D.A. ANDERSON (Victoria): Mr. Speaker, the bill we have

before us is one to increase substantially the borrowing of the

B.C. Railway to make sure that cost overruns of past

administrations and past years are met. It was introduced by

the Premier last week, and in that speech of his he gave a

great number of facts about the previous administration of the

railroad and the present administration of the railroad, facts

which were obtained by way of outside specialists and outside

auditors — people like Swan Wooster and Price Waterhouse —

looking into the previous years' activities. It was impressive

material. I think that the auditing done by Price Waterhouse

has only reinforced the need to have a proper auditor-general

for the province. I suggest that had there been a proper

auditor-general, the problems might not have arisen as they

did.

One matter I would like to deal with right away, Mr.

Speaker, is the question of losses. I listened with interest to

the previous speaker. I was surprised that so few of his party

were in the House. There were a few of us, but we are both

here. But I was surprised that so few were here for what is

such a major matter in terms of provincial development in

northern British Columbia. I was particularly surprised that

the Leader of the Opposition (Mr. Bennett) was not here. He has

spoken out about an almost million-dollar profit. Apparently

that did not take place in the last year of Social Credit. It

turned out to be a more-than-$8-million loss. He talked about

the resignation of the auditors being forced because they

refused to cook the books, and it turns out that indeed the

books were cooked — but previous to the

[ Page 3307 ]

new administration. He talked about political patronage.

That is something about which there is apparently a great deal

more to be said about the last 20 years rather than the last

three.

There is one thing I would like to make clear at this time.

That is that there are really two different issues at stake

here. One is the question of overruns. One is the extra costs.

I think we can all complain about overruns, be they from this

government or the previous one. I think we can total them up,

if you want, but I don't think it is a particularly profitable

exercise. This government has had overruns — ICBC had $3.4

million; B.C. Ferries, $25 million; the overrun of the Human

Resources department of $103 million; and there were overruns,

of course, in the B.C. Rail which were outlined by the Premier.

I think we have to put that aside. We can accept the fact these

overruns have led to the bill and the need for more money, but

we must put it aside when we start looking at such things as

why the overruns were caused.

I don't think that the provincial good is really well served

in attempting to draw comparisons which are not valid.

Certainly there have been overruns which have occurred, but I

wonder whether the overruns of the present administration (and

certainly I have been here criticizing them fairly roundly over

the years) have been caused by instructions given to auditors,

as was done in the case of the B.C. Railway. I wonder whether

their overruns have been caused by refusal to follow recognized

engineering or accounting practices. I think we will deal with

the individual overruns of the various departments — the

Minister of Transport and Communications (Hon. Mr. Strachan'

s) department and other ones — on the basis of what caused them.

But I think we should look at what caused the overruns in the

B.C. Rail and not simply say that because there are overruns

with the present government and there were overruns with the

previous government, therefore they are all the same, lump them

together, it is the pot calling the kettle black, ignore them

because they are all much the same thing. It is not the same

thing.

Interjection.

MR. D.A. ANDERSON: B.C. Hydro is another one, of course.

HON. MR. BARRETT: We have not hidden any information.

MR. G.B. GARDOM (Vancouver–Point Grey): Well, you haven't

made much available.

MR. D.A. ANDERSON: The Premier has interrupted and said he

is not hiding anything. I think that is a matter to be brought

up at this time, Mr. Speaker. The fact is that it is the way these overruns

occurred and how they occurred, as outlined by the Premier,

which is the most worrying aspect of this whole matter.

We know that overruns occur. This government has

had them, every provincial government has them and the federal

government has plenty of them, too. We know this government is

not the first; we know the previous government was not the

first. They do occur and they should be legitimately criticized

by the opposition on the strength of what they are. But when

you find overruns caused by deliberate practices which are

clearly wrong, you have something a great deal deeper which

you've got to dig into.

I was surprised, because I thought that the previous

administration's boasting about B.C. Rail would at least have

suggested to them that the Leader of the Opposition (Mr.

Bennett) should at least be present when his critic was

commenting on this.

He spoke to the press last Friday and said very little. But

there are matters here which are tremendously important in that

the name Gunderson and the name Bennett Sr. have been

introduced into the record; instructions by directors were

given; lawsuits have arisen. Of course, we can't go into the

actual lawsuits. Lawsuits have arisen and Mr. Broadbent is now

engaged in a lawsuit where the provincial government has

undertaken to pay his expenses in view of the fact that he was

acting under instructions. So there is a very, very interesting

and unsavory aspect to this aspect of the case, which I think

we should go into.

Mr. Speaker, the documents that the Premier tabled indicated

that the B.C. Rail has been badly run. That in itself is

important. The public has a right to expect that the agencies

of government will operate efficiently. This applies to this

railway as well as other government services. But it appears

that British Columbians, in addition to straight cost overruns,

have been victims of a deliberate attempt to hide both the true

costs and the financial mismanagement which took place in the

building of the northern extension of the B.C. Rail.

In tabling this year's report of the railway, the Premier

pointed out at some length that the railroad was using new

accounting techniques as recommended by Mr. Minty, the

comptroller-general of the government, who, by the way, served

the previous government in that capacity for many years. In

fact, at the present time, the new accounting procedures, which

were pooh-poohed by the previous speaker, are essentially the

accounting procedures which the previous government said they

were following all along, said it on their audited statements

and, in fact, were not following all along.

I listened with astonishment to his statement in that

regard. Let me read to you, Mr. Speaker, from

[ Page 3308 ]

the Pacific Great Eastern Railway Co. statement of

consolidated income, 1969, auditor's report — very brief.

"Report by Buttar and Chiene, chartered accountants,

Vancouver, B.C., upon the accounts of the PGE Co. as of

December 31, 1968.

"We have examined the balance sheet of the Pacific Great

Eastern Railway Co. as of December 31, 1968, and the statement

of the consolidated income for the year ending on that date and

have received all the information and explanations required by

us. The statements for the current year are prepared in

conformity with the uniform classification of accounts

prescribed by the Board of Transport Commissioners for

Canada."

HON. MR. BARRETT: Not true.

MR. D.A. ANDERSON: That was not so. 1970 this exact same

statement occurs; I have it in my hand. In 1972, the same

thing; 1973, essentially the same thing: "The statements are

prepared in conformity with the uniform classification of

accounts prescribed by the Board of Transport Commissioners for

Canada."

We have statement after statement, year after year which we

were forced to accept because there was no other real way of

getting at Crown corporations, even through the public accounts

committee, even much later. At least there is some improvement

there. We accepted those and they turned out to be false

statements. That is a pretty shattering thing when you think

about it, Mr. Speaker: audited statements put forward by a

Crown corporation year after year — falsely put forward

inasmuch as they did not correspond with the criteria that

opposition Members of that time could accept on the grounds

that it applied to other railroads in Canada. Therefore we

assumed that there was reasonable hope that the present B.C.

Rail or the previous Pacific Great Eastern was being audited

properly. It did not occur. That is a major reason why a firm

of chartered accountants has been suspended and why we're in

the bind we're in today.

The former Premier constantly rejected opposition

allegations about accounting procedures, but it now appears

that the irregular procedures followed are revealed for all to

see. Once again, it's most curious that the Leader of the

Opposition is not here.

In addition to the terms in which the railway's financial statement was drawn

up, the Minty report which was tabled in this House some time ago was highly

critical of the internal auditing techniques of the railroad. As an example,

it suggested that immediate steps were necessary to "investigate important discrepancies

with recorded book inventory requirements." In other words, according to the

Minty report, there were substantial differences between the material the railroad

said it had and what it actually had in stock.

Mr. Speaker, I would only ask the Premier to tell us when he

closes this debate whether that and the other recommendations

of the Minty report have been implemented, because the Minty

report, although it came in some time ago, was a very detailed

one. I have it in my hand here now. It came in on April

5, 1973, and there was plenty of time for the government to

have taken steps.

The Minty report, External Audit,

section B says this:

"According to the comptroller, E.M. Gunderson restricted the

extent to which the external auditors could go in their

auditing, with a consequent limitation of fees charged."

Fees charged for auditing the whole of the B.C. Railway Co.

in 1973 are $324 million, yet the auditing figures are $4,100,

an absurd indication of how little external auditing was done.

That would just pay for a chartered accountant for a few days.

If he had any staff at all, he could do the whole thing in less

than a week with only that much money being provided. So it

shows how little was done in the way of external auditing.

The Minty report went on to say that for at least the past

10 years the auditors have not reported on internal cost

deficiencies in the company. The auditors did not obtain from

the company for their files a financial management certificate

covering inventories, payables, commitments, contingencies. The

auditors attended at physical inventory counts at North

Vancouver and at Squamish, but consider all other external

on-site auditing to be an internal audit function while

reporting that the company's level of internal auditing over

the past three years has been minimal and of little or no value

to them.

AN HON. MEMBER: Did they count the locomotives?

MR. D.A. ANDERSON: One wonders whether they counted the

locomotives.

The Minty report goes on in great detail, and I want the

Premier, when he speaks again in this debate, to indicate

precisely how many of those Minty report recommendations have

been implemented.

Mr. Speaker, I'd like to spend a moment on the Swan Wooster

engineering study, and once again urge the Premier to recognize

that these external studies indicate the need for an internal

auditor-general in the Province of British Columbia.

AN HON. MEMBER: Hear, hear!

MR. D.A. ANDERSON: The Minty report and

[ Page 3309 ]

later the Swan Wooster engineering study noted that serious

problems had developed in construction of the northern

extension of the railroad as a result of a curious engineering

practice in the BCR. In layman's terms, what happened was this:

the railway simply didn't carry out engineering studies prior

to commencing construction; they proceeded at the same time.

Instead, the engineering work went on at the same time as

construction, and a

summary of the Swan Wooster Report

indicates that this was in sharp contrast with normal

practice.

The result was that the railway itself had no way, because

they had no engineering work done, of comparing the different

bids. They couldn't compare which tenders should be accepted.

They couldn't tell which of the tenders actually reflected the

amount of work being done. Nor could the bidders because they

had no better engineering material than did the railroad. So

the result was, in a bewildering number of cases, that enormous

cost overruns occurred and had to be covered. In considering

this, it is important to remember that, according to the Swan

Wooster report, these overruns were not due to faults of the

contractors.

Here's the Swan Wooster Report, Mr. Speaker, and on page 42

it says: "The apparent overruns are in no way due to poor

construction practices or excessive payments to the

contractors." So it appears that they were for something else

again, and let's see what they were.

It's not just that the Dease Lake extension has cost us more

money, as is the case in some of the overruns of the previous

government and some of the overruns of the present government.

It's not just the case of costing more money. The previous

government, in fact, made a deliberate effort to conceal and

mislead the people of this province into thinking the costs

would be less than they ultimately turned out to be. Now under

certain circumstances you could blame the railroad people for

these problems, but I doubt whether anybody in the province

would accept that at the present time. The workers in BCR

attempted to do a conscientious job, but they were unable to

because the board of directors of the railway and former

Premier interfered.

Now I would ask you, Mr. Speaker, to consider the question

as to why, in the case of the extension, did the previous

government and the previous Premier act this way. With respect

to the extension, I think the answer is obvious. The history of

the former Premier as financial manager of this province is a

tale of attempting to conceal the true financial state of the

province from the people in the province.

We all remember the gala performance on Lake Okanagan where

a flaming arrow was shot at a barge, a barge of bonds. It went

out, and I believe an RCMP constable provided a lighter.

We had staggering per capita debt. We still have staggering per capita debt,

yet the impression was given that somehow by transferring these to contingent

liabilities, there was no debt at all. A straight attempt to conceal in this

respect.

Interjection.

MR. D.A. ANDERSON: The Member for South Peace River (Mr.

Phillips) says that I've never been on the BCR. Yes, I have,

Mr. Member. Yes, I have and also the PGE before it.

In this case, Mr. Speaker, you're going to have to look for

a moment or two about the more controversial and surprising

contracts which were issued in the summer of 1972. At that time

the former Premier, at a press conference in the north,

announced a $250 million deal for coal. He had on the stage the

man who is interrupting me, Don Phillips, Socred candidate and....

MR. SPEAKER: Are you complaining about now or then?

(Laughter.)

MR. D.A. ANDERSON: He was there, Mr. Speaker, and he was

interrupted by applause 15 times in the hour and a half that

the Member and the former Premier were there.

HON. MR. BARRETT: Clancy was at work.

MR. D.A. ANDERSON: But, of course, four times that applause

was started by the former Premier.

HON. MR. BARRETT: Old Clancy used to stand back and yell,

"Fire!" (Laughter.)

MR. D.A. ANDERSON: So we have the Peace coal contract,

talking about Sukunka coal. Now what happened to that? It was

again political flim-flammery, designed to get....

Interjections.

MR. D.A. ANDERSON: It was political flim-flammery at the

time of an election, at a time when it was clear from the

results of August 30....

Interjections.

MR. D.A. ANDERSON: I believe the man who has the slimmest

majority in this House is not commenting on how many votes....

MR. SPEAKER: Order! Order, please. The Hon. Member will be

able to answer afterwards.

MR. D.A. ANDERSON: Mr. Speaker, the railroad was an area for

boasting, and there was no desire by

[ Page 3310 ]

the former Premier to have the true cost revealed.

Now there are benefits, as was outlined by the Member for

Cariboo (Mr. Fraser). There are benefits from BCR, no question

about it. But when it comes to cost, there is certainly room

for serious debate, and far more than we have had so far from

the defenders of the former administration.

HON. MR. BARRETT: Hear, hear!

MR. D.A. ANDERSON: I think, Mr. Speaker, that we have here

what is essentially the tip of an iceberg — more material will

be revealed in an area upon which, obviously, I cannot comment

without incurring your wrath, namely the fact of the lawsuit. I

can't touch that. More material will come up from that about

the operations of the BCR, one way or another.

There are some interesting observations in the Swan Wooster

report. I think that it is worthwhile to have a look at some of

the pages of that report.

This deals with contracts and unit work. It is page 16. Swan

Wooster said:

"Inaccurate quantities used for tendering give the bidders an opportunity for bid loading. This is

when the contractor guesses that the owner has inaccurate

quantities on the bid sheet, and bids low on high-volume units

and high on low-volume units, hoping that the low-volume units

will far outrun the estimated amount. This may result in him

being awarded the contract as low bidder."

Let's not forget

that every single one of these contracts was given to the low

bidder. They had no choice because, Mr. Speaker, they had

nothing to compare the bids against, so they simply handed them

out to the low bidder.

"So when the final contract quantities are known, and the low-volume units are found to have actually

increased, it becomes apparent that the contractor has

benefited from unearned profit."

In other words, Mr. Speaker, by deliberately bidding low —

and let me remind you, every one of those bids accepted were

the low bids — the bidder can somehow make up more than he

would have made had the high bid been accepted and the extra

margin been given there. The margin spread of the overrun is

substantially higher for the low bidder, and the result is that

there is the opportunity for fraud, which the Swan Wooster

report had made clear could have occurred in these areas.

Until such time as we have looked into this even further, we

are not really going to find out whether that fraud occurred in

this area of bid loading.

You see, Mr. Speaker, in terms of bid loading, according to the report here,

on page 17, when the final payment is made it is based upon the number of units

of work actually performed, so the contractor, then, has the opportunity of

loading his bid. This may well have happened in a number of these cases.

The general council of the railway prepared a paper on the

Fort Nelson and Dease Lake extension, and in every instance in

that report it indicates that the low bidder was chosen.

I ask the government to look into this matter: would it have

been more efficient in these bids to have chosen the higher

bidder who, at least, had some better idea of what they were up

against than those low bidders who consistently went over? I

think, had higher bidders been accepted, in actual fact there

would have been less cost to the public and there would have

been a more efficient utilization of equipment in the area.

Now this is where I will agree with the Hon. Member for

Vancouver–Little Mountain (Mr. Cummings). We need a royal

commission to look into this whole matter of bidding. The

opportunity for fraud was enormous in those BCR bids in

mid-1972. The reason being that the government didn't know what

they were up against. This was obviously known to the

contractors. They clearly knew how little the government knew,

and the opportunity was there for substantial fraud and

misrepresentation. In no way is it suggested that these people

have deliberately gone out and done that, but I believe that

when the government leaves open the possibility in that way,

the government also has a duty to make sure that the bidders

are protected, the contractors are protected and that the whole

matter be looked into by way of royal commission.

The former fund-raiser for the Social Credit Party, Mr.

Gunderson, director of the railroad, has come forward with

statements critical of the analysis given by the Premier, and

critical of the analysis given by Price Waterhouse. I think

that a royal commission would provide him with the opportunity

of getting before them on oath, under cross-examination, and

explaining precisely what did go on and what did not go on.

It is easy for him to come up and say: "Oh, there was

nothing to it; it's just a different accounting procedure.

Anybody can devise a different accounting procedure." But until

a royal commission is established, we are not going to get to

the bottom of that. I don't think that there was necessarily

any connection between Mr. Gunderson's efforts on behalf of the

Social Credit Party and his position in the railroad, but that

is again something that could be looked into by way of a royal

commission.

Mr. Speaker, the next point I would like to touch on is a

more general one. That is that the experience of 1972 makes it

perfectly clear what happens when companies are owned by

governments and they start operating them o