1976 Legislative Session: 1st Session, 31st 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, APRIL 27, 1976

Night Sitting

[ Page

1155 ]

CONTENTS

Routine proceedings

British Columbia Railway Company Construction Loan Amendment Act, 1976 (Bill 5) Committee stage.

section 1.

Mr. Lauk — 1155

Hon. Mr. Wolfe — 1155

Mr. King — 1157

Mr. Lloyd — 1157

Mr. Macdonald — 1158

Mr. Chabot — 1159

Mr. King — 1160

Mr. Chabot — 1163

Mr. King — 1163

Mr. Lauk — 1164

Mr. Wallace — 1166

Mr. Stupich — 1167

Mr. Chabot — 1168

Mr. King — 1170

Report and third reading — 1172

Committee of Supply: Department of Finance estimates. On vote 61.

Mr. Stupich — 1172

Hon. Mr. Wolfe — 1174

Mr. Gibson — 1174

Hon. Mr. Wolfe — 1174

Mr. Gibson — 1176

Mr. Lloyd — 1176

Mr. Rogers — 1177

Mr. Nicolson — 1177

Mr. Stupich — 1178

Hon. Mr. Wolfe — 1178

Mr. Stupich — 1179

Mr. Gibson — 1179

Appendix — 1180

TUESDAY, APRIL 27, 1976

The House met at 8:30 p.m.

Orders of the day.

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, by leave I would be pleased to move into committee on Bill 5.

Leave granted.

BRITISH COLUMBIA RAILWAY COMPANY

CONSTRUCTION LOAN AMENDMENT ACT, 1976

The House in committee; Mr. Schroeder in the chair.

section 1.

MR. G.V. LAUK (Vancouver Centre): Mr. Chairman, there was an

opportunity for the Minister of Finance to explain the details of his

bill in second reading, when debate on principle was underway. With

respect, I say that the Minister of Finance failed to do so. I wonder

if the hon. minister has had an opportunity to discuss the matter with

the recently deposed director sitting behind him, or the Minister of

Economic Development (Hon. Mr. Phillips). When an extension for

borrowing power is requested from the House, it seems to me that the

House should know some of the details with respect to the expenditures

that are expected for the upgrading of the Fort Nelson line, for

example, and for the Dease Lake extension.

I'd be very disappointed indeed, as I am sure many British

Columbians would be, if those programmes that were initiated by the NDP

administration would be continued. And I mean that in this sense, Mr.

Chairman, through you to the minister: we did undertake a programme of

rehabilitating the Fort Nelson line, a very expensive proposition. But

the history of derailments which caused injury to property, and to the

person, that hampered that line for so many years has got to be forever

put to rest. The only way to do that is accepting the Swan Wooster

report and the other engineering studies completed in the past three

years, and continuing the upgrading and maintenance of the Fort Nelson

line.

Perhaps some figures could be suggested with respect to that — what

kind of a programme the corporation intends — because, yes, we voted to

increase the borrowing power of the railway, but I would hate to think

that that borrowing power, that money may be borrowed, will be used to

do something totally different than is expected. So we should know the

intentions of the corporation before proceeding — at least, in the

committee stage.

HON. E.M. WOLFE (Minister of Finance): Mr. Chairman, as the

member is aware, we debated this question of the loan-extension bill

extensively under second reading, under principle. In answer to a

specific point he raises with regard to the upgrading of the Fort

Nelson line, I am given to understand that an estimate of $7 million

each year has been provided for upgrading this line in the next three

or four years, and that the ongoing authority to borrow also has to

cover equipment purchases and manufacture of cars, this type of thing,

and, of course, the upgrading of the present system in other respects

as well as the Dease Lake extension.

The authority to borrow by no means indicates our intention, or the

railway's intention, to use the entire authority, but it is within, I

think, $31 million of its authority at the moment, and having used

something like $188 million to $190 million of this borrowing authority

in the past years, has certainly indicated that a further $200 million

of borrowing would be required in the coming year.

MR. LAUK: I thank the hon. minister. With respect to these

expenditures, certainly I think that for safety's sake during the

operations of the railway in the next year this money will be

necessary. I can foresee, Mr. Chairman, that the railway will have to

have a lot more money. I wonder if the minister would be prepared to

comment on the programme, if any, of refinancing the railway and

bringing it on a better footing, because the interest payments that the

railway is making currently has brought it to the point of no return,

If their revenues are going to be eaten up annually by these

interest payments, what financial plan is there for that railway so we

can take it out of this debt burden — a problem that we didn't turn our

minds to, in the sense that we didn't have a programme implemented

during our administration? But certainly it was our intention to bring

about such a programme this year. Is the current administration

contemplating a refinancing of the railway?

HON. MR. WOLFE: Mr. Chairman, we are reviewing this

possibility or other alternatives to the present method of finance, but

at this moment have no alternative to what we are now indicating.

MR. LAUK: Would the Minister of Finance and the government

accept the suggestion that the public accounts and economic affairs

committee interview the principals of the railway, together with the

Department of Finance staff, and perhaps assist the hon. minister and

the officials of the railway in developing such a programme?

HON. MR. WOLFE: Well, Mr. Chairman, we'll take this into consideration and, further, I might also

[ Page 1156 ]

indicate to the member that more detailed questions

covering the railway could be asked of the Minister of Economic

Development (Hon. Mr. Phillips) during his estimates.

MR. LAUK: I thank the hon. minister and I certainly intend to

do that. I'll take advantage of his invitation on the Minister of

Economic Development's behalf. I'm sure that he's accumulated his own

files currently, and he will be able to answer some of the questions.

AN HON. MEMBER: He needs help.

MR. LAUK: I understand he is in my basement now with a flashlight. He wants to beat the provincial archivist. (Laughter.)

Mr. Chairman, I know this is not a committee to examine the Lauk

papers, but the other question that I would ask the minister to discuss

for the moment is the Dease Lake extension.

The government has come under heavy criticism since January for its

not taking advantage of the northwest rail agreement with the federal

government. The total figure in terms of the Dease Lake extension, with

some opportunity for more federal contributions, was $117 million. It

seems to me that the railway is in dire need for this. The money has

already been spent to a large extent and the federal government had

designed a payment programme so the railway could receive some of this

money in the past fiscal year and in the current fiscal year. It seems

to me it would be a great advantage to us.

Now let us not quibble, I say, Mr. Chairman, with the details of

this agreement. If the federal government will not accept reasonable

terms that you may put forward, well, let's hear about that and let's

go to town on the federal government. But the people of British

Columbia particularly who are affected by the economic life-blood of

this railroad are most interested in seeing the Dease Lake extension

completed. They are also most interested in seeing that the BCR is more

financially viable.

Could the minister indicate whether negotiations are pending,

whether they are about to start, if they are not underway? What are the

problems? Perhaps the opposition could be of some assistance.

HON. MR. WOLFE: Now, Mr. Chairman, this matter of the railway

agreement, of course, is being administered or handled by the Minister

of Economic Development (Hon. Mr. Phillips) and his department. I might

say that we are equally concerned and anxious to resolve an agreement

with the national government covering this subject. It is very

important.

I think the member who just spoke is aware that there were

limitations placed on their proposed agreement — I forget the end

figure proposed, except that they did place the top limit of the extent

to which the national government would participate in this railway

agreement. Also, I am given to understand that although the former

government intended to expedite a quick solution and a quick agreement,

it would have been at considerable expense and risk to the long-term

effects of this agreement, and also that the former ministers involved

were advised against — strongly advised against — pursuing this

agreement in too expeditious a manner because it is a very difficult

matter to negotiate, and you can be sure this government is anxious to

pursue it.

MR. LAUK: That is, of course, a legitimate point of

difference between this side of the House and the government. Our point

of view was not only the British Columbia Railway, but we wanted to see

jobs and economic development more rapidly occurring in the northwest.

It has been promised by your administration, by the previous Social

Credit administration and by ours. We were not happy with the slow pace

at which things were developing, particularly in the throes of a

world-wide recession. It seemed to us that it would have been

appropriate, Mr. Chairman, for this railway agreement to be proceeded

with. There were details that had to be worked out.

I don't agree, however, that the long-term effects of this agreement

would negatively affect the total responsibility of government,

together with all of its Crown corporations. I also think that this

current government is really seriously underestimating the value of

originating revenues on the BCR line as a result of this agreement.

Remember the agreement called for the carrying of copper from the

Stikine and we would get originating revenues from that source. There

was also the possibility of originating revenues in the northeast from

those lines.

It seems to me appropriate, Mr. Chairman, that that has been

underestimated by the government. But let's not worry too much about

some of those things. What I am really concerned about is: is the

government proceeding with negotiations with the federal government?

What is the federal government's point of view? Do you have changes you

want in the agreement or are you abandoning the agreement altogether?

It seems to me that this is $117 million. Maybe it should be more.

There has been some delay, so maybe there should be more. What is the

position of the government? Are you going to negotiate with the federal

government and get some of this money?

HON. MR. WOLFE: Mr. Chairman, yes, we are going to negotiate this. The matter is being pursued.

[ Page 1157 ]

MR. NICOLSON: Mr. Chairman, we're discussing borrowing here.

The matter was raised during second reading that if you were to go to

any financial house and ask for a sum of money 1/1000th of this amount,

you would have to file a financial prospectus. There isn't one before

us. Is a prospectus being prepared?

Interjections.

MR. NICOLSON: There is no prospectus being prepared,

AN HON. MEMBER: For what — to borrow money? Check with your lawyers. No, better than that, check with Gibson.

MR. NICOLSON: Well, how serious is this problem then, and how urgent is it?

HON. MR. WOLFE: Mr. Chairman, I might remind the member that

we are not borrowing this money; we are asking for the authority to

borrow it. The matters you refer to, of course, would be a matter of

requirements at the time we went to borrowing, particularly if we went

to public funds or this type of thing. This is just an authority to

borrow which, as you well know, does not require a prospectus.

MR. NICOLSON: Well, Mr. Chairman, I would assume that we are

extending the authority to borrow by $250 million, which is an enormous

sum, and the minister suggests that we are approaching the limit of the

current borrowing power. We are increasing this sum by a fantastic

percentage — I guess in excess of 30 per cent in one year, because it

was just extended a year ago — yet the minister is saying that there

are no plans to actually go forward and borrow at this time. It is not

being contemplated? Is that the case?

MR. W.S. KING (Leader of the Opposition): Mr. Chairman, I

notice one of the government backbenchers down there desperately trying

to catch the attention of the Chair. I am really happy to see that some

of the government backbenchers have come to life. I hope that the

Chairman keeps his eye on that member, because I'm sure he'll be up

again.

There are a number of questions I have for the minister with respect

to B.C. Rail. He indicated the other day — and I appreciate his answer

— that the bulk of the money that is contemplated will be borrowed

would be for the northern development on the railway. I wonder if the

minister could give us some indication of what the position of the

railcar shop at Squamish is with respect to production at the moment

and with respect to the financial position. I wonder if he could give

us some information on what extent, if any, the BCR is presently

involved in rental or lease agreements with any of the American lines

or the car companies for the rental of rolling stock: namely, boxcars,

flatcars, gondolas and so on. I wonder what kind of lease agreements

are presently underway, what the tenure of those leases are, and

whether or not any of the borrowing power to be authorized to the

railway — whether any of the funds necessary — would be used for these

purposes, either for the car shop or for car rental or

lease-to-purchase agreements.

HON. MR. WOLFE: Mr. Chairman, with respect, I do think that

type of question might more easily be asked of the minister as a

director of the B.C. Railway. But I will refer the question to him with

regard to whether the borrowing is intended to accommodate the lease of

cars in their forward plans. Is that the question you have?

MR. KING: No, there are two separate questions, through you,

Mr. Chairman. One was with respect to lease arrangements for rolling

stock from American car companies. The other question related to the

financial status of BCR's own car-construction shop at Squamish. I

would like some up-to-date data as to what the production capability of

that operation is at the moment, and perhaps some indication of what

their capital obligations are with respect to the physical plant at

Squamish. It may or may not be related to this particular bill; the

minister is quite right. But there are things that we don't know by a

two-line, one-section bill which simply authorizes an increase in

borrowing power to the tune of $250 million. We would just like a bit

more precise information as to the purposes that this money might be

directed towards.

MR. H.J. LLOYD (Fort George): Mr. Chairman, there are a

couple of points which I would like to set the record straight on.

First, on the BCR-CNR agreement, I believe the Minister of Economic

Development (Hon. Mr. Phillips) in the House the other evening

explained the ramifications of the agreement. The vice-president of the

railway himself was very much against signing this agreement — a

last-ditch effort by the former Premier to try and get his hands on

$117 million, when all it really would have resulted in was that the

CNR wouldn't have built their connection. They would have had running

rights over our railway, over the BCR. Certainly it would have been

completely inadvisable to sign that particular agreement at that time,

and I am very happy to see that it wasn't formalized but was held off.

Secondly, Mr. Chairman, in speaking in favour of this bill, I can

understand some of the opposition's concern on where the money is going

and how much of it is going there, but I think if you study the record

of construction of the previous Social Credit

[ Page 1158 ]

government, which I outlined in my maiden speech,

some 700 miles of railway were built. More railway was built than on

any other railway system in North America or, I daresay, possibly the

world.

Another point which the Member for Vancouver South stressed quite

often was the standard of railway construction. I think we are running

into a similar situation in the Forest Service over the last few years.

We're demanding highway construction to get our resources out and our

stumpage revenue has dropped off to nothing. If we are going to do the

same as the NDP has proposed over their term of office on railway

construction — going to a mainline construction standard right off the

bat — we will never build any more railway than they have, which is

practically nil. The construction methods that have been used are very

sensible. When you build a highway or a railway you always build a tote

road first; you always open the country up first. When you build a

light standard railway through you can haul your gravel back both ways.

You use a lighter rail and when the freight generation deserves the

extra-heavy traffic, you lift these lighter rails and take them up to

the end of the line.

MR. J.R. CHABOT (Columbia River): As an old railroader, I say that's true.

MR. LLOYD: Is that true, Jim?

MR. CHAIRMAN: Order, please.

MR. LLOYD: I think it's only common business sense to do

things the most economical way, but when you try to go firstclass on

dreams and philosophies instead of a practical, common-sense approach,

I think all you can expect is just planning and planning and planning.

Up in the part of the country I came from we like to see a little

action, not so much planning and not so much words.

They also spoke quite a bit about northwest development. Well, all

they did do was speak of it. They certainly didn't do anything to get

it on the road.

MR. NICOLSON: Get back to your sandbox.

MR. LLOYD: In fact, they discouraged northwest development;

they killed all the mining development that had been proposed for the

line. When you kill the bulk carries of a line, whether it's chips,

forest products or minerals, you also put the ordinary freight up — the

freight to the householders and to the taxpayers. The more bulk we can

carry over that line, even if we have to subsidize part of it, we

certainly open the country up and lower the overall freight rates for

everyone.

The former Premier made himself the laughing stock of North America

when he suggested they could possibly haul Alaskan oil down by tank

cars. My God, they couldn't even haul the forest products out of our

area, let alone talk about hauling oil from Alaska down. Someone

suggested they'd have to have enough tank cars to put them end to end

if they were going to do that, and I certainly agree with it.

I think that with the construction methods the former Social Credit

government used and the plans that are underfoot to get the development

moving again, all the opposition members can rest quite easily that the

additional buying will be well spent.

MR. A.B. MACDONALD (Vancouver East): Mr. Chairman, I didn't

intend to ask questions of the minister, but I am concerned that he

should listen to the words of the member for Fort George that have just

been spoken, because the Minister of Finance knows that when the

decision to make the Dease extension was made there was never a

decision made by businessmen or politicians or planners anywhere that

was more disastrous, in terms of its estimates of quantities of rock to

be moved.

HON. A.V. FRASER (Minister of Highways): The railroad doesn't go through the Dease tunnel!

MR. MACDONALD: Don't you know that you are now being sued for

deliberately underestimating the costs of the Dease extension, here in

the courts of B.C. at the present time? Do you not know — you people

who talk about us being inefficient in business methods — that the late

Social Credit government that was swept out of office in 1972 and

should have been swept out of office long before that canned that Dease

extension without even getting an agreement from the Indians with

reservations along the line?

SOME HON. MEMBERS: Oh, oh!

MR. MACDONALD: That's right! That was a disastrous mistake of

the Social Credit government. We came into office and we had to try to

negotiate a way through this impasse where we had a Social Credit

government of so-called businessmen who were so lacking in ordinary

business sense that they went ahead and built the railway before they

had an agreement with the Indians through whose lands the railway was

passing.

AN HON. MEMBER: Bulldozing tactics.

Interjection.

MR. MACDONALD: Sure you did!

Interjection.

MR. MACDONALD: And to extend the railway

[ Page 1159 ]

for political advantage. There was no estimate of

the costs, and the Minister of Finance knows that perfectly well. He

knows what he's facing now in terms of millions of dollars, maybe $200

million to finish that extension, and the costs are away over.

You people think you blundered on the Columbia River! Let me tell

you that the Dease extension of the BCR was one of the greatest

boondoggles of government wastage and playing politics with the

railways that this province has ever seen.

MR. CHABOT: Mr. Chairman, I'm not going to huff and puff like

the member for Vancouver East. He has the habit of doing that; he

wanders all over the place. He talks about highways, he talks about

hydro construction; he's never on the point. As long as he's huffing

and puffing, that's about all that's important as far as he's concerned.

Mr. Chairman, I'd like to relate my remarks to the remarks made by

the acting Leader of the Opposition, in which he brought up the matter

of the railcar plant at Squamish. You know, that's a shameful

experience. It's a blemish on the image of this province; it's a

blemish on the railway of this province of which I'm very proud. I'm

shocked and shamed that the acting leader of the opposition would have

the gall and the temerity to raise that issue tonight, because of the

dereliction of duty on the part of that government in putting this

railcar plant together.

I'll never forget the statements made by the government of the day

when the matter had been brought to fruition that we would establish a

railcar plant in British Columbia. The former socialist government of

this province had established a particular deadline in which the first

car would roll off the assembly line of this new plant in Squamish. It

was anticipated to cost $4.5 million at the outset. Would you believe

that the plant, beyond the period in which the Premier of this

province, boss No. 1 of the railway, the president of the railway, had

suggested it was going to cost $4.5 million to construct and that it

would be operational within a certain period of time...? Lo and behold,

that railcar plant did not become functional until two years after the

stipulated deadline in which the Premier, the president of the railway,

had suggested would take place.

The member for Vancouver East (Mr. Macdonald), the former

Attorney-General, who huffs and puffs when he stands in this House, has

the gall to mention the Columbia River Treaty — a passing reference to

the Columbia River Treaty. I know very well, Mr. Chairman, we're

talking about the B.C. Railway, but there is a reason from time to time

to make comparisons. Would you believe that the cost of construction of

that railcar plant was 90 per cent, in a two-year period, over its

projected cost?

There is a reason to compare, because the Columbia River Treaty had

an overrun. It took 10 years to construct the Columbia River Treaty,

and would you believe the overrun was 33-1/3 per cent? Very shocking —

3-1/3 per cent per year. Oh, but the railcar plant was substantially

greater — 45 per cent per year! And these people have the gall to

suggest that there were overruns on the Columbia River Treaty when they

had no idea what the railcar plant was going to cost in Squamish.

You know, if I were a socialist today in British Columbia....

MS. R. BROWN (Vancouver-Burrard): Heaven forbid!

MR. CHABOT: And heaven forbid! There is no black cloud over my constituency, I'll tell you that, madam member for Vancouver-Burrard.

MR. COCKE: Withdraw!

MR. CHABOT: But, really, I would never mention the Columbia

River Treaty if I were those people, when one looks at the kind of

overruns that were involved in the construction of the railcar plant in

Squamish — not only overruns, but the extreme shortage because of the

taxation measures which were imposed by that former government against

the B.C. Rail, and which brought retaliation against that railway by

the two major lines of this country, the CP and CN. They had no

alternative but to retaliate because of the extreme taxation measures

which they had imposed. No wonder there were hardships on those people

who were trying to get gainful employment along the railway and in the

forest industry, because there were no cars because this government had

no sympathy and had no consideration for the plight of those people

from the north.

No, Mr. Chairman, I'm shocked and dismayed that the leader of the

opposition, who is a former director of the BCR, and who knows a little

bit about railroads, having been a hoghead for the CPR for many years,

would stand in his place....

But I am not going to suggest that he doesn't understand railroading

as a functional thing. But I never forget, Mr. Chairman, when we are

talking about BCR, the shocking statement made by the former Minister

of Economic Development (Mr. Lauk), who for a short period of time was

a director of the BCR in which he made a certain projection of when

cars were first to roll off the BCR. He stood in this House and

suggested it would be about four months until the first car would roll,

off the assembly plant.

MR. LAUK: Wrong.

[ Page 1160 ]

MR. CHABOT: Three months.

MR. LAUK: Wrong.

MR. CHABOT: No, that's not wrong. The minister is trying to

distract at this time. But would you believe that the minister stood in

his place in this Legislature not too many months ago and corrected an

erroneous statement he had made to the House and to the members of this

House, based not on his knowledge as a director of the railway but

based on the newspaper

article he had read in the Vancouver Province ? For that reason, Mr. Chairman I have

never been noted to be extreme in my statements (laughter) or in my requests

in this House, but I had to be extreme when I listen to that minister who knew

nothing about railroading, who had no rights, really, on the basis of his experience,

to be a director of the railway. He stood in this House and on the basis of

a newspaper

article in the Vancouver Province suggested that he had to make a

correction as to when the first rail car was to roll off the assembly plant.

HON. P.L. McGEER (Minister of Education): He should have checked the

files in the basement.

MR. CHABOT: He made the suggestion that he should correct his statement

because he was quoting from a Vancouver Province article. Can you imagine the

director of a company quoting from a newspaper article? (Laughter.) Can you

imagine? Can you imagine?

MR. R.L. LOEWEN (Burnaby-Edmonds): I can't imagine him being a director

of the railway.

MR. CHAIRMAN: Order, please!

MR. CHABOT: No, neither can I, and I have stated that before.

Interjections.

MR. CHABOT: Mr. Chairman, but on the basis of a newspaper

article the minister — former minister, I should say, and a former

director as well — indicated to us that the first car had rolled off

the assembly plant. He was very proud indeed. He corrected his former

statement. It goes to show you the kind of understanding, the kind of

knowledge that took place and the kind of correlation that took place

in the railway.

At that particular time, Mr. Chairman, I suggested — I have never asked that

in the years that I have been in this assembly; I haven't been here that

long — that the minister, if he had that serious lack of knowledge of what took

place on the B.C. Railway, had no right to be a director. I suggested at the

time that he should resign. That's why tonight I am shocked and dismayed that

the Leader of the Opposition (Mr. King), a man who has some knowledge about

operations of a railway, would raise the issue — would raise the shameful issue

— of the financing and the operation of the rail car plant at Squamish and would

raise the matter of leasing cars in the United States when he knows full well,

if he wants to be honest, that the rail car plant is not in the position today,

even, to look after the requirements of the BCR.

MR. KING: Mr. Chairman, we're getting into an interesting railroad

discussion. I want to assure the member for Columbia River that I do, indeed,

want to be honest. The member for Columbia River is quite wrong when he says

I used to be a hoghead. I still am.

Interjection.

MR. KING: That's a traditional term to describe a locomotive

engineer, a proud profession, a profession which I am proud to be a

member of.

SOME HON. MEMBERS: Hear, hear!

MR. KING: I want to assure that member, too, Mr. Chairman, that I still

remember the rules of the railway and the

definitions of the various functions

that employees perform. I know that the member for Columbia River was a dispatcher

on the railway for any years. To prove the point that I am still conversant with

definitions and the railway lingo, I am going to provide the House with the

definition of train dispatcher. (Laughter.)

AN HON. MEMBER: Shoefly! Shoefly!

MR. KING: That was "a combination of arms and legs coupled

together with or without brains and displaying a sun visor."

(Laughter.) That is the definition of a dispatcher, Mr. Chairman. He is

the guy that casts the running crews off into far-flung musty sidings

and maketh them tarry there for untold hours simply because he can't

correlate leaks. (Laughter.)

MR. CHAIRMAN: Now back to

section 1.

MR. KING: Seriously, Mr. Chairman, talking bout the BCR, I

want to remind the member for Fort George (Mr. Lloyd), who is concerned

about the eight of steel that is utilized on new trackage and he normal

gradient standard that is employed on new railway line, that I

indicated earlier in this House

[ Page 1161 ]

that the entire BCR is indeed a resource railway.

Perhaps that is one of the problems. It is certainly one of the

problems that relates heavily to industrial relations on that railway.

Slow trackage, light steel involve long hours between terminals

located many miles apart, and therein lies one of the basic industrial

relations problems which this government is facing and the railway is

facing. It's not an easy problem to grapple with, I appreciate that,

but it's simplistic and incorrect to suggest that it's economically

sound to introduce light steel which can then be moved up to a further

point as construction takes place. That's just not sound, economic

railway planning. I think the trend in all railways, both resource

railways and the standard North American railway, which both our

transcontinental lines are, indicates that they are going to heavier

steel, not only to accommodate heavier tonnage, but to accommodate a

longer lifespan.

They are also going to welded rail of one-half mile length. If the

member for Fort George (Mr. Lloyd) and the member for Columbia River

(Mr. Chabot) are interested in doing a bit of research on the BCR, they

will find that the engineering report commissioned by our government

when we were in in 1972, utilizing railway personnel from both the

transcontinental lines — well-qualified engineers — using independent

engineering firms, indicated that the BCR was in abysmal shape. The

roadbed had not been properly attended to. It was not even of adequate

standard to service the resource line that it is, and there was indeed

a strong recommendation that that railway be brought up to North

American railway standards.

Similarly, if the members want to dig a little bit deeper, it's true

that the BCR has a microwave system for dispatching and running

traffic; nevertheless, an investigation by the two senior rules

representatives of the CNR and CP Rail indicated great deficiencies in

the safety provisions on that railway. Indeed, during the tenure of our

government in office, we came to grips with many of those safety

problems as recommended by the rules instructors for the two national

railways in Canada.

So these are problems that are common. There's nothing political in

that as far as I am concerned. I don't necessarily condemn the former

Social Credit government, although I think they were partially guilty

of failing to appropriate sufficient funds for upgrading of the railway

physical plant. I think that's true, and it was indicated and supported

by the engineering report we commissioned on it. However, we all want

to see the railway running well, whether we're in opposition or whether

we're in government. These things are technical matters that are best

handled and best analysed by technical people in those fields.

I do think, though, that the government owes this House some explanation, some

information, some enlightenment in terms of what the long-term priorities are

for that railway, both in terms of upgrading the physical plant, the trackage,

the ties, the standard gradient of the roadbed and so on, and the standard gauge

of the bed. These were matters that were commented on very unfavourably in engineering

reports we had commissioned.

These are all factors that should be dealt with in a continuing way

and the House should receive frequent up-to-date reports on these

important matters, particularly when the Minister of Finance is

standing before the House asking for the authorization to increase the

borrowing power of that Crown corporation to the tune of $250 million.

I don't doubt for one moment but what this money is required, but I

would like to see some more specific information offered on precisely

what the priorities are.

I simply cannot leave this subject, Mr. Chairman. Much as I hesitate

to stray from the precise subject, I have to return once again to the

member for Columbia River (Mr. Chabot) when he comments on the car

plant and condemns that as an unsound project, as a project for which

the former NDP government should receive some criticism.

MR. CHABOT: Serious overruns.

MR. KING: Mr. Chairman, I want to tell you that comparing

that railway car plant with the Columbia River has to take the most

fantastic imagination I've ever seen in this House.

AN HON. MEMBER: Right on!

MR. KING: That's a fantastic imagination, Mr. Chairman, which

allows the member to make a comparison between those two projects, not

only in terms of the finances involved and the capital expenditure, but

I would remind the member, Mr. Chairman, that the car plant remains in

British Columbia, generating jobs in British Columbia, strengthening

the economy of the railway and its independence from foreign car

manufacturers. All of these things are for the long-term economic good

of the province,

whereas contrasted against the Columbia River

sell-out....

MR. CHABOT: A lot of jobs!

MR. KING: It was a sell-out which generated a lot of jobs, I

agree — all south of the border in the pulp mills and the aluminum

plants that were generated, that were processed, and developed south of

the border, based on the increased generating capacity of the Columbia

River dam south of the border.

I'm going to leave that subject, Mr. Chairman. But

[ Page 1162 ]

finally, I remember that little dispatcher from

Columbia River, Mr. Chairman, when he came up to Revelstoke to

campaign, and he....

MR. CHABOT: I'm not a dispatcher.

MR. KING: No, that's true. The boys always used to tell me that you were no dispatcher, and I believe them. I believe them.

I remember when he came up to Revelstoke campaigning, and he was

talking about railroading — we're talking about railway matters — and

he was campaigning on railway matters, Mr. Chairman.... Yes, the

Kootenay and Elk Railway. There's a man who knows so much about railway

economics that he was willing to build a line from McGillivray to the

border of the United States of America...

MR. CHABOT: That's a lie.

MR. KING: ...to ship out the jobs, to ship out the coal from Fording River and Kaiser Resources.

MR. CHABOT: That's a lie.

MR. CHAIRMAN: Order, please. The Leader of the Opposition has the floor.

Interjections.

MR. KING: Mr. Chairman, is it not true that the former Social

Credit government granted charter renewals to the Kootenay and Elk

Railway 11 different times to construct a railway, not only to

construct a new line from McGillivray to the U.S. border but to also

grant running rights to that foreign railway partially over C.P. Rail

lines? That is certainly true, Mr. Chairman...

MR. CHABOT: Just let him go, Mr. Chairman.

MR. KING: ...and that member supported that government's

position although some of his colleagues of that time did not, namely

the former Minister of Human Resources, the member for Kamloops at that

time, Mr. Gaglardi.

MR. CHAIRMAN: Order, please. Hon. Member, may I interrupt you? I have been waiting patiently to hear you relate this to

section 1.

MR. KING: I shall in a moment, Mr. Chairman.

MR. CHAIRMAN: You cannot stray….

MR. KING: I have been interrupted and harrassed. I'm all flustered.

I'm really upset, Mr. Chairman. I've had interjections and everyone

is picking on me. Us Irishmen are always used to that. Everyone's always picking

on us. Shame on you, I say.

MR. CHAIRMAN: And now to

section 1.

MR. KING: Mr. Chairman, that member did come to Revelstoke to

talk about railway matters, and he should know something about steel

after he came up there because he got run out of town on a rail by the

angry railroaders of Revelstoke whose jobs he was jeopardizing by

advocating the construction of the Kootenay and Elk Railway, and I

think he has...

MR. CHABOT: Nonsense! Nonsense!

MR. CHAIRMAN: Order, please.

MR. KING: ...an unprecedented amount of....

MR. CHAIRMAN: Order, please.

MR. KING: Yes, Mr. Chairman.

MR. CHABOT: Let him go, Mr. Chairman. I want to answer.

MR. CHAIRMAN: We are now embarking on a personal attack which, if we allow this to continue, we're going to have to....

MR. KING: Oh, I'm not attacking him personally. I'm simply

relating a story, Mr. Chairman, and I wouldn't attack that member

personally. I think he's a nice little fellow.

MR. CHAIRMAN: I encourage you to move to

section 1, please.

MR. KING: And the record, with respect to the former Social

Credit government, is quite clear on what they advocated, and, indeed,

what they allowed in terms of legal charters to a foreign rail line. I

just find it curious and I find it altogether beyond my comprehension

and understanding how that member could attack a B.C. development such

as the Squamish rail car plant when his government, a government in

which he was a cabinet minister, was prepared to sell out British

Columbia railway jobs.

MR. CHABOT: That's a lie.

MR. CHAIRMAN: Order, please.

Interjections.

MR. CHAIRMAN: Order, please.

MR. KING: Mr. Chairman, are you going to do the

[ Page 1163 ]

right thing, or must I request you to have that

member withdraw? That's about the fifth time he's said it and he plays

upon one tune on that old broken record of his.

MR. CHAIRMAN: Would the member...? Would the Leader of the Opposition just be seated for one moment, please?

I have called the Leader of the Opposition to order on at least

three occasions, reminding him that unless he stops the personal

attack, we have to allow some rebuttal. And on three occasions I have

insisted that he return to the discussion provided for under

section 1.

The spirit in the room this evening has been good and I'm sorry that it

would have to deteriorate because of personal attacks, and since it has

done I'm going to have to do this. I'm going to have to ask the member

to withdraw the words "It's a lie." Would he do that in this...?

MR. CHABOT: Mr. Chairman, I have great difficulty in doing so

because I've found in the last two elections that member in particular,

the member for Revelstoke-Slocan, has not told the truth about the

Kootenay and Elk and the government's position. The NDP, and in

particular that member, has lied...

MR. CHAIRMAN: Order!

MR. CHABOT: ...deliberately lied, about the government's position on the Kootenay and Elk.

MR. CHAIRMAN: Order, please. We cannot allow that kind of an

accusation in this House, and the member knows this. It may be an

opinion which you hold but it cannot be expressed in this room, and

therefore I must ask you to withdraw it.

MR. CHABOT: Mr. Chairman, the member for Revelstoke-Slocan

suggests that I was in Revelstoke speaking during a particular election

campaign — I think he's referring to 1972 — and he suggested I was run

out on the rails out of that community. If he said that, Mr. Chairman,

I have to say that is a deliberate lie.

MR. CHAIRMAN: Mr. Member, you've been in this House long

enough to understand that we cannot allow that kind of an expression in

this room; therefore I must ask you to withdraw.

MR. CHABOT: Mr. Chairman, how can you allow the Leader of the

Opposition, or the acting Leader of the Opposition, to make falsehoods,

when I'm attempting to correct the inaccuracies of his statement?

I'm suggesting that the statements made by the acting Leader of the

Opposition (Mr. King) are inaccurate. I'm doing so in the most genteel

way I know, Mr. Chairman, and I'm suggesting that he hasn't been

stating the facts as they are.

MR. CHAIRMAN: Hon. member, if you wish to draw the House's

attention to some inaccuracies which appear to you, that is fine.

However, I must ask you to withdraw the term "it is a lie."

MR. CHABOT: Well, I'll withdraw the term "lie", Mr. Chairman,

because I know that I'll have the opportunity to correct the

inaccuracies of his statement.

MR. CHAIRMAN: Thank you.

Now the second part which I must ask: I must now ask the Leader of

the Opposition to keep his remarks strictly to

section 1, or else we

will have a repeat of this performance.

The Leader of the Opposition has the floor.

MR. KING: Thank you, Mr. Chairman. I must object, though, to

the Chairman's assertion that I had made a personal attack on the

member. I don't think that's true. I certainly did not intend any

personal attack. I appreciate the member for Columbia River (Mr.

Chabot)....

MR. CHAIRMAN: That will close the matter. We are now on

section 1.

MR. KING: I appreciate the member for Columbia River's gracious manner of withdrawing. (Laughter.)

I want to correct a statement I made which was made with levity and

humour, that the member was run out of the town of Revelstoke on a

rail. That's not true, completely, at all. (Laughter.) Mr. Chairman, I

think the railroaders in Revelstoke indicated quite clearly to that

member their displeasure with his position. It's true, he wasn't

literally run out of town on a rail. I withdraw that. It was made in a

spirit of humour.

In any event, what I was interested in doing, and what I just want

to conclude with, is the analogy which I have drawn and which is a

matter of record in this province, between the Social Credit

government's willingness to give preference to a foreign rail line over

a Canadian line, to allow running rights on CP Rail by a foreign rail

line, and to go into it further, Mr. Chairman, to keep a brief, through

the Attorney General's department, at railway transport commission

hearings in Ottawa supporting the application of that foreign line,

Kootenay and Elk Railway, at the expense of the B.C. taxpayers. This is

all for the purpose of gaining the legal right for that Kootenay and

Elk Railway, which had been chartered 11 times by the former Social

Credit government to transport our coal from Fording River and Kaiser

[ Page 1164 ]

Resources to the tidewater through a route running

south of the border in the U.S.A., manned by railroad crews of U.S.

origin. I question the economic wisdom of anyone who subscribed to that

kind of a plan to comment intelligently on the dilemma of the B.C.

Railway today, Mr. Chairman.

MR. LAUK: To draw the committee's attention to Bill 5, Mr.

Chairman.... Well, the hon. member for Columbia River (Mr. Chabot) is

tapping his desk, but it was the member for Fort George (Mr. Lloyd) and

the member for Columbia River who encouraged the Leader of the

Opposition (Mr. King) and others on this side of the House to give them

an education in the history of this railroad.

AN HON. MEMBER: Right on!

MR. LAUK: He shouldn't be tapping his desk.

But I wish to draw the committee's attention back, saying that the

hon. member for Columbia River and the member for Fort George have had

some education. I don't think that they are helping the Minister of

Finance at all, or this committee, to get down to what's facing the

railway today and what Bill 5 is all about.

AN HON. MEMBER: Are you going to?

MR. LAUK: But before I get to the point, the member for Fort

George did make a couple of statements which disturbed me greatly, and

I know the front benches must not agree with this. He said it was a

"last-ditch stand," the northwest rail agreement. This directly

relates, as you know, to the amount borrowed — a "last-ditch stand."

As I recall, the implementation agreement as understood by Telex

between Ottawa and Victoria was stolen from a briefcase and released

prior to any press conference or public information being released by

the government of the day. How did they describe that as a "last-ditch

stand"? That information was stolen and released prior to the

government calling a press conference or releasing any information

about the implementation agreement.

MR. L.B. KAHL (Esquimalt): Tell us why, Gary.

HON. L.A. WILLIAMS (Minister of Labour): You were so embarrassed you wouldn't talk about that.

MR. CHAIRMAN: Order, please.

AN HON. MEMBER: Sold us out.

AN HON. MEMBER: Sold us out.

MR. CHAIRMAN: Order, please! The member for Vancouver Centre has the floor.

MR, LAUK: Well, you know....

Interjections.

MR. CHAIRMAN: Order, please!

MR. LAUK: I always seem to, when I cover that point, hit a

sore spot with the Minister of Labour (Hon. Mr. Williams). I know he's

very, very disturbed at the fact that someone would deal in stolen

documents who's so close to him.

In any event, the information with respect to that agreement was

released by the Leader of the Opposition (Hon. Mr. Bennett), as he then

was, and not by the government. Now the member for Fort George (Mr.

Lloyd) who has rushed out of the House someplace doesn't want to hear

any more of the truth about the railway. That's unfortunate, because

he'll probably come wandering back into the House sometime on some

other bill, on some other pretext, and delay the proceedings again by

his utter nonsense.

SOME HON. MEMBERS: Order!

Interjections.

MR. CHAIRMAN:

Section 1, please.

MR. LAUK: Mr. Chairman, may I bring the committee's attention

back to the fact that we were dealing with

section 1, asking questions

of the Minister of Finance, and which he was answering when the member

for Fort George (Mr. Lloyd) got up in his place and delayed these

proceedings by almost a full hour? Can I draw the committee's attention

to that? Every time we are blamed for delaying the proceedings of the

House.

HON. K.R. MAIR (Minister of Consumer Services): Nonsense! Nonsense!

MR. LAUK: I say that you get your backbenchers in control.

HON. MR. MAIR: He's got a right to speak.

MR. LAUK: Of course he's got the right to speak; I agree with that, but speak to the point.

He says that it's more economical than to go first-class on the Fort

Nelson railway. More economical. Where has he been, Mr. Chairman? He is

the member for Fort George. Every week, almost every day, we heard

reports of derailments. There was an average, during a critical period

of time, of four derailments a week on the Fort Nelson line. A

[ Page 1165 ]

disaster! Even today the speed limit in some areas

that have not been upgraded by the previous administration is less than

10 m.p.h., causing labour disputes and delays that are disastrous.

Where has he been?

What nerve! What gall he has got to come into this committee and

say: "Let's not travel first class." That's more than saying penny

wise, pound foolish. That's insane. I'm saying the economics is insane,

not the member.

Mr. Chairman, I won't pursue this matter. I think the hon. member

should be encouraged to read the documents tabled in this House, the

Swan Wooster report. Please, for all of our sakes, member for Fort

George, read the Swan Wooster report, and argue about something else.

You have a right to speak in this House but don't put your foot in it

every time.

The member for Columbia River (Mr. Chabot) talking...well, I won't pursue that.

Mr. Chairman, just before getting back to the last question I have

of the Minister of Finance with respect to this bill, I would ask your

indulgence. Visiting the House tonight and viewing the committee's

proceedings, from the city of Toronto, is Robin McMorris, the niece of

our distinguished Deputy Clerk of the House. I would ask the House to

welcome her to our Legislature. I had the distinct feeling, Mr.

Chairman, that that indulgence would not be ruled out of order — at

least the Deputy Clerk would not so advise.

MR. CHAIRMAN: Proceed with

section 1.

MR. LAUK: Mr. Chairman, there are a number of questions.

First of all, I wonder if the Minister of Finance knows when we can

expect the annual report of the British Columbia Railway. It was

delayed last year, I know, because we were still waiting for our

accountant's final report.

MR. G.S. WALLACE (Oak Bay): He filed it today.

MR. LAUK: No, that's the auditor's report. I'm talking about the annual report.

HON. MR. MAIR: Have you read it yet?

MR. LAUK: Well, I was looking for it in the basement tonight, as I mislaid the copy. (Laughter.)

MR. CHAIRMAN: Order, please.

section 1.

MR. LAUK: Yes. As I was saying, I wonder if the Minister of

Finance.... I know the secretary of the railway is also the Deputy

Minister of Finance, so he might know.

The second question is purely for the information of the House with

respect to other aspects of the railway. With respect to the Dease Lake

extension, it occurs to me that there are problems with the

Stuart-Trembleur and other bands along the line. It should be pointed

out — and I think it was accurately pointed out by the member for

Vancouver East (Mr. Macdonald) — that no agreement had been reached

with those Indian bands prior to the line being surveyed, prior to the

line being constructed.

AN HON. MEMBER: What did you do about it?

MR. LAUK: The question is asked what we did about it, Mr. Chairman. Let me describe that briefly.

Interjections.

MR. CHAIRMAN: Order, please. The Member for Vancouver Centre has the floor.

MR. LAUK: It was reported to us that it was the understanding

of railway officials that there were some agreements obtained from some

of the bands along the line. Upon investigation we found out that was a

misassumption, or an assumption that was mistaken. As a result we

immediately began negotiations. That's what we did about it. There was

nothing more we could do about it.

Interjections.

MR. LAUK: That's not true. Before you open your mouth, Mr. Member, check your facts.

AN HON. MEMBER: You'd better check yours.

MR. LAUK: Really, that's not true.

MR. CHAIRMAN: Order! We have to restore some order to the

House. May I ask the hon. members to return to their seats, please?

Please remember the standing orders of the House which say that if you

wish to speak, you must stand in your place and be recognized by the

Chair.

The Member for Vancouver Centre has the floor. Please proceed.

Interjections.

MR. CHAIRMAN: Order!

MR. LAUK: Mr. Chairman, I have two questions to ask, and I

know that there are two individuals who could advise the Minister of

Finance. First, with respect to the Indian bands, is it expected that

we will be able to proceed without interruption with construction along

the Dease Lake extension? Secondly, can we expect the annual report

soon and in this session?

[ Page 1166 ]

HON. MR. WOLFE: Mr. Chairman, I think the answer to both questions is yes.

MR. WALLACE: Mr. Chairman, it's not difficult to find out

which

section of this bill we are debating, since there is only one

section. That's really my biggest concern with the bill — that in one

section of two lines and one word we're extending borrowing capacity by

$250 million. Again, I would just very quickly repeat the basic concern

I would have about this kind of legislation, which is that it's very

short and neat and tidy but that in debate we really haven't had an

outline by the minister of how he decided that $250 million was the

appropriate amount by which borrowing should be increased.

I spent a lot of time reading various documents — those that were

tabled at the last session, and yesterday's auditors' report — and I

find it very difficult to relate these various sets of figures. I

wonder if the minister perhaps at this stage of the game would give us

a breakdown on the $250 million. I have been able to decipher from the

Clarkson Gordon report that of the current authorized borrowing

permitted of $650 million, $623 million have been utilized by the end

of March, 1976, or that borrowing requirements for the remainder of the

1976 year were estimated at $60 million. So in round figures I suppose

we need at least $40 million right now or within the near future. But

one goes on to these other areas of railway extension where various

figures have been presented, some of them not quite in relation to

others. The time factor isn't clearly quoted either. Over what period

of time is it anticipated that this $250 million borrowing will be

required? We have heard from the documents and studies that have been

tabled in the House before of inefficiency and band construction and a

whole lot of other concerns to both the previous government and the

government before that.

So it would take a very naive person to sit on this side of the

House, in light of all the evidence that has been brought forward as to

mismanagement and bad construction and inadequate estimates of capital

expenditure and so on, and just simply stand here and say, well, yes,

they need another $250 million. Again, as I said yesterday, this

conflicts very much with the tremendously rigid attitude which the

government has taken on borrowing for operating expenditures. There

seems to be a double standard here that the amount that can be borrowed

for capital expenditures can be very flexible and you don't have to

give much detail, but as far as balancing the operating annual

expenditures of the province, we get our microscope out and count it

right down to the last dollar. So there's this double standard.

Over and beyond that, there is the question on

section 1 of

justification or explanation. I am sure somewhere there is

justification, but what is the explanation as to why it's $250 million?

Why not $200 million? Why not $500 million? The information that was

brought before us in February, 1975, by general counsel to the railway

states that the Dease Lake extension total expected costs are $232

million. There is a little asterisk opposite that which says "subject

to variance as to results of litigation."

That raises the next question. We used the word "litigation" in the

auditor's report yesterday. It states: "No provision has been made in

the accounts for any liability which may arise out of this action." Now

I am not expecting that the minister or anybody in this House would be

able to predict what the litigation might cost if it goes badly for the

railway in court, but surely when we are talking about increased

borrowing of $250 million, we should at least know whether the

government has included a ballpark figure to cover the possible amounts

of money for which they might be found liable in civil action. It's

clear that the auditor's report tabled in the House yesterday does not

take that into account, but what about this $250 million; has the

Minister of Finance made some allowance for litigation?

Perhaps he could tell us where the litigation is at. I don't mean to

go into the whole issue of the court case, but when is it to be heard?

Is the date set? Is there any possibility of settlement out of court?

It all involves taxpayers' money in British Columbia, and we as the

representatives of the taxpayers are entitled to ask these questions

and get some answers.

The other point was raised in regard to land owned by Indian

reserves. The previous speaker touched on a different aspect from the

one that I would like to ask, although it is, of course, important that

we also have some reassurance that there will be peace and stability in

these areas so that construction can proceed. But also on this

auditor's report, on the final page, it states regarding Indian land

claims: "Any payments made in settlement of such claims would not be

material and would be accounted for as part of the cost of the total

road property." Once again, I have to ask: within this $250 million

figure that we're debating in

section 1, has there been any approximate

amount which the government considers might be reasonably accurate for

payment to the Indian bands? Or again is this just a matter that the

government cannot define in even ballpark figures.

It keeps coming back, Mr. Chairman, to the very basic point that

we're asked to increase borrowing by a very large sum of money. All of

us in this House know there are five or six different respects in which

money is needed for railway extension, litigation, interest debt, and

so on. But they just ask us to say "okay, that's fine; that sounds like

a nice round figure," without giving us some breakdown and some period

of time over which the $250 million will be borrowed.

[ Page 1167 ]

That latter point is surely important,

if only for the fact that if the battle against inflation is likely to

be even partially successful, then interest rates will be coming down —

we hope. So when we're talking in terms of $250 million worth of

borrowing I think it's very important for us to have some idea how soon

that might have to be borrowed. Again, I'm not expecting that we can

get it on every $5 million amount, but this is a large sum of money.

We know that the past history of the railway, in terms of

construction, has not been a very laudable one in terms of many of the

mistakes that have been made, and although both sides of the House

tonight have tried to blame each other, I'm really not too interested

in who is to blame; I'm interested in what we can expect from this

point onwards. We need some assurance that in future planning, at

least, we will go into more detail on the capital amounts required and

that some more intensive engineering studies will be done, so that you

choose the right place to put the railway in the first place, and then

once you choose the location of the railbed then at least you do the

preliminary work efficiently, and then install the actual rail lines

efficiently.

These are all questions that are perfectly reasonable when we're

talking about such a substantial sum of money. If the minister gets up

and tells me that the figures are very approximate and subject to

revision with inflation and a lot of other things, I'll accept that,

but at the present time, unless I've missed part of the debate, we

haven't been given what I consider we're entitled to have as

responsible opposition members, and that is some reasonable breakdown

as to the aspects of the railway commitments that will spend the money,

the time factor over which this $250 million will be borrowed, and

particularly that fraction of the $250 million within this current

fiscal year that we have entered — 1976-77.

HON. MR. WOLFE: Mr. Chairman, I do believe the member was out

when I attempted to answer some of these questions earlier, but I think

we should emphasize that last year there was an increase in the

borrowing authority from $440 million to $650 million — an increase of

$210 million. I'm sure it was intended at that time that the $650

million outside limit of the authority required would be ample to cover

more than one year, but in fact it wasn't. Here we are back again

having to ask for further authority, so it's important that we

authorize an amount which is an outside amount, and which is ample to

cover all the departments. It's not intended to borrow up to $900

million; nor would we want to fix a figure which was within a few

dollars of what we would anticipate. So it would be hopeful that we

might not have to come back another year to ask for a further

extension. It is an outside figure and we should always keep this in

mind.

I look back at the financial statement for the year end and I see

where the long-term debt has increased by $124 million between the two

years. I think I mentioned earlier that we borrowed during the year

something like $188 million in new borrowings, all of which were

internal borrowings.

There was no outside borrowing made within that and, beyond that, I

can only once again answer, which you perhaps didn't hear earlier, that

for the coming year the Dease Lake extension anticipated expenditure is

something like $44 million and there are additional amounts, as I

mentioned, covering upgrading the Fort Nelson line and other systems

totalling some $51 million. All of these, I realize, don't add up to

$250 million, but it is an outside figure and I think that detailed

questions then on the lines and immediate progress of capital

improvements and expenditures could be asked under the minister's

estimates.

MR. D.D. STUPICH (Nanaimo): I just wanted to pursue this $250

million a bit more. I was looking at the same

section in the Clarkson

Gordon report as was the hon. member for Oak Bay (Mr. Wallace), and

reading this it would appear as though the railroad is going to require

financing to the extent of roughly $7 million a month. Now unless

there's.... As we've established before — and I don't think that

there's any quarrel about this, although the Premier may feel

differently — Clarkson Gordon merely put together information that was

supplied to him by the Minister of Finance from his own sources and

from the Crown agencies. Presumably this information must have come

from the railroad, and the railroad pointed out that it will need $60

million for the remainder of 1976, for nine months. So at that rate....

Interjection.

MR. STUPICH: Well, not their calendar year — for the

remainder, for nine months. Well, okay then, but it does say what has

happened in the first three months; for the remainder of this year, $60

million, so for nine months $60 million, which is about $7 million a

month. Now at that rate, the $250 million, unless there is new

information available that was not available at the time Clarkson

Gordon were informed about BCR, unless there's something new available,

it would appear as though we were authorizing borrowing that will take

care of the railroad's needs for some three years.

Now I'd be surprised if the Minister of Finance wants to record even

contingent liabilities that far ahead in view of what is happening with

all the other Crown corporations, in view of the fact that we are told

we will be establishing a new Crown corporation that will probably be

doing borrowing as well. And

[ Page 1168 ]

while they are not direct government liabilities, certainly

contingent liabilities will have some effects on the credit of the

province as well. So I am surprised, if we are indeed trying to provide

the borrowing authority that will carry us three years into the future.

We'll pursue that then when we do get to the minister responsible.

Mr. Chairman, I wonder if this would be the appropriate time to

raise once again this question of the money that was loaned or granted

to B.C. Railway. The minister said this afternoon, when we were

considering his estimates, that it was not the intention of the

government to recover these grants, and he said that we were standing

by the legal position. Mr. Chairman, I don't know whether the minister

has had an opportunity to read the minutes of the directors' meetings

to which I referred. I think perhaps he hasn't when he's talking

about....

Interjection.

MR. STUPICH: I could read from both, but I think the minutes

will give the picture as clearly as does the order-in-council, Mr.

Chairman. The minister's inviting me to quote the order-in-council, but

let's have a look at the minutes:

"The financial effects of the recent strike…." This is

the one on January 9, 1975. "The financial effects of the recent strike

were discussed in view of the fact that the company has exhausted its

borrowing authority. It was duly moved, seconded and carried that the

secretary" — that's the secretary of BCR — "ask the Minister of Finance

of the province for a grant" — and that's what the order-in-council

refers to — "of $15 million, such grant to be repaid to the province

prior to March 31, 1975."

The other minutes refer to the same situation, continue to call it a

grant, but continue to recognize the liability of the railroad to repay

that money by a certain date, to repay it later on simply when the

borrowing authority had been increased. So the railroad recognizes that

this is money that was going to be repaid to the province, Mr. Chairman.

Now I'm not quarreling with the government giving a handout to BCR. Goodness knows it needs it.

Of course, one of the reasons it needs it is because the cost of the

Dease Lake extension is not 3.3 per cent per year over what was

estimated, not 50 per cent per year over, but it's 300 per cent of what

was originally, incorrectly estimated, deliberately underestimated, 300

per cent of what it was deliberately underestimated to be. So certainly

the BCR does need a handout. But the point I want to make, Mr.

Chairman, is that if we do determine.... The government has determined

that it will be a grant rather than a

loan that will be recovered. It is this government that now is deciding

that this money will be granted to BCR rather than something that was

done by the previous administration, which intended from the beginning

that this money would be recovered.

So the decision to make it a grant rather than a loan is a decision

made by the present administration. As I say, Mr. Chairman, I'm not

quarrelling with that, but for the minister to say that he's hanging

his hat on a legal aspect of the order-in-council, in view of the

reasons for the order-in-council being done that way, in view of the

fact that the directors of BCR recognize why it was done that way and

recognize their obligation to repay that money to the government, the

government could still call on that $35 million to be repaid.

As I say, I don't quarrel with it being given — they need it — but

let's recognize that it is this government, the government of today,

that has made the decision to give that rather than the previous

government that made that decision.

MR. WALLACE: Just a few words.

MR. CHABOT: Mr. Chairman, just a few words as noted by the

member for Oak Bay (Mr. Wallace). A few corrections on statements made

by the acting Leader of the Opposition (Mr. King) vis-à-vis the

Kootenay and Elk Railway extension.

You know, the member for Revelstoke-Slocan hangs his hat on the

basis of the Kootenay and Elk Railway extension line to American

railways on the basis that the former government's intention was to

move coal over an American railway to seaboard, which is erroneous in

fact, which the member full recognizes is erroneous. I am sure if the

member will allow his mind to wander back to the necessity of the

times, of the government's necessity at that time, to make the Canadian

railway involved responsible in its presentation of a freight

transportation rate, the movement of coal from the Sparwood area to

Roberts Bank, he must realize that the government was using this

particular application to make the enterprise of coal development in

the East Kootenay a viable enterprise and that without this application

never would we have had a responsible, objective and reasonable

transportation rate for movement of coal over CP Rail from

Fernie-Sparwood to Roberts Bank. That is the prime objective.

I am sure that if the member wants to be responsible he will

recognize that fact, that it was necessary for the provincial

government of the day to make this application to the board of

transport in Ottawa for the purpose of bringing the CP Rail to the

reality of the rate necessary to make it possible to develop the coal

fields of the East Kootenay.

He fails to realize that — I'm not going to call it a ploy, but the objective — the objective of the

[ Page 1169 ]

government of the day was not only to move coal but was to create

jobs in the East Kootenay in the Fernie-Sparwood area for a very

seriously depressed area of British Columbia, an area in which when I

first campaigned, on the federal trail incidentally, many years ago

when people were working only three days a week....

Interjection.

MR. CHABOT: Three days a week, that's all they were working.

It was a seriously depressed area. It was the first area designated by

the national government as depressed for incentives because of the

situation in the coal fields of the Fernie area. The government of

British Columbia at that particular time recognized the need to have

responsible freight rates to make jobs within the East Kootenay — also,

transportation jobs for the railway that was going to transport that

coal from the East Kootenay to the Roberts Bank as well. It just so

happened that it was the CPR that was the prime carrier in this

particular instance, and which the acting Leader of the Opposition

happens to be an employee of. So am I, but I am not holding any brief

for the CPR. I am just speaking as the member for Columbia River.

There are no particular jobs involved in the movement of coal

through my constituency for my people but I felt.... I have always

stated without reservations whenever I have spoken in this Legislature

or publicly of the necessity of movement of this coal over a Canadian

carrier to ensure jobs for British Columbians. I have never deviated

from that. The acting Leader of the Opposition can't really hang his

hat on any particular statement ever made by any minister of the former

government suggesting that coal was going to be moved over an American

railway jeopardizing jobs in the transportation field in British

Columbia.

It was always the lever on the part of the former government to

ensure that jobs were created in the coal fields and jobs would be

available for moving the coal on Canadian railways. The government has

never deviated from that position at any time, all the years that it

attempted to develop this coal market in Japan and tried to establish a

reasonable rate so that the coal market would develop in Japan. That's

the prime objective, the prime reason, in which the former government

attempted to establish an alternate route — the Kootenay and Elk — to

the Burlington Northern to the west coast.

I think that the member for Revelstoke-Slocan, Mr. Chairman, in

speaking about Bill 5(1) speaking about railways and the financing of

railways, has to realize that the government has never deviated from

its position of the creation of jobs in British Columbia.

He talked about a particular demonstration that was sponsored in the

community of Revelstoke when he was on his feet, Mr. Chairman, and

suggested that certain things had taken place.

Now I know there was a demonstration when the cabinet of the day

appeared in the community of Revelstoke, primarily a railroad

community. I want to suggest to you, Mr. Chairman, that this particular

demonstration which took place was sponsored by one particular union,

the UTU, of which the acting Leader of the Opposition happens to be a

member. It was spearheaded by one Jim Pecora, a fellow hoghead of the

acting Leader of the Opposition, and a brother, incidentally, of the

candidate who ran against me in the last election, one Orlando

Horatious Pecora who ran for the NDP against me last time.

So there appear to be some ulterior motives about Bill 5(1)

vis-à-vis the statements made by the Leader of the Opposition and the

political position taken by the UTU and Jim Pecora, a locomotive

engineer from the community of Revelstoke, a brother of the candidate

which I successfully and without any doubt defeated in the last

campaign in the constituency of Columbia River.

Now I want to make it abundantly clear, Mr. Chairman, that the

member for Revelstoke-Slocan won two successful elections primarily on

the issue of the movement of coal over Canadian railways, and he won

two successful elections on very erroneous statements and deviations

from the facts.

I had the opportunity of speaking in that community of Revelstoke

during the campaign of 1972. There was an attendance of approximately

600 people, of which I would venture to guess 250 were carrying New

Democratic Party badges. At that particular....

MR. CHAIRMAN: Hon. Member, may I interrupt you?

MR. CHABOT: Yes, Mr. Chairman, you may interrupt me.

MR. CHAIRMAN: I've allowed you quite a bit of leeway in

correcting statements which you thought were erroneous. However, I

cannot see how the remarks upon which you are now embarking have

anything to do with

section 1 or with erroneous statements.

MR. CHABOT: I heartily concur with your

interpretation.

Nevertheless, you allowed a certain leeway to the Leader of the

Opposition, the acting Leader of the Opposition (Mr. King), for which I

have a responsibility, coming from the same part of the province from

which he comes. I have a responsibility to correct the erroneous

statements which he made, and they have to do with the Kootenay and Elk

Railway.

[ Page 1170 ]

As I stated a little earlier, Mr. Chairman — in all fairness to a

backbencher who doesn't have too many opportunities to speak and must

take advantage, when he is on his feet, to state the position as it

really is, and that's what I'm attempting to do tonight — I'm

suggesting to you that when I spoke in Revelstoke we had 250 people,

approximately, in that crowd of 600 people who had NDP badges.

I told them at that particular time the absolute position of the

former government regarding the movement of coal from the East

Kootenays to Roberts Bank, or to Japan if you want. At no time did I

have one of those socialist badge-wearers challenge any of my

statements.

I told them that the government of British Columbia of the day was

interested in jobs in the coal extraction and in the jobs in

transportation as well, that at no time were we concerned with the

movement of coal over an American railway. I was never challenged by

any of those socialist badge-wearers. So I have to come to the

conclusion that under those circumstances they accepted the word of the

member for Columbia River.

Mr. Chairman, why I stand in my place tonight is to correct the

erroneous statements made by the acting Leader of the Opposition, the

member for Revelstoke-Slocan, who has won two successful elections on

erroneous statements vis-à-vis the position of the former government

regarding the movement of coal to Japan. I never want to see any member

of this House win any election again on erroneous statements. He must

win elections on his own qualifications, on his own rights and on his

party platform as well. Never again should that happen in British

Columbia.

I listened to the radio programmes from Big R, from Salmon Arm and

Revelstoke, in which the member successfully campaigned on this, again,

erroneous issue. Never again, Mr. Chairman, should this happen in

British Columbia, that a member should win an election on a non-issue.

MR. CHAIRMAN: Order, please. Your point has been well made,

Mr. Member. Now would you refrain from making any remarks, other than

section 1?

MR. CHABOT: Mr. Chairman, I think my point has been well

made. I have a responsibility in view of the fact that the member for

Revelstoke-Slocan has been elected twice on the issue of the erroneous

statements of the Kootenay and Elk Railway. I hope that I've corrected

these erroneous statements, having gone to Revelstoke to attempt to

correct them, been accepted by the people of Revelstoke but never

accepted by the member for Revelstoke-Slocan. I hope, once and for all,

that issue will be put to bed.

MR. KING: On

section 1, I'm concerned, Mr. Chairman, with a bill

that just may, if it's granted without full explanation to this House, be

used for the purpose of perhaps generating or subsidizing or initiating other

railways in this province.

Interjection.

MR. KING: I'm just wondering about the need for these funds

which the BCR apparently needs, without any great explanation as to

what purposes these funds are to be used for. I'm concerned that

perhaps there's a motivation here to reactivate construction of the

Kootenay and Elk Railway.

Interjection.

MR. KING: I want to assure you, Mr. Chairman, that I am not

the only one from my area who's concerned about construction of the

Kootenay and Elk Railway. I want to assure you that the member for

Columbia River (Mr. Chabot) has been concerned in the past.

In this House, on March 25, 1971, a headline in The Vancouver Sun of that date carried the headline "Export of Jobs Charged by Socred Backbencher:

Victoria — a Socred backbencher called Wednesday for a clear

statement of the government's position on the Kootenay and Elk Railway,

which he said amounts to an export of jobs to the U.S.A. Jim Chabot,

Columbia River, said he is not really sure whether the provincial

government is in favour of the building of the railway, which would run

from the East Kootenay coal fields to the U.S. border, to give an

alternate route for exports. A link between the Kootenay and Elk and

the Burlington Northern has been put forward as a route to Roberts Bank

from where shipments of coal are being sent to Japan. Chabot said coal

should not be transported by an alternative means until it has been

proved Canadian rail lines are being used to capacity. 'If you allow

coal over American railroads, it amounts to export of jobs, and this I

do not support,' he added.

"Chabot got no answer from Mines and Commercial

Transport minister Frank Richter, nor from Premier W.A.C. Bennett, who

spoke later in the debate."

He got no answer from them.

"Allan Williams, Liberal, West Vancouver–Howe

Sound, told him the provincial government has hired the best lawyer in

Ottawa they can to make sure coal goes across the border. This was a

reference to the provincial government's intervention in a case in

which permission is sought to build the Kootenay and Elk railway. A

lawyer for the provincial government, in supporting the

[ Page 1171 ]

application, argued it came under the provincial jurisdiction

because the tracks would end a quarter-inch from the border."

A quarter-inch from the border. That's what that member said then.

Now he stands up here tonight and says: "Well, it was just a ploy to

put the squeeze on CP Rail." That's what he said.

Interjection.

MR. KING: I want to tell you about CP Rail's submission — and I have it here — to the supreme court hearing on this case.

MR. CHAIRMAN: Order, please, Mr. Member. This must be related to

section 1 of Bill 5...

MR. KING: It is, Mr. Chairman.

MR. CHAIRMAN: …or else it is clearly out of order and we cannot permit it.

MR. KING: Mr. Chairman, I'm still concerned about that

railway. It was active until killed by our government in 1972. We

killed that railway by denying Kootenay and Elk permission to cross

Crown land until their charter expired. That charter can be reactivated

by order-in-council from this government. It was done first in 1966,

and it can be done again. I'm concerned about it, particularly when I

hear the member for Columbia River get up and attempt to justify it. I

want some assurance that funds voted for BCR tonight are in no way

related to some subversive attempt to reactivate a foreign line that

would export jobs and coal from this province.

Mr. Chairman, at the time this case was being argued CP Rail was

already in contract with the Japanese interests for the purchase of 45

million long tons of coal from Kaiser Resources, from 1970 to 1985;

with Kaiser Resources again for another six million long tons of coal

from 1970 to 1973; and with Fording River Coal for 45 million long

tons. They were already hard contracts. That member is absolutely wrong

when he gets up and suggests that this was a bargaining ploy to develop

an acceptable freight rate. The contracts were already signed and

underway.

MR. CHAIRMAN: Order, please, Mr. Member. I do not see how

this relates to

section 1. This is the British Columbia Railway Company

Construction Loan Amendment Act, 1976.

MR. KING: Mr. Chairman, the member has made statements that

are completely untrue and improper in this regard. It's a matter of

record with the Supreme Court of Canada. and it's a matter of record

with CP Rail on the submissions they made to the supreme court that

contracts were already in place, so the member's submission is patently

false, Mr. Chairman.

MR. WALLACE: Why don't you railroaders go outside and settle this in the hall?

MR. KING: I would point out that when the contracts were signed, the federal minister of....

MR. CHAIRMAN: Shall

section 1 pass?

MR. KING: Mr. Chairman, I'm on my feet. Mr. Chairman, I point

out that the federal Minister of Transport and Communications at the

time these contracts were signed, which was prior to the supreme court

hearing, as to whether or not the railway should be chartered,

acknowledged the increased economic activity that would accrue to the

southeastern area of the province of British Columbia as a result of

the new coal contracts, and he stipulated precisely that the transport

of all of this coal should be undertaken by an all-Canadian route by

Canadian workers and that was a condition under which the federal

government had assisted the CPR in developing the hard contracts with

the Japanese steel interests for the shipment of Kaiser coal via a

Canadian route. So what the member for Columbia River said is a bunch

of absolute nonsense and completely at variance with the records, and

anyone who wants to check into it can certainly ascertain that fact in

short order.

Mr. Chairman, I don't want to belabour this point too long, but I

would point out that there is a.... Oh, I'm not going to bother with

that. I think the people of Revelstoke and the people of Columbia River

know what happened and what was said when that member campaigned in the

area. I have the headlines here. I'm not going to belabour the House or

stretch the rules or your generosity, Mr. Chairman, in rehashing that.

But I don't want it intimated that the government of that day was

simply using their granting of a charter to a foreign rail line as a

ploy to bargain effectively with CP Rail. That's patently untrue.

Their contracts for freight rates were already intact, had been for

some time, and that simply isn't borne out by the facts, nor is it

borne out or would it justify the employment of legal counsel by the

Attorney-General's department to actively argue the case for the

construction of a foreign rail link to export our coal via a foreign

line route, and that is a matter of court record also. I have the

submissions here, Mr. Chairman, and if the member would like, I am

quite prepared to file copies of them with the House for his

edification.

Interjection.

[ Page 1172 ]

MR. CHAIRMAN: Is this on

section 1?

MR. CHABOT: No, on a point of order.

MR. CHAIRMAN: Because we have allowed cross-statements and I think that matter is closed. Is this on

section 1?

MR. CHABOT: What matter is closed, Mr. Chairman?

MR. CHAIRMAN: We have allowed statements and retractions and

explanations on both sides, and I believe that we have covered that

area. Is this on

section 1?

MR. CHABOT: Yes. You have allowed the Leader of the

Opposition (Mr. King) or the acting Leader of the Opposition to cover

it twice and myself once. But that's not the point, Mr. Chairman. I

rise on a point of order. My point of order is: are you going to allow

the acting Leader of the Opposition to use the words "patently false,

patently untrue"?

MR. CHAIRMAN: These words, are they found to be offensive to the member for Columbia River? You are requesting that they be withdrawn.

MR. CHABOT: I find them to be offensive.

MR. CHAIRMAN: You are requesting them to be withdrawn?

MR. CHABOT: I find them to be offensive and I leave that to your discretion.

MR. CHAIRMAN: Would the hon. member, the Leader of the Opposition (Mr. King), withdraw the words "patently…."

MR. KING: A qualification, Mr. Chairman, I want to assure the Chair

that I didn't direct any accusation at the member. I simply asserted it

was my intention to say that those facts were incorrect and untrue and I believe

that to be the case. But I certainly cast no a reflection on the member for

Columbia River.

Section 1 approved.

Title approved.

HON. MR. WOLFE: Mr. Chairman, I move that the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill 5, British Columbia Railway Company Construction Loan

Amendment Act, 1976, reported complete without amendment, read a third

time and passed.

HON. MRS. McCARTHY: Mr. Speaker, by leave, Committee of Supply.

Leave granted.

The House in Committee of Supply; Mr. Schroeder in the chair.

ESTIMATES: DEPARTMENT OF FINANCE

(continued)

On vote 61: minister's office, $78,246 — continued.

MR. STUPICH: Mr. Chairman, I have just a few comments on some

of the remarks by the Minister of Finance (Hon. Mr. Wolfe) earlier

today when we were considering this vote.

One of them was a denial on his part that the government took

several steps to maximize the 1975-76 deficit in order to improve the

picture for 1976-77. I was surprised, Mr. Chairman, to have him deny

this. I thought it was pretty well accepted by now that in paying out

to the universities $7.5 million several months earlier than the

universities had any reason to expect it and several months ahead of

the time when they intended to spend any of this money, and that in

paying out a number of municipalities — four, I believe — restructured

grants that it had previously agreed with those municipalities would be

paid out over a period of three years....

AN HON. MEMBER: Not so! Incorrect!

MR. STUPICH: Well, Mr. Chairman, as far as the city of

Nanaimo is concerned, certainly the agreement there was that these

payments would be paid over a period of three years. Certainly the

agreement with the city of Prince George was that these payments would

be paid out over a period of three years.

AN HON. MEMBER: Wait till my turn comes.

MR. STUPICH: Okay, I'll wait till your turn comes, but I was

a party to those negotiations and certainly that was the understanding

with the Minister of Municipal Affairs, and the member for Nanaimo at

the time and the member for Prince George were fully aware that it was

the government's intention to pay this money out over a period of three

years. That advance payment, paid out ahead of

[ Page 1173 ]

time, contributed to the deficit in the previous period. We don't

know just how many other payments might have been paid out ahead of

regularly scheduled time.

There was information earlier in a debate that some farm income

insurance money was paid out again in the 1975 fiscal period that was

scheduled to be paid out in the 1976-77 period, and again the

suggestion was that it was paid out in that period to maximize the

deficit in 1975-76 and to improve the position for 1976-77. I am

surprised that the Minister of Finance is still saying that there was

no such attempt to do that. I think there's all kinds of evidence to

the effect that there was a deliberate government attempt to maximize

the 1975-76 deficit.

In talking about expenditures for this period, the Minister of

Finance said that it will be the comptroller who makes the decision as

to whether expenditures during the month of April should properly be

charged against 1975-76 or 1976-77, and that there is some latitude

there — but only some.

Interjection.

MR. STUPICH: Mr. Chairman, the minister expresses some

surprise. I could read, to refresh his memory, from the Clarkson Gordon

report. We are the ones who like to say the Clarkson Gordon report is

fine. I don't think the minister really wants to question it, but

reading from page 3 in my copy: "Similarly, if an expenditure is made

on March 31, the fiscal year end, it will enter into the calculation of

the surplus or deficit. If it is made a day later, it will not.

Therefore the timing of expenditures or revenue can have a significant

effect on the final result."

They do go on to say: "Finally, it is important to note that revenue

and expenditures enter into calculation of an annual surplus or deficit

only to the general accounts of the province and do not fully

consolidate any special.... I'm sorry, that's not the.... It does go on

to say that there is some latitude in deciding whether certain items

paid out in April should properly be charged against March. That's true.

But when it comes to government decisions...and the minister did

say, with respect to certain grants, that the government did make a

decision that these would be paid out prior to March 31, and there the

decision was not the comptroller-general's but the government's

decision. The Minister of Finance was at least the spokesman for the

government in deciding that $175 million or more, since, would be

granted to ICBC. He did say that the grant to B.C. Hydro was paid out

before March 31. He did say the decision with respect to B.C. Rail was

made. He didn't comment on the transit bureau grant of $26 million. He

missed that out. My question at this moment is whether or not the grant

to the transit bureau was indeed paid out by March 31. That is one

question I would like the Minister....

Interjection.

MR. STUPICH: It was paid out. That again then was a

deliberate decision, not of the comptroller-general but of the

government, for the government did have considerable latitude in

deciding just how large that deficit should be.

With respect to B.C. Harbours Board, I asked the question....

HON. MR. WOLFE: You agree with the payment of debts, don't you?

MR, STUPICH: I'm not quarrelling about any of these things,

Mr. Chairman, through you, I'm only quarrelling with the minister's

statement to the effect that it was the comptroller-general who decided

what payments are going to be charged against which period. That's my

quarrel with the minister right now — not whether or not these things

should have been done.

I don't say that any of these things should not have been done. I

have consistently argued, Mr. Chairman, that the government was in a

position to make the choice, and the government made a choice. It's my

concern that they made their choice purely for partisan political

advantage, rather than for economic reasons. Nevertheless, they had the

right to make that choice. They established that right by getting more

votes than we did on December 11. So be it.

The other question I wanted to ask — which I did ask earlier and I

think he didn't answer — is this one: whether or not a decision has

been made, and the legislation before the House with respect to B.C.

Harbours Board makes me think that the decision has been made, to

recover that money from B.C. Harbours Board. But to the best of my

knowledge the minister did not answer that question as to whether a

decision has been made to recover the $25 million that was advanced by

a previous Social Credit administration to B.C. Harbours Board.

The legislation before us provides for a government guarantee for

any money that B.C. Harbours Board might borrow, which leads me to

believe that B.C. Harbours Board is going to borrow money for some

purpose or other. I'm wondering whether or not one of those purposes —

if there is more than one purpose — would be so that the B.C. Harbours

Board can replay its advances to the government. So I would appreciate

it if the minister could answer that question.

I did discuss it earlier, and the minister said he didn't have the answers with respect to specific

[ Page 1174 ]

figures on resource revenue, and I'm not really asking for that

right now. I do want to renew my plea, though, that the minister direct

more of his attention towards getting more of our government revenue,

as time goes on, from development of resources.

I'd like to quote briefly from a news information service from the

province of Saskatchewan where the Premier of the province, talking

about the possibility of raising money from the development of

resources, points out that if you are willing to tax resources, you can

have good services, a balanced budget and fair taxation. If you are not

willing to tax resources, you have to have a huge deficit — which he

has chosen not to do, and this government has chosen not to do — or

very heavy taxes on ordinary people, or perhaps both.

Now this government has chosen to go the route of having heavier

taxes on ordinary people,

whereas they might have chosen to go the

route of getting more money from our resources. I did point out several

times that we should have looked more at coal; we should be concerned

at what is going to happen in mining; and we should be trying to get

more money from the sale of our natural gas out of this province.

I think the province of Saskatchewan are getting, roughly, 15 per

cent of their total revenue from exploitation of resources —

approximately the same percentage as we are getting in the province of

British Columbia, where we are so rich in resources compared to the

province of Saskatchewan. Certainly they are moving in the direction in

which I would like to see us going here in British Columbia.

We were moving in that direction. Under our administration we moved

significantly in that direction. The mineral royalties tax was brand

new. I pointed out earlier how much more we were getting from the

exploitation of coal resources, and we expected that to increase.

The development of natural gas, the sale of natural gas, which was

bringing to the province something like $5 million a year when we

assumed office, and that in our last year was going to bring in over

$200 million — we moved significantly in that direction, but we hadn't

reached the end at all, Mr. Chairman. We were simply moving, and

there's a long way to go yet. B.C. should be getting a much higher

proportion of its total revenue from development of its natural

resources.

I'd like to come back for a moment to this order-in-council that did

provide for the borrowing of $250 million. The Minister of Finance said

that this did not necessarily mean that that was all that was required

to cover the bank overdraft at March 31, because he said there would

be outstanding cheques. But, Mr. Chairman, we have already established

that the significant payments in here, apart from ordinary government

expenditures, the extra payments that were not a part of ordinary

government expenditures, were all made by March 31, with the exception

of the ICBC one, which is included in this, So the amount could well be

established by April 9 as much closer than $150 million. So I still

feel that the Minister of Finance has in no way at all convinced us

that $250 million was inadequate to cover the total deficit position as

at March 31, 1976, and we'll have to believe that until he's able to

come up with something better in the way of explanation.

Mr. Chairman, I'd like to move on to something that I think no one

has touched on to this point in time, and that is a report that was

prepared by the credit union movement — under their auspices, at least

— with respect to the proposed B.C. Savings....

HON. MR. WOLFE: It was covered earlier.

MR. STUPICH: It was covered earlier? Then I missed it.

HON. MR. WOLFE: The member for Oak Bay (Mr. Wallace) raised the question.

MR. CHAIRMAN: Proceed, please.

MR. STUPICH: I don't want to proceed if I'm really rehashing old ground.

HON. MR. WOLFE: Well, he did raise the question.

MR. STUPICH: Well, I'm not sure. For example, was the

question asked: is the report going to be made public? Is it going to

be tabled in the House? It will be?

HON. MR. WOLFE: The question was raised and I gave an answer to the question.

MR. STUPICH: You don't want to tell me now what the answer was?

Interjection.

MR. CHAIRMAN: Hon. member, the only way you're going to get an answer is if you are seated.

MR. STUPICH: I'll be guided by you then, Mr. Chairman. I am

told that these questions were asked; I am told that the answers were

given. Now I didn't hear the answers. I think it's a very simple

question. The question is: will the report tabled in the House be made

available? Now I think that while I may be repeating it, it's not really

too much to ask that that question be answered again. I'll sit and wait

and see.

HON. MR. WOLFE: Mr. Chairman, I will repeat

[ Page 1175 ]

the answer I gave earlier. The task force report is tremendously

large, about two feet deep. As you are aware personally, we have been

debating the authenticity or the authorization for the payment of a

substantial bill which has been submitted with the report. I won't go

over those matters again. But we are currently negotiating with the

credit union people in the meantime, in the interim. I have not read

the report. As recently as last week I read one

section of it. I cannot

indicate at this stage whether, in fact, we will be prepared to file

the report because I don't know what's contained within the report.

MR. GIBSON: Mr. Chairman, I will start out by once again

reminding the minister that he has not answered my question as to who

authorized the issuance of the $181 million NSF cheque. He has not told

us the approximate cash position of the Province of British Columbia

today and he has not really given a satisfactory answer on whether or

not we will have a Clarkson Gordon type report next year.

I'll move on to another phase of his department right now. I want to

make some comment, Mr. Chairman, about what I would call the goofy

Social Credit attitude on borrowing. The member for Prince Rupert (Mr.

Lea) was asking earlier on today about the favourite economist of the

minister. This was apparently an economist who was going to give this

Legislature a report. I would be very interested when the minister

tells us the name of the book to suggest that the sales tax isn't

regressive. I think probably the favourite economist of the....

HON. MR. WOLFE: Read us something that tells us it is, will you?

MR. GIBSON: That it is regressive? Oh, my gosh! If you want that, Mr. Minister.... I'll tell you what. I took that file back to my office.

HON. MR. WOLFE: You don't have it with you, eh?

MR. GIBSON: I'll bring it tomorrow, or if there is time before 11 o'clock I'll bring it back.

MR. CHAIRMAN: Order, please! Would the hon. member please address the Chair?

Interjection.

MR. GIBSON: I suggest, Mr. Chairman, the favourite economist

of that minister must be Major Douglas. I think he's the last real

Social Crediter in this province.

Interjections.

MR. GIBSON: What is the difference — this is the question I

want to ask the minister put in its simplest terms — what is the

difference, Mr. Minister, between the British Columbia Railway building

a bridge and amortizing that bridge over, say, 20 years and borrowing

to build that bridge, and the Department of Highways building a bridge

and amortizing that bridge over 20 years and borrowing to build that

bridge? Mr. Chairman, the government has a definite myopic dogmatic

stand that they will not borrow for capital projects. I'd just like to

make that simple comparison.

Would the minister stand up and tell us what the difference is

between those two bridges except the fact that one was built by the

railway which he controls the finances of and which he is going to

borrow to build and just passed that bill right now, and the other

bridge is built for a public highway by the Department of Highways

which is going to last the same amount of time, but which is going to

be paid for by gasoline tax instead of railway fees? In every way they

are the same thing except that one happens to be within a different

kind of public account than the other. Would the minister stand up and

tell us why his government approves of debt in Crown corporations and

disapproves of debt in capital public works?

HON. MR. WOLFE: Mr. Chairman, I think the real nature of this

question is: how much borrowing do you want? Do you want to see us

borrow against everything? Are you advocating more borrowing, Mr.

Member? I believe that's what you're saying.

MR. CHAIRMAN: Please address the Chair.

HON. MR. WOLFE: If we borrow against railways, Mr. Chairman,

he says we should borrow against everything else and continually saddle

this province and its people with load upon load of debt. This is the

thing we really have to fear the most. Look around the world, my

friend, through you, Mr. Chairman, and just see the difficulties other

areas are accomplishing. So what you seem to be saying is: if you

borrow against one thing, why not borrow against everything? More

borrowing, more borrowing.

MR. LOEWEN: Federal Liberal, federal Liberal.

Interjections.

MR. GIBSON: Mr. Chairman, obviously I wasn't saying borrow against everything.

MR. CHAIRMAN: Order, please!

Interjections.

[ Page 1176 ]

MR. GIBSON: What I was saying is, what's the difference

between the bridge that the minister wants to borrow against for the

railway that we just passed a bill for and the bridge that the Minister

of Highways (Hon. Mr. Fraser) might build that is in the public

accounts? What is the difference?

HON. MR. MAIR: That's Trudeau's point of view.

MR. GIBSON: What is the difference, Mr. Minister? The minister doesn't know. He kind of shrugs his shoulders.

Interjections.

Mr. GIBSON: He dunno. There is no difference. It is this

absolute refusal to go into any kind of debt on capital account, even

for one year, which has led us to this 2 per cent sales tax increase.

That's what it leads you to.

Interjections.

MR. GIBSON: Don't you realize, Mr. Minister, through you, Mr.

Chairman, that these items of capital infrastructure that we have to

provide in British Columbia for our 3 per cent per year growth on the

long-term trend line aren't all capital structure that are being put in

place today for people who are going to use them over the next

generation? Yet you want to make all of the current taxpayers pay for

them today, so you're subsidizing those future generations. Now will

you tell me the logic in that?

If you do see some logic in that, why are you borrowing to complete

the Columbia River treaty projects? Why don't you just raise taxes and

pay for all of them out of this year's revenue? It makes just about as

much sense.

AN HON. MEMBER: What do you suggest?

MR. GIBSON: That is the very clear issue that I'm putting to

you. What's the difference between that railway bridge and that highway

bridge? It all comes down to that. If you can't explain that, I say

it's funny money and that's all it is.

HON. MR. WOLFE: Mr. Chairman, I don't know if that's a question or not.

MR. GIBSON: Of course it is.

HON. MR. WOLFE: It is?

MR. GIBSON: Explain the difference between those two....

HON. MR. WOLFE: Well, there is no difference between borrowing against

one thing or another, but the member is suggesting, it seems to me, "why

can't we borrow for one thing as well as for another, and have more and

more borrowing," which is the philosophy of the federal government and

why their debt cost is over 20 per cent of the tax dollar. And in this province

it's just a fraction of 1 per cent. That is the reason why the federal government,

out of every tax dollar, pays over 20 per cent, my friend.

AN HON. MEMBER: Terrible!

MR. GIBSON: Mr. Chairman, if that minister wants to make

comparisons, I want him to explain something else to me. Will he

explain to me why the per capita income of British Columbians over the

period of 1964 to 1974, according to a Financial Post survey

during years where seven out of 10 were under a Social Credit

administration, why that per capita British Columbia economic growth

was 10th out of 10 among all of the provinces of Canada? When he has

satisfactorily explained that, he can then go about making comparisons

with other jurisdictions in this country.

SOME HON. MEMBERS: Produce the report.

HON. MR. WOLFE: I would just ask the member to produce the report he's referring to.

AN HON. MEMBER: Table the document.

MR. GIBSON: I certainly will, as soon as I can dig it up.

AN HON. MEMBER: It's a hypothetical argument.

MR. GIBSON: It's absolutely not a hypothetical argument!

MR. CHAIRMAN: Order, please.

MR. GIBSON: Obviously you don't read the Financial Post . What kind of minister is that?

MR. CHAIRMAN: Order, please! The member for Fort George has the floor.

AN HON. MEMBER: Unsubstantiated statements.

MR. LLOYD: There are just a couple of points I'd like to

clear up. The member for Nanaimo (Mr. Stupich) stated the amalgamation

grants were prepaid, that they were going to be paid over a period of

time. As a former member of the council of Prince George and a present

member of the council of Prince George, I can tell you that it

certainly wasn't the case in Prince George. The Municipal Affairs

minister of

[ Page 1177 ]

that time, Mr. Lorimer, promised us at the signing of the

restructure agreement that the grant would be payable at that time.

Since our government chose to honour the original commitment and pay

that restructure grant and get us on a current basis, if they really

wanted to prepay expenses they could have also honoured some of the

blank cheques that the past government issued for recreational grants.

They never told the communities there was a top end on recreational

grants: "Go ahead boys. Everybody build all the projects you want.

There's no top end on this." That is until such time as all the

projects start coming in. Our city of Prince George is still waiting

for commitments made by the previous government on recreational grants.

If we'd really wanted to prepay, we could have prepaid those too, if

you really want to know the truth.

There's one other thing I'd like to straighten out while I'm on my

feet, and it's the member for Vancouver South stipulating that I'm

wasting the time of this House and that he should maybe decide when I

get up and speak. Mr. Chairman, I want to assure him, and the rest of

the opposition, that my constituents didn't send me down here for the

opposition to tell me when I can speak.

SOME HON. MEMBERS: Hear, hear!

MR. LLOYD: Certainly if we're talking of time wasting and

filibustering, I think the member for Vancouver South is a perfect

example of wasted time. He's wasted more of the House's time on

filibustering and points of order than any of the opposition over there.

Interjections.

MR. LLOYD: I'd also like to comment on the member for North

Vancouver–Capilano's (Mr. Gibson'

s) statement about having another

Clarkson Gordon report every year. I'm sure his father, who served in

this Legislature for some time, would be quite proud of his son if he

could hear him in the House today saying that quarterly statements

don't tell him how the province is running. I'm sure he's be very proud

of that member over there if he can't tell from a quarterly statement

how the province is running.

MR. GIBSON: I want to know how the quarter's running, not how it ends.

Interjections.

MR. C.S. ROGERS (Vancouver South): Mr. Chairman, I would like

to ask the member for Fort George which member for Vancouver South he's

referring to, whether it's myself as the first member or my esteemed

colleague as the second member (Mr. Strongman). Neither of us have had

very much to say in this debate. I was going to get involved in the

discussion of railway tie weights or something else that was totally

irrelevant, as the rest of the discussion has been. Perhaps we could

ask the member for Fort George to allow us to know which one of the

members for Vancouver South he's referring to. (Laughter.)

MR. LLOYD: Mr. Chairman, I will certainly be pleased to

straighten out that statement. I wouldn't want anybody from Vancouver

South being under the stigma of what this member, the first member for

Vancouver Centre (Mr. Lauk), has been perpetrating on this House. I

should be pleased to correct that statement.

AN HON. MEMBER: Hear, hear!

MR. NICOLSON: Mr. Chairman, I'd like to discuss a couple of items

of concern — first of all a submission by the Propane Gas Association of Canada.

The submission was made, I believe, to cabinet and to the minister, and it's

of a great deal of significance for a person like myself, who represents a rural

riding where not all of the people can avail themselves of piped-in natural

gas, where people that live in rural areas and want to use gas as a method of

heating or fuel have to rely upon liquefied gas, propane and butane.

There is a gross injustice alleged in the brief, and I might say

that had we continued as government we might have been in a position to

do something about it because when we became government we didn't have

agencies such as the B.C. Energy Commission to whom we could refer such

matters for studying.

Interjections.

MR. CHAIRMAN: Order, please.

MR. NICOLSON: Presently liquid petroleum gas, liquified propane or butane...

Interjections.

MR. CHAIRMAN: Order, please. The member for Nelson-Creston has the floor. Proceed.

MR. NICOLSON: ...is subject to a tax of 7 per cent,

whereas

the tax levied on fuel oil for the same use is 0.5 cents per gallon. I

raise this because it is two completely different types of taxation

and, of course, it comes up at this point. Based on a straight gallon

charge, the tax on propane amounts presently to about 3.22 cents a

gallon and the tax on fuel oil is

[ Page 1178 ]

0.5 cent per gallon — a tremendous difference, a difference of 2.72 cents per gallon.

But it's even more significant when it's compared on a BTU basis,

and $42.39 more tax is actually paid for the same amount of heat for an

average user, because fuel oil does have more BTUs than a gallon of

propane.

So which tax is right? I ask the minister which tax does he think is

correct. Is the tax on fuel oil correct at 0.5 cent a gallon, and

should the tax on propane then be one-third of a cent per gallon, or is

the tax on propane correct at 7 per cent, and should the tax on fuel

oil also be 7 per cent? Is the minister giving any consideration to

this?

The report also said that it's their understanding that the B.C.

Energy Commission supports the contention that there is a tax

inequality and that they would recommend the bringing of the two fuels,

propane and fuel oil, into a comparative tax structure, either

increasing one or lowering the other. The amount that might be

considered here is considerable. For instance, with the fuel oil it

could be a matter, I believe, of about $4.5 million in revenue, but is

the minister giving any consideration...? Has he requested any

information from the B.C. Energy Commission? Have they made any

recommendations?

HON. MR. WOLFE: Mr. Chairman, in answer to the member, we

have very recently received probably the submission he's referring to,

and we definitely are giving it consideration. I'm getting some

information on this right now.

MR. STUPICH: Mr. Chairman, I would like to have had an

opportunity to look at the views before I pursue this business of the

B.C. savings and trust report, but I do think we have to have a little

bit more on it than we've had from the minister so far, and from what

I've been able to find out from others there was not very much

discussion of this up to this point.

I understand that the report was made available to the Minister of

Finance as early as January 28. Now that's three months ago today. Now

the minister tells us he has had time in this three months to read only

one small part of a report that is two feet thick. I wonder, Mr.

Chairman, whether or not he has referred this report to his own

research people.

I know he hasn't had very many, but it would seem to me that, from

what we read of the report in the newspaper it would make very

interesting reading for some of the people in his own Finance

department. I think he would be doing a disservice to them not to at

least refer it to them for some reading, some study, and some

recommendation — at least to recommend to him which volumes of the

report he should be reading.

I am concerned that he tells us that a decision to make the report

public has not yet been made and will not be made until — at least

that's the way I understand it — he has a better idea what is in this

two-foot-thick report. At his present rate of progress it could be a

long time before a decision is ever made as to whether this report will

be made public. I think that's unfortunate.

Again, the little bit that we read about it in the newspaper makes

it sound as though it could be a very interesting report, not only for

the members in the House but for the whole community — the business

community, the whole community of the province of British Columbia.

The newspaper reports would indicate that other governments are

interested in seeing this report. I wonder whether the Commonwealth of

Massachusetts has made an official request of the Minister of Finance,

or of anyone else in government, that a copy of the report be made

available to them. If such a request has been received, has the

minister responded in any way, or is he still considering what response

he will make?

A couple of questions then, Mr. Chairman. I would hope for some

assurance.... I can recall Carruthers report, for example, that for

some 20 years remained hidden and only saw the light of day in the

garage of an ex-member of the cabinet of the previous Social Credit

administration after an election unseated that administration. I'm

afraid that it may be that this report, too, will be buried until after

an election results in a change of administration. I hope it wouldn't

take 20 years to do that, Mr. Chairman. I'm sure you will agree with me

on that. But a report such as this should not be buried for 20 years.

We should have a change of administration much sooner if that is what

is required in order to have this report see the light of day.

So I would like something more in the way of an assurance from the

minister that it is not going to take 20 years to review this

two-foot-thick report. I would like to know whether or not he has

referred it to any of his own staff, or given them an opportunity to

read it. I'd like to know whether he's had an official request from the

Commonwealth of Massachusetts for the report, whether he's considering

an answer, and what has been the answer.

HON. MR. WOLFE: Mr. Chairman, we've been over this matter

during the time when the member was out of the House earlier, but I'd

be pleased to make a further comment on it.

He asked whether we've had requests for copies of the report. We've

received no requests or communications from anyone regarding copies of

this report, in spite of what you might read in the newspapers. I read

the same article, I think, and I think it's quite inaccurate.

[ Page 1179 ]

MR. STUPICH: That's fine. Okay.

HON. MR. WOLFE: The fact of the matter is that we were

delivered a copy of the report shortly after taking office, and without

having any knowledge of what order or authorization was placed for it.

We had communicated with yourself and the former Premier (Mr. Barrett),

asking whether there had been authority for it and what the amount was,

because we were billed with some $155,000.

Until we were able to receive some indication from the former

government where there was written authorization or anything on file

approving of the ordering of this report, we were really not in a

position to receive it or use it, or take whatever benefit there might

be from it. We didn't feel that this was the case. In any event, we

have the report now; I will be studying it, and we'll make our

decisions from that point on.

MR. STUPICH: What I am wondering at the moment, Mr. Chairman,

is whether or not the report is being reviewed by his own staff or

whether it's waiting for his personal attention. Would he care to

comment on that?

Interjection.

MR. STUPICH: I didn't quite hear the minister's response, or

maybe there wasn't one. I looked away for a moment; maybe there wasn't

one. Did the minister respond to that question?

Interjections.

MR. STUPICH: Everyone else is responding to that question, I see, Mr. Chairman.

MR. GIBSON: Mr. Chairman, I won't go through the unanswered

questions thing again right now. I'll get onto that tomorrow a little

bit, maybe.

I wonder if tonight the minister would tell us how his department

plans to follow along with the friendly relations which had been

developed with credit unions in terms of increasingly working more of

the government's banking arrangements or cash arrangements through the

credit union — the maintenance of some deposits and so on. Could the

minister tell us what percentage of their general deposits they would

hope to keep with the credit unions, and whether the past practice will

be followed, or what would be the plan there? There's another question

I'd like to ask him. Earlier on today, during the question period,

there was an allusion to a report, done by Dr. Cragg out at the

University of British Columbia, on the impact of the new 2 per cent

sales tax on the cost of living. Dr. Cragg, as the minister may recall,

was an economist who did an extensive study for the rentalsman last

year as to what the proper increase should be for rents under the rent

control system. I seem to remember that his general philosophy and