1977 Legislative Session: 2nd Session, 31st Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

THURSDAY, FEBRUARY 10, 1977

Afternoon Sitting

[ Page

801 ]

CONTENTS

Statement

Telegram of condolence to King Hussein — 801

Routine proceedings

Oral questions

Royal commission on BCR operations. Mr. King — 801

Legal adviser to Consumer and Corporate Affairs department. Mr. Levi —

Meadow Creek Farms racetrack proposal. Hon. Mr. Nielsen answers —

BCGEU agreement. Mr. Gibson — 802

Royal commission on BCR operations. Mr. King — 803

Committee of Supply: Ministry of Economic Development estimates.

On vote 79.

Hon. Mr. Phillips — 804

Mr. Lauk — 807

Mr. Gibson — 808

Hon. Mr. Phillips — 811

Mr. Wallace — 814

Hon. Mr. Phillips — 817

Mr. Levi — 818

Mr. Nicolson — 822

Mr. Lockstead — 823

Mr. Barber — 826

Hon. Mr.Phillips — 833

THURSDAY, FEBRUARY 10, 1977

The House met at 2 p.m.

Prayers.

MR. C.S. ROGERS (Vancouver South): Mr. Speaker, in the

gallery today I have two very special guests, Mr. Mohammed Daoud and

his wife Zohra, who are with us from Kabul, Afghanistan. I think

perhaps they may be the first visitors introduced in this House from

Afghanistan, and I would ask the House to give them a very special

welcome.

MR. R.E. SKELLY (Alberni): Mr. Speaker, I would like to have

the members welcome a group of students from the Arrowsmith Seventh Day

Adventist School in Coombs. They are here visiting the buildings and

observing the session under the direction of the principal of the

school, Mr. A.E. Blake.

MR. D. BARRETT (Leader of the Opposition): Mr. Speaker, I

would like the House to welcome a prominent Vancouver businessman who

is in the gallery today, Mr. Roger Trentanaro.

MR. L. BAWTREE (Shuswap): Mr. Speaker, I would like the

members to make welcome an old, old friend of mine, Mr. Mosie Adams,

who is in the gallery this afternoon. He is a citizen of this total

province.

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, I would like to make

everybody welcome this afternoon, because I understand that this very

day is the 79th anniversary of the first sitting that was held in this

chamber. I think it should be recognized.

MRS. B.B. WALLACE (Cowichan-Malahat): I would like the House

to join me in welcoming a class of high school students from the G.E.

Bonner Junior Secondary School in the Duncan area, together with their

instructor, Mr. Nimsey.

HON. J.A. NIELSEN (Minister of Environment): Mr. Speaker, I'd

like the House to join me in welcoming three constituents from the

municipality of Richmond: Rose Morrisette, Lorraine Ferrier and Claire

Hahn.

HON. G.M. McCARTHY (Provincial Secretary): Mr. Speaker, I would ask the House leave to make a statement.

Leave granted.

TELEGRAM TO KING HUSSEIN

HON. MRS. McCARTHY: On behalf of the government, Mr. Speaker,

I would like to read a telegram that has been sent by the Premier of

the province of British Columbia to His Majesty King Hussein of Jordan:

MAY I, YOUR MAJESTY, ON BEHALF OF THE GOVERNMENT OF BRITISH COLUMBIA, EXTEND

OUR HEARTFELT SYMPATHY AT THE TRAGIC DEATH OF YOUR WIFE, QUEEN ALIA. SHE WILL

BE LONG REMEMBERED WITH AFFECTION BY THOSE WHO MET HER DURING YOUR VISIT TO

BRITISH COLUMBIA IN 1974.

MR. BARRETT: Mr. Speaker, we too wish to express our

condolences. The King, who did visit British Columbia in 1974 along

with his wife, spent some very fruitful hours in this province

extending a new contact with the Middle East at that time that is still

presently of value.

Oral questions.

ROYAL COMMISSION ON BCR OPERATIONS

MR. W.S. KING (Revelstoke-Slocan): A question to the acting

Attorney-General in the absence of Attorney-General Bonner...I mean

Gardom. (Laughter.) Last night, the chairman of the royal commission on

the B.C. Railway, Judge McKenzie, was interviewed by Arnold Epp of CJOR

radio. The substance of Judge McKenzie's comments was that the MEL

Paving case would not be allowed to divert their main concern and focus

from the overall operation of the railway and, further, that the MEL

case would only be investigated if it was deemed to be relevant to the

commission's main focus on the overall railway operation.

Will the Attorney-General now amend the royal commission's terms of

reference to specifically include a detailed investigation of the MEL

Paving case?

HON. L.A. WILLIAMS (Minister of Labour): Mr. Speaker, I was

otherwise engaged in other matters this morning. I know that the

Attorney-General has this matter under consideration and I expect he

will be in the House shortly. Perhaps the member would defer that

question until he arrives.

MR. KING: Mr. Speaker, I want to thank the Minister of

Labour. I wonder if the Attorney-General will put in an appearance

during the question period.

[ Page 802 ]

LEGAL ADVISER TO CONSUMER

AND CORPORATE AFFAIRS DEPARTMENT

MR. N. LEVI (Vancouver-Burrard): Mr. Speaker, a question to

the Minister of Consumer and Corporate Affairs: does the department

office in Kamloops have a legal adviser?

HON. K.R. MAIR (Minister of Consumer and Corporate Affairs):

We don't have a legal adviser on staff, Mr. Member, but there are a

number of lawyers, I understand, from time to time that are called upon

for advice on an ad hoc basis.

MR. LEVI: Could the minister tell the House if Mr. Doug Smith is an adviser to the office in Kamloops?

HON. MR. MAIR: Yes, I believe he is, Mr. Speaker.

MR. LEVI: Is Doug Smith with the firm of Mair, Horne, Janowsky and Blair?

HON. MR. MAIR: He is, Mr. Speaker.

MR. LEVI: Another supplementary: is the minister still connected with that firm?

HON. MR. MAIR: Mr. Speaker, no, I am not.

MR. LEVI: Mr. Speaker, I draw the attention of the minister

to an advertisement that exists in the Canadian Law List, 1976, which

states underneath the rest of the members of the firm: "Counsel, the

Hon. Rafe Mair, MLA." What is this? Is this a touting for business or

just for information to the public?

HON. MR. MAIR: Mr. Speaker, I've already indicated that I

have no interest in the firm and, therefore, I have no control over

what advertisements they may put in any publications. I simply have no

interest in the firm whatever.

MEADOW CREEK FARMS

RACETRACK PROPOSAL

HON. MR. NIELSEN: Mr. Speaker, in response to oral questions

asked the other day, the member for Alberni (Mr. Skelly) asked if the

Ministry of Environment had conducted tests in the Hazelmere Valley

area which would indicate a replacement cost for artesian well supplies

of $6 million. The question was: had we conducted such studies to

indicate this? The answer to that question is no.

The member for Oak Bay (Mr. Wallace) asked if the Land Commission,

when considering the Meadow Creek racetrack application, had before it

three separate studies regarding the soil that were carried out by the

Department of Agriculture and property management branch. The answer to

that is yes.

The first member for Vancouver East (Mr. Macdonald) asked who

requested a trip by myself to view the Hazelmere Valley area. He asked

specifically: was it by Captain Terry? The answer to the question is:

the chairman of the Land Commission, Mr. Garry Runka, advised me that

he was touring the area to familiarize himself with the area in

question — there were three separate properties — at no one's request,

and I stated that I would like to accompany him on that tour.

Finally, Mr. Speaker, there was a question from the member for

Vancouver-Burrard (Mr. Levi). He asked if when I visited the Hazelmere

properties there was an application before the Land Commission. The

answer to that: yes, there were three applications before the Land

Commission and they were refused.

BCGEU AGREEMENT

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Speaker, I

have a question for the Minister of Finance. The other day, the general

secretary of the BCGEU, Mr. John Fryer, was quoted in the press as

saying that the recently approved agreement amounts to an increase of

24 per cent over 22 months. I would ask the minister if he agrees with

these percentages as stated by the BCGEU.

HON. E.M. WOLFE: (Minister of Finance): Mr. Speaker, I would

like to thank the member for giving me notice of this question. First

of all, with relation to the final settlement made by this government

in the last week or two, on the basis of the union vote, the answer is

no. In fact, the degree of settlement in that respect was something

like 2 per cent. When I say 2 per cent, I am referring now to the final

proposal which was based on $123 of a lump-sum payment in lieu of

retroactivity plus a $25 per month increase effective February 1 of

this year which would extend to the end of the contract for six months.

In explanation of that answer, I'd like to read a brief statement here which will perhaps explain.

"The recently announced agreement with the B.C.

Government Employees Union completed the second tier of bargaining,

with a resulting increase in the average monthly wage rate of slightly

more than 2 per cent. The union has accepted the government's offer of

a $123 lump-sum payment to each employee with a $25-a-month increase to

wage rates effective February 1, 1977, for the remaining six months of

the agreement.

"In this second tier of bargaining, management was able to negotiate greater

[ Page 803 ]

flexibility in work schedules, enabling the efficient use of

longer workdays to reduce overtime costs. The master contract, which was agreed

to in September, 1975, contains improvements to working conditions and a staged

cost-of-living clause, the combination of which will result in employment costs

at the end of the contract being at an estimated 21 per cent higher than they

were in September, 1975. Accordingly, the two rounds of bargaining, combined,

result in benefit increases of approximately 24 per cent by the end of the contract,

of which this administration is responsible for approximately 2 per cent and

which is more than offset, we believe, in the saving achieved in ship scheduling

costs."

I'd like leave to table this statement.

MR. GIBSON: A supplementary on that then, Mr. Speaker, since

the minister does seem to indicate that it is approximately 24 per cent

over 22 months, if I understand him rightly in the final analysis,

which is around 13 per cent a year. I would ask him if he considers

this to be within the guidelines and the general thought of restraint

of the government.

HON. MR. WOLFE: Mr. Speaker, if I may answer that question:

the entire cost-of-living index phase of that increase was approved in

September, 1975, and was put before the Anti-Inflation Board, which

approved this as being a concept developed prior to the guidelines

programme. In other words that cost-of-living and the entire

master-agreement phases of the contract were approved under the

Anti-Inflation Board. The present increase is to adjust for the salary

increases that had not been received, except for COLA, dating back to

September. As I said, there was a $123 lump-sum payment in lieu of

retroactivity, plus a $25 per month increase effective February 1.

One can reflect different percentages on this, depending on whether

you average the percentages over the length of the contract, or whether

you apply them from time to time as you go through.

MR. WALLACE: A supplementary question to the Minister of

Finance: since there's also been considerable public reaction to the

publication of certain parts of the management statement of personnel

policy which documents the management-executive group plan awarded to

public employees who are not in a union, could the minister, in view of

the fact that only part of the information has appeared in the media,

agree to table the documents outlining the full content of that

agreement?

HON. MR. WOLFE: Mr. Speaker, I believe the information I tabled would have that basic information, but I can supplement it if you wish.

MR. WALLACE: Since the agreement covers three years up to

March 31, 1977, can the minister tell the House what procedures, if

any, have been agreed to for ongoing negotiations in future years? Are

these negotiations now underway, since this agreement ends next month?

HON. MR. WOLFE: Mr. Speaker, just a matter of correction. The

agreement does not expire until July 31, 1977, and the matter of

negotiations will of course be under the auspices of the Government

Employee Relations Bureau.

ROYAL COMMISSION ON BCR OPERATIONS

MR. KING: Mr. Speaker, the Attorney-General is present now so I'd like to place a question to him again.

Last night, the chairman of the royal commission on the B.C.

Railway, Judge McKenzie, was interviewed by Arnold Epp of CJOR radio.

The substance of Judge McKenzie's comments was that the MEL Paving case

would not be allowed to divert their main concern and focus from the

overall operation of the railway and, further, that the MEL case would

only be investigated if it were deemed to be relevant to the

commission's main focus on the overall railway operation.

My question is: will the Attorney-General now amend the royal

commission's terms of reference to specifically include a detailed

investigation of the MEL Paving case?

HON. MR. GARDOM: Hon. members, it's not possible for me to

interfere with or comment upon remarks that have been attributed to the

commissioner or commissioners, and I've not heard them. I would again

just like to draw your attention to a couple of items within the order,

and expand the statement as well.

MR. BARRETT: Yes or no.

HON. MR. GARDOM: It is the responsibility of the

commissioners to look into the conduct of the railway. It's the

responsibility of the commissioners to see that the operations of the

railway were conducted in accordance with good business practices. I

would assume, Mr. Member, that if there was evidence led before the

commission that it was not conducted in accordance with good business

practices, that would certainly be within the terms of their

responsibility to look into.

I'd also like to say that insofar as a personal and a government

interpretation of the terms of the order,

[ Page 804 ]

it is our view that the various contracts, the

settlements and what-have-you concerning B.C. Railway extension, the

Dease Lake extension, the Keen, the MEL, the Jones or whatever else the

contracts may be are ones that can be before the commissioners and

certainly within their very broad terms of reference.

MR. BARRETT: Yes or no, Garde.

HON. MR. GARDOM: It was the government's intention, Mr.

Member, in drafting the order-in-council, that everyone would be given

the fullest opportunity to present their briefs, to offer their

opinions and, certainly, present evidence before the royal commission.

MR. KING: On a supplementary, yesterday the hon. Liberal

leader pointed out that the Sloan commission had the broad authority

within their terms of reference to investigate the Sommers case but,

lacking the specific direction from the government, failed to do so. Am

I to conclude then, and is the House to conclude, that the

Attorney-General and the government will not directly require the royal

commission to investigate the MEL Paving case?

HON. MR. GARDOM: As I stated to you, hon. member, it is the

interpretation of the terms of the order, insofar as the government is

concerned, that all of those matters are before the royal commission —

MEL Paving, Keen Industries, you name it. It's a completely broad

order, but it was the government's intention to provide these

commissioners with the broadest terms of reference. It was not the

intention of the government day by day to amend orders or bring in

specifics and say...

SOME HON. MEMBERS: Ohhh!

HON. MR. GARDOM: ...that the commission will be doing this,

that or the other thing. Again, I want to say that in the

interpretation of the government, yes, by all means. I can't really do

more than that. The powers are there and, in the government's

interpretation, these are matters that the commission should look at.

MR. BARRETT: Four days of whitewash!

MR. SPEAKER: Order, please. Hon. members, I would like to draw to the attention of the members in the House a quotation from Beauchesne

regarding question period. It is stated that it is not in order to

multiply, with slight variation, a similar question on the same point

or to repeat in substance a question already answered.

MR. BARRETT: It wasn't answered!

HON. MRS. McCARTHY: Mr. Speaker, I would like to file an

answer to an oral question that was asked me by the member for Burnaby

North (Mrs. Dailly). If you like I could read it, if we're still within

question period.

MR. SPEAKER: The question period is terminated, but you could file the answer.

Hon. Mrs. McCarthy files an answer to a question.

Orders of the day.

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

ESTIMATES: MINISTRY

OF ECONOMIC DEVELOPMENT

(continued)

On vote 79: minister's office, $141,324 — continued.

HON. D.M. PHILLIPS (Minister of Economic Development): As the

House rose last night, I was talking about a subject which the

opposition opposite seemed to be very interested in, and that is the

MEL Paving case as it surrounds charges of fraud. I'm sure their

efforts are wearing a little thin.

I was very interested in what the member for Vancouver Centre (Mr.

Lauk) had to say about my remarks. He said that my allegations — and I

made no allegations whatsoever; I clearly outlined to the House certain

facts....

MR. G.V. LAUK (Vancouver Centre): I didn't say that either.

HON. MR. PHILLIPS: He said my allegations are simply a red

herring. The ex-president of that railway, the second or third member

for Vancouver East, just recently shouted across the floor that it was

all whitewash. Now it appears to me that the opposition are doing a bit

of doubletalk, and I'd like to ask them again why they did not settle

the MEL Paving case.

Maybe I should outline to the House just a few facts surrounding

this situation. I want it to be clearly known that the MEL Paving

contract, the Keen, and the KRM were all contracts on the same railway

extension, the Dease Lake extension which is from Mile 0 to Mile 335.

Interjection.

HON. MR. PHILLIPS: The contracts had in them

[ Page 805 ]

the same terminology. I wish you would ask the

member for Vancouver East not to get so excited and to please maintain

his cool for just a moment while I outline a few statements to the

House.

All the contracts were basically the same contract; they had the

same terminology. All three contracts were basically working under the

same conditions; they were working under the same railway management;

they were working under the same weather conditions; they were all

faced with the same inflation rates, rates which I referred to in the

House yesterday afternoon.

MR. LAUK: Which ones?

HON. MR. PHILLIPS: They had the same railway engineers.

MR. LAUK: Which figures are you referring to?

HON. MR. PHILLIPS: But during the period the discussions were

made, they made them not to re-negotiate the MEL case. At the same

time, under all of these similar conditions — the same contract, the

same line, the same management, same weather conditions, the same

everything, and even the same board of directors — they chose to

negotiate with Keen and KRM.

Now it seems to me Mr. Chairman, that they're stating a case here. I

~on't think history has ever proved yet where you could be just a

little bit pregnant. The member for Vancouver Centre, who, I

understand, is in the law profession, says, however, that although MEL

Paving were experiencing basically the same problems, they were

experiencing them to a much greater degree and were making much more

serious charges about them.

Now I ask the House, Mr. Chairman, is there a degree of fraud? The

lawyer from Vancouver Centre full well knows that if the contracts were

the same, if there were allegations of fraud in one, there certainly

would have been the same conditions that applied to the other.

Now it's very difficult for me to put any blame on the member for

Vancouver Centre, because when the decision was made on the MEL case he

was not at that time a director of the railway; he replaced the member

for Revelstoke-Slocan part way during the socialist reign in this

province. He was a party to the negotiation with Keen, and I think, Mr.

Chairman, that he probably brought a little bit of sensibility to that

board of directors, the president of which was the socialist Premier

whom we had in this province for about three years.

Both contracts suffered from inflation, both contractors suffered

from changes in the standards of the grade, both contractors suffered

from new and stricter environmental standards which were brought in

during the term of their contract. However, the same board of directors

chose to settle one out of court and one in court.

Maybe the court case was because MEL Paving was forced off the job

and was not given the opportunity to sit down with the board of

directors and negotiate its case. But I must reiterate, Mr. Chairman,

that both problems existed for both of the contractors.

Now I'm not condemning the Keen settlement, but I do think we have

to come down and condemn that previous administration and that previous

board of directors, of which the socialist Premier (Mr. Barrett) of

this province was president, for not settling out of court with MEL

Paving. I am condemning that non-settlement. It was a very grave error

in judgment on behalf of that board of directors. The president — the

ex-Premier of this province — the member for Revelstoke-Slocan (Mr.

King) and the minister without from Prince George were the principal

directors on that board. It was a grave error and it cannot be

overlooked.

MR. J.J. KEMPF (Omineca): It wasn't their only error.

HON. MR. PHILLIPS: No, it wasn't their only error, but I

don't wish to go back into the many errors that that government made

while they were in power because the people of British Columbia

condemned them for that on December 11. I think possibly we might be

able to overlook their error in judgment — and it was an error in

judgment, But for them to be building up some kind of a smokescreen for

the people of British Columbia about charges of fraud leaves me just a

little bit dismayed. I think it's a direct attempt by that previous

administration to hide behind a smokescreen that they have created,

using innuendo, smear and smut and dragging this Legislature into the

muck.

AN HON. MEMBER: That is unparliamentary.

HON. MR. PHILLIPS: I condemn it, Mr. Chairman, as a slovenly

act on behalf of that opposition over there. Mr. Chairman, we can

forgive the graveness of their error but in considering this, I think

we have to take into consideration some of the problems that it has put

on the people of British Columbia — the taxpayers — and on the railway

itself. Their decision to go to court with MEL has set construction of

that railway back a long number of years, and no one will ever be able

to determine exactly.

AN HON. MEMBER: Shame!

HON. MR. PHILLIPS: It has worked a great hardship on that construction company. It has given

[ Page 806 ]

months of additional work to the very hard-working management and staff on that railway.

The original contract to MEL Paving was from Mile 286 to Mile 335.

It was let in July, 1972, for $5,464,840. Mr. Chairman, what happened

when the MEL Paving case was not renegotiated and when he was not

allowed to stay on the job and finish the contract? That contract was

re-let last July — that would be July, 1976 — in two portions. I want

you to bear in mind that the original contract was for about $5.5

million. The contract re-let to finish that portion of the railway was

in two sections; one let to Chinook Construction and Engineering Ltd.

In July, 1976, in the amount of — and this is only for a portion of the

original contract, and remember the original contract was for $5.5

million....

MR. LAUK: Is that a low bid?

HON. MR. PHILLIPS: It was let in July of last year to Chinook

Construction and Engineering, for a portion of the original bid, for

$10,268,812, nearly double the amount of the original bid. The second

portion of the railway contract which MEL had was let to Miller Cartage

and Construction Ltd., in the amount of $5,471,470.

Now Mr. Chairman, there's one other factor that we must consider.

During the increased costs of those contracts to the contractors, the

railway was building a new plant facility known as Rail West, in

Squamish, and in a little over two years, the cost of that plant

escalated some 84 per cent.

MR. KEMPF: They built one car.

HON. MR. PHILLIPS: So the board of directors, who were the

politicians, knew that there were increased costs in contracting in

British Columbia. Mr. Chairman, I don't know how much additional cost

is going to be incurred by the railway because of this action of

driving MEL off the contract and not renegotiating, but those members

opposite, on this deal, so far as I am concerned, are talking out of

both sides of their mouth as they wallow in their own gutter, because,

unfortunately, that's exactly what they're doing.

You know, Mr. Chairman, it's typical of the manner in which that opposition

has conducted itself during this session. They have condemned every positive

thing this government has done. They have not offered one positive suggestion

regarding the economy. Prior to the opening of this session, their leader (Mr.

Barrett) stated publicly that he is enjoying the fact that the economy of British

Columbia is not as good as it could be. He said that he's enjoying seeing

the economy in its present state, that he's enjoying seeing the number of

persons we have unemployed in this province unemployed. So, Mr. Chairman, I

just thought that I'd point out to the House some of the aspects surrounding

the MEL case so that you will at least have the knowledge in this House.

Mr. Chairman, there has been a tremendous amount of talk about

whether or not the line should be extended into the Dease Lake area. It

was interesting to go back into the history books and recall some of

the debates that took place in Ottawa prior to the construction of the

Pacific Railway, because it reminds me of the same type of

conversations and debates that we are having today. Just for the

House's edification, Mr. Chairman, I thought....

Interjections.

MR. CHAIRMAN: Order, please. The member for Vancouver Centre on a point of order.

MR. LAUK: I am really asking whether the minister will be

courteous enough to indicate whether that's under the heading: "The

Pacific Scandal Debate." Is that the one he is referring to?

MR. CHAIRMAN: Order, please. That's not a point of order.

MR. LAUK: Oh.

MR. CHAIRMAN: It's not really proper to interrupt a minister's speech with that kind of a frivolous point of order.

HON. MR. PHILLIPS: Mr. Chairman, we are coming to understand

that that particular member for Vancouver Centre rises on his feet in

this House and never has a legitimate point of order. As a matter of

fact, practically everything that member says lately leaves a lot to be

desired, and we have to take it with a grain of salt.

Mr. Chairman, I just thought that it might be interesting, because

this debate is taking place, to give you some examples of criticism

about the economic worth of the rail link to British Columbia. The

government was going to be condemned for "the willingness to expend

hundreds of millions of dollars on a railway in a barren and

mountainous country." That must have been the NDP opposition in those

days.

MR. LAUK: Nonsense!

HON. MR. PHILLIPS: "The B.C. economy cannot form settlements

because there is so small a proportion of land fit for cultivation."

This was one of the forward-thinking opposition members in Ottawa at

that particular time. "Cultivatable lands are

[ Page 807 ]

not available in B.C., this miserable region in the

west. B.C. residents are represented as being of wasteful and

extravagant habits." I could go on, Mr. Chairman. There are many

instances of the type of debate that we are having today with regard to

the British Columbia Railway extension into Dease Lake.

I don't have to think too hard to recall similar conversations and

similar debates that were made when the decision was made to extend the

British Columbia Railway north of Quesnel to Prince George, and on into

the Peace River country. However, history has proven that that was the

right decision at that time. I am sure that as negotiations with the

United States of America and the state of Alaska continue, as mineral

and economic development continues in the Yukon Territory, history will

prove someday that it was the right decision to build the extension on

the British Columbia Railway into Dease Lake. When we look to the

future and see that great railway as the only railway link to Alaska,

I'm sure that history will look back and pat those forward politicians

who made that great decision on the back and say that indeed, they had

vision, and indeed, they had courage.

MR. LAUK: Mr. Chairman, the minister has personally recalled

the debates in Ottawa in 1868. He was there stalking the corridors,

providing leaks to the press. I don't think it is relevant, because

this side of the House never opposed the railway, does not oppose the

railway, and in all likelihood would oppose any attempt by that

government to sell off one of the most important economic levers for

the province of British Columbia to a national railway whose interests

do not coincide with the development of the economy of British

Columbia, with this government, this opposition, or anybody else who

lives in the province. So that was, I am sure, a little bit of a

colourful tour through history which we all appreciate. We'll all rush

to our Pierre Berton this evening and double-check.

Even though these aren't my estimates, I'll answer the questions

that the minister raised. First, there was no fraud alleged in the

Keen-KRM case.

HON. MR. WOLFE: Table your answers.

MR. LAUK: When he says "degree of fraud," there was no fraud alleged, so let's get that clear.

Secondly, it was a situation where counsel and officials of the

railway advised the board that the action by MEL Paving could be won

and that the allegations of fraud should be heard at a judicial

tribunal.

He referred to the socialist Premier. Well, let me talk about the capitalist

minister, and let's define the difference. The capitalist minister gives

away money by the cabooseful to private contracting companies; the socialist

government takes every step to protect the interests of the taxpayers of British

Columbia — all of them. The socialist government takes a principled stand when

allegations of fraud against high-level public officials, elected or otherwise,

have been made. That's the issue, Mr. Chairman, and that's the issue

I now believe that side of the House will never understand.

There are many subjects with respect to the previous day's debate on

this minister's estimates. All questions that have been raised have not

been answered, and that may come as some surprise to the minister. I

know he has made every attempt to answer them and I hope he will today.

Some of the questions — indeed not all — that have not been answered

are: Was the Minister of Economic Development the unnamed cabinet

minister who stated that the British Columbia Railway will need $1

billion over the next five years? Did the British Columbia Development

Corporation act on a resolution of the board to purchase 9.8 acres from

Canadian National Telecommunications in Dawson Creek? What were the

coal commitments that the minister received as a result of his trip to

Japan?

Those are a few of the questions that the minister has carefully

avoided and that should be answered. I would ask the minister to

consider carefully those questions again and give replies.

Another question is: will the minister personally refer the MEL Paving case

to the royal commission? He's raised the KRM and Keen negotiations, which,

by the way, were negotiations up until December 10, as far as my recollection

is concerned. This negotiation took place very skilfully and arduously over

several weeks and months, trying to keep KRM and Keen within contract commitments.

I would suggest that both these situations be referred to the royal commission.

The opposition would be fully satisfied with a review of that situation. Let's

call Mr. Broadbent, Mr. W.A.C. Bennett, Mr. Williston and Mr. Gunderson to give

evidence under cross-examination and evidence in chief before that commission.

Let's not take potshots at each other in here. Let's have the

judicial tribunal deal with it. Let's not have them pass it around like

a hot potato and avoid it like the Sommers case. Let's let the sun

shine in and let's have a thorough hearing. There is nothing that this

side of the House is afraid of having exposed to the public and neither

should you. Let's do it.

I have some other questions for the hon. minister. Did the British

Columbia Development Corporation make a loan to Silverton industries, I

believe the name is, or Silverton mines in the minister's constituency;

and if so, in what amount?

Another question, by the way, that the minister has not yet answered

and that I'm very interested in is: did he have any political or

business association with any of the principals involved with Ragan

[ Page 808 ]

Construction company?

Another question has to be answered if the other royal commission is

to act properly. You will recall that two British Columbia Petroleum

Corporation employees resigned. Arthur Weeks and Mr. Cameron have

resigned for dealing in shares. Is the minister satisfied that no other

Crown-corporation official or employee purchased shares in August,

Cheyenne or Quasar? Has he conducted an investigation of officials and

employees specifically with the Development Corporation? If the

minister would indicate that he has and that this information will be

given to the commission, I'll be satisfied for the purposes of this

debate with that answer. But I think it's important that I find out

about two things that have happened in the minister's riding that

there's a cloud of suspicion over because the nature of the deal that

I'm aware of creates a very, very serious conflict of interest.

One is the Dawson Creek case where the officials of the BCDC said,

"No way; it's not in our interest to take this land. It's not useful to

the BCDC," and where the minister — I'm suggesting as a possibility —

suggested to the board: "Well, no, let's buy this land because Dawson

Creek can't afford it; and when they're ready to speculate or deal in

the land, we'll sell it to them at cost."

I refer the minister to the Act that established the BCDC. That's

not what the BCDC is for. It's not for constituency porkbarrelling.

It's to establish industrial land, to encourage industries, to make

loans, and to encourage industrial development. That question is very

important.

The second issue in the minister's riding is Silverton industries or

mines — I haven't got the note with me now. But Silverton, as I recall,

applied to the BCDC several times when I was the minister responsible

for that corporation. They just were not, in any way, able to fill

certain criteria. My understanding is that against the recommendation

of all of the officials of the BCDC, the minister intervened to make a

loan to Silverton. Now I would ask the minister to refute that if it's

not true, but that's the information that I do have. If it is true, why

did the minister intervene? How much was the loan? Did the minister

conduct an investigation into the development corporation vis-a-vis

trading in shares in August, Cheyenne and Quasar?

MR. GIBSON: Mr. Chairman, before going on to other matters I

would like to return to a subject that was discussed yesterday, namely

the Pemberton report. We seem to have smoked out a little bit of

information as a result of that debate yesterday, Mr. Chairman. I

suggested at the time that that tremendously important report forecast

a considerable loss of jobs in our basic industry — the forest

industry. I suggested that the stories I had been told were 50 per cent

of the jobs in the coast forest industry.

Today we find in the Vancouver Province of this morning that

Mr. Murray Leith of Pemberton Securities has given another figure. Let

me just quote the report here. He says that he'd never talked about a

50 per cent drop in jobs and, in fact, he said the report didn't

indicate any specific number, but then he goes on: "A subjective guess

would be something in the order of 20 to 25 per cent" — 20 to 25 per

cent, Mr. Chairman. This is from the horse's mouth this time. It's not

rumours about a secret report. It's a statement by, I would say, the

foremost expert in these questions in British Columbia — a possible

loss of 20 to 25 per cent.

What does that come down to in terms of direct jobs? It could be

7,000 to 8,000 direct jobs, and 15,000 to 20,000 indirect jobs in

addition to that. Remember, our forest industry and its employment

permeates every aspect of our economy. Up until now it has been the

industry that has fueled the growth of British Columbia. Now we have a

report that indicates that not only will it not be growing in the

future, but it will be contracting, and we have Mr. Murray Leith saying

that there may be 25 per cent of the jobs gone in the coast forest

industry because of the factors that are discussed in that report.

Mr. Chairman, that's nothing less than a crisis in British

Columbia's economy. I said yesterday that that was an incendiary

document, and it is. It simply must be released now that we have this

independent verification that that, indeed, is the way that the firm

that authored that report sees the future. Whether the magnitude is to

be 25 per cent or 50 per cent only the future will tell us. It remains

within our hands in this province to do something about it, to try and

make certain that the kinds of requisite modernization and forest

tenure policies, and so on, are adopted which will cause this gloomy

forecast not to come about.

But, Mr. Chairman, we cannot do that — the public of this province

can't do it, this Legislature can't do it, the industry can't do it —

unless they have access to this secret report. The minister yesterday

in his reply said that he couldn't release the report because of

confidential financial information contained therein. Mr. Chairman,

that's nonsense, and I'll tell you why it's nonsense.

A report was presented to the Pearse commission by Pemberton

Securities which discussed the same question, and there was no

difficulty with the publication of that report. As I say, it was

publicly presented. What did it contain? It contained public financial

information already on the public record from some of the major

companies in this province. If this latest report contains something

more than that, if it contains data on individual firms which the

minister considers should not be released because of

[ Page 809 ]

commercial confidentiality, then there is no

problem because the figures for the various companies can simply be

aggregated so that specific firms and their specific problems can't be

identified. Then you release the report, and then the public has the

benefit of the information and forecasting in that report.

MR. CHAIRMAN: Hon. member, maybe I should just interrupt you

long enough to ask whether or not this particular item might not be

more adequately discussed under the Minister of Forests' vote.

MR. GIBSON: I don't think so, Mr. Chairman, because that

report was commissioned by the minister's department and submitted to

his department. Indeed, my information is that the Minister of Forests

didn't get it for a little while after it had been received, which I

don't think is very good.

MR. CHAIRMAN: Please proceed.

MR. GIBSON: So, Mr. Chairman, that blows any excuse the

minister may have for secrecy. Now that the general direction and the

general gloominess of that report has been confirmed on the public

record, I say he simply has to release it. Twenty-five per cent of the

jobs in the coast forest industry is something that's just too serious

for that minister to sit on. That information has got to come out in

public so we know how to avoid that disastrous future.

MR. H.J. LLOYD (Fort George): You're saying there doesn't have to be confidentiality?

MR. GIBSON: No, Mr. Member, through you, Mr. Chairman. I'm

not saying there doesn't have to be confidentiality. What I'm saying is

that the information can be released without injuring in any way the

cause of confidentiality.

As you may be aware, the census department, for example, runs into

this problem every day when they have to release information which is

based on small geographic, or financial, or industrial units, which

would tend in some cases to identify the private operations of

individual firms. They simply aggregate the cases into large enough

numbers so that you can't identify the individual firms, and then they

release it. The public has its information, and the confidentiality of

the data is respected. There's no problem there. That's a complete red

herring. The minister can release that report on that basis.

Next, in re-reading the minister's remarks yesterday, I notice he

did not reply to my question concerning the Hazelton connection from

the mainline of the CNR up to the Dease Lake extension. I suggested

that the minister's statements that this wasn't really needed right

now, assuming he is going to go ahead and continue the Dease Lake

extension, constitute a major policy pronouncement. As the minister

knows, most of the potential traffic for the Dease Lake extension is

tidewater traffic. It has to be gotten to tidewater. So how do you get

to tidewater? Unless you have that cut-off, you have to haul it all the

way back to Prince George and then all the way back on the CN line.

That is about an extra 600-mi. haul. It's going to be hard enough for

the resources up there to pay the freight on that line, if you're going

to try and do anything like recapture your costs. But if you're going

to try and pay the freight on an extra 600 miles, then it becomes, as

near as I can see, impossible.

I'm particularly puzzled by the minister's approach to this because

my recollection had been, and I may be wrong, that this was to be

federal money rather than provincial money to build this cut-off. If

that's the case, then of course the minister should be advancing it as

quickly as he can. I simply don't understand why he is telling this

House that that cut-off connection is now in question. I would very

much like him to clarify that.

Also, the minister didn't comment on the curious case of the missing

president. I won't go over the description of that, but an individual

had, in my opinion, been very badly treated in terms of his employment,

which he thought was employment and which was then abruptly terminated

just when he was ready to move out here to take on the job of

president. I ask the minister why that was done.

Interjection.

MR. GIBSON: And how much did it cost? That's a good question,

Mr. Member; that's an excellent question. I pass it on to the minister:

was there any settlement involved?

Continuing on the BCR and getting back to the Dease Lake extension,

the minister supplied us with figures yesterday, which I appreciate.

They indicated that roughly $170 million has been spent so far on that

extension, and there is about $95 million yet to be spent till

completion. He did not give us revenue estimates, Mr. Chairman, and

that is what it all has to turn on. We've got $170 million in there,

and there's no going back on that. That money's spent. We're paying the

interest on it. We have to maintain the work that's been done.

Now is the time to go ahead and put in the extra $95 million to $100

million. Does he have revenue traffic forecasts which indicate that

that $95 million is a good investment? Let's use $100 million, because

it's easier to calculate. If you're paying interest on that money, you

have to figure maybe $10 million a year there. If you're figuring

depreciation on the track and roadbed — I don't know what you choose to

use as your depreciation period; let's say 15 years — then you have to

look at another $6 million or $7

[ Page 810 ]

million right there. Can the minister even tell us

if he sees, by the time that line is completed, after operating costs,

what you might call an operating profit sufficient to carry those

capital charges of the extra $100 million yet to be put in there? It's

a very important question, Mr. Chairman, because B.C. Rail is costing a

lot of money to our people.

Those are questions from yesterday, Mr. Chairman. I would like to

just briefly raise one new point at this time, because it's a question

that spans several departments: unquestionably, the department of this

minister; probably the Department of Environment; and the Minister of

Energy, Transport and Communications (Hon. Mr. Davis). That is the

current attitude of the government, and specifically of this minister,

on the Kitimat pipeline proposal.

My recollection from last summer — and I don't want to put words in

the minister's mouth, so I'll simply say that it's my recollection — is

that he came down pretty squarely in favour of that pipeline proposal

I'm wondering if he's backed off a little bit on that because I haven't

heard him talk about it too much since. I would say to him, Mr.

Chairman, and to the rest of the government, that British Columbia must

have a position on how oil is to come in to the western coast of this

continent. It's not a question of whether, it's a question of how.

In an excellent

article in The Vancouver Sun the other day,

the former chairman of the Energy Commission, Andrew Thompson, makes

that point. He says we don't have a choice any more. Now that Alberta

crude is no longer flowing down to the three or four refineries around

Cherry Point, somehow they are going to be serviced with oil. They're

either going to be serviced overland somehow from Canada, or they're

going to be serviced by tankers. Those tankers are either going to

off-load at Cherry Point, or Port Angeles, or Burrows Bay, conceivably.

I know the government has a report from the Environment and Land Use

Committee on this. My purpose at this stage is not to go into the

overall merits of that question. Rather, it is to say to the minister

that these questions are important enough to Kitimat and to the lower

mainland of our province that the provincial government must develop a

position. The question is important environmentally; it is important

economically; it is even important in terms of our relations with our

neighbour to the south.

The provincial government must develop a position to submit to the

federal government, which has final jurisdiction in much of this. To do

that, they must hold hearings. They must hold hearings that make it

possible for the people of Kitimat to state their concerns, for the

people of the lower mainland to state their concerns, for the various

oil companies, or pipeline companies, or whoever might wish to come and

state their concerns. But particularly, the concerned citizens of the

province should have direct access to their provincial government on

this question which is concerning and vexing the minds of many of us

right now.

Mr. Chairman, when you look at the latest incredible suggestions

from TransMountain Pipeline that Cherry Point should become the main

unloading area for the tanker traffic that would come in to service not

only Cherry Point, but the American midwest as well.... This suggestion

is one of the most astonishing and, in many ways, amusing that I've

ever heard — that their pipeline should be reversed a few days a week

to ship the oil up to Edmonton and then down to the U.S. midwest, and

the rest of the week run oil down to Vancouver, the excuse being that

Vancouver refineries can't handle the Alaskan-type crude. But, of

course, you would think that other types of crude could be brought into

Cherry Point or that the Vancouver refineries could be modified. But,

of course, that wouldn't solve TransMountain's problem, which is that

the through-put of their line is going down and down and down, and they

want to fill it up. So they've come up with this incredible suggestion

of running it one way one day and one way the next. So a barrel of oil

makes a 1,000-mile-plus round trip when it could have just gone across

the street. We are getting further and further into Alice's wonderland.

HON. MR. PHILLIPS: Come on, there are different types of oil.

MR. GIBSON: Sure there are different types of oil, Mr.

Minister, but you can offload different types of oil at Cherry Point,

and you can also modify the refineries to use the different types of

oil. You'll recall that those Cherry Point refineries were originally

built for Alaskan crude. They were modified simply enough to use

Alberta crude. Vancouver refineries are built for Alberta crude. They

could be as easily modified to use Alaskan crude.

AN HON. MEMBER: How?

MR. GIBSON: Just back and forth. I'm suggesting that that

should not be done, because I don't want to see that Alaskan crude

coming into Cherry Point. I think that's entirely the wrong solution.

I'm just saying how Alice-in-Wonderland this whole situation is getting

and the provincial government should hold some public hearings to put

together their position on this so that they can make it unmistakably

known.

I want to take a few sentences to congratulate the minister on the

establishment of the tariff analysis unit in his department. I am told

it consists of about five people and I think there will be few

expenditures the government will make that have a potential for a

higher benefit cost ratio. It is an unequivocally good

[ Page 811 ]

move. I congratulate him on it. The economic facts

of life behind it are that British Columbians pay at least $500 a year

per man, woman and child for the tariff wall that surrounds us. We sell

on the world market and we buy on this protected market and it just

costs us a lot of money. It makes our production facilities a higher

cost and makes it more difficult for us to earn our living in the world

through our unprotected exports. So every way that the minister,

through the application of reason and common sense and the figures and

arguments developed by this unit, can chip away at that tariff policy

of Ottawa's and try and get the recommendation of the Economic Council

of Canada adopted, which says it's better for all of the country to

gradually get rid of our tariff walls, the quicker he can do that the

better, and I congratulate him on that.

My final thought at this point, before sitting down, is to make my

regular plea for the establishment of an economic council of British

Columbia. Mr. Chairman, I won't go back over the sad story of the

Economic Policy Analysis Institute of British Columbia. I'll just say

that there is a continuing need of this government, and of the people

of British Columbia, for independent economic advice. The government is

very concerned, for example, with our competitive situation in the

world. It is using that as an argument for both management and labour

to show restraint. Unfortunately, it does not have the figures, the

research, or the hard facts to back up that argument. It's largely a

matter of waving of the arms and saying that our competitive situation

is serious. An economic council provide exact data on that kind of

thing.

We have an unusual economy in British Columbia compared to the rest

of Canada or the rest of North America. We are an economy exceptionally

dependent on trade. We are very heavy in primary industry and in

tertiary industry — services — and very, very light in the secondary

area. That's a strange kind of animal as economies go, and the usual

economic theory doesn't tell us too much about what's the best way to

run with that. This is the kind for thing that an economic council of

British Columbia could look at, and it could look at so many other

things that are of concern to the people, to the government of the

province, and to this House — things like rent control. The list could

go on and on — mineral royalties, and all of the vexatious economic

questions of the day that are subject to interminable argument across

the floor of this House. They might be so much better ventilated and

the dialogue improved by an economic council to look at these things

and to bring in sound, reasonable arguments and provide some kind of a

foundation for the public dialogue on the economy because, whether we

like it or not, governments are getting further and further into the

economy. That means the economy is run on that basis of political

decisions, because that's what governments are, and those political

decisions have to come back, in the end, to the opinions of the public.

So the opinions of the public in economics are important, and they must

be soundly based or else the government will be forced into unwise

economic decisions.

As I say, that's a regular plea, Mr. Chairman. I am confident that

the government will one day see the light and I will sit down in the

hope that the minister will stand up and say he has seen it right now.

HON. MR. PHILLIPS: I think the member for the high plant of

the questions which he has just recently asked. First of all, I'll

endeavour to deal With the Pemberton report. I know the member would

not want to leave the impression with this House that a spokesman for

Pemberton Securities did predict a 50 per cent decline or, indeed, did

predict a 25 per cent decline in the employment in the lumber industry.

Now if you read the

article very carefully, Mr. Chairman, and I am sure

the member has done this, what he said, according to the press report

is:

"'We've said there is going to be a decline in

employment but have never tried to quantify it,' Leith said. He said he

could not discuss the report prepared for the government but added that

his firm's views on the forest industry are well known and it has never

'talked about a 50 per cent drop in jobs.'

"A subjective guess, he said, would be 'something in the order of 20 to 25 per cent...50 per cent would be an exaggeration.'"

That is in the Vancouver Province report. However, the wire story states this:

"However, in Vancouver a spokesman for Pemberton

Securities says the 50 per cent-reduction prediction is incorrect.

Director Murray Leith says there will be a reduction but the company

has never tried to predict by how much. He says he can't discuss the

report but a substantive guess would put the figure somewhere between

20 and 25 per cent."

But those are figures from Pemberton not necessarily based on the

report. I want to call to the member's attention again that since this

report has come out, we now have the Pearse report. As you know, his is

a complete and thorough report that has been heralded in the province

by the industry and, I believe, by opposition and by everybody as a

very thorough analysis of the lumber industry in British Columbia.

MR. GIBSON: The Pearse report is pretty gloomy too.

[ Page 812 ]

HON. MR. PHILLIPS: Well, yes, it's pretty gloomy. However,

the purpose of reports — at least as I see them — is to gather all the

facts so that decisions can be made. As you know, we have a committee

right now set up to study ways of implementing the recommendations of

the Pearse report, When those recommendations are implemented, I would

hope and pray that there will be sufficient changes made in the

industry so that we will not be faced with this decline in employment

in the lumber industry. There have to be changes made in production;

there have to be some changes made in tenure; there have to be some

changes made in the way we do things. The purpose of doing these

studies is to bring to our attention and make recommendations. I would

hope that when the Pearse report is implemented — certainly with some

of the problems that we are facing now in our lumber industry — enough

changes will be made, Mr. Member, that we will not, indeed, be facing

those gloomy days ahead. Again I say that the Pemberton report deals a

tremendous amount with the profitability of individual companies and

the industry on the whole — the reasons why some of the profits are

lower than others. As I say, it's really confidential information, and

I will not be releasing it at the present time.

One of our major analyses on the General Agreement on Tariffs and

Trade relates to the lumber industry and plywood. What comes out of

that agreement will certainly have a very large bearing on the lumber

industry in British Columbia, and that's why we are so concerned about

it. I certainly thank the member for his statements with regard to our

tariff analysis unit; we certainly agree with him. I think it's one of

the major hurdles that the government of British Columbia will face,

and with sufficient knowledge and planning, hopefully, overcome. As

everybody knows in British Columbia, that's one of the areas which at

the present time really has our economy tied in many areas, and we

can't move. This is one of the first and, as one of the members said,

one of the most important areas that British Columbia can move in.

[Mr. Veitch in the chair.]

With regard to the Terrace-Hazelton connection, I'd like to point

out to the member that the connection is still part of the agreement

being negotiated with the federal government. I also realize that

timing is an issue in this. However, I would suggest that probably no

decision will be made on that connection until such time as the royal

commission brings in its recommendations. It states very specifically

and clearly in there that the royal commission must make

recommendations with regard to areas presently being served or those

areas that the railway proposes to serve.

With regard to the cost of extending that railway, sometimes, as the

member knows, it's very difficult to come up with hard and

cut-and-dried revenue projections. But what you have to base your

decisions on, in many instances, is the potential.

But in many instances, what you have to base your decisions on is

the potential. Certainly if there was no potential in the area you

would not be extending. I mentioned this when the committee first sat

this afternoon. I talked about the potential of linking up with Alaska.

But I would like to say that we would probably have substantial revenue

from that line today had we not had that mining legislation which

basically — and I mentioned this again yesterday — stopped all

exploration and stopped the ongoing projects that were in that area.

That would have given revenue immediately. However, the potential is

still there, and a lot of it, of course, will depend on the economic

climate and development in the area.

As I say, there's a forecast of potential, but the forecasts that

were made some years ago have, of course, changed. The timing has

changed. We must also realize that the viability of extending that

railway through to Alaska has become of much greater importance today

than it was in 1971 or 1972 or, indeed, in 1969. There have certainly

been a lot more minerals and more exploration in the Yukon.

With regard to the Kitimat pipeline, as you know, the preliminary

announcement was made in 1976. Formal application has now gone to the

National Energy Board, and they are the ones who really have the

jurisdiction in this case. The provincial government, through the

Department of Energy, Transport and Communications, is currently

studying the information available and will make a decision very

shortly whether to intervene on behalf of the government in the

National Energy Board hearing.

You know, of course, the Kitimat-Edmonton pipeline is only one of a

number of pipelines and shipping proposals to transport Alaska crude

oil to southern markets. But I did appreciate the member's summation of

the situation and the understanding of it. I look on British Columbia's

role as figuring how the province will best benefit from the best

proposal. With regard to the benefits to British Columbia, I believe a

lot of misunderstanding does exist today. However, I think the

intervention of yet another government body at this time would just

serve to confuse the issue. However, as I say, we are studying the

entire problem, and various solutions to it. But before committing the

province we want to make sure that we have had the opportunity to do a

thorough study.

I would like to just say that all committees and people in the

province should, indeed, not be making statements with regard to that

pipeline until they have, indeed, looked at all the facts, surveyed all

of the safety measures that can be taken and taken a

[ Page 813 ]

look at the benefits. Now as I say, the hearings

are going on, and I think they are being monitored and a position will

be taken.

With regard to a plea for an economic council of British Columbia I

certainly appreciate the member's comments in that regard, and I

certainly appreciate the fact that there is, indeed, need for dialogue

with the public on some of the economic issues. As a matter of fact, I

have tried to convey some of my feelings on the economy of the

province, as determined by this ministry, to the public. But we do know

what the key issues are. I think we have identified them in our

studies, and they concern the General Agreement on Tariffs and Trades;

they concern transport; they concern taxes; they concern incentives,

interests, markets and so forth. Sometimes we know what the problems

are, but the difficulty is knowing how to implement them. As I have

said earlier, that is one of the reasons we are now negotiating with

Ottawa and not confronting with Ottawa, because there are many areas

where Ottawa has control over many aspects of the economy of this

province. However, I am heartened with the attitude that Ottawa is now

taking, because they realize that British Columbia does indeed have the

potential and the resources and the people and the markets to give a

big boost to the economy of Canada. I am very heartened with this

attitude and I think it's a change in the right direction.

However, I do thank the member for his suggestion with regard to the

economic council. I would not want the economic council of British

Columbia, if and when one is formed, to not come to grips with some of

the problems that are facing the Economic Council of Canada because I

think that they could more readily apply themselves to the main issues.

I think you know that one of the main issues facing the business

world in Canada is the need to retain some of their own profits in

their own pocket so that they indeed can expand and run their own

affairs. As I have said before, I had a meeting with Len Marchand in my

office, when we were surveying ways in which we could help the small

independent businessman. I said: "You know, Mr. Minister, we have a

tendency to take money away from the business community and send it to

Ottawa, launder it through the bureaucracy, and then form another

bureaucracy in finding ways and means in which we can give incentive

back to the very people from whom we took the money away in the first

place."

Now to you, Mr. Member — through you, Mr. Chairman — that may seem

like an oversimplification. But I think that if we looked back at what

has happened over the past few years, that is exactly what has

happened. Every time we find a particular segment of society making a

few dollars, we have a tendency to move in and say: "No, we're going to

stop that."

I think one prime example of that is when professional people in our

country were investing in housing and in rental accommodation. The

government came along and saw that they were investing their money and,

lo and behold, they were making a profit! Canadians were actability

making a profit and keeping their money in Canada and the government

had to come along and say: "No, you bad boys, you can't do that! Now,

we'll take the money away from you and we'll put certain curbs on what

you can do and then we'll take it down and we'll launder it through the

bureaucracy in Ottawa and then we'll come back and we'll subsidize

housing and we'll subsidize accommodation." Now to my way of thinking

that is not good business sense. Maybe that's an oversimplification,

but one of the reasons that we have a shortage of rental accommodation

in Canada today is simply because of that fact. So what do we do?

Then we come out, a couple of years later, after we really killed

the industry and killed the incentive and taken away the desire for the

professions to build accommodation. I'll use them as a prime example.They've since taken their money and are investing in accommodation in

the United States, into Washington and Seattle. So now we have to take the money

that we've taken away from them on this profit and we have to come back

and we have to find ways of subsidizing the accommodation. We come out with

incentives to give them more than they had in the first place. I think it's

a comedy of errors the way governments had taken away the incentive from the

business world. In my humble opinion, that is one of the reasons we are faced

with the economic problems and woes that we have in Canada today.

Now I can see that there must be some normal dips and balances in

the economy, and that happens. But immediately the government steps in

and tries to smooth that out, there is where we have been getting into

the problems. I say yes to an economic council. But let's implement the

things that we know and the things that we should do. Let's implement

them first. Then I would like to see that we have an economic council

in British Columbia that would help us cope with growing problems.

You know, the province would be growing so fast that we would have

to have an economic council to decide how we're going to limit it or

where we're going to put it in what direction we should be going. That

would please me if we make some of the progress that I think Ottawa is

going to make because they recognize this problem. Hopefully I will be

meeting with the Minister of Industry, Trade and Commerce next month,

when some of these decisions will be made and I look forward to

representing British Columbia at that time.

[ Page 814 ]

MR. WALLACE: Mr. Chairman, I would like to return just for a

few moments to the B.C. Railway, both because some points have not been

made and because the minister has not answered questions that were

posed yesterday. But there is certainly one person who's been

overlooked in all this mess on the BCR, and that's the small

businessman in the north country. The evidence, regardless of the

government of the day, is overwhelming that projects on the B.C.

Railway were planned and conducted by a seat-of-the-pants approach, to

the degree that the engineers involved in the planning are now under

the scrutiny of their own peers. It makes it quite obvious that the

degree of planning and the efficiency of the engineering planning have

been so abysmally inadequate that even the engineers employed by B.C.

Railway are being investigated by their professional brethren. Now, Mr.

Chairman, there is neither the need nor the time to go off in that

particular direction. The point that I think has to be made is that

regardless of the government of the day, the manner by which the

railroad has been functioning for many years is clearly most

inefficient and unbusinesslike. That is no longer debatable, or at

least let's say that it hardly needs debate. When you have an ad hoc

approach to large projects involving millions of dollars, sooner or

later it has to come to disaster, particularly when external economic

factors such as inflation add a further dimension to the inadequate

planning and the inadequate projection of costs that have been done in

the first place.

In researching the more specific problem of Ragan Construction, I've

done a lot of phoning in the last day or two. I would just like to be

sure that this House and the whole of British Columbia know that it

isn't just the contractor who ends up in difficulties. It's the

numerous small-business people who do business with the contractors who

end up holding the bag.

Mr. Chairman, I think I should make it plain that in trying to

become knowledgeable about this whole situation, I have found that I

really can't have too much sympathy for the contractor. It seems to me

that both parties to this miserable kind of procedure knew exactly what

the score was. The government, through the BCR, knew very well that the

engineering, planning and projection of costs might as well have been

figures plucked out of the air. They certainly bore little relationship

in the ultimate analysis to the specific amounts of rock, gravel and

what-have-you that had to be moved.

Without taking up the time of the House again to quote

chapter and

verse, the documentation which was produced in this House earlier on

showed that overruns were the order of the day. It was just the size of

the overrun that was in any way changeable.

AN HON. MEMBER: Right on.

MR. WALLACE: So whether the government was acting directly

under the thumb of the then Premier, W.A.C. Bennett, in telling one man

to cut back by X millions of dollars, or whether it was an engineer or

whether it was a project manager, I'm not even interested in getting

into today. I just think that it should be established once and for all

that this was a game and both sides knew what the game was.

The government was fudging on the projection costs. The contractors

simply looked at previous situations with previous contractors, who, in

many cases, went ahead with work and knew very well it would cost 100

per cent more, and subsequently made a deal, if they could, with BCR on

overruns. As I say, we won't go through all the documentation, but both

sides of the game, Mr. Chairman, knew what the ground rules were, and

they're not very respectable ground rules. I think that for everybody

to get so hurt and holier-than-thou about some of the inadequacies and

unprincipled behaviour on both sides of the situation is just a little

much to swallow.

What I want to say is that regardless of the fact that there are two

sides to a very expensive game — expensive to the taxpayer, that's for

sure — all kinds of responsible small businessmen get absolutely nailed

right in the middle. The more I dig in to the Ragan Construction

agreement, the more obvious this becomes. There were over 100 small,

unsecured creditors who were owed money by Ragan Construction. Had it

not been for the various measures which were taken, many of them would

have gone broke in their own business.

Just to take the Ragan Construction situation as an example of the

general point I'm trying to make, there's no question that it may be

all very well for a Crown corporation and various contractors to play a

kind of guessing game where they hope that in the long run they'll get

enough to make a profit, but couldn't care less about 100 or 120 other

little businessmen who finish up in bankruptcy because the little game

didn't quite work out the way they had expected.

MR. LAUK: Are you suggesting a conspiracy, Mr. Member?

MR. WALLACE: No, I'm not suggesting a conspiracy; I'm

suggesting that a lot of small businessmen in places like Dawson Creek

in the north country where the railway developments are occurring,

enter into business in good faith with contracting companies, and it is

their livelihood. It may not prove to be the complete livelihood of a

contractor who can move to richer and greener fields on another

occasion, but if you've built a small business in Dawson Creek, or

Terrace, or wherever, and you find that because of the fact that the

contractor had been sucked into a deal which leaves

[ Page 815 ]

him greatly short of funds, you go broke as an individual businessman, there don't seem to be too many people to weep for you.

That's particularly galling when this government in the 1975

election made a very strong pitch for voter support based on the fact

that they realized and sympathized with the problems of the small

businessman. The people in the north are not too amused — and I've

talked to quite a few of them — by the fact that this government and

other governments — and ours if we were government — always talk about

the key value of our national resources, such as gas and oil and

minerals, which come out of the north country. The people in the north

see all of these hundreds of millions of dollars worth of resource

assets being shipped out and taken out of the north country but they

are not very convinced that the kind of revenue, benefits and services

which this government provides find their way back into the north

country in an equitable ratio to what is taken out.

There is no question that the B.C. Railway, or whoever owns it one

day, is a key element in the wise and progressive development of our

resources. But the people in the north, and particularly the

small-business people, are not at all amused that a large Crown

corporation like BCR, and contractors like Ragan Construction, Keen

Industries, MEL Paving or whoever, can enter into this basic

prerequisite of developing the railway. But all that happens to the

small businessman is that he goes bankrupt in the process because of

this game that I referred to earlier.

MR. KEMPF: Name names, Scotty.

MR. WALLACE: Why don't you go back to sleep! I just explained, if you had been listening, what the game's all about.

MRS. P.J. JORDAN (North Okanagan): Well, he lives up there.

AN HON. MEMBER: He lives up there? Are you kidding? He's semi-conscious.

MR. WALLACE: Well, Ray Jones Ltd. went bankrupt. They are a

company in the north country who were doing business — not in a large

way, but a small business. There are other companies which I am sure

the minister knows very well, among the 120 creditors. I don't know if

it was exactly 120, but somewhere around 100 creditors. All of them or

many of them were facing bankruptcy because of this contract between

Ragan Construction and BCR, where BCR knew very well that the work

could not be done for the cost which has been projected.

I can't but respond to the minister's comments in answer to the

Liberal leader. One of the big problems in continuing to develop our

economy is that private enterprise doesn't finish up with enough money

in their pockets as profits. That is indeed a very integral part of any

economic system that is based on private enterprise — namely, that if

there is inadequate net profit, there is less incentive to the ongoing

investment of more and more capital, without which the economy can't

expand.

It keeps coming back to this basic fact of economics: if you have

excessive taxation, that is one of the primary reasons that the

companies don't have the profit left in their pocket. They are

overtaxed. I don't know how long it's going to take this province, and

indeed this country, to look and listen to our very much more

successful brother south of the border who has seemed to realize that

tax cuts have that very predictable and essential result of encouraging

the development of the economy, of encouraging investment. As I

mentioned in an earlier debate, we have to remember that we compete

with whatever sources of capital are available, with other countries

such as the United States, Japan, West Germany or wherever.

So again, I just say to the minister: why is it not that instead of

the kind of tax increases we had last year, which have had a very

dampening effect on the economy — and we needn't go over for the nth

time the fact that consumer spending or the money available for

consumer spending was greatly reduced by perhaps $500 million...? Why

cannot we learn from that, and try to learn also from the American

policies regarding tax cuts? I have already referred to the Corporation

Capital Tax Act, which is just another addition to the cost of doing

business by corporation.

The minister made great reference to the bureaucracies that are

involved in cost-sharing programmes and in dealings with Ottawa, and

that is a valid point also. But I would like the minister to respond,

and tell me his own position and his own policy regarding the role of

tax cuts in the present state of our economy.

It would seem to me that we've proven that the tax increases did

nothing but increase an already high rate of unemployment. Now that

President Carter seems to be willing to set the example and since we,

in turn, know from the million times it's been mentioned in this House

that our economy waxes and wanes parallel to the American economy, it

would seem to me that this is an ideal time for tax cuts.

Mr. Chairman, if I could just return for a moment to some of the

specific questions dealing with the Ragan Construction settlement, I

wonder if I could ask the minister again what total sum of money Ragan

Construction was asking when it was decided to try and help the

creditors. Secondly, what was the appraisal figure which was arrived at

as to the market

[ Page 816 ]

value of the equipment? Who did the independent

appraisal? I've been given inaccurate information and I've been on the

phone today again, and I can't seem to track down who the appraiser

was. I think it would simplify life a lot if the minister would just

tell me.

I would also like to know, if the value that was paid out on the

equipment was $600,000 and the total that was paid out was $1.2

million, could the minister tell me how the other $600,000 was

allocated?

I would also like to know — and this is a very key question which I

would like to ask, because there is a great measure of confusion,

obviously, in the B.C. Railway in relation to a large number of

contracts — if I could ask the minister if he was ever involved in any

other meetings with creditors involved in other contracts where

overruns occurred, other than the Ragan Construction situation.

It seems that there are a variety of ways in which these

embarrassing overruns have been tackled. We've had quite a variety.

We've had the MEL Paving situation which went to court. We've got

evidence that Keen Industries settled on one occasion, late in the

middle of December. And here we have this specific instance of Ragan

Construction, where the creditors called a meeting and invited the

minister to attend. We know that, subsequent to that meeting, a

negotiated settlement was arranged. Now I just want to know whether the

minister got involved in a similar capacity in any of the other

contracts where the contractor was asking for a payment on overruns

and, indeed, whether this was meant to be some kind of precedent for

future negotiations regarding other contracts where the BCR's projected

costs fell far short of the contractors' expenses.

I asked yesterday, Mr. Chairman, in this same debate, as to the

finance companies that were involved in benefiting from the settlement

which was negotiated in the Ragan Construction situation. In Hansard ,

the minister mentioned Toronto Dominion Bank, Wardley, Finning, IAC,

FMCC and Traders. I would like to know, in particular, what involvement

Traders Finance Company had in this particular settlement, because I've

been doing a little bit of research and the minister himself, in his

disclosure document as a provincial employee or a provincial official,

has listed Traders Finance Limited as one of his personal creditors.

Now there may be some explanation of this. The terminology is the same.

But it certainly raises again the point that I raised earlier in

debate, that this minister became involved, albeit with the best of

intentions, on behalf of creditors in his riding to try and solve their

problems.

I want to make it very plain I'm not disputing at all the fact that

these creditors, many of them small businessmen, were in a real bind

and needed some fair and just settlement of the financial problems they

were faced with. Nevertheless, the facts seem to indicate that one of

the finance companies which did benefit from the settlement is

described by the minister here yesterday as Traders, and that was the

only word the minister used. In his disclosure document, under

section

31(3), the minister has listed Traders Finance Ltd. as one of his

personal creditors.

There are many other points which have arisen out of this whole

sorry situation on the B.C. Railway. I regret the fact that the

Attorney-General (Hon. Mr. Gardom), in answering questions in question

period, seems to think that everything's going to be all right now that

we're going to have a royal commission, even if the royal commission

may not spend enough time looking back into all the various problems

that have arisen on the B.C. Railway and which have been ventilated

here in this House.

Yesterday we heard that an unnamed cabinet minister had suggested

that the cabinet was looking at the option of selling the railway, and

when I try to look at all the ramifications of the railway activities

over the last 10 years or more, it would seem to me that there has been

immense political interference by W.A.C. Bennett in the days that he

was Premier of this province. Even as late as this Ragan settlement —

which was made only recently and which followed an initial meeting by

the minister with creditors in August, 1976 — even as late as that date

there is still political interference. Just because we have a royal

commission, this is no kind of guarantee that we will get to know all

the facts surrounding many of these contract disputes. It's no

assurance whatever that we're going to be seeing less, or no, political

interference in the running of the railway.

This minister has particularly stated on many occasions, Mr.

Chairman, that there should not be political interference with Crown

corporations, and with that I couldn't agree more. I also agree that if

there were many small businessmen going broke in Dawson Creek because

of the particular Ragan Construction financial difficulties, I again

have to ask whether it was appropriate for the minister to become

involved to the degree that he did in discussions over the ways in

which Ragan Construction might receive some, if not all, of the money

they claimed was owing to them.

We also have the minister on another Crown corporation, the B.C.

Development Corporation, and more than a year ago he again repeated his

philosophy that there should not be political interference or

ministerial representation on the boards of Crown corporations. More

than a year has gone by and there's no evidence that he's about to step

down. Really what I. am trying to sum up is the fact that we've had a

tremendous amount of discussion on BCR — many of the fundamental

reasons it's in the mess it's in have been clearly demonstrated in

debate — and we have certain

[ Page 817 ]

statements by the minister, both in this debate and

in months gone by, regarding his strong belief that politicians should

stay out of the functioning and the administration of Crown

corporations, and yet there's no evidence whatever that he is about to

remove himself from the sphere of activity of the B.C. Railway or the

B.C. Development Corporation.

[Mr. Schroeder in the chair.]

What this House, I think — and certainly the opposition parties — is

pondering is whether, on the basis of bad decisions, the minister

should step down anyway, or whether, on the basis of government policy

that ministers should not interfere with Crown corporations, that

should happen anyway. All I know is that somewhere in this debate I, or

someone else, will be trying formally to bring that about if, in fact,

there is no evidence that the minister himself sees the wisdom and the

improvements that could be made if he removed himself from the board of

the B.C. Railway and the board of the B.C. Development Corporation.

AN HON. MEMBER: And from the cabinet.

MR. WALLACE: That is not intended as any kind of threat but

is simply meant to be what I believe is an objective look at what we've

seen by way of evidence not only of the inefficiency of the management

of the railway, but of the minister's involvement in an ill-considered

attempt, however well motivated, to help certain individuals in his

riding.

While the responsibility of all of us as MLAs is to try and help

people in our ridings, the minister, in his capacity, had a much wider

responsibility. His responsibility, as a minister in cabinet, is to the

overall well-being of the province of British Columbia and, at the same

time, to the avoidance of conflicts of interest of the very kind he

injected himself into. Perhaps that's not quite fair — I'm sure he

didn't "inject" himself into this situation. I'm sure he was very keen,

if he had the option, to stay right out of it. But at any rate, he

showed bad judgment in being dragged into it when, in point of fact, he

inevitably finished up with a foot on both sides of the fence. He was

supposed to be meeting his responsibility as a director of B.C. Rail,

and he was trying to help people in genuine hardship in his riding.

If the minister had not been on the board of B.C. Railway this

conflict of interest would never have arisen. He would have been quite

at liberty to work for as much benefit as he could on behalf of the

creditors living in Dawson Creek and in that area. But I think the

minister has shown the same kind of bad judgment on the Ragan

Construction settlement as he did on the choice of his immediate staff.

That bad choice has already resulted in the need for a judicial inquiry.

We now have a judicial inquiry regarding the B.C. Railway. One has

to wonder just how many more pieces of evidence are to be discovered or

unfolded in this House surrounding this minister's portfolio and his

responsibilities.

This is no attempt to simply pursue this minister and play political

games, There is a high question of principle involved in the role of a

minister of the Crown involved in the type of meeting where he

inevitably compromises his own integrity. I would hope that we don't

have to go on and on and on asking the same questions day after day,

but I just want to end, Mr. Chairman, by saying that I'll be asking

these same questions this afternoon as long as I have to ask them in

order to get an answer.

HON. MR. PHILLIPS: Mr. Chairman, I'll endeavour to answer some of the member's questions...

AN HON. MEMBER: Why not answer them all?

HON. MR. PHILLIPS: ...although I find it just a little difficult to understand that pious member for Oak Bay...

MR. WALLACE: Oh, don't get personal!

HON. MR. PHILLIPS: ...who would stoop to new lows in this

House to try and weave in the fact that Traders Finance happens to be a

creditor of mine — not directly, but through a company — to make sure

that I disclosed everything. Actually, it's a company that I don't even

have a one-third per cent interest in. He would try and weave that

around my endeavour to try and help small businessmen in my

constituency when I found them in a situation which he very well

delineated. It's just a little much, particularly when that member

tries to be so pious and so righteous.

MR. WALLACE: I'm only asking questions. What's the purpose of the disclosure?

Interjections.

AN HON. MEMBER: Oh, that's not the purpose, Scotty! For goodness' sake! You know better than that!

HON. MR. PHILLIPS: I wonder, Mr. Chairman, if we should check

and see if that member has ever talked about a hospital, or the medical

profession or anything, but I wouldn't stoop that low.

MR. KING: Stand straight up!

[ Page 818 ]

Interjection.

HON. MR. PHILLIPS: Your time will come, Mr. Member for Prince Rupert. Don't get excited.

MR. G.R. LEA (Prince Rupert): Your time is now!

HON. MR. PHILLIPS: Your time will come; you'll have your say.

MR. CHAIRMAN: Order, please.

HON. MR. PHILLIPS: I realize it's difficult for the member for Prince Rupert to be quiet.

MR. LAUK: You're approaching your Good Friday.

HON. MR. PHILLIPS: I was very interested in what the member

had to say about the benefits to those firms in the north with regard

to natural resources. The member might be interested in knowing that

one of the reasons so many of the small businessmen found themselves in

the dire financial state they were in because of Ragan Construction was

the fact that during the previous two winters most of those companies

had nil business in the oil patch in Fort Nelson. A lot of those

companies which were servicing the industry and some of the smaller

companies in the Fort St. John area had, indeed, gone broke.

I will relate to the member again that he tries to weave a conflict

of interest around me meeting with these businessmen. I would have met

with those same businessmen had they been in any constituency. The

member knows that whether I be a director of the British Columbia

Railway, a director of B.C. Hydro, the Minister of Highways or any

other cabinet minister, where there are businessmen going broke because

they thought they were dealing with the government and they thought

they had a secure base, that particular cabinet minister would have to

step in and see if there was anything he could do, I do not appreciate

that member for Oak Bay (Mr. Wallace), who very seldom, by the way,

gets out of Oak Bay — he should go up in the north and spend some time

— trying to weave that there was a conflict of interest. You'd better

rest assured that if that Minister of Highways let a contract to a

contractor anywhere in the province, even in your own riding, and did

business with the local merchants.... Although you have very few local

merchants or local people serving a service industry in your area, and

I realize it's hard for you to come to grasp with that.... But I don't

care what area of the province it was in; if the minister of Highways

let a contract to a contractor and that contractor went out and bought

goods and services from the local people and then the contractor went

broke, you can rest assured they would be in the Minister of Highways'

office or they'd be on the lawn of the parliament buildings.

We have to have more discretion in letting contracts out. I am very

pleased to say that the railway has instituted major capital control

proposals in the last year. The latest two contracts negotiated that I

mentioned earlier in this House this afternoon included clauses that if

quantities exceeded the amounts estimated by IS per cent, the unit

prices are to be negotiated. The situation now has changed drastically.

Again, I want to emphasize that in spite of all of the cost overruns

and the way contracts were bid and the engineering, that railway line

is still going to be built at a very low cost per mile-- in spite of

all the charges, counter-charges and talks about engineering and cost

overruns and so forth. I think that's something everybody in this House

should bear in mind.

With regard to the secured creditors, there was $410,179 paid out to

secured creditors. There was $190,216 paid out to preferred creditors

and $601,605 paid out to unsecured creditors. I might say just for the

members' edification that Traders Finance got $1,820.79, so I hardly

think that the fact that Traders Finance might by a very remote manner

be a creditor of mine would have anything to do with this settlement.

As I say, I very much resent that. Had I owned shares or something in

Traders Finance, then the member could have had something to say.

Absolutely. But because a person has credit with a certain finance

company, to weave an area of intrigue around that is really, really

something.

The equipment portion of the equipment bought by the railroad was appraised by, I understand, Finning Tractor.

MR. WALLACE: Will you check that out?

HON. MR. PHILLIPS: Well, I'll have to look it up and I'll get

back to you in a moment. If I'm wrong in saying it was Finning, I'll

correct myself in just a moment.

AN HON. MEMBER: That's what Phil said.

MR. N. LEVI (Vancouver-Burrard): Mr. Chairman, it's

interesting watching the old stag, or maybe it's the old goat there,

wrestling on the ground, being very upset because....

Are you having trouble with that one, Mr. Chairman? I'll repeat it, if you like.

He was having trouble with the member for Oak Bay because he lays

out a case. You know, I can remember the kind of cases that that

minister used to lay out when he was on this side of the House. He used

to get up and he was kind of like the high priest

[ Page 819 ]

of calumny, and away he would go.

MR. SKELLY: That minister is a case.

MR. LEVI: There he would be, laying out unfact with unfact,

and developing such nonsense and accusation. As the first member for

Vancouver East (Mr. Macdonald) said yesterday, he made statements which

outside of this House would have been libelous and were proved libelous

in a recent case.

He's hurt because the member for Oak Bay attacked him. Then, of

course, he in turn attacks the member for Oak Bay and says he never

gets out of Oak Bay. I think he's been in the minister's riding

recently, as most MLAs have been in his riding.

But I just want to make some reference, before I go on to the Ragan

Construction case, to the minister's economic philosophy. He's truly

got to be the Milton Friedman of B.C. He stands there and his only

contribution to the kind of economic philosophy that we can have in

this province is that we are going to concern ourselves with GATT. He

has an absolute obsession with GATT. I don't think all the members know

what it means, but he has an obsession with it. You know, it's a

concern of the national government, but this minister somehow has

latched onto the idea that if he has a little committee considering

GATT, somehow it's going to improve the economy of this province.

Then he talks about not needing an economic council right now

because the suggestion is that he has got all the economic policies at

the back of his head. Well, what we want to happen is for them to come

out of the back of his head, to the front of his head, onto the tip of

his tongue, and then we'll understand what he's talking about. But he

rejects the idea of an economic council. I would point out to that

minister, Mr. Chairman, that here in Victoria, through the initiative

of the second member for Victoria (Mr. Barber), an economic council of

greater Victoria is actually being considered by the business

community. Day after day in the press there are more people in the

business community talking about getting involved in that economic

council as suggested by that member.

But our Minister of Economic Development wants to leave it all to

Ottawa — to the Economic Council, which is a group of eggheads that

meets four times a year and really has no relevance to the kind of

economic policy that the federal government gets involved with at all.

But this is where he's pinning his hopes — looking at GATT and the

Economic Council of Canada. He's an incredible man. He really truly is

a Milton Friedman — there's no question of that.

I want to talk a little bit about Ragan Construction because there

are some things that concern me about it and I'd like the minister

perhaps to enlarge on it for me as to what happened. I agree with the

member for Oak Bay that the minister made a very serious mistake when

he got himself involved in that kind of discussion. He made a very

serious mistake because as a cabinet minister he's got to appear to be

above everything. Not only that, but we don't know yet — I don't think

he's told us specifically — whether he was involved, as a member of the

board, in the decision to pay out Ragan Construction when he was a

member. Has he told us that yet? I recall that he couldn't remember.

Well, Mr. Chairman, if he was involved in that decision, then that is a

very serious conflict of interest.

What I would like to know is: where did the initiative come from in

the Dawson Creek area about the settlement for the Ragan Construction?

Who took the initiative to approach the Minister of Economic

Development, or maybe they approached him simply as the MLA. Did he

receive a phone call from his assistant, the stock manipulator who he

had to get rid of who was formerly the president of the Social Credit

Party in South Peace River? Did he get a call from him saying, "Don,

you'd better come up here because the natives are restless and we've

got some problems on our hands"? Who initiated the discussions?

Now one can read between the lines and we presume that it was Mr.

Lewin, who is a solicitor and also a city solicitor — but presumably

that's only a part-time job. Now we all know about Mr. Lewin because

Mr. Lewin formerly was a president of the Social Credit League in South

Peace River. I know that the minister knows him quite well because back

in 1972 when the then sitting member for South Peace, Don Marshall,

crossed the floor, there was a meeting up there with Mr. Lewin and Mr.

Warren, who was then the leader of the Conservative Party. Yes, you can

shake your head, Mr. Chips, but this is how it happened. There was a

meeting, and the Minister of Economic Development was at that meeting.

He wasn't the Minister of Economic Development then, he was just a

private citizen. He had decided to get out of politics in 1969 — he was

tired. He indicated then that he was going to support Mr. Marshall. He

was going to leave the Social Credit and support Mr. Marshall.

You didn't know that, Mr. Chairman? Well, it's a little bit of

history. You can find it in the newspapers. That was a very interesting

occasion in 1972 in South Peace. But, lo and behold, after he said he

would he turned around and, in a little kind of double-cross, he ran

against him. As I recall, he got elected by about 20 votes.

AN HON. MEMBER: He didn't want to come here.

MR. LEVI: Not really. He was reluctant. He had to be dragged down. He came down really to have

[ Page 820 ]

some fun, and he really did have some fun in the three years when he came back.

As I understand it, Mr. Chairman, the initiator of the discussion

with the creditors was Mr. Lewin. He's the one who was the lawyer for

the creditors. The minister went to a meeting, and we don't know from

the minister whether the meeting was public or private, but

nevertheless there was a meeting and some kind of proposal for a

settlement was agreed to.

Nevertheless, there was a meeting and some kind of settlement was

agreed to, or a proposal for a settlement was agreed to. Then we don't

know what happened after that, other than that a decision was made by

the BCR to pay off Ragan Construction. Now we don't know if the

minister voted in favour of that or whether he said to his fellow

directors: "I'm in conflict here. It's better that I not become

involved in the decision." Of course, we're not going to be able to

find that out unless the minister is prepared to table the minutes of

the BCR meeting. Of course, he told us yesterday that it's very

difficult to get any kind of documents from the BCR. These are all

internal documents.

Well, we are going to have to have the minutes of that BCR meeting

because we want to know exactly what position the minister took when

that item came up at the board of directors' meeting — whether he voted

or whether he abstained. You know, this whole business in the north, in

Dawson Creek with Ragan Construction, has an old odour of the Social

Credit in-group that used to exist under the previous government. We

have a minister of the Crown who was a Social Credit member. He has an

executive assistant who was a former Social Credit president in the

area. We have the man who calls the meeting who was formerly a Social

Credit president. So what's going on? Is this a cozy little

get-together where they sang: "We've got to save Don so we'll get

together and pay them off"? How much pressure was put on?

You know, he stands in this House and he reads from documents that

he's not even prepared to table. He knows the rules about it in this

House: you quote from a document, you table it! If you're not going to

quote from it, then don't bring it into the House. That's the way you

have to behave in terms of that kind of information. Let us know what

the facts are. But there is no way that he wants to tell us this. He

keeps going around and around, and every day he lets a little bit more

out.

His deputy is here, because the minister is out somewhere. I don't

know where he is. Perhaps he could make a note of the questions that I

would like him to answer.

Was he at the board meeting of the BCR when the BCR decided to pay

Ragan Construction over $1 million? Then I want to ask him a second

question. After reflection, is he prepared to stay with the statement

that he made in reply to a question from the first member for Vancouver

Centre (Mr. Lauk) which said: "Supplementary to the Minister of

Economic Development: Does the minister have any business or political

association with any principal of the company known as Doug Ragan

Construction Limited?"

Now I watched the minister answer. He waited for a while and then he

said: "Not that I can recall immediately. I'd say the answer is no. Not

that I recall. No." Well, does he have a fresh recall? Is he sure that

he had no business or political association with any of the principals

of the Doug Ragan Construction company?

Oh, he's back. I was getting worried about him, Mr. Chairman. He disappeared but he is now back.

Perhaps I might go over, Mr. Chairman, for the benefit of the

minister, the questions that I just asked his deputy to write down —

we've only got to the second one anyway.

The first question was, Mr. Chairman: was the minister present at

the board meeting of BCR when the decision Was made to pay Ragan

Construction Limited over $1 million?

The second question is: after reflecting, is he prepared to stick to

his statement that he made in response to a question by the first

member for Vancouver Centre and that question was: "Does the minister

have any business or political association with any principal of the

company known as the Doug Ragan Construction Limited?"

The minister replied: "Not that I can recall immediately. I'd say the answer is no. Not that I recall, no."

Now that you've had time to reflect on that, Mr. Minister, through

you, Mr. Chairman, can you tell us very specifically whether you are

still staying with that statement?

The next question is: Was the minister aware, when he met with Mr.

Lewin — and I presume he was at that meeting with Mr. Lewin, either the

public or the private meeting — that Mr. Lewin was a shareholder in

Keen Construction? Was he aware of that? The Keen Construction people

had recently reached an agreement with the government. Perhaps the

minister would tell us whether his former business sold any equipment

to the Ragan Construction company. Are they, in fact, on the list of

the creditors — the preferred creditors, the secured creditors or the

unsecured creditors? Of course, it would help us if he would table the

whole document. Then we wouldn't have to do this one by one.

Prior to the meeting that was held in August in Dawson Creek, had

the minister eve r spoken with Mr. Ragan? After all, Mr. Ragan had been

in business in that riding since 1969. He had lived there for some

time. Had he spoken to Mrs. Ragan or Mr. Wheat? Did you speak to Mr.

Wheat, who is one of the shareholders in the company? Is Mr. Wheat a

member

[ Page 821 ]

of the Social Credit Party? Is he somebody that you know, through you, Mr. Chairman?

Interjection.

MR. LEVI: Ah-ha! Do you see that? We get a crack from the

side: "It's none of your business!" It's none of our business, eh?

That's the way it is, isn't it? You pay out $1.2 million to a company,

the minister is present, and he says, "It's none of your business!"

Well, it is our business. That's why we are here — to get at the facts.

Yes, we'll get at the facts. It will take some time because this

minister is just standing there and stonewalling, but we'll get at the

facts. Slowly we'll get at the facts, and then we'll get at the other

facts later on.

"It's none of your business!" Well, isn't that a remarkable

statement from a minister of the Crown! "It's none of your business!"

Well, that shows a great degree of responsibility towards the taxpayer. "Why

should you know what's going on? We'll make all the decisions. We're

in the saddle now. You don't have to know anything." That's why

we are here — to question these kinds of decisions.

Yesterday we had the Minister of Economic Development stand up and

tell us about open government, how it's good for the province that now

they have a new government that is going to be open. He talked about

letting the sun shine in. Well, we are going to have to keep

stretching, and pulling, and pushing until eventually we get the

answers.

You tell us, Mr. Minister. You know you can get it over with. Be

candid, and then we'll get onto something else. But you're not being

candid. You keep avoiding it. Give us the list of the preferred

creditors. After all, the money was paid by the taxpayers. They have a

right to know what money was paid out and to which people. They have a

right to know that, because that is the position that minister took,

Mr. Chairman, when he was over here. He demanded to know everything.

Well, we demand to know everything. The information was forthcoming

from that side when we were over there, and the information should be

forthcoming from you now that you're over there.

It is my impression that this minister had enough trouble when the

staff that he had around him was dabbling in the Grizzly affair. But it

would seem to me that this affair now, in relation to Ragan

Construction, is one that does have to be looked into. It does have to

be looked into because we can't have the kind of situation where we

have the minister standing up and quite rightly saying that he has to

have a concern about small businessmen. That's quite right, but he

can't say that if he happens to be a member of the board with which

that group is indirectly doing business. He cannot do that; that is not

the appropriate behaviour of a cabinet minister.

1 want to cover just one other item with the minister which relates

to the discussion yesterday in respect to the Grizzly gas reserves. We

still do not know, although we have to take it from the minister, that

some assessments were done by the B.C. Petroleum Corporation staff,

although they don't have that kind of staff to do it. Perhaps they went

to the Department of Mines and Petroleum Resources. I would like to

bring the minister's attention to a statement that appeared in the

Vancouver Province on January 27. This relates to a release out

of Ottawa dealing with Foothills Pipe Lines. I would just like to quote

from it, Mr. Chairman. It is in relation to reserves:

"Foothills Pipe Lines Ltd. has chopped nearly two

trillion cubic feet from its estimate of natural gas reserves in the

Mackenzie River delta.

"The company, one of the two seeking permission to

build the northern pipeline, says that it is filing with the National

Energy Board that it now estimates the reserves at 5.7 trillion cubit

feet compared to 7.5 trillion cubic feet a year ago.

"Figures in the filing include gas already discovered as well as estimates of probable or possible future additions.

"Earlier this month, the other applicant for a

pipeline, Canadian Arctic Gas Pipeline Ltd. put reserves at 6.7

trillion cubic feet, which was up slightly from 6.2 trillion. Much of

the drop in the Foothills estimate results from lower forecasts of

natural gas."

Now the question is that with Foothills Pipe Lines, there was a

difference of two trillion cubic feet between the original estimate and

the actual one that they filed with the National Energy Board. As I

understand it, with Grizzly we are dealing with something around two

trillion feet. The question is: how accurate are they in terms of the

assessment they have done on the reserves? Because when they go to the

National Energy Board and file the statement on reserves, is that the

figure that they are going to go with? Is the government prepared to

give us that kind of information or do we have to wait for the Premier

to come back because he did indicate to the House that he would file it?

But the first member for Vancouver Centre (Mr. Lauk) was concerned

about the estimates. He was concerned about it because if there isn't

sufficient reserves then the whole operation does not become

economical. But the minister has not really dealt with that in his

statement. He should tell us on what basis these estimates of reserves

were made. Give us more specifics. Don't tell us that BCPC did it when

we know that they don't have any staff to do it. We need to know this;

it's important for us to be able to make this kind of estimate because

they're presumably

[ Page 822 ]

going to put a great deal of money into this effort.

The other question, of course, relates to the inquiry that's going

on with respect to a lot of people down on Howe Street who appear to

have made a great deal more money on this. But that's something we'll

have to wait for in terms of the inquiry.

I would appreciate, Mr. Chairman, if we can get from the minister

the answers to the questions I asked him in relation to whether he

knows any of the principals in Ragan Construction. Is he prepared to

stick with his statement that he thinks not? Was he present at the BCR

board when the decision was made? If he was, how did he vote, or did he

abstain, as he should have done? Did the minister speak with anyone

before that meeting? Did he speak with Mr. Ragan or Mr. Wheat or Mrs.

Ragan? Perhaps he'd tell us exactly what took place and what his role

was at the meeting, and what he reported back to BCR.

HON. MR. PHILLIPS: Very interesting to hear these questions

from the $100-million man over there. The $100-million man blows $100

million with one swipe of the pen. But all of a sudden he's so

interested in a very small amount of money that went to some very small

businessmen.

MR. LEVI: Oh, what's a million, eh?

HON. MR. PHILLIPS: That's what you said what's a million? —

when you blew $100 million at one crack of the whip, and never even

batted an eye. Now all of a sudden he's very interested. I just want

the record straight. I noticed how that member twisted around this

"none of your business" deal. I did not state that.

MR. LEVI: I didn't state that.

HON. MR. PHILLIPS: Oh, yes you did!

MR. CHAIRMAN: Order!

HON. MR. PHILLIPS: Mr. Chairman, the member can sit over

there, but he said that coming from a minister of the Crown, it's none

of your business. I did not state that.

MR. LEVI: You were not in the House.

HON. MR. PHILLIPS: I realize that it's very much of his business exactly, and that's why I've answered the question.

MR. CHAIRMAN: Order, please, hon. members. I will just read a citation out of May's

16th edition. At page 458 the good man says: "Good temper and

moderation are the characteristics of parliamentary language, and

parliamentary language is never more desirable than when a member is

canvassing the opinion and conduct of his opponents in debate." I would

suggest that that's right now, and perhaps we could have a little more

order in the House.

HON. MR. PHILLIPS: Thank you very much, Mr. Chairman, for your guidance. I just wanted the record straight that I did not say that to the member.

The answer to question No. 1: was there a board meeting and was I there? Yes. Did I vote? As I recall, yes, I did.

MR. C. BARBER (Victoria): How did you vote?

HON. MR. PHILLIPS: Does the minister have any business

connection with Ragan Construction? Well, you know, the question is

really redundant because the member knows that any business connections

I have after selling most of them out on becoming a cabinet minister

are lodged securely with National Trust, in trust, and I don't have any

operating businesses. The member knows that, but I'm sure I understand

why he asked it.

MR. L. NICOLSON (Nelson-Creston): The minister has shown some

willingness to answer some questions. Yesterday I asked some questions

which I think should be answered.

The minister, last year, refused to tell this House a fact — that he

was one of the directors of Swan Valley Foods. It wasn't until we got

to the Minister of Labour (Hon. Mr. Williams) and to the Premier that

the fact came out that this minister was on the board of directors. I

asked him this yesterday; he heard it yesterday. He talked, looked

knowingly and winked at the Minister of Agriculture (Hon. Mr. Hewitt).

The minister has been there for some time, with Swan Valley, and I

asked him when the last general meeting of Swan Valley Foods was held.

Was there an election of officers?

HON. MR. PHILLIPS: The answer to question No. I is: the last

general meeting was held in Creston on February 3. Yes, there was a

financial statement. Yes, there was an annual general meeting. The

directors of the company are the same as they were last year: Mr.

Powrie, Mr. Piper, Mr. Peterson, Mr. Phillips and Mr. Williams.

MR. NICOLSON: And officers?

HON. MR. PHILLIPS: That's the total board of directors.

MR. NICOLSON: Through you, Mr. Chairman, is there no president or secretary of the company as well?

[ Page 823 ]

HON. MR. PHILLIPS: Mr. Chairman, the member knows that I'm the president of Swan Valley, and the secretary is the law firm that we've had before.

MR. NICOLSON: There was the financial statement. I'd like to

ask the minister, through you, Mr. Chairman, if he'd make that

financial statement public, if he would file this, or how soon he

intends to file it.

Is the government still pursuing the sale of Swan Valley Foods? If

they are, is it through the minister's office, or through the B.C.

Development Corporation, or through some agent? I'd like to have some

details on that.

HON. MR. PHILLIPS: Yes, Mr. Chairman, I'm sure that all of

the people of the province will very shortly see the financial

statements of Swan Valley. Yes, I'm sure of that.

MR. NICOLSON: Well, we certainly know, Mr. Chairman, that the

government has been carefully working very hard for over a year to

create every obstacle in order to prove that at least one of the

operations in which the provincial government was engaged at the time

that they came to office was in financial difficulty. They took a

company when it was engaged in marketing, and took a company which had

a completed factory — all the capital costs had been completed — but

didn't allow it to turn a wheel.

Yes, we have heard, Mr. Chairman, the dark warnings from the

Premier, which came from the $100-a-plate dinner, referring to a

Bricklin. It's taken that minister just over a year to perhaps turn

Swan Valley into a Bricklin.

Now he's chuckling right at this very moment, Mr. Chairman. But I'd

like to say that the people of Creston, the people who looked forward

to 104 jobs in that area from this, don't see anything to chuckle

about; the free-enterprise people who invested in this corporation

certainly see nothing to chuckle about.

I would like to find out from this minister how he is going about

the peddling of the government's interest in Swan Valley Foods. Is it

through the minister’s office? Is it through BCDC, or has he hired a

consultant or some legal firm to peddle this? Who is approaching

people? How many people have been approached? How many people have been

interested? What type of activity has been going on?

HON. MR. PHILLIPS: I'm not really just sure how to answer that member

for Nelson-Creston, because if he only knew.... But I will assure you and the

House at this time, Mr. Chairman, that every effort is being made with regard

to Swan Valley to protect the taxpayers' money. We have two firms working

on Swan Valley. I don't have the exact number of the firms that have been

contacted. I don't know if it's 100 or 120. I haven't got the exact

figure here at my fingertips, but I want to assure the House that all of the

facts and figures and the entire story of Swan Valley will be related to the

public of British Columbia in due course.

One of the reasons, Mr. Chairman, that I don't want to say more at

this time is there are ongoing negotiations. I just don't want to

prejudice those negotiations.

MR. D.F. LOCKSTEAD (Mackenzie): I'm going to change the tack

of this estimate debate, Mr. Chairman. I have a few items I wish to

discuss, and some questions that I wish to ask the minister on matters

relating to my constituency, and perhaps one or two other matters

before I sit down.

That minister has not been too visible in my riding in terms of

economic development. There hasn't been a great deal of economic

development; as a matter of fact, there has been a downgrading of

development in my riding, a real downgrading.

First of all, Texada Mines, which is located on Texada Island, as

you well know, Mr. Chairman, shut down last December 17, 1976. Forever!

There were 180 jobs gone!

HON. J.R. CHABOT (Minister of Mines and Petroleum Resources): No more ore.

MR. LOCKSTEAD: The Minister of Mines says no more ore. Well, that's debatable.

But the fact of the matter is, Mr. Chairman, that what I am

discussing here is not the fact that the mine closed — the mine is shut

down. What I am discussing here, or trying to discuss, is what the

Minister of Economic Development's intentions are or what he has done

in terms of future economic development. And to the Minister of Mines,

Mr. Chairman, I'll be discussing the content of how much ore was left

underground under his estimates. So you'll get your turn, Mr. Minister.

HON. MR. CHABOT: What are you waiting for?

MR. LOCKSTEAD: Anyway, the economic impact on a small

community like Texada Island, when you lose 180 jobs, right now is

horrendous to witness. I wish the minister would come up there and have

a look. For example, I would suggest there are at least almost 200

people unemployed, in spite of the fact that many of the miners who

were employees previously employed at Texada Mines have gone to other

locations in the province and the Yukon and places like Sparwood,

perhaps. The impact of that kind of thing is that it splits families,

Mr. Chairman. It splits families. We have husbands an