1974 Legislative Session: 4th Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, MAY 7, 1974

Night Sitting

[ Page

2901 ]

CONTENTS

Night sitting

Routine proceedings

Committee of Supply: Department of Lands, Forests and

Water Resources estimates.

On vote 137.

Hon. R.A. Williams — 2901

Mr. Bennett — 2906

Mr. Phillips — 2919

The House met at 8:30 p.m.

Introduction of bills.

Orders of the day.

The House in Committee of Supply; Mr. Dent in the chair.

ESTIMATES DEPARTMENT OF

LANDS, FORESTS AND WATER RESOURCES

(continued)

On vote 137: Minister's office, $105,352.

HON. R.A. WILLIAMS (Minister of Lands, Forests and Water Resources):

I really thought, Mr. Chairman, that this might be a pleasant occasion to go

over the kinds of things they've been saying in northwestern British Columbia.

We spent some 10 days in that part of this magnificent province, and it might

be worth while to discuss the kind of dialogue we've been developing with the

people of that part of the north. We have been offered....

AN HON. MEMBER: Dialogue or diatribe?

HON. R.A. WILLIAMS: Well, it varied, but with the thinning

of the Socred strength in the region, it was primarily a

dialogue, Mr. Chairman. We talked in the region stretching from

Mackenzie to Vanderhoof, Fort St. James, Burns Lake, Smithers,

Terrace, Kitimat, Prince Rupert and the various communities en

route.

MR. A.V. FRASER (Cariboo): Running scared, aren't you?

HON. R.A. WILLIAMS: We discussed different kinds of goals

for that part of British Columbia.

Interjections.

HON. R.A. WILLIAMS: Oh, no. We discussed the possibility of

a greater diversity in that part of British Columbia; that we

could do things with more local input than we've seen before;

that we would have structures and ownership patterns that would

be different than we'd seen before in the southern part of the

province and during the 20 years of the former

administration.

We said we wanted to strengthen the industrial sinews of a region that had

been too long forgotten, and our tour is just the beginning of many. The Minister

of Human Resources (Hon. Mr. Levi) will be moving through the region within

a couple of weeks and will be discussing the strengthening of the human resources

and the social institutions of the region, along with the other Minister.

I'm sure that after my estimates are over — within a day and

a half — we might embark on a further tour of the east and the

west Kootenays while the opposition carries on. I can think of

a few other regions as well that would be productive.

MR. W.R. BENNETT (Leader of the Opposition): I'll be

there.

HON. R.A. WILLIAMS: We didn't charge $10 a plate, but....

Interjections.

HON. R.A. WILLIAMS: No, no. Oh, I see.

MR. BENNETT: You didn't pay your own way like I did; you

went on it under the government.

HON. R.A. WILLIAMS: Shocking, shocking, isn't it? Imagine,

members of the Environment and Land Use Committee going out and

talking to the people about their region, asking for their

proposals. Imagine! Mackenzie, meeting with a citizens'

committee; Mackenzie, meeting with the local council;

Vanderhoof, meeting with the local council; Fort St. James,

meeting with the local council; Kitimat, meeting with the local

council; Terrace, meeting with the local council; Smithers,

meeting with the local council — and Prince Rupert, meeting

with all of the local councils of the northwest region.

But, you know, what was especially rewarding, Mr. Chairman,

was the kind of turnout. With the establishment of an NDP

government in British Columbia there is a deeper political

interest of a genuine nature than we'd ever seen before in this

province. I suggest that the kind of free-and-easy, three- or

four-year-lease Cadillac caravans that we had in the past will

be an inadequate dialogue with the people in the future.

Those kinds of patterns can't be repeated. We will have

established, with the beginnings by this administration, the

necessity to carry out discussions with the people with an

openness and on a scale that we have never before seen in this

province.

Interjections.

HON. R.A. WILLIAMS: The jump seat? Well, I prefer those in

the helicopters, but....

AN HON. MEMBER: Alex, control yourself.

HON. R.A. WILLIAMS: At any rate, we discussed many of the

things that we have discussed in this House before.

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2902 ]

Interjections.

MR. CHAIRMAN: Order, please.

HON. R.A. WILLIAMS: We discussed the need for acquiring

Canadian Cellulose. And, heavens, we had to admit that the

official opposition and the Liberal Party were opposed to

acquiring Canadian Cellulose — that they had voted against it.

It was new news up there in Prince Rupert and Terrace, in these

communities whose lifeblood depended upon this company.

It was news that that many over there who normally, one

would expect, would be very responsible and concerned about

people's livelihoods and jobs in regions like the northwest.... It was a shock, a terrible shock for them. It was too bad

that I had to convey that news, that the people of those two

great parties did not really care about the livelihood of the

individuals in that region.

It was nice to talk about the kinds of success that we've

achieved in the short time that we have with this corporation:

the kind of profit pattern last year and the profit pattern

this year that is considerably improved over last year; the

prospect of $300 million in capital expenditures of Canadian

Cellulose over the next five to seven years for improving all

of the operations both north and south; the prospect of

spending, in capital sense, probably 50-50 between the north

and south, so that the west Kootenays face the prospect of $150

million in capital expenditure over that time period, and the

northwest can expect a similar application of capital in their

region. So there is a basic strength for the regions and for

the company.

It was pleasant to be able to tell them that at long last

the local plants in places like Terrace and Kitwanga and the

sawmills in fact could be upgraded, and that we could have

collection systems built into the sawmills so that the wood

waste that should have been going into the pulp mill for the

last decade would at long last, with the expenditure of some

$19 million this year — out of earnings within the company — be

applied in the region to strengthen the company and improve the

waste situation with respect to the resource. That will be done

this soon, this year — some $19 million.

In addition, part of that $19 million will be used for

workers' conditions in the plants and safety conditions in the

plants. And the priority for those expenditures will be

determined jointly between management and labour. That is the

kind of precedent that we're establishing.

It was fascinating to meet with the rich and varied groups of the region —

with respect to Col-Cel again — meeting with the executive of the Pulp and Paper

Workers of Canada, meeting with the executive of the government employees union

that now represents the white-collar workers in Can-Cel in Prince Rupert, and

discussing the kinds of basic problems they face. So when we have our meetings

with the management of Col-Cel, we can convey the kinds of gut reactions on

the floors of the plants, and to begin to discuss in a very basic way how we

might work towards establishing the beginning of industrial democracy in British

Columbia.

The interesting thing, Mr. Chairman, is that the kind of

thinking that we've been evolving down here in our own

discussions are clearly the kind of thinking that's developing

on the floor level of the plant as well. So it was really

something to be able to see the kinds of parallel views that

are developing here at the government level and there at the

workers' level in the plant.

It appears that the fundamental problems in the plant are in

the first band of management essentially. There's a need for

adjustments at that level so that there is a decent response

between the workers and the first level of management. That, in

fact, is where the greatest level of frustration does exist

among the workers of the province — according to our

discussions and what we see at this stage in that

operation.

So we'll have an opportunity to start changing and lifting

the kinds of frustrating job activities that don't make sense,

that may well in fact be unnecessary, so that the worker and

the first level of management might develop a different and

better relationship, so that we can avoid the kinds of problems

that we've lived with so much in the past.

It was worthwhile to be able to discuss the rail agreement

and what that would mean for the region. In addition, it was a

chance to discuss developments such as the sawmill development

proposals. The sawmill development proposals, as everyone is

probably aware, began in the community of Burns Lake.

MR. FRASER: Tell us what the natives said about it.

HON. R.A. WILLIAMS: Oh, there are some representatives of

the BCANSI group in the audience tonight and I am sure they

would be happy to confirm most of what I have to say this

evening.

It was fascinating to attend the meeting in Burns Lake,

first with the local council and then with an audience of

people from the town and the region, numbering about 350

people. If the NDP, with a couple of cabinet ministers, on

half-hour notice, madam, can bring out an audience of 350, then

we wouldn't have to cancel $10-a-plate dinners in the Peace, as

some others have done.

In Burns Lake there was the chance to discuss these kinds of

variations in ownership and management, as we did. It was most

worthwhile.

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2903 ]

MR. FRASER: Tell us about the pie-throwing contest.

MR. D.E. SMITH (North Peace River): He didn't want to get

egg all over his face.

HON. R.A. WILLIAMS: No, I think the point is that I think we

are now on the threshold of a very worthwhile agreement with

the Indian people of the region and the three companies that

are involved.

We are establishing a different structure with a different

ownership pattern to what we have seen before. We have a

company like Can-Cel with 79 per cent ownership by the people

of the province. We have a company like Babine with roughly 25

per cent ownership, with ownership also by the local Indians.

That is a different structure.

But we were able to talk about other things. In Burns Lake

we were able to talk about tree farm licences, for example, as

well as the prospect of the municipality being able to share in

the basic resources surrounding the community. We were able to

talk about that prospect in Prince George as well, also in

places like Quesnel and the Kootenays, I am sure, where the

local community might have a say in how the immediate resources

- the timberland resources — around their communities might be

used.

MR. FRASER: Just ducking your responsibilities.

HON. R.A. WILLIAMS: I wonder if the Member for Cariboo is

willing to say that in the Cariboo where they are very anxious

to have a municipal tree farm.

MR. FRASER: You bet!

HON. R.A. WILLIAMS: Oh, I see. Well, I admit that the

problems in the Cariboo are more difficult because of the

mismanagement of the special sale area that we had for 20 years — the gross overcutting.

MR. FRASER: Phooey! Phooey to you.

HON. R.A. WILLIAMS: Would the Member say that there is not

gross overcutting in the special sale area in his region?

AN HON. MEMBER: Come on Alex, speak up, speak up.

(Laughter.)

HON. R.A. WILLIAMS: At any rate, the point was made, Mr.

Chairman, that the first municipal tree farm licence in British

Columbia was in Mission.

MR. FRASER: Yes, tell them which government it was that gave

them that.

HON. R.A. WILLIAMS: It actually began with a small CCF group in Mission.

(Laughter.) And the small CCF group was actually able to convince the coalition

government. (Laughter.) The neophyte Socred government didn't have the guts

to say no even though they would have wanted to.

At any rate, the Mission one is a genuine success story and

one that generally has not been discussed in the last 20 years.

We as a government were convinced that it made sense to

transfer the success in Mission to the more northern

communities where there was the resource base, where they might

manage in a good way themselves. Frankly, we saw it as a lesson

or a process in democracy in terms of the community putting its

imprint on the landscape around it; it wouldn't just be the

major company that was making its imprint on the landscape

around the community, but the community itself might do so.

We are now very close to establishing municipal tree farm

licence No. 2 in the Burns Lake wherein the community will

determine the management and wherein the community will

determine what areas should be preserved for recreational

purposes, including most of the shoreline of Decker Lake to the

west of Burns Lake, most of the shoreline of Burns Lake itself,

and small beautiful lakes in the hills — Maude Lake, Crystal

Lake and the like. They will determine how those areas should

be protected. In the process, they will also determine what

will be harnessed for industrial or local sawmill use.

MR. FRASER: They will make the decisions you should

make.

HON. R.A. WILLIAMS: Oh, no. We think the communities

themselves should have a say in the landscape around them. That

has not been the case in the last 20 years.

Beyond that, there will be a sharing of the revenue from

that land area. In Burns Lake there will be this large area on

Burns and Decker Lakes and also to the northeast. There will be

a sharing of the revenue from those municipal tree farms. That

will mean that the resource can be used to improve the social

and institutional base of the community as well.

We see the prospect for more municipal tree farms around the

province. We have similarly discussed the possibility of a

municipal tree farm in Smithers, but there the community backed

off.

There was a prospect for a municipal tree farm at the base of Hudson Bay Mountain

and in the valley to the west. There again there is the chance of them managing

it in their own way. For those who are not aware, Hudson Bay Mountain is one

of the most significant ski hills in northern British Columbia. It was developed

by a community group just as the Red and Granite Mountain areas were developed

in Nancy Greene's hometown area of Rossland. It is a local success story. They

are concerned with how the land

[ Page

2904 ]

is used around that mountain, and that it might be abused,

so they pulled back and we are still carrying on discussions

regarding the tree farm licence there.

I think one of the purposes of the trip was to deal with the

misinformation that existed in the region. I don't know how the

misinformation developed; I suppose spokesmen for other groups

might have somewhat twisted the provincial position somewhat.

But I think we made it abundantly clear that these lands at

Hudson Bay Mountain, for example, could be used in the way they

wanted them to be used. If it is to be primarily related to

skiing and recreation, then so be it. That could be the way the

local community would manage.

We saw this as a means to strengthen attitudes regarding

resource development provincially as well. We thought it made

sense for the community to be involved in this process so that

they could look at what this government or future governments

might do in the resource management field, particularly in the

wood industry. If they saw that the province was mismanaging,

then they could readily blow the whistle and use their own

experience as a baseline in relation to what the province was

doing.

We see the building of municipal tree farm licences in the

province as the means of building a stronger, more

knowledgeable base of opinion throughout the province so that

should we face the prospect of another Social Credit

administration, for example, there will be people around the

landscape of this province who know how and why things can be

done better so that the kinds of abuses we have seen in the

past, such as in the special sale area that the Member for

Cariboo represents, will not, in fact, be tolerated by a

knowledgeable public opinion throughout the province.

MR. FRASER: Phooey!

HON. R.A. WILLIAMS: There is an attitude abroad in relation

to the environmental movement, Mr. Chairman, that is

anti-growth. I think that deserves some discussion because it

has certainly been raised with respect to the development of

northwestern British Columbia.

It seems to me that the anti-growth point of view is a

narrow one and one that really doesn't recognize the basic

human needs that exist. In the northwest region we are talking

about a population of some 85,000 people; it is a quarter of

the province. Yet, this province is the size of the States of

Washington, Oregon and California combined.

It seems to me that to say we have got to close the door, that 85,000 people

is enough and that a doubling of that population is frightening and wrong, is

to be selfish about the landscape of this province. It is our view, Mr. Chairman,

that we should take a careful, modulated view of growth in a region like the

northeast. It is my view that the consensus in the region supports that view.

Nevertheless, there is a fairly broad minority view that says no growth at all.

It seems to me that if we want institutions in the region to

develop, if we want community colleges to establish in the

northwest, if we want better community medical facilities, if

we want better institutions, doctors, dentists, and the like,

then a reasonable amount of growth is necessary in order to

(1) strengthen the basic economy, and (2) provide the kinds of

services that most people in this province feel they should

have the right to. The kind of modulated growth pattern that we

see in the northwest would, we believe, provide that.

I think there is also concern regarding impact studies and

environmental studies. I would simply say, Mr. Chairman, that

in fact we have carried out, in the short time we have been in

office, more environmental studies and analyses than the former

administration carried out in 20 years — I would guess almost

tenfold.

Interjection.

HON. R.A. WILLIAMS: No, that just isn't so. Well, I agree

the number is correct, but I don't think we are starting out

with the same amount.

The point is, Mr. Chairman, that impact studies have been

carried out regarding the railway proposals, and they have been

carried out by CN and their advisers. They have been carried

out by the province and our advisers through the various

departments.

We haven't just plugged in environmental attitudes in one

agency; we have plugged them into several agencies. In the

Department of Recreation and Conservation numerous people have

been at it — ecologists, biologists, conservation officers. In

the Environment and Land Use Secretariat ecologists and

biologists have been plugged in. In the Lands department

ecologists and biologists have been plugged in.

People who never had a say before are now within the various

departments of government, and having an impact with regard to

all of these proposals. A highway in the north, for example,

isn't built without an environmental impact analysis. A railway

isn't built without an analysis in terms of its impact on the

environment. So there has been that kind of plugging in.

But there was a kind of misinformation abounding too, Mr.

Chairman. In the Smithers area, to give an example, the local

newspaper said that what we are proposing is a supermill for

Smithers, and that a supermill would cause environmental

destruction and would remove all of the forest from all the

hilltops in the Bulkley Valley. In 12 years there would be no

forest left, That is what The Interior News in Smithers

said.

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So we thought we had better reduce the information that we

had at hand to something that could answer that kind of

commentary from the local press. We were able to check it out.

The supermill? Well, the largest proposal we had, Mr. Chairman,

was from Richmond Plywood. The capital amount was $3.6 million.

Yet Canadian Cellulose is planning just basic improvements to

their own system this fiscal year of $19 million.

Impact on the forest. There are 1.1 million acres of forest

land in the Smithers area. Impact would be 0.25 per cent of

that land area per annum. The 12-year tenure of life for the

mill, when they had to amortize the capital, would be it. So it

was 12 years times less, than 1 per cent. We are talking about

a 3 per cent impact on the landscape in terms of cutting

rights.

MR. FRASER: Did you get someone to write a counter proposal

in The Interior News ?

HON. R.A. WILLIAMS: I am sure that The Interior News

will be doing that themselves this week. We had 20 per cent

of the town out at the meeting. So if the newspaper twists what

I said, 20 per cent of the town folk will know that the

newspaper in fact was not reporting what I had to say at the

town meeting. But that gives just one example.

We also see on the west coast the opportunity for doing

something again. The town of Ocean Falls to date is not the

success that Canadian Cellulose has been. We had no illusions

about that when we acquired Ocean Falls. We are satisfied,

however, that we now have a scheme that will in fact probably

double the population of Ocean Falls, will in fact establish a

sawmill in the community and will make use of the

under-utilized timber resource in that part of the central

coast. It will preserve and strengthen the settlement of Ocean

Falls, and maybe at the same time develop Prince Rupert itself,

so that we might have complementary development between Ocean

Falls and Prince Rupert, and that in fact, having the supply of

pulp provided for Ocean Falls, and then chips provided for

Prince Rupert to supply pulp, we would have a viable

proposition.

Now, the waste at the sawmill in turn would be an energy

source. We have not been using this energy source in the

province to the degree we should. Hog fuel could be a

significant energy source. It will in fact be a significant

energy source in Ocean Falls.

MR. FRASER: Why don't you get burners to burn hog fuel?

HON. R.A. WILLIAMS: Well, it is an interim problem

again. That is a product over a period of time that I don't

really want to go back into.

At any rate, it is clear now that there is opportunity to make Ocean Falls

a viable enterprise. In fact, the latest analyses indicate that the kinds of

payback are such that it is almost shocking to a naive NDPer to think that such

a knowledgeable corporation as Crown Zellerbach would have let go of such a

significant asset. But my faith in free enterprise of large multi-national corporations

has been shaken occasionally during the 20 months we have been in office. This

is, I guess, just part of the learning process for us all, here in the cabinet

and all around.

Interjection.

HON. R.A. WILLIAMS: I might just say, for those who voted

against the Can-Cel acquisition, that I remember the words of

the leader of the Liberal Party (Mr. D.A. Anderson) only too

clearly. I will be reminding him again and again in Prince

Rupert, in a future election, that he said this was like....

What did he say it was like? He said: "Why, it is like buying

the Titanic after it hit the iceberg." That is what he said. We

only made $12 million last year, the prospect is much much more

this year, and in the meantime we are able to put the basic

economic underpinnings to that corporation in that region, so

that they won't face the kind of problems they faced in the

previous decade. That, and $19 million in capital expenditures,

all the jobs preserved — that is like buying the Titanic after

it hits the iceberg?

Interjections.

HON. R.A. WILLIAMS: I can understand the Liberal leader

reflecting on the Titanic , because if I was in that group it

would seem to me that being in that job was like playing

musical chairs on the Titanic , or something like that.

(Laughter.)

I will let you in on a secret, Mr. Member, and that is that

one of our senior analysts, regarding the acquisition of

Can-Cel, was an outstanding accountant and an extremely able

person. He has now prepared an in-house document, circulated

among the senior accountants of their major firm in

Vancouver.

Interjections.

HON. R.A. WILLIAMS: I haven't seen it yet. I am looking

forward to seeing it. With his permission I will share it with

the House when I receive it.

I would like you to know what he has entitled it. He has

entitled it: "The Acquisition of Columbia Cellulose: The

Financial Coup of the Century in British Columbia." (Laughter.)

That is the head of an accounting firm.

Interjection.

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2906 ]

HON. R.A. WILLIAMS: When I receive it, I will. I would just

like also to say — I am sure it won't embarrass him — that he

is also a former president of the Progressive Conservative

Association of British Columbia.

I think that we have covered some of the points that we made

along the trip. It was interesting to see communities like

Mackenzie, single resource towns that are the product of the

former administration, and a good reminder to us that we might

in fact do something better than Mackenzie in the future.

MR. FRASER: There is nothing wrong with Mackenzie that you

haven't fixed up.

HON. R.A. WILLIAMS: It is along the north line of the CN

that we have the nucleus of towns — towns that are historic and

have been established for some time. We have there, along this

major railway that has been underutilized, the chance of

building around existing, viable, interesting, communities, and

it seems to me that that's a far better prospect than

communities like Mackenzie.

There will be new towns built in the future but they will be

carefully analysed. They will not be towns that are singly

controlled by one company — where the land ownership is turned

over to one company. That simply won't happen under this

administration.

MR. FRASER: Let's hear about your land policies. Come on

now; tell us about your land policies.

MR. CHAIRMAN: Order, please.

HON. R.A. WILLIAMS: We have an opportunity to build richer

communities, more interesting communities, more varied

communities with stronger social and cultural institutions than

we've ever seen before. In addition, in this region we have the

chance to have a strong, basic economy related to a rail system

that no longer focuses just on the lower mainland, and related

to a port system that isn't tied to the lower mainland

either.

It's a golden opportunity. The dialogue with the people in

the north was only a beginning. It will be a continuing

discussion as the choices evolve. I am satisfied, however, that

there's a basic, strong feeling throughout that region that the

steps we've made to date make sense and will make for a better

life for them.

MR. BENNETT: Mr. Chairman, I was very interested in the speech of the

Minister of Lands, Forests and Water Resources, mainly because it's one of the

few times I've heard him speak in the Legislature this session. I had hoped

that many of the questions we'd asked during the question period that have been

taken as notice might have been answered in his preliminary remarks to his estimates.

Instead we got a travelogue of his trip to the north, just without the slides.

I hope that next time — because the narrative wasn't that

good — the slides may be provided to provide some entertainment

while he drones on through his trip. But it's nice to know that

the Minister has finally discovered the north. While he

travelled it with his team of apologists...

AN HON. MEMBER: He lived there last summer.

MR.BENNETT: ...and the Minister of Highways (Hon. Mr. Lea),

trying to recoup some of the losses they've made in the north —

losses that have developed because of their attitude towards

the north — it was interesting to note his report of the

meetings and what really happened up there, because I happened

to go up to the north just after the Minister.

SOME HON. MEMBERS: Oh, oh!

Interjections.

MR. BENNETT: His reports of what he found there and what the

people said to him certainly weren't what they told me...

AN HON. MEMBER: Oh, oh!

MR. BENNETT: ...about what they thought about the

Minister.

HON. G.R. LEA (Minister of Highways): We weren't talking to

the chamber of commerce.

MR. BENNETT: As a matter of fact, neither was I, Mr.

Minister of Highways. It's easy to see why you didn't go in the

pie contest. There's no room for the pie because you always

have egg all over your face. It's nice to see you there.

But here they are. They go with their team and they all

bombed out. Two of the MLAs on the official team, the Member

for Omineca (Mr. Kelly) and the Member for Atlin (Mr. Calder)

said they had to go to the northern seminars to hear what was

happening.

Here they were travelling with the cabinet Ministers and

finally, I think, one of them left because when he found out

what was happening, he didn't want to be associated with them.

That's what two of your own Members said. That's what they

said. That was in the newspaper and the people told me, but I

didn't hear the Minister mention it.

Now it's nice to know that they went to the north.

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2907 ]

As I said, I went to the north too. I didn't go by

helicopter at $1,000 an hour. I went on the scheduled

airlines. It's interesting to see the people, because that's

who I talked to.

MR. CHAIRMAN: Before the Hon. Leader of the Opposition

continues, I'd ask the Hon. Member for Cariboo to withdraw the

remarks that he made.

MR. FRASER: Which remarks?

MR. CHAIRMAN: I think it's a reference to.... Order,

please. It was a reference to an Hon. Member of the House. I

think it's....

MR. FRASER: What was the remark?

MR. CHAIRMAN: Will the Hon, Leader of the Opposition

continue, please? The Hon. Member for North Peace River.

MR. SMITH: If you ask any Member of this House to withdraw a

remark, then it's incumbent upon you to say what that remark

was. Who did he address it to?

MR. CHAIRMAN: Order, please. The Hon. Member referred to

another Hon. Member as "the lippy..." something or other. He

also referred to him by his proper name rather than by his

proper title.

Interjection.

MR. CHAIRMAN: The Hon. Member has withdrawn. Would the Hon.

Leader of the Opposition continue?

Interjection.

MR. CHAIRMAN: The Hon. Second Member for Vancouver-Point

Grey.

MR. G.B. GARDOM (Vancouver–Point Grey): I'd like to know who

he said it to. He may have been totally correct.

(Laughter.)

MR. CHAIRMAN: I'm sure the Hon. Second Member for

Vancouver-Point Grey (Mr. Gardom) would not have liked to have

had this applied to himself, and I think that that's the

standard.

MR. GARDOM: I'm not too sure whether it's even been applied

to anybody yet, so I'd just like a few explanations, Mr.

Chairman.

Interjections.

MR. CHAIRMAN: Would the Hon. Leader of the Opposition

continue, please?

MR. BENNETT: Yes, Mr. Chairman. Thank you very much. The

Hon. Minister mentioned Burns Lake. I'd like to mention that

later in connection with the Woods proposals for Burns Lake

because I'm concerned about its place in the scheme of

things.

The Minister mentioned progressive forest management, and I

say all Members of this House are in favour of progressive

forest management. I know many of the fine Deputy Ministers

that have been with British Columbia for many years, and many

of the staff that have managed our forests well are still

continuing with this department, and I think that their

professionalism brings an air of stability to what may be

erratic departures by this Minister.

This Minister said he was worried about some of the comments

in newspapers in the north because they twisted the provincial

position. I say: how can you twist the provincial position?

Many of us have been waiting to hear just what it is from this

Minister. It's wonderful, but part of the remarks later are

going to be just what this Minister's plan is for the forest

industry and what his attempt is.

Well, Mr. Chairman, in coming to this Minister's salary,

we're not discussing just any ordinary Minister. This Minister

just isn't the Minister of Lands, Forests and Water Resources.

This is the super Minister.

AN HON. MEMBER: Right on.

MR. BENNETT: The super Minister. The Minister, out in the

public where I've been speaking and even in this Legislature,

is considered the grand architect for the government of all

policies...

MR. J.R. CHABOT (Columbia River): Super planner.

MR. BENNETT: ...the architect of Bill 42 and its land

control...

AN HON. MEMBER: Right on. Right on.

MR. BENNETT: ...the architect with the idea of the control

of land through leasing in the housing department...

Interjections.

MR. BENNETT: ...the Minister responsible for the takeover

of the PNE...

AN HON. MEMBER: You're right.

AN HON. MEMBER: We're making more money

[ Page

2908 ]

than ever.

AN HON. MEMBER: Who's making more money?

MR. BENNETT: ...the Minister who's probably responsible for

some of the things in Municipal Affairs like the new Island

Trust.

AN HON. MEMBER: What about the Labour Code?

MR. BENNETT: He's a director of Hydro. This, indeed, is no

ordinary Minister. This is the super Minister that is

responsible for most of the controversial policy of this

government.

AN HON. MEMBER: Hear, hear!

MR. BENNETT: Now the only consolation we can take over here

is that thank goodness the Minister of Health (Hon. Mr. Cocke)

obviously isn't taking any advice from him, because his

department seems to be working.

Here's the Minister who's really the Minister of what's

happening to our resources, in the attack on the mining

industry, through Bill 31, and on his own official department,

Lands, Forests and Water Resources. This is the super Minister.

This is the man that really could have been leader of this

party.

MR. CHABOT: King-maker.

MR. BENNETT: He's the man that even the former leader, who

is not with us tonight, in convention...

Interjection.

MR. BENNETT: ...realizing that he was the pick of the bunch,

back at the leadership convention a few years ago.... But

unfortunately for them, Tom Berger won. In the next leadership

convention, of course, he chose to be away and they took second

choice, but it hasn't hurt his ambition and it hasn't hurt his

effectiveness.

This is the super Minister. This is the real premier of the

Province. This is the man that calls the shots in that

government.

HON. W.L. HARTLEY (Minister of Public Works): No shortage of

leaders over here. (Laughter.)

MR. CHAIRMAN: Order, please. Would the Hon. Leader of the

Opposition address himself to the responsibility of the...?

MR. BENNETT: Certainly, I'm talking about the Minister. And,

Mr. Chairman, if I choose to attribute certain other controls to this Minister, certainly you'll

allow me that latitude. We're discussing the Minister and his

salary.

No, I admit that this Minister then has the control of the

government. He and the Premier travel together as a team.

They've been to New York together, rather like the old days of

Bulganin and Kruschev as they tripped around the world — the

pudgy little funny fellow and the cruel, calculating,

beady-eyed companion. (Laughter.)

Interjections.

AN HON. MEMBER: Who was the funny fellow again?

MR. BENNETT: Well, I'm coming to that, because we're not

sure. In fact, to bring it more to North American standards,

they are maybe closer to the Abbott and Costello image. There

again there was the pudgy little funny fellow that didn't mean

to be funny and was always wrong and his aggressive,

autocratic, mean friend who was always wrong but pushed him

around.

MR. CHAIRMAN: Would the Hon. Member please apply his

questions to the Minister?

MR. BENNETT: Yes, I'm sorry, Mr. Chairman.

Anyhow, I have been trying to point out, Mr. Chairman, that

this is no ordinary Minister and this is no ordinary

department.

Interjection.

MR. BENNETT: Well, frankly, the Minister of Highways (Hon.

Mr. Lea) will still be with that government when we need him in

the next election. You will be the best help we can get and I

would like to thank you now while I've got the opportunity.

Anyhow, this is no ordinary department. This is the basis of

over 50 per cent of the British Columbia economy. This is the

forest industry — an industry built over many years of the

pioneer and primitive logging and sawmill operations, through

the cut-and-get-out operators who operated through the coasts

of this province prior to 1947 and the first Sloan Commission,

and before we brought forest management to this province,

before we brought sustained yield, before we brought such

things as reforestation, when Sloan and his first commission,

and subsequent commissions in 1957, and indeed, the continuing

development through technology and the sophistication of

management that's made our forest industry what it is today,

through all governments. It is something that has built the

economy of B.C. and something we can all be proud of.

This is an important department. As I said, over 50

[ Page

2909 ]

per cent of the employment can be directly attributed to the

forests in B.C. What we would like to know is: what is the

future of this industry? It is something that hasn't been

touched on by this Minister. What's the true intent of the

future of this industry by this Minister? Is it going to be

complete nationalization? Is it going to be complete

provincialization?

This Minister seems to be bent on a takeover plan in all the

economic regions of this province on a design that seems to be

on a grand scale. He seems to be more concerned with taking

over and running companies for the very heady fact of being the

new H.R. MacMillan of the forest industry with the public's

money than he is in actually considering the management of the

resource from the government level for the benefit of all

British Columbians.

We have to be concerned that maybe his intent, as I said, is

the complete provincialization of the industry.

One of the things that has come out recently in the

discussion of Bill 31 has been a letter by Martin Kierans, an

engineer. While he deals with the mining industry, he refers to

a background and point paper produced by this Minister at an

NDP convention. In that point paper, I would suggest, is part

of the plan for taking over the resource industry.

HON. A.B. MACDONALD (Attorney-General): Read it. It's a good

quote.

MR. BENNETT: Yes. The whole paper?

In this background paper he suggests that the way to take

over mining would be to allow the shares to drop before you

take them over, to depress the industry.

The four-page paper has been summarized quite well by Mr.

Martin Kierans in his letter. But what he suggests would apply

to the mining industry applies equally well to the forest

industry.

So I think the Minister should be honest with this

Legislature and the people and tell us exactly what the true

intent of this Minister is for the forest industry of British

Columbia because we see developing a pattern of takeovers — like

Ocean Falls, Columbia Cellulose, Plateau Mills, Kootenay Forest

Products — and I believe it's part of a scheme to start

complexes in each area.

What's in the future takeovers? Well, we can see that they

need a complex in the Kamloops forest region, perhaps the

further takeover in the Kootenays might be Crestbrook, who they

can force to sell because of the allocation of timber. Perhaps

the next takeover in the north will be Eurocan. It has already

been suggested or discussion is already starting. That seems to

be the pattern of takeovers: talk about the wounded companies,

suggest they need aid, and move in.

HON. MR. MACDONALD: It's a terrible thing for the people to

own anything.

MR. BENNETT: But we are concerned, Mr. Chairman. If the

Minister was honest with us, and gave us his intent, we would

appreciate that he would be willing to level with the people of

the province and the Legislature. But what we are concerned

about are the methods and the results of his intervention in

the takeovers in the forestry industry.

We are concerned about the methods and I would like to just

briefly, working backwards, talk about Kootenay Forest

Products, and how it could have been taken over with little

innuendoes about how they couldn't get certain wood, or blocked

the sale. When the Minister killed the Kootenay Forest

Products–Crestbrook Forest Industries deal, there was never

any doubt that Kootenay Forest Products, an important part of

the Kootenay-Slocan-Arrow Lakes district, couldn't survive —

that Crestbrook wouldn't survive without additional timber.

If this Minister, when he blocked that sale, set up

Crestbrook for a future takeover, and the Eddy Match Company,

who were anxious to get out of B.C., were caught for a buyer on

Kootenay Forest Products....

Indeed, because the government controls the allocation of

timber and the rights to cut, and because of all of the

allowances and controls that the government has, really no one

in this province can sell out or sell their forest complex or

their sawmill without the full co-operation of the

government.

AN HON. MEMBER: Block the sale to the Kootenay?

MR. BENNETT: They blocked the sale to Crestbrook Forest

Industries of Kootenay Forest Products.

HON. MR. MACDONALD: Who — the Japanese?

MR. BENNETT: I'll come to that, Mr. Attorney-General. Don't

get excited.

Interjection.

MR. BENNETT: The longest travel the Attorney-General has is

putting on his own clothes and going from Point Grey to

Vancouver East at election time. (Laughter.)

HON. MR. MACDONALD: And I'll do it again, too.

MR. BENNETT: Instead of declaring his position to Kootenay

Forest Products in an open manner, he hid behind the Purcell

Range study prepared by Dr.

[ Page

2910 ]

Allen Chamber...

AN HON. MEMBER: He's still hiding behind it.

MR. BENNETT: ...with the help of Dr. Peter Pierce and

eventually refused to transfer the K.F.P. Ltd. cutting rights.

He gave as his reason that Crestbrook Forest Industries Ltd.

was in foreign control by the Japanese.

HON. MR. MACDONALD: Are you in favour of that?

MR. BENNETT: I'll go further, because it seems strange to

me, Mr. Attorney-General, that on one hand you can justify a

sporting trip to Japan to get Japanese investment in a steel

mill, and yet existing industry in this province you condemn on

the other hand. What sort of schizophrenic behaviour is that?

That's completely in keeping with your attitude.

To continue, finally, early in February, 1974, the Minister

took over Kootenay Forest Products Ltd., which from the instant

Crestbrook Forest Industries had firmed up their deal to buy

the Nelson operation, was the inevitable result. And it is

apparent that the Crestbrook Forest Industries also expanded to

achieve an economic rate of production, and now they have no

place to go.

The Minister has backed them into a corner, and they appear

to be the next victim in what is a developing regional complex — a complex that eventually can economically control the forest

industry in that area. Area by area we see this government

developing throughout this province — the Kamloops area, the

Cariboo area, the northern area and, of course, Ocean Falls on

the lower mainland area.

AN HON. MEMBER: What is there in the Kamloops area?

MR. BENNETT: The Kamloops area is, I believe, the blockage

of the sale of integrated wood, and it may be the next victim.

Can you tell me which one isn't? Give me a hint.

HON. R.A. WILLIAMS: It's news to me.

MR. G.H. ANDERSON (Kamloops): I'd like to know myself.

MR. BENNETT: We have to concern ourselves with the amount of

control any forest Minister has and the amount of conflict he

may have in dealing even when the government doesn't own a

forestry complex in an area. The allocation of timber and

cutting rights and chips and all of the responsibilities of the

Minister are complex enough and difficult enough without having a vested interest in the area where

the intent of the Minister may become clouded in showing that

they can manage and develop their own complex in competition

with private enterprise. In the need to prove this to the

public, because of their social-economic philosophy, they may

work against the detriment of the industry.

Surely, Mr. Attorney-General, you can see the apparent

conflict that may develop when you in fact have a need to prove

your managerial skill and you are allocating the timber, and

you also have one of the mills operating under your

directorship. I know you see it, but does the Minister see it?

That's what we say — how can the government, moving into area

after area such as the Kootenays, with all fairness, on behalf

of the people, allocate timber in a responsible manner?

The people of B.C. own the forests. The people of B.C. only

allocate to their government the harvesting and cutting rights.

We have the right of how they may harvest, the type of

recovery, the type of pollution control. We have royalty, we

have a stumpage. You can innovate on the stumpage as

technological improvements, make the industry financially

stronger as foreign markets get better, which has certainly

helped this province last year and this year with forestry

revenues.

Certainly the government has control of the industry and

owns it. The only thing these forest complexes have is the

right to harvest in our province, subject to the rules and

subject to the direction of the government, under the direction

of the Minister.

I'm only saying that the conflict of interest that Minister

may have is when the government becomes preoccupied with making

themselves look good with their own operation in the same area

and forgets the bigger picture of managing the resources for

the benefit of the province and the people.

Here we see on the one hand the Lands and Forests Minister

(Hon. R.A. Williams) saying that they turned down the sale of

this complex to Crestbrook because it's owned by the Japanese.

On the other hand we have the Minister of Trade and Industry

(Hon. Mr. Lauk) and the Premier in Japan just lately, seeking

Japanese investment in a steel mill, further saying that they

will accept Japanese investment in industries in this province.

What sort of doubletalk is that?

MR. FRASER: It's socialist doubletalk.

MR. BENNETT: There's the Minister who can turn down a sale, take away

the logical buyer, let them suddenly know that the only sale is to the government

of British Columbia at their price. Is that using the responsibility of the

office in the correct and proper manner? We've had takeovers like Plateau Mills,

where the newspapers were full of charges like

[ Page

2911 ]

"Terror Tactics".

AN HON. MEMBER: They sure were!

MR. BENNETT: That's right, and I intended to read some of

them today because I think it fits part of a pattern of the way

power is used and abused by the Minister.

AN HON. MEMBER: Empty charges.

MR. BENNETT: Empty charges?

MRS. P.J. JORDAN (North Okanagan): Everybody's wrong but my John.

MR. BENNETT: Empty charges?

AN HON. MEMBER: That's what he says.

MR. BENNETT: We shall see.

HON. MR. LEA: Empty, empty.

MR. FRASER: Not used power, abused.

MR. BENNETT: Let's just talk about Plateau Mills because it

could be the basis of the government's complex in the Cariboo

area, Mr. Minister from Cariboo. It's at Vanderhoof; it employs

about 300 people in three mills and another 100 in contract

logging operations. The offer to purchase Plateau was made by

Cinco Holdings Limited.

HON. R.A. WILLIAMS: And IT&T.

MR. BENNETT: Well, first of all IT&T and then Cinco

Holdings.

MR. R.T. CUMMINGS (Vancouver-Little Mountain): That's your

favourite company isn't it, IT&T?

HON. MR. MACDONALD: Let's hear it for the foreign

interests.

MR. BENNETT: I'll tell you, Mr. Attorney-General, we're

going to come to the foreign interests and their involvement

with this department. We'll be discussing that in just a moment

we'll be discussing the foreign interests in this government

and this Minister. Just a moment, just be patient.

Interjections.

MR. BENNETT: Be patient, be patient, we'll discuss the

foreign interests, Mr. Attorney-General. In fact, I would

advise you to be here and listen closely.

The shareholders of Plateau were David Martins & Sons,

Blue Mountain Sawmills, Cougar Enterprises, Beryl D. Goodwin.... In fact we had a company partially owned in the United

States and partially owned by the people living in the area.

The history of the transaction, of course, was that the

original deal was with IT&T (International Telephone &

Telegraph) who own a forest subsidiary.

HON. MR. MACDONALD: And Richard Nixon.

MR. CHABOT: There's the clown of the A-G's department.

MR. FRASER: He's got enough trouble without you helping.

MR. BENNETT: Right, right. Is there anyone else you would

like to mention, Mr. Attorney-General, who is owned by the big

corporations, while you have the chance?

HON. MR. MACDONALD: John Mitchell.

MR. BENNETT: Yes. Who else? Go ahead, I'd like to give you

the opportunity... under the protection of the

Legislature.

MR. CHAIRMAN: Order, please. Would the Hon. Leader of the

Opposition address the Chair please?

MR. BENNETT: Yes, Mr. Chairman. Can you control the

Attorney-General? I didn't hear your gavel when he was

interrupting.

MR. CHAIRMAN: Order, please. I would ask the Hon. Members on

both sides of the House to observe standing order 17,

part 2,

which requests that Hon. Members do not interrupt the person

who has the floor.

MR. BENNETT: Anyhow, the history is that after the Minister

turned down, because they were Americans, the sale by some

Americans and some Canadians to a subsidiary of IT&T, it

was suggested that they could sell to any other Canadian

company. An offer was made by Cinco Holdings. The amount of

Cinco Holdings Ltd. offer was $10 million, with a deposit and

payments payable at $999,000, $3 million, $5 million, and $1

million in fully paid, non-assessable 6 per cent redeemable,

convertible preferred shares of Cinco to Brigham Young

University. Some of the money was to go to support a

university, Mr. Attorney-General.

What did the government pay for Plateau? — $7,400,000. Now,

why would a firm take a lesser amount? Why, indeed, if indeed

they only had one choice?

[ Page

2912 ]

MR. D.M. PHILLIPS (South Peace River): You made them an

offer they couldn't refuse.

AN HON. MEMBER: The godfather.

MR. BENNETT: The IT&T offer was about $7.4 million, the

government was about the same. But what about the other offer

that was higher? Why would these people settle for a lesser

amount?

Let's take a look at some of the significant dates, because

they're catalogued:

April 4, 1973, G.B. Phillips in the presence of Mr. Hartley

Dent discussed with the Hon. Minister Cinco's proposal for the

acquisition of Plateau.

April 6, G.B. Phillips wrote the Minister setting forth

Cinco's proposal. Messrs. W. Martins and G. Froese, present

Plateau minority shareholders, would join with Cinco in the

acquisition.

April 10, the Minister acknowledged the letter and declared

a decision would be forthcoming soon.

April 26, Hartley D. Dent, MLA, recently refrocked, wrote,

to Phillips stating that Williams would be replying to Cinco's

proposal.

Mid May, Cinco learned about the government's involvement

and tried to get in touch with the Minister, but he remained

silent. They couldn't get an answer.

June 1, Phillips wrote to the Minister complaining that

Plateau's Canadian shareholders had informed Phillips that the

government was talking to another Canadian group whose offer

was in existence at the time of Cinco's meeting with Williams

on April 4, — I mean the Hon. Minister on April 4 — but not

mentioned at that time by the Minister. Phillips said further

that he was still proceeding with his acquisition of

Plateau.

June 7, Martins, a Plateau shareholder, said Cinco made its

first serious offer to buy Plateau for $9 million.

Tuesday, June 26, Cinco made a $10 million offer to the

Plateau shareholders.

Tuesday, June 26, Plateau shareholders signed a deal with

the government for $7.4 million. Unusual.

June 29, Phillips wrote to the Premier asking that he

intercede to prevent the Minister from continuing with this

treatment of what was supposed to be a condition, an allowable

condition, a purchase by Canadian citizens of this mill. He

asked for 60 days further to complete the deal.

Now the question that we have is, first of all, in the

Minister's letter to G.B. Phillips of Cinco, and his comment

that "we shall give consideration to your proposal along with

the other possibilities that are before us" — what were these

other possibilities? Did the other possibilities include the

government takeover? Did Cinco know at the time of the meeting

that the government was considering taking over Plateau?

Thursday, June 28, in The Vancouver Sun , Phillips and Beech said: "Plateau

shareholders have expressed fears that if they accepted the private offer, the

government would make the sawmill operation unprofitable through its control

over timber resources." The question I have is: was this statement of Phillips

and Beech justified?

Thursday, June 28, The Vancouver Sun : "The Premier

said he phoned Martins who backed up the government claim that

no such terror tactics were used by the government." The

question I have is: is it reasonable to expect Martins to speak

up against his new partner and boss? He was going to continue

in a minority capacity.

The mill had to work at the pleasure of the government.

Would he dare to speak up?

On Thursday, June 28, the Hon. Minister of Lands, Forests

and Water Resources said he was not aware of any offer made by

Phillips and Beech for $10 million, although he admitted

meeting the two Cinco men.

The question I have is: didn't Phillips write to the

Minister on June 1, 1973, stating he had "found the necessary

financing and competent management, coupled with the assistance

and expertise of Messrs. Froese and Martins. The operation is

secured continuing success." And he said that he is proceeding

along with the original proposal.

Thursday, June 28, Vancouver Sun :

" 'We,' the Hon. Minister said, 'told the Plateau people at the start they could sell to any Canadian company

they wanted to. They were not obligated in any way to accept

the government's offer.'

"He said the government first indicated its interest in purchasing Plateau shortly after the government

blocked a bid by IT&T."

Question: when Phillips met with Williams and Dent on April

4, did the Minister disclose to Phillips the government was

considering the purchase of Plateau?

Thursday, June 28, again in the Vancouver Sun : "The

government at no time used any pressure tactics during negotiations, the Minister said. All

the shareholders in Plateau agreed it" — the government

purchase — "was a fair deal."

Question: did all the shareholders agree it was a fair

deal?

Thursday, June 28, Vancouver Sun :

"The Minister said, in announcing the government

purchase, that it wanted to use the mill as an experimental unit and to

protect the religious ethnic group and to protect Plateau from pressure

put on by big business interests."

Question: did the Minister classify Cinco as big business? Did the Minister

consider pressure put on by big government less onerous than that put on by

[ Page

2913 ]

big business? If the answer is in the affirmative, what are

the benefits from big government benevolence? And is this

government really interested in protecting these religious

groups?

Thursday, June 28, Vancouver Sun :

"The Minister said he was not satisfied as to Cinco's

financial capacity to handle the Plateau purchase."

Question: one minute they are big business, the next minute

they don't have the financial capacity to handle the

transaction. Which is the correct answer, and which definition

did the Minister mean?

Thursday, June 28, Vancouver Sun :

" 'I think we were free to make a private deal,' said

Goodwin, one of the vendors from the United States" — one of

the American shareholders who sold out. " 'The government said

we could sell to a private company but they did indicate we

couldn't sell to a large corporation or any American company

which diminished our possibilities of selling at all.' " The

question is: is this statement correct, and does it not

contradict the statement that they could sell to any Canadian

company?

Friday, June 29, Vancouver Sun :

"He (Beech) and Phillips said the shareholders told them

they were afraid the government would use its control over

timber-cutting rights to hurt them financially if they do not

accept the government's offer."

The question: was there any justification for the fear

expressed by the shareholders? Did the Minister do anything to

assure the Plateau shareholders that as free citizens they

could sell to any Canadian company without any fear of reprisal

from the government?

Friday, June 29, Vancouver Province :

"Three of the four American directors also said, with

varying degrees of qualification, they were worried if the

private deal fell through they would be in a difficult position

because the government controlled the Plateau timber

supply."

Question: wouldn't this indicate that the American

shareholders were afraid to do anything but sell out to the

government? Does a threat necessarily have to be that they will

hit them with a club or use physical violence, or do

intelligent men accept the subtle threat when the person who is

threatening holds all the cards and all the power?

Friday, June 29, Vancouver Province :

"Said Dr. Claude Brown (one of the vendors), 'We discussed

it at the board of directors meeting on Tuesday. Essentially we felt if something

happened to their Cinco deal after they put a little money down, then the mill

would come back to us and we would be in a bad position with the government,

a vengeful government, unhappy that they chose to make a free choice in their

original purchase-sale agreement.' "

Question: was anything said or done that would lead the

directors of Plateau to fear anything from the government of

B.C. If they were forced to take back their sawmill and run it

as before? Is the government of B.C. anti-American, as

contended by Dr. Claude Brown?

Interjection.

MR. BENNETT: One of the vendors.

AN HON. MEMBER: Identify him.

MR. BENNETT: I don't want to remind the Second Member for

Vancouver-Little Mountain (Mr. Cummings) that he shouldn't

speak unless he is in his correct seat.

Interjection.

MR. BENNETT: Yes, it's so rare you're in here it is hard to

know where you belong.

Friday, June 29:

"He (Phillips or Beech) said when they learned about

the government involvement in mid-May they tried to get in touch with

Williams to see if they should proceed. The Minister didn't answer a

telephone call or letter."

Question: was the government's refusal to answer Cinco's

communications a means to stall the Cinco deal so the

government could firm up their own competing deal?

All of these discussions, all of these statements from some

of the purchasers involved, from some of the vendors that were

involved indicate that threats were used. Those threats,

whether they were shouted or whether they were used like they

were going to kick the censored out of you, or whether they

were whispers, are clearly just as improper when used by a

Minister of a government. I don't believe that we know yet

whether terror tactics were used, but I am convinced after

talking to these gentlemen and going through these files that

indeed threats were made and improper use of the office was

made to get control of a timber company in a key area of this

province.

Three: Columbia Cellulose, now Canadian Cellulose, the one that was voted against

by this party and the one that the Minister, Mr. Chairman, took such pride in,

with the same amount of pride he takes in not being involved with big multi-national

corporations, without being involved with the large American corporations, without

being involved with the large Japanese corporations — reasons he's used for

taking over other companies. Here we have what is now called Can-Cel. Can-Cel

was the second

[ Page

2914 ]

company taken over by this government, taken over in some

sort of confusion, taken over over a period of time when the

trading of the stock increased in volume, taken over over a

three-month period, with unusual financial circumstances

surrounding the takeover of this company. Very unusual. A rise

unrelated to other stocks in the same industry on the market

for the same type of increase, a rise that seemed to coincide

with the first indication of discussion of a takeover....

AN HON. MEMBER: It sure went down under Social Credit.

MR. BENNETT: Very unusual circumstances. I wouldn't take

pride in it until the committee that the Attorney-General...

or the investigative staff has come in with their report.

HON. MR. MACDONALD: Or make any innuendos either, would

you?

MR. BENNETT: The make-up of this company seems very strange

indeed. It's a company that has four of the directors who are

not Canadians, when we are concerned about Canadians in British

Columbia not controlling their companies.

SOME HON. MEMBERS: Oh, oh!

MR. CHABOT: I wonder what the A-G is going to say about

that.

MR. BENNETT: It's a company where, in fact, the weight of

the experienced control is in directors who live in New York:

Mr. Ira Wallach; E.B. Berkley, who manufactures envelopes in

Kansas City; Max Litvine, from Brussels, Belgium; and the

operating president of the company, R.M. Gross, formerly of New

York, now Vancouver. In fact, there are very few British

Columbians on this board of directors when....

Interjection.

MR. BENNETT: The Attorney-General flips and flops and

says "you don't like the Americans" — flip-flop.

All we're trying to do is establish this government's position. The questions

we are asking this Minister are: What are his intentions? Why is he developing

this sort of attitude for the takeover of forest industry without coming clean

to the people of British Columbia? Why does he use, as he is accused of using,

terror tactics and threats and the misuse of the government's office in the

allocation of timber to frighten people into selling to the government? Why

does he use as an excuse the fact that he doesn't want the Americans or the

Japanese? Yet, here in what he calls a financial coup, his greatest coup, I

guess his second greatest coup is Ocean Falls.... The double-coup Minister

living up to his reputation as the coup-coup Minister. (Laughter.)

Why does he have two or three different standards on foreign

ownership and control? Here we have Can-Cel operated and

controlled by directors not Canadian, not British Columbians,

but from the international financial community.

Let's just take a look at the connection, because the

Minister has also said he has a concern of large,

multi-national corporations — worried about little Cinco in

Vancouver, worried about the subsidiary of Rayonier. We have a

chart here of the B.C. government: they own Can-Cel; B.C.

Cellulose owns 79 per cent of Can-Cel.

HON. MR. MACDONALD: Not the government, the people of

British Columbia.

MRS. JORDAN: If I owned the CBC, what good would that do

me?

MR. BENNETT: Mr. Chairman, would you control the

Attorney-General?

That's 79 per cent.

One of the questions I have is why was 21 per cent left? Was

it left for people to make a profit on, the usual thing in a

takeover? Especially when Columbia Cellulose was controlled 90

per cent by the company it was taken over from — why was 21 per

cent left to trade? An unusual amount, coinciding with an

unusual trading pattern.

What I'd like to point out is: here we have B.C. Cellulose

that owns 79 per cent of Can-Cel, which owns 50 per cent of

Haseldonckx, a Brussels paper distributor that owns 43 per cent

of Les Papeteries de Gastouche in Brussels. Fine. Now, who

controls the other part? Well, we have the 62nd largest

American corporation of which Weldwood is a subsidiary,

Champion International, a company with annual sales similar in

size to the record-breaking provincial budget, sales of around

$2 billion. And what do they do? They own-control 57 per cent

of Intermills in Brussels. Now we're into the European

financial community. Intermills owns 57 per cent of Les

Papeteries de Gastouche.

There we have the British Columbia government, through a

series of foreign subsidiaries, in bed with Champion

International, the 62nd largest company in the United

States.

But wait, that's not all — Champion International has more

in B.C. Champion International owns 73.6 per cent of Weldwood.

Who's going to get the new mill in for Babine Forest Products?

Weldwood just happens to own 48 per cent of Babine.

Here we have Champion International in partnership by mysterious connection

in Brussels,

[ Page

2915 ]

Belgium, through interlocking companies. Champion

International again getting a new allocation in Burns Lake. And

who's the partnership there in Burns Lake? Why, they're

partners again. Can-Cel will have a percentage, and I presume

that Eurocan will have a percentage.

Here's the projected percentage — 26 per cent for Can-Cel

and 26 percent for Eurocan. If I was Eurocan, I'd watch out

because if you add them together, that gives 52 per cent — a

logical control situation for Can-Cel in their continuing

marriage with Champion International.

There's nothing wrong, except for a government, a

hypocritical government, that blasts multi-national

corporations on one hand and then goes to bed with them on the

other. Both with companies under other names — in one area

through mysterious Belgium companies.

But there's a further connection of Champion International.

The former president, Mr. Scrimshaw, worked for Champion from

1964 to 1968. The present — a director, Mr. Groves, worked for

Champion in 1962 to 1968. Directors — Mr. Litvine was a

director of Intermills, which is a subsidiary of Champion, in

1973. All of these people oriented to Champion, all of them

directors of Can-Cel, all of them part of a web that reaches as

far as Belgium and Europe, part of a web that sees Weldwood get

the latest participation in the latest major concession at

Burns Lake from a government that hypocritically says that

they're against large multi-national corporations, that says

they're against foreign control. What sort of nonsense when we

have a situation like this in Can-Cel, the financial coup of

the century? What's the connection where these people had a

connection before this government became financially involved

with Columbia Cellulose and Can-Cel?

Interjections.

MR. BENNETT: And who else do we have as a director of

Can-Cel?

AN HON. MEMBER: Who?

MR. BENNETT: Mr. Ira Wallach. Who is Mr. Ira Wallach? Well,

he's the director appointed by the British Columbia government,

by that cabinet, by that Minister, as a director of Can-Cel.

And what other further connection has he got with the

Government of British Columbia and their forest complexes?

Well, it just so happens that he's the president of Gottesman

& Co. of New York.

AN HON. MEMBER: What do they do?

MR. BENNETT: They are world-wide sellers of pulp, liner board and newsprint.

Interjections.

MR. BENNETT: The Minister of Public Works (Hon. Mr. Hartley)

says that we're making money. The same way you figured out

ICBC, the same calculations that led your party into running

those $25 ads.

Just a minute. I'd like you to stand up and say how B.C. is

making money on this agreement. I'd like you to support it,

because I'd like to go from there. I have more on Can-Cel, but

I don't think I'll bring it up tonight.

I think I'd like to go to Mr. Wallach, and the sales

arrangement with Ocean Falls. The first company that was taken

over.

Now for some time in this House we've been trying to get

answers to the sales agreement between Gottesman and Ocean

Falls. There was a question in the House October 15, 1973, to

the Hon. Premier about Mr. Wallach's connection and the fact

that he's a director. And the Premier said:

It is correct that it is the same man, but there is no conflict of interest. The sale of newsprint of course is

something separate from Can-Cel's products.

The reason for the change in the Wallach contract is that the price is much higher now, I'm sure that with this

move we will be returning even greater funds to the corporation

on behalf of the people of British Columbia.

October 25, the Hon. Member for Langley (Mr.

McClelland);

My question is to the Minister of Lands, Forests and Water Resources. On October 15, the Premier told this House

that he would consult the Minister about tabling the new

newsprint sales agreement with Gottesman-Central National

Organization. I would like to ask if that consultation has

taken place with you and whether you would now agree to table

this agreement as public business.

HON. R.A. WILLIAMS (Minister of Lands, Forests, and Water Resources): The answer, Mr. Speaker — and I

indicated that on a previous occasion — is no.

Again on October 25, and again the answer is no.

MR. FRASER: Open government.

MR. BENNETT: Again on October 23, and the answer is no. No

answers for a contract that the people of British Columbia are

starting to question.

I'd like to go back to Ocean Falls, and just through some

of the history of Ocean Falls before it got involved in this

contract, and how pulp and newsprint is priced in the Canadian

market.

Based on information from the Canadian Pulp and

[ Page

2916 ]

Paper Association, and Statistics Canada, the total

production of newsprint in B.C. for 1973 was 1,471,000 short

tons. All of this newsprint was produced by MacMillan Bloedel,

B.C. Forest Products, Crown Zellerbach and Ocean Falls. Of

course, Ocean Falls was taken over by the B.C. government from

Crown Zellerbach on April 1, 1973, an ongoing sales agreement

to market the newsprint and to supply part of the pulp and

chips for the manufacture of newsprint.

The actual tonnage of newsprint produced at Ocean Falls for

1973 is difficult to find. It is difficult to find because we

know that Ocean Falls has not operated to capacity. The rated

capacity is 300 short tons per day. If you operate it for 340

days it would be 102,000 tons per year.

E.E. Vesak, manager in Vancouver, in the Sun of March

19, 1974, said that production was still at the rate of 150 or

160 tons per day — about half of normal capacity at that time.

We know we have had curtailed production at Ocean Falls. The

statement about the present curtailed production due to lack of

rainfall of 150 or 160 tons per day.... Mr. Vesack implies

that last year, before the water shortage, the production was

higher — thereby making the informed estimate for 1973 of 157

to 200 tons per day seem more reasonable.

Because we cannot get any information about this company I

would like to estimate further, Mr. Chairman, about just how

much tonnage is being produced at Ocean Falls and what that

production is. The exact tonnage for 1973 newsprint by each of

the four manufacturers is not readily available, not even from

the government-owned Ocean Falls. However, as all the newsprint

mills except for Ocean Falls are running at full capacity, a

very close approximation for each of the three major suppliers

can be obtained by deducting from the 1973 B.C. total of

1,471,000 tons the 1973 estimate of 51,000 tons for Ocean Falls

and breaking down the remaining 1,420,000 tons in proportion to

the rated capacities of these three companies. This would give

us the figures of capacity for MacMillan-Bloedel of about

1,000,000; for B.C. Forest Products, 255,000; and for Crown

Zellerbach, 238,000. But the figure to watch is Ocean Falls

because that is what we are concerned with in this

Legislature.

The latest figures available for all of Canada are for 1972.

They show that 73.3 per cent of the newsprint went to the

United States. The Canadian Pulp and Paper Association and

Statistics Canada do not provide separate figures for the

tonnage of B.C. newsprint shipped to the various markets but

the bulk of it certainly goes to the United States.

The Vancouver Sun , on March 19, 1974, when reporting the interview with Mr.

E.E. Vesack, manager, stated that the Ocean Falls newsprint production was sold

through the Gottesman-Central National Corporation under a new agreement. Here

we have the government in the Ocean Falls Corporation, when they took over Ocean

Falls, signing an ongoing agreement with Crown Zellerbach for supply and then

cancelling that agreement. They cancelled an agreement for sale and gave it

to a director of Can-Cel, another government-owned company, through one of his

companies — Gottesman International, a large American corporation — to sell

on behalf of the province.

Where does Mr. Vesack suggest that this newsprint is going

to? He suggests that it is going to Argentina, Brazil, India,

Japan, Thailand and Burma. Apart from Japan all of these

countries could be considered part of the Third World;

certainly all but Japan can be classified as emerging

countries, particularly India, Thailand and Burma. The estimate

of 51,000 tons of newsprint produced at Ocean Falls in 1973

represents 9.6 per cent of the 532,983 tons of newsprint from

all of Canada shipped in 1972 to South America, the Indian

area, the Orient and the Pacific, excluding Australia.

Conventional marketing of pulp and newsprint is that it is

generally sold directly to the consumer by the newsprint

manufacturer. This is the normal way to market newsprint. The

amount, in terms of total world production, that is sold

through New York brokerage houses is extremely small. Any small

amount that does go through a broker is almost always on an

agency basis, Mr. Chairman. It is on an agency basis with a

commission to the broker of 2 or 3 per cent of the net price to

the manufacturer. It is most unusual for newsprint to be sold

outright to a broker or newsprint trader, particularly for a

term of years at the U.S. conventional newsprint marketing

price with the mark-up in the ultimate sale to a market other

than the U.S. retained by the broker or newsprint trader.

Here is the situation that is developing, Mr. Chairman.

Ocean Falls, owned by the British Columbia government, had a

sales agreement with Crown Zellerbach to market all of their

newsprint through the regular channels. That agreement was

cancelled. Would Crown Zellerbach dare not cancel an agreement

with the government who control their security in the forestry

in British Columbia?

HON. R.A. WILLIAMS: There was a clause in the contract that

covered it.

MR. BENNETT: That is fine. These are some of the questions

that haven't been answered.

AN HON. MEMBER: Ask for the contract.

MR. BENNETT: It was terminated. We can't get contracts

developed. We have to develop what we have.

[ Page

2917 ]

The standard Canadian newsprint contract gives the newsprint

manufacturer the right to raise the price at any time. The

consumer can accept the increased price or give notice of

cancellation as described above and look elsewhere for

supply.

As the newsprint mills are generally more or less in step

regarding price, and as the lead time to bring a new plant into

production is several years away, it is a very difficult task

for a newsprint consumer to locate a new source of supply.

How is newsprint priced? Prices are expressed in U.S. funds

for short tons — 2,000 pounds — at the newsprint mill. The

price includes the freight to the destination, which is to the

account of the seller. Thus a newsprint sales price of say,

$213.50 in U.S. funds per short ton includes the newsprint mill

cost and freight costs to the destination. This puts the onus

on the newsprint mill to make advantageous freighting

arrangements and to sell as close as possible to home. That is

conventional newsprint marketing.

There is another newsprint market. It is called the dump

market or the black market. If newsprint is not sold by the

manufacturer (1) direct to the consumer under a term contract,

or (2) through a commission agent on a continuing basis, it

finds its way in times of oversupply on to what is called the

dump market or, in times of shortage, on to what is called the

black market.

The obvious time for a newsprint merchant to firm up a fixed-price purchase

contract for a two- or three-year period of the then-going U.S. newsprint price

is just when a world newsprint shortage looms ahead. When the time for a cancellation

notice approaches two or three years later and a tight newsprint supply appears

to be easing, it would be advantageous for the newsprint broker or merchant

to give notice of cancellation, effective when the original contract period

runs out. However, Mr. Chairman, if he doesn't terminate the contract and allows

the contract to automatically continue on a year-to-year basis, his maximum

period of exposure to the possibility of a dump market is only 12 months. On

the other hand, when the date for giving notice of cancellation approaches and

newsprint is still in short supply, the manufacturer who is party to such a

one-sided contract, unless there is some obscure benefit, would find it advantageous

to give notice to get out of the contract at the end of the first term.

Exchange

rates as they affect newsprint. Newsprint prices are quoted in U.S. dollars.

On April 10, 1974, the Royal Bank was buying sight drafts on New York for amounts

in excess of $10 million at the rate of 97.02 cents Canadian. When converting

U.S. to Canadian deduct 2.9 per cent and we find that newsprint, in U.S. funds

when converted to Canadian funds, drops from $213.50 per short ton to $207.14.

If we take off the freight to California, basing it on the California market,

the freight rate relating to Canadian funds would be $18.92, the newsprint mill

would receive $188.22 a short ton for their newsprint.

That is how newsprint is marketed on the various markets.

The basic amount per ton that the newsprint mill receives from

the other conventional export markets is much the same as

received from the large conventional U.S. market.

The freight charge however, to a destination such as Burma

is much larger than to California. As a result, the price in

the U.S. dollars per ton tends to bear some relationship to the

freight charges. However, the present conventional newsprint

price in Southeast Asia is about from $225 U.S. per ton to

about $255.

It has been announced that these prices have risen today,

and I have not made adjustments. But these figures represent

the figures as they would be available within the last month.

If we were selling in Southeast Asia for $225 less freight, we

would be getting $193 a short ton. To convert the funds to U.S.

funds, we would be getting $195 per ton. This is the way that

conventional newsprint marketing is done.

But what about the black market? A very reliable newsprint

marketing source with first-hand knowledge from a recent trip

to Southeast Asia indicates the black market price for

newsprint in that area is in excess of $350 per U.S. ton. In

some sales the price has gone from $500 per U.S. ton and, just

recently this last week, newsprint has sold as high as $640 per

ton.

It is most unlikely that newsprint traders selling in the

black market would have arranged for a long-term freight

contract from the Pacific northwest to Southeast Asia at low

freight rates and thus would pay the current freight rate on

each black market sale. The current freight rate of about $60

U.S. per ton and $194 U.S. per ton yield from California are

used in the following table to indicate the extent of the black

market profit. If we take it to $500, black market price, less

$60 freight, less the California conventional marketing yield,

there can be an excessive ripoff, black market profit of $246 a

ton.

What we see is that for the emerging nations of the world

which have never been in a position to firm up long-term

contracts for newsprint and aren't on a most-favoured-nation

basis like Japan and the U.S. where they've had an economy that

can develop long-term contracts, they are subject to the black

market. These are the countries which can least afford it that

would be buying newsprint on the black market, countries that

are getting ripped off by a society which helps them with one

hand and rips them off on the other for excessive profits in

newsprint and commodities, something no British Columbian or

Canadian would want to be part of.

[ Page

2918 ]

MR. PHILLIPS: Who gets the profit?

MR. BENNETT: Well, I'd like to question the deal the

Minister has with Gottesman which sells our newsprint from

Ocean Falls at a firm price, something done nowhere else.

Indeed, if that price is $213 Vancouver, and, indeed, if

Gottesman International is turning around and selling that

newsprint — newsprint owned, as the Minister said, by the people

of British Columbia — on the black market into the emerging

nations, the third-world nations, the people of the world who

have no chance, having difficulty coming into this century,

people whom we help with dribbles and drabs of aid to salve our

conscience.... In this Legislature I've seen the Ministers get

up and talk about a fund to distribute $500,000 to the nations

of the world.

Yet here we have, on the best of my information, this

Minister, acting on behalf of Ocean Falls, making an agreement

with the director of Can-Cel, another British Columbia company,

who was appointed a director by that Minister, acting on behalf

of a New York company, a large American company, cancelling the

Crown Zellerbach normal newsprint contract and transferring it

to his friend, Mr. Wallach, of Gottesman-Central at a fixed

price of $213 a ton based on the California market — even when

all experts predicted that newsprint would enjoy a favourable

sale for a long and continuing basis in the world because it

was in short supply and prices would continue. No time to sign

an agreement which is reported to go to 1975. No time to sign

an agreement at a fixed price. No time to sell to a corporation

who will sell this British Columbia newsprint not on the

regular market but rip off the emerging nations of the

world.

MR. PHILLIPS: Who made the money? Who made the profits?

MR. BENNETT: Here we have Mr. Vesak, the manager of Ocean

Falls, saying that newsprint from Ocean Falls was shipped to

Argentina, Brazil, India, Japan, Thailand and Burma. These

countries, Thailand and Burma, are considered part of the third

world of the emerging nations. These people are probably buying

Canadian newsprint, British Columbia newsprint, newsprint from

the citizens of British Columbia at black market prices: $500 a

ton, $600 a ton. What do you think they think of British

Columbia? What do you think they think of Canada?

MR. PHILLIPS: We're not getting the profit off

it.

MR. BENNETT: What do you think these people think when we distribute

a paltry $500,000 to the world in some sort of benefits and rip them off for

millions by dealing through the black marketers to them for newsprint, firms

that sell in the black market of newsprint?

Interjection.

MR. BENNETT: The newsprint industry considers any newsprint

that does not go through the conventional newsprint market in

times of shortage as black market newsprint. That should answer

the Minister of Health. That is the definition developed by the

industry, an industry where most newsprint manufacturing plants

and marketers choose to market in the normal manner through an

agent.

Yet here we have British Columbia on an agreement which I

think smacks of a conflict of interest. We have a director of

one British Columbia company, appointed by that Minister,

arranging a sales contract and a firm price for a period of

time, in a time of rising newsprint prices, for his company,

ripping off this Minister and taking this Minister — indeed, he

was taking all British Columbians. This newsprint from Ocean

Falls has been marketed in the area of the world that can least

afford it.

Yet this Minister and that party makes a career of standing

up and saying how they're for the little people, the poor,

emerging nations of the world. The true socialist feeling for

their fellow man is that they're there to help them. Who would

be a part of such an ongoing arrangement as to rip off through

a New York company these nations struggling to bring themselves

into the 20th century? Who indeed?

Yet we have an agreement that I suggest does just that. This

Minister has been taken by the sharpies of New York. This

Minister, when he trotted down to New York and was wined and

dined, and took the Premier with him....

HON. R.A. WILLIAMS: I've never been to New York.

MR. BENNETT: Didn't you go to New York? They didn't take you

there either. I've got my facts right.

HON. R.A. WILLIAMS: I went to New York 15 years ago....

MR. BENNETT: That's fine. The Minister, in connection with

his appointee from New York then, has been taken by the same

type of international community that seems to be involved in

Can-Cel: Champion International. Now, because of their close

relationship with this Minister and this government — the

relationship and the directorship of Can-Cel — they have made

themselves a favourable arrangement to take the pulp from the

newsprint to be made from Ocean Falls and to be marketed on the

black market at an exorbitant price.

[ Page

2919 ]

Let's take a look at the type of profits they'll be talking

about. If they're buying it at $213.50, based on the California

market less freight, and if they sell it at $550 a ton, less

the freight allowance to the third world, they would have a

profit over and above the excess of the normal 3 per cent

commission based on the Ocean Falls estimated production of

102,000 tons per year. That's a maximum of $28 million. If we

reduce that to 200 tons a day, to 68,000 tons a year, it's a

profit of $19 million over the normal price negotiated plus 3

per cent commission.

Interjections.

MR. BENNETT: And who is paying that? Who's paying that price

to the people of New York? The people of Thailand and Burma,

people who can least afford it. It's not even coming back to

the people of B.C. This is the agreement that the Minister

won't table in the House. He won't show it in the House.

MR. FRASER: No wonder.

MR. BENNETT: We wondered why the Premier chose to be away

during this time. I could suggest that he didn't want to be

here when this Minister's estimates came up. Why else would he

take estimates out of context? Why else would we see the

juggling of the legislation?

AN HON. MEMBER: Are you suggesting that it's going through

an agreement?

MR. BENNETT: The Minister can stand at any time and tell me

that this agreement I charge is wrong. You can stand now, Mr.

Minister, and tell me that this is wrong. The Minister can

stand. He can laugh. The Attorney-General can try and defend

him with quips across the floor.

But I charge here tonight that this Minister has allowed the

people of B.C. to be ripped off by the very person that he

appointed to Can-Cel as a director in the Ocean Falls

corporation on newsprint sales by some $8 million to $20

million a year, based on the black market price. That's a

serious indictment of the inability to meet the commitment of

the portfolio of any Minister.

AN HON. MEMBER: "Indictment" is the term.

MR. BENNETT: I read earlier that he is just a poor boy from

Vancouver, and that's what he said up north when he was trying

to be folksy. The only person that thinks he is folksy is Mr.

Wallach from Gottesman International.

What I am saying is that here we have a Minister who is more concerned with

developing his own complex around B.C. than he is for the concern of looking

after the business of guarding the resources we have for the people of the province.

He is a Minister who has been accused since he took office of terror tactics

in taking over mills, who is now accused of signing an agreement that has Ocean

Falls, British Columbia's newsprint mill that the government was so proud of,

that lost $800,000.... But he has signed an agreement with, I believe, a government

appointee to another corporation, that he would give him a favourable agreement

to rip off that corporation for millions of dollars.

I believe for this reason that this Minister has not carried

out the duties of his office, or his commitment to British

Columbia, or his responsibilities in protecting the interests

of the people of British Columbia in either good or fair

management.

It is open to question the further complexities of the

Can-Cel deal and the international connections with Champion

International. The terror tactics at Plateau Mills and now the

final cruncher of the millions of dollars lost to this province

through Ocean Falls and their newsprint are direct

responsibilities of this Minister, this super Minister — this

strength of the government.

If the Premier were here I would ask him to ask for this

Minister's resignation. The Minister of Labour (Hon. Mr. King)

thinks it is funny, but because he is not here I think we will

give his own backbenchers a chance to stand up and be counted

in British Columbia. They would vote, perhaps, that they are

British Columbians first before their fear of the Minister, or

before their support of a party.

To give them that opportunity I move, seconded by the Member

for South Peace River (Mr. Phillips), that the salary of the

Hon. Minister of Lands, Forests and Water Resources, as

provided for in vote 137 be reduced by $1.

Interjection.

MR. BENNETT: Mr. Minister, if you don't think there is

something wrong with a sales agreement like that in Ocean Falls — you were taking a lot of pride a minute ago — stand up and

explain it; explain it like you did ICBC. Ask the Minister to

explain it, because I think that an agreement of this nature

.... I believe that this agreement should be filed

forthwith.

Mr. Chairman, I so move.

[Mr. Dent in the chair.]

MR. PHILLIPS: Mr. Chairman, I certainly think we have very

serious charges laid here tonight, and I certainly think the

amendment gives each and every backbencher from the silent back

bench in the New Democratic Party a chance to stand up and be

counted.

[ Page

2920 ]

You know, I would like to know whether the back bench truly

supports the double standard, or if they are going to stand up

for one ideology. Right here we are asking them to either

endorse double-dealing or be against it. Mr. Chairman, we seem

always to have double standard in this Legislature. On one hand

the Attorney-General says: "Let the light shine in. Let the sun

shine in."

What happens when we ask the Minister of Lands, Forests and

Water Resources to reveal an agreement where there is a

possibility that one of the directors of Can-Cel is making a

side profit of some $8 million to $20 million? He doesn't want

to reveal the agreement. He has been asked for it in this House

three or four times.

It is all right for everybody else in private industry to

let the light shine in, to let the sunshine shine in, but that

government certainly doesn't want to let any sunshine in on

their back-door dealings in their Crown corporations.

MR. FRASER: Open government! Phooey!

MR. PHILLIPS: The Minister of Lands, Forests and Water

Resources seems to have an entirely different concept of a

Crown corporation than does his Minister of Housing — an

entirely different concept. Because I remember some time ago

when the Minister of Housing (Hon. Mr. Nicolson) was purchasing

a corporation known as Dunhill Corporation. The directors and

owners of Dunhill Corporation owned some 80 per cent of that

corporation.

I really and truly believe that it was the Minister of

Lands, Forests and Water Resources who was truly the architect

behind this takeover bill, but the Minister of Housing said:

"We must have all of the shares of Dunhill Corporation." Why,

Mr. Chairman? Why must we have all the shares? Why can we not

allow little people in the community to retain that additional

20 per cent?

MR. CHAIRMAN: Order, please. Would the Hon. Member relate

his remarks...?

MR. PHILLIPS: I am making a point, Mr. Chairman, that has to

do with the Minister of Lands, Forests and Water Resources and

with Can-Cel. This relates to a policy of the government of

which I believe that Minister was the architect, Mr.

Chairman.

The Minister of Housing said: "No, we cannot allow any little individuals or

any minority shareholders throughout the province...." Now I would like

you to pay particular attention to this, Mr. Chairman. "We cannot allow any

of these minority shareholders throughout the province to reap a profit by holding

shares in a Crown corporation where the Crown holds the majority; and in the

case of Dunhill it would be 80 per cent." That was the stated policy of the

Minister of Housing.

In other words, he said: "We shall use the force of

government, if necessary, to force these minority shareholders

to sell their shares in Dunhill Development Corporation so that

the government can hold 100 per cent of the shares." That is

the stated policy. That discussion has gone on in this

House.

Now I want you to relate that policy, Mr. Chairman, to

Can-Cel. Can-Cel is a British Columbia Crown corporation owned

79 per cent by the government of the Province of British

Columbia. Unlike the stated policy in Dunhill, some 21 per cent

of the shares owned by Can-Cel are allowed to remain in the

hands of private individuals. So, as the Minister of Housing

said, these private individuals will be able to rip off profits

as the shares in that Crown corporation grow. All of a sudden

we have one policy.

Now we have a different department and the Minister of

Lands, Forests and Water Resources allows private individuals

to retain 21 per cent of the shares in Can-Cel, a corporation

which some of the shareholders and managers have said is going

to grow to great heights in British Columbia, is going to

become a forestry complex of great magnitude, one that the

government by feeding it timber reserves, can make the shares

increase.

I ask you, Mr. Chairman, what is going on? I'd like to know.

Who owns these shares? Who, indeed, are the shareholders in

Can-Cel? Who stands to profit by measures which this Minister

might take in reducing stumpage rates, in reducing the price of

chips from some of the other government sawmills? Who, indeed,

are the shareholders?

Well, let's take a look. I'd like to refer to the Canadian

Cellulose Company Ltd. notice of the annual general meeting. It

doesn't list all of the shareholders, but we find in there that

one of the directors, E. Bertram Berkley, chairman and

president, holds 7,000 shares. Where is Mr. Berkley from? Mr.

Berkley is from the United States of America.

AN HON. MEMBER: Good heavens!

MR. PHILLIPS: Yes, good heavens. He owns shares in a company

which that Minister, through actions in the people's timber,

can improve vastly the value of Mr. Berkley's shares.

HON. R.A. WILLIAMS: Would you think 79 per cent gives

control?

MR. PHILLIPS: Well, now does 79 per cent give control? But the Minister

of Housing (Hon. Mr. Nicolson) says we're going to own all of Dunhill because

we are not going to allow any individual in

[ Page

2921 ]

the Province of British Columbia, who might own the minority

shares of 20 per cent, to make a profit through things he

might do through building up the assets of Dunhill.

HON. R.A. WILLIAMS: Do you want 21 per cent

nationalized?

MR. PHILLIPS: No. I'll tell you...Well, the Minister of

Lands, Forests and Water Resources is a little jumpy

tonight.

AN HON. MEMBER: And well he should be!

MR. PHILLIPS: Ronald M. Gross, who is the president of the

company... Mind you, Mr. Chairman, don't forget this is a

British Columbia Crown corporation.

HON. R.A. WILLIAMS: No, it is not.

MR. PHILLIPS: Oh, it's not a Crown corporation at all?

HON. R.A. WILLIAMS: You're mixed up a bit.

MR. PHILLIPS: No, I'm not. I don't think I'm that mixed up

at all. Mr. Ronald M. Gross, where did he come from? He came

from New York. He's really a protege of Mr. Berkley.

HON. R.A. WILLIAMS: The Crown equals 100. Have you got

it?

MR. PHILLIPS: So, what does he own? He owns 5,100 shares

according to the latest company annual meeting report.

What about those other two out-of-British Columbia directors

of this great British Columbia Crown corporation? — the people

who really run the corporation. Well, Max Litvine doesn't own

any, because he controls the bank in Brussels that controls

another company that is owned by Can-Cel. But here's this name

Ira D. Wallach again, president of Gottesman-Central National

Organization, international marketers of pulp and paper. How

many shares does he own, Mr. Chairman? Oh, just a mere 5,000.

Not even a British Columbian, but yet a director of a British

Columbia Crown corporation, and a man who stands to reap

profits by owning partial shares in a British Columbia Crown

corporation.

I ask you, Mr. Chairman, what is going on? This same Ira D.

Wallach, president of Gotteman and Company also is the man who

merchandises the paper from Ocean Falls. Can you wonder that we

on this side of the House question the movements of the

Minister of Lands, Forests and Water Resources?

A moment ago the Minister of Lands, Forests and Water

Resources was on his feet and he was telling us how Can-Cel was

going to make $12 million this year.

HON. R.A. WILLIAMS: How much?

MR. PHILLIPS: Twelve million.

HON. R.A. WILLIAMS: Last year.

MR. PHILLIPS: Last year — 1973, this Crown corporation was

going to make $12 million.

HON. MR. WILLIAMS: Right. It is not a Crown corporation

though, have you got that?

MR. PHILLIPS: Well, I suppose. It's owned by the people of

British Columbia though.

HON. R.A. WILLIAMS: Seventy-nine per cent, remember, 79 per

cent.

MR. PHILLIPS: Oh, I see. You just own 79 per cent of it.

You're not going to....

HON. R.A. WILLIAMS: You've got it!

MR. PHILLIPS: For all intents and purposes if you own 79 per

cent of it, it's a Crown corporation.

HON. R.A. WILLIAMS: No, it's not.

MR. PHILLIPS: Well, all right. Anyway, the point is that it

is owned by some people, but who will benefit?

HON. R.A. WILLIAMS: Free enterprise....

MR. PHILLIPS: Oh, free enterprise. What I'm talking about,

Mr. Chairman, is the double standard. Now I'll talk about free

enterprise — at least they have a standard and they adhere to

it. But here we have the Minister of Lands, Forests and Water

Resources who told me and a lot of other people at a meeting in

Terrace a year ago last spring that he bought this corporation

to protect the investment of the little people so they wouldn't

lose money. I wonder what little people he was referring to,

Mr. Chairman? Was it the little people from Gottesman? Would

you call Mr. Gross little people? Mr. Berkley, Mr. Wallach —

are they the little people whom he was trying to protect?

Let's look at the $12 million that this corporation made. Now, they purchased

last year approximately 500,000 b-d units of chips. A b-d unit is a bone-dry

unit. What did they pay for them, Mr. Chairman? They paid $10 per bone-dry

unit; $10 a bone-dry unit and ripped off their suppliers. What would have

[ Page

2922 ]

happened had they paid the regular price? Let's take a look

at it.

Supposing they had paid the normal $52 price, which is the

price of chips in the Puget Sound area.

HON. R.A. WILLIAMS: You're too good. You're just too good.

(Laughter.)

MR. PHILLIPS: Well, all right. It's all right for the

Minister of Lands, Forests and Water Resources to rip off the

suppliers and rip off the people who were supplying him chips

so that he can come up with a $12 million profit, but if he

paid the market price he wouldn't have made any profit at all,

he would have lost money. But he has the power to twist and

bend elbows because of these sawmills that are selling chips to

Can-Cel. If they don't sell at the price he wants them to, what

happens? They won't get any more timber. This is the power

magnate. This is the king who uses terror tactics. This is the

man who wants to build up an empire for himself. He couldn't be

Premier so he's going to build up his own forest empire. And he

laughs because it tickles him right where he wants to be

tickled. And he's going right where he wants to go.

HON. R.A. WILLIAMS: Oh, come on!

MR. PHILLIPS: Oh, come on? Well, let's take a look — if

Can-Cel had paid the Vancouver price of $35 per b.d.u.....

HON. R.A. WILLIAMS: Or if Northwood had.

MR. PHILLIPS: Yes. What would have happened?

AN HON. MEMBER: Or if anybody did.

MR. PHILLIPS: Yes, what would happen? What would happen to

this profit of over $12 million? This profit of $12 million

would have been reduced to a $182,000 loss.

HON. R.A. WILLIAMS: What do you think Weyerhaeuser paid?

MR. PHILLIPS: This is what is going to happen as the

government becomes entwined in pulp mills and sawmills — the

whole deal. The Minister will do the dictating. And I'll

guarantee you right here and now, Mr. Chairman, that if the

Minister has his way, Can-Cel will become one of the biggest

forest industries in the Province of British Columbia, and they

will make untold profits unheard of before by any corporation

of their size.

I'll tell you why: because there will be deals made. The

Minister will make deals with the Minister. Under the table,

over the table. Certainly. On the PGE (BCR); you name it.

HON. R.A. WILLIAMS: With CN.

MR. PHILLIPS: Certainly. Well, with CN.

This is why there will be conflict of interests; this is why

this Minister should not have this power. He will go throughout

the province, telling the people everywhere what a great

Minister he is, what a great businessman he is; while all the

time who is really paying these would-be false prophets?

HON. R.A. WILLIAMS: Author! Author!

MR. PHILLIPS: Who's really paying?

HON. R.A. WILLIAMS: Is the council giving you this....

MR. PHILLIPS: The taxpayers of British Columbia.

HON. R.A. WILLIAMS: ...been giving you this material?

MR. PHILLIPS: It doesn't matter who is giving me material.

If I don't have material, you say I haven't done my research.

That's the way you are, Mr. Minister.

I would like to know the real reason for Mr. Wallach being

appointed to the board of directors of Can-Cel. Was it because

he was a shareholder already? Did it have something to do with

this sweetheart deal of selling the pulp for Ocean Falls?

I would like to know, further, why this Minister absolutely

refuses, when asked in this House, to give any information

whatsoever about his dealings. The Attorney-General says, "Let

the light shine in, let there be sunlight. Let it be open to

day. It must stand up to scrutiny."

Why won't the Minister file with this Legislature his sales

agreement? Why won't the Minister table his feasibility studies

he recently had done on Ocean Falls? And I understand, Mr.

Chairman, that Ocean Falls lost approximately $800,000 last

year.

HON. R.A. WILLIAMS: $850,000.

MR. PHILLIPS: $850,000. Just think, had the paper from Ocean

Falls been sold on the open market at the going price, Ocean

Falls might have come up with a profit of $10 to $15 million.

But no. The paper from Ocean Falls was sold on a pre-determined

agreement which we can't even have the chance to look at in

this Legislature.

This is one of the things that seems to be wrong with Crown corporations and

powers vested in the Minister where he doesn't have to answer to this Legislature.

One of the things this opposition has been talking about in the last 18 months,

the very

[ Page

2923 ]

thing we warned about when these bills were going through

this Legislature, was that the Ministers would not have to

return answers to this Legislature. That's happening already;

it is exactly what's happening.

HON. R.A. WILLIAMS: Just to the people.

MR. PHILLIPS: Oh, you answer to the people. The people can't

go in and find out about your international deals with some of

the directors on this corporation, but I certainly intend to

tell them. You go north? You'll be going south; you will be

going down the drain, my friend, that's where you'll be going.

Down the drain.

I would like to know why Mr. Wallach has had any opportunity

to sell on the black market at upwards of $400 with only a

guarantee of $195 to Ocean Falls. Why? I think that the

Provincial Secretary realizes the errors and pitfalls of some

of this legislation.

AN HON. MEMBER: I think you had better do some homework.

MR. PHILLIPS: Well, I have done some homework and I will be

doing a lot more. I certainly intend to get to the bottom of

this whole stinking mess. I certainly will let the people of

British Columbia know exactly what is going on in their

affairs.

How did the president, Mr. Gross, of Can-Cel know before the

government took over Kootenay Forest Products that the

government would have additional timber in the Kootenays? How

did he know? He made the release in a press statement that

Can-Cel would be getting additional timber in the Kootenays.

How did he know?

Interjection.

MR. PHILLIPS: Yes, but he made the statement before you

owned it. How did he know?

HON. R.A. WILLIAMS: They have been under-utilizing it.

MR. PHILLIPS: Oh, I see. On this chart we have here, we

wonder who is being "Championized." The Minister? Eurocan? Is

Crestbrook next? The Minister intends to move through Can-Cel

to take over timber in various areas of the province so that

eventually he can squeeze out the forest complex that is well

established.

When that Minister took over his portfolio, he took over one

of the best operated forest industries of anywhere in the

world. That is why he wants to get his fingers into it. He

thinks he can run it as well as private enterprise can run

it.

But I do hope that when this comes to a vote, the silent backbench of the NDP,

if they don't believe the facts that have been presented here tonight, will

do some research on their own. I hope they will have the fortitude to stand

up and be counted; to stand on a principle.

Tell us why — and ask themselves the question — why were

foreign directors allowed to retain shares in this Crown

corporation when individual British Columbians were not allowed

to retain any shares in Dunhill? It is a double standard. Why

were the trading patterns before this company was purchased by

the government so weird?

This department should be scrutinized by an independent

group of auditors who would be responsible only to this

Legislature. The Department of Lands, Forests and Water

Resources and his Crown corporations, Ocean Falls, Can-Cel, the

Kootenays.

Interjection.

MR. PHILLIPS: Make it a Crown corporation? What? Mainly the

Crown corporations. And they will be Crown corporations as soon

as these people have had an opportunity to increase the value

of their shares enough to rip off the people of British

Columbia, profits which are duly due to the people of British

Columbia.

HON. R.A. WILLIAMS: Would you sort that out again?

MR. PHILLIPS: Profits which are due to the people of British

Columbia.

HON. R.A. WILLIAMS: Which profits?

MR. PHILLIPS: Profits of your corporation, Mr. Chairman.

HON. R.A. WILLIAMS: Do you think that we should nationalize

the entire operation?

Interjections.

MR. PHILLIPS: You wonder why we have to bring up these

questions of trustworthiness in government; but when we don't

get the answers and the evidence is there, we have no

alternative. We don't know what's going on in many of these

areas or what will happen when these other corporations and the

other Ministers start using their similar powers. In this

department there are a lot of questions that should be

answered. Maybe the evidence is today circumstantial, Mr.

Chairman, but there is evidence.

I hope that the backbench, when it comes to the vote on this

amendment, will give it some really serious consideration,

because they may live to regret the day if they don't do their

own homework.

[ Page 2924 ]

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports progress

and asks leave to sit again.

Leave granted.

Hon. Mrs. Dailly moves adjournment of the House.

Motion approved.

The House adjourned at 10:58 p.m.

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