1975 Legislative Session: 5th Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JUNE 10, 1975

Night Sitting

[ Page

3323 ]

CONTENTS

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

27). Second reading. Hon. Mr. Lauk — 3323

TUESDAY, JUNE 10, 1975

The House met at 8:30 p.m.

HON. D.G. COCKE (Minister of Health): Mr. Speaker, on a

matter of privilege. I wonder if as the weather becomes hotter

you would give some consideration to the males in this House

wearing jackets, and the fact that maybe they shouldn't be — as

a matter to improve their comfort. I'm not all too sure that it

is good for people to be overheated mentally, emotionally and

also physically.

MR. SPEAKER: Well, if it is too comfortable in here, we'll

be here all summer. (Laughter.) I'll give it some thought.

Orders of the day.

HON. E. HALL (Provincial Secretary): Adjourned debate on

second reading of Bill 27.

BRITISH COLUMBIA RAILWAY COMPANY

CONSTRUCTION LOAN AMENDMENT ACT, 1975

(continued)

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

hear the Member for Langley (Mr. McClelland) already with his

daily joke. Somebody has got to provide him with some new

material.

Mr. Speaker, just before we adjourned for supper I was

asking the question: where is the Leader of the Opposition (Mr.

Bennett)? I suggested perhaps he was on the phone to Kelowna

checking with Pa, finding out what he was going to say with

respect to the serious charges levelled against the Bennett

regime with respect to their handling of the accounts of the

British Columbia Railway.

Well, we seem to have smoked him out, and I hope he stays

long enough to speak in this debate, because I would be very

interested to hear what he has to say.

I see the three chairs towards the back wall of the

independents are vacant. I hope they are on their way because,

Mr. Speaker, people all over this province are asking the

question: "What about their political future? Are these

independents going to go to the Social Credit Party? Are they

going, and, if they do go, will it be on a matter of principle,

philosophy or just a lunge for power?" I would be interested to

hear their comments in this debate, Mr. Speaker, with respect

to this bill and the serious charges that have been levelled

against the Bennett administration.

MR. SPEAKER: The Hon. Member just related it to this bill at

about the right time, I would say, before he was

interrupted.

HON. MR. LAUK: I'm beginning to sense your proclivities, Mr.

Speaker. (Laughter.)

MR. SPEAKER: I hope they are public. (Laughter.)

HON. MR. LAUK: Mr. Speaker, before the supper adjournment I

raised several issues, and the issues that were raised are

serious ones. It is clear that the accounts of the B.C. Railway

were false. The statement in the financial documents that were

filed were false. There was a deliberate attempt to hide the

true financial affairs of the British Columbia Railway from the

public of British Columbia. That is a serious charge that has

not been answered, and cannot be.

Mr. Speaker, this government will support the railway. It is

an important and integral part of the transportation system of

this province. It has brought resource development to the

inaccessible regions and social and economic development. It

must be supported. I know every Member of this House does so.

But the record, as I said before, must be set straight. We

must know who made those mistakes and why. The accusations

against this administration on fiscal mismanagement are based

on so-called overruns, Mr. Speaker, overruns that occurred in

the past, overruns that have occurred in the past in other

departments in other times. But never, never has this

government and never will this government deliberately mislead

the people of this province with respect to its public

accounts. Never!

That is why I charge, Mr. Speaker, that this is the worst

scandal of political life in this province since the Sommers

case.

MR. W.R. BENNETT (Leader of the Opposition): I would hope

the Premier extends me the same courtesy as I extended to him

last Friday, when he made his presentation in the House.

I looked with interest at the newspapers following the

Premier's presentation on Friday on Bill 27, because the

headlines should have read the next day: "Barrett Government

Consistent — BCR losses of $32 million fit the pattern of

losses in Crown corporations with ICBC losing $36 million, the

B.C. Ferries estimated by the Minister himself to lose $25

million, the transit division of Hydro estimated to lose $17

million, by the Minister's estimate, along with overruns in

Human Resources of $103 million, and overruns of over $700

million in the two years of budgeting, as presented by this

Finance Minister and this government."

I thought that is what the headlines would have read. I

thought they would have read: "Here is the government

consistent in its financial inconsistency and

mismanagement."

They went along partially on the front pages with

[ Page 3324 ]

the headline-seeking tactics of the Premier, the smokescreen

he put up to cover up what has happened to this railroad since

August of 1972. But he didn't fool the columnists and he didn't

fool the editorial writers (laughter) because nobody appears to

have supported the Premier. A lot of them consider his tactic

for what it was.

I would just like to quote a few paragraphs from an

article

in The Vancouver Sun .

HON. W.S. KING (Minister of Labour): By whom?

MRS. P.J. JORDAN (North Okanagan): Be quiet and listen!

MR. BENNETT: By the business editor, Mr. Froehlich. He

said:

"Barrett's huffing and puffing about the fact that British

Columbians were never given a true picture about the BCR is

ironic. After all, Barrett himself in a very short time has

created his own little pride and joy about which British

Columbians know very little, when it comes to financial

details. Of course, we are referring to the good old Insurance

Corp. of British Columbia, that wonderful institution that

would show the private insurance companies a thing or two about

operating efficiency."

AN HON. MEMBER: Hear, hear!

MR. BENNETT: He goes on to say:

"Barrett used to speak glowingly about the fact that ICBC

would never be subsidized, that it would be run efficiently and

that it would not be used as a political tool. Well, by now

everyone knows that certainly this is not the case. We now know

that it is the cabinet which decides what the ICBC insurance

rates will be. We now know that Barrett's statement that ICBC

would lose only a modest amount was made at a time when the

corporation was aware that the amount would be more than

modest. We now know that when Bob Strachan, the Minister in

charge of ICBC, said the loss would not surpass $18 million, it

eventually amounted to $24 million."

AN HON. MEMBER: What about B.C. Rail?

MR. BENNETT: And we now know that the government is subsidizing ICBC

to the tune of at least $120 million a year, which always goes to prove that

a straight man sooner or later becomes so good in his job he becomes the comedian.

The Premier and Minister of Finance may have become the comedian, but the performance

he put on wasn't funny. In his attempt to attack and re-fight the election battles

of '72, '69, '66, '63, '60 and '56, he indeed was attacking many of the fine

people who have worked within the British Columbia Railroad, as it is called

now, or on the Pacific Great Eastern as it was called before.

It is not funny to the Broadbents. It is not funny to the

Esterbrooks and Trasks and others who have a history of

commitment — people who came up through the ranks and built

that railroad and directed it and were on the board of

directors and in senior management. It is not funny that the

record of carving out a pioneer railroad.... And that is not

just the expression. It is a pioneer railroad. The Premier has

called it a pioneer railroad, and it is. The Premier

deliberately set out to mislead the public....

MR. SPEAKER: Order, please. The Hon. Member has gone too far

in saying that any Member deliberately sets out to mislead the

public.

MR. BENNETT: I am only quoting examples. I just want to

quote this. It is exactly the same phrase as the Economic

Development Minister (Hon. Mr. Lauk) just used about the former

government.

MRS. JORDAN: Right on!

MR. BENNETT: I wrote it down!

MR. D.M. PHILLIPS (South Peace River): The Member for Oak

Bay (Mr. Wallace) did it twice this afternoon in his speech and

you let him by with it!

MR. SPEAKER: Order, please. I asked a Member on the other

side to withdraw precisely the same thing before the

adjournment.

MR. BENNETT: Just a second, Mr. Speaker. I will withdraw it,

but it is just that the Hon. Economic Development Minister used

that phrase. I copied it down.

MR. SPEAKER: Who did?

MR. PHILLIPS: The Hon. Minister of Economic Development!

MR. BENNETT: Just while I was in here this evening.

MR. SPEAKER: Concerning whom?

MR. PHILLIPS: Just 10 minutes ago!

MR. BENNETT: Concerning the former Premier of the province,

the former government.

[ Page 3325 ]

HON. D. BARRETT (Premier): His words were "deliberately

misleading by the former government", Mr. Member. Be

accurate.

MR. BENNETT: All right. The government set out on Friday — I

withdraw that — to deliberately mislead the people of this

province. The government of today.

HON. MR. BARRETT: That's your accusation, is it?

MRS. JORDAN: Be quiet!

MR. PHILLIPS: Sit down and be quiet!

MR. BENNETT: I would remind the Premier that we sat in

silence during his speech. We gave you every opportunity to

make your speech. I would like to have the same courtesy. It

may be unbecoming to your traditional pattern of conduct, but

perhaps just once the Premier of this province could sit and

listen to a response when he was considered every courtesy in

this Legislature last Friday.

As I was saying, Mr. Speaker, it is not funny to the people

who built this railway. This railway that built this province

has a long history, a history of ups and downs, a history of

some successes and some failures, and apparently right now we

are once more again in one of those dips to which this railway

has become accustomed.

MR. A.V. FRASER (Cariboo): You don't even know how to run

it!

MR. SPEAKER: Order, please. Would the Members on that side

of the House allow their leader to speak, too?

MR. G.S. WALLACE (Oak Bay): He is heckling his leader, Mr.

Speaker.

MR. BENNETT: We have come from a period of growth and

success to a period of concern over the future of the railroad,

a concern for the very development and the loading factor.

I think it would be wise right now to discuss some of the

history of the railroad because this railroad has an unusual

history. It was incorporated in 1912 to be a branch line to the

Grand Trunk Pacific which was a line from Winnipeg to Prince

Rupert, and which later became part of the Canadian National.

The incorporation of this railroad included B.C. government

legislation to guarantee the railway and also provide a

development grant.

Now the original builders of the railway, Stewart, Foley and Welsh, all Americans

who provided most of the financing from Britain, had poor success with the railway.

Eventually it went broke, and the government, to realize its guarantee, took

it over. That was in 1917, and the PGE became a railroad of and owned by the

people of British Columbia.

The railway had been and was a political white elephant from

the start. At the time it went broke the PGE had failed to

reach its initial objective of connecting with the CN in its

run into Prince Rupert. Following the government takeover, the

chief business of the PGE was passenger traffic from Whytecliff

to the area of Lion's Gate, and this operated as a commuter

transport. In 1922 the PGE was completed into Quesnel, linking

it with Squamish and creating the first opportunity for any

real revenue freight to be carried over the line, even though

the value of that freight was under $1 million a year.

Eventually a backhaul business was developed, hauling wood

down to the coast for use at Woodfibre and Port Melon. This

freight business became semi-viable during World War II, and in

1949 the extension between Quesnel and Prince George was begun

by the coalition government of the day. This was completed in

1953, after we had had a change of government.

The Squamish to North Vancouver extension was begun in 1954

and completed in 1956. In 1955, Prince George to Dawson Creek;

the Fort St. John extension was begun and completed in 1958.

The later construction of the O'Dell-Fort St. John extension

and the Fort St. James-Leo Creek extension were both developed

as branch feeder lines, mainly to provide service to the

developing forest industry.

MR. C. LIDEN (Delta): Who wrote your speech?

AN HON. MEMBER: He has 10 more pages.

MR. BENNETT: Mr. Speaker, the original quality of the

railroad was 60-pound steel, and it had spikes that could be

literally pulled by hand from the ties. In terms of what the

government bought, its history with the railway has been one of

rebuilding the line from Squamish north, from day one. For this

reason such things as labour and track laying have been

associated with the capital cost rather than an operating

expense, and upgrading has been synonymous with building.

Similarly, when new extensions were built, such as the

O'Dell extension or the extension from Prince George to Fort

St. John, these were initially built to specifications of

quality when related to anticipated traffic-to-cost.

Traffic-to-cost because this has been the policy of for

construction and development of this railway north.

Traffic-to-cost — that should be the theory behind the

development and construction of a resource railway.

[ Page 3326 ]

This has never been a railway to move people; it's been a

railway to open up the interior of British Columbia and the

northern reaches of British Columbia to provide the economic

wealth of that area to build the economy of this province, to

provide employment, to provide jobs, to provide taxes and

revenue to government to provide services to people. The very

success we have today — the successes of other governments in

providing services, the success that this government today has

in providing services — have all been fed, in part, by the

tremendous economic expansion this province has had by the

construction, extension and development of the British Columbia

Railway.

If the highways as they were constructed were the lifeline

and the link of the people with the coast, then the railroad

was the economic link that drew this province together, Mr.

Speaker. This was the link that brought British Columbia

together. This is the link that transformed this province from

being a province with a population that extended just beyond

the Fraser Valley.

This is the policy that extended the economic thrust and the

decentralization, which I hope will continue in the future,

away from the coast and into the interior and the north of this

province, opening an area where living is not easy, but where

living and life can be better. This railroad has been and

always will be an important part of building the economy of

British Columbia.

It was no accident when we look back and find that after the

railway was extended, the forest industry, the major industry

in this province, instead of being captive and solely a product

from the coast, now the dominant part of the forest industry is

in the interior of the Province of British Columbia. A dramatic

change from the 1940s and the early 1950s, and a change that

not only benefited the interior, but also brought benefits to

the whole province. The resource line, then, north. The

extensions to Dease Lake, the extensions that we're talking

about now, and for which this bill is to provide capital, were

indeed developed to make transportation available for important

minerals, important wealth that could feed the economy of this

province.

It's a quote by many people that there's more coal in the Stikine than anywhere

in the world. Today we see the re-evaluation of coal as an important mineral,

an important product, a product that a few years ago sat wasting. You couldn't

give it away. The mines closed in Alberta; the mines closed at Drumheller; they

closed all over. But now coal is of premium value because of its energy source.

The Stikine and the northern areas where this railway was to go are bountiful

in this mineral and many, many others. The reason this railway was extended,

and the reason why it is linking now — is almost linking the northernmost reaches

with the southernmost reaches of this province — is that it will make available

cheap transportation to all of the natural resources for which this province

is so lucky to be blessed, and which are important to our continuing economy.

We only have to look at the recent strike on the BCR to

realize the importance of the railway, to realize that the cost

factor of hauling lumber by truck makes it uneconomic in the

type of market that we've had in 1974 where we had a dipping

market, and that the rail extension with lower freight rates,

indeed, is important as a continuing transportation source. So

I am in favour of the extension of the railway. I am in favour

of more capital for the railway. I am in favour of and proud of

the history of the railway.

I would like to deal specifically with some of the things

the Premier said the other day because I think that many of the

statements, some of the reports and some of the statements,

have created doubt and a smokescreen for the real facts of what

I consider the development of the railway.

I don't think this railway will be built or that this

province will grow while we deal with charges and

counter-charges and statements such as were made by the

Premier. His statements must be cleared up, and once they're

cleared up, I would hope that this province could get on with

the job of building and growing.

Right now in British Columbia we have a serious unemployment

problem — 100,000 of our people unemployed. We have a serious

economic problem where industry is not developing and growing

to create that employment. We have a serious problem that

affects this railroad and its viability. The problem is that

the mineral production and the forest production from that

great northern area that these extensions were to bring into

the mainstream of the economy and develop the economy are not

being developed because of economic policies of this

government.

We're dealing with more than the extension of a railway;

we're dealing now with the feasibility of that railway having

been destroyed by the destruction of the mining industry, the

destruction of the forest industry, and destruction of the

confidence for long-term investment. Indeed, the very load

factors upon which this railway was predicated are threatened

in the north right now. These things have been brought to the

people's attention during Bill 31, and brought more

dramatically to our attention as the mineral production and

expansion has not gone ahead.

Now I want to deal with some of the statements by the Premier as I find them

in Hansard from his Friday's speech. First of all, from Hansard , the Premier

dealt with the auditors, Buttar & Chiene, and the principal of the company,

Mr. Walker, who is president and who did the audit for the British Columbia

Railway. It is my understanding that Buttar

[ Page

3327 ]

& Chiene were not appointed by the last government. It

is my understanding that this auditing firm has been doing this

railway for other governments, and for many years.

In reading the charges the Premier made relating to Mr.

Walker's professional capacity, and the problem with the board

of accountants, I would like to read what the Premier said. At

this time the Premier was quoting evidence about

non-professional conduct before the institute's professional

conduct inquiry board panel.

"The panel having found unanimously that the said member,

Douglas McKenzie Walker, violated rule 21 of the code of ethics

and rules of professional conduct as alleged in paragraphs 1

and 2 of the statement of complaint by reporting on and

associating himself for or on behalf of the firm of Buttar

& Chiene with the financial statements and auditor's report

thereon for the British Columbia Railway Co. for the year ended

December 31, 1972, when he failed to obtain sufficient

information" — this is the charge — "to warrant the expression

of unqualified opinion expressed thereon and therein; and that

the said member has been incompetent in professional matters

within the meaning of bylaw 6783 in force in all material time

and also bylaw 6883 in force at the present time as alleged in

paragraph 3 of the statement of complaint."

I think we should deal with that because the Premier makes

it a very strong part of what he considers a political scandal

in his attempt to attack the government of the past. Here is an

outside auditing firm, as all businesses and all corporations

have auditing firms. There was no suggestion of malfeasance;

there are no criminal charges. What is the charge? That he

"failed to obtain sufficient information to warrant the

expression of unqualified opinion expressed thereon and

therein." Well, I looked at the 1972 annual report because the

railway ends December 31, 1972 — that's the year end. I looked

to see what president and directors might hamper the outside

auditors having a full search and making a full search of all

of the business of the B.C. Railway, because the audit would be

conducted after the end of the fiscal year; it would be

conducted in the spring of 1973. But the board of directors as

of the end of 1972 were: president — the Hon. David Barrett;

executive vice-president, William S. King; director, J.S.

Broadbent; director, E.F. Rowland; director, R.E. Swanson;

secretary of the company, G.S. Bryson. They didn't suggest that

these people didn't allow Mr. Walker to obtain sufficient

information.

But this is the directive and this is the management of the railway. These

are the people who had control of the railway at a time when Mr. Walker and

Buttar & Chiene were called before an inquiry board. It was for this year

— this fiscal year; this is the year we're talking about — for which Mr. Walker

was called before an inquiry board. It wasn't 1971; it wasn't 1970; it wasn't

for the year 1969, 1968, 1967, 1966, 1965, 1964. It was for the year 1972.

Apparently I read into this that Mr. Walker did a lazy audit

while he had a green, incompetent president and board of

directors. That's what I see.

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: Here we have new management so the auditor

sloughed off. That's what it says right in their report. It

would be very irresponsible for anyone else to read into that

something else — very irresponsible, because that's exactly

what happened. The auditor and directors of record are

responsible for the financial statement and they are

responsible for any interference or restriction to that

auditor. That is a year that is in question — 1972; those are

the principals of the company.

I also read that we have a new director, a Mr. R.E. Swanson.

Mr. Swanson is well acquainted with the B.C. Railway. Mr.

Swanson was for many years chief engineer, engineering branch,

Department of Transport. He would have known if there was

anything wrong. For years he had done an inspection on behalf

of the Department of Transport because he was the chief

engineer. He was responsible for providing reports to this

Legislature, reports to the Minister that would have been the

reports that were questioned by an alert opposition during

those years when they had the Minister up for estimates.

In his report from 1967 — here's part of his report to the

Legislature. I read it.

"Dispatching was checked from various locations and at all

times communication was maintained with the dispatcher in

Vancouver. At Fort St. James it was noted an excellent job of

track clean-up had been completed. The piggyback ramp was

completed and in order and the facilities to Imperial Oil Co.

bulk plant were inspected and found to be up to the required

standards.

"It is recommended that both the north and south turnouts

from the mainline to serve this extension be equipped with

reflectorized switch targets rather than oil-burning switch

lights. In view of this extension being properly completed I

would recommend that pursuant to

section 179 of the rail Act it

be declared open for the carriage of traffic."

He inspected the rail line; he inspected the construction;

he made reports. Here's his

summary.

"It can be reported that the Pacific Great Eastern railway

is being properly maintained and operated. Its facilities are

being expanded commensurate with the growth of British

[ Page 3328 ]

Columbia. I have found it be in safe operating condition,

and that the public interest is being served.

(Signed)

Robert E. Swanson, Chief Engineer."

And here we have the report from 1968. He talks about the

various weights of rail. He talks about all of the expansion.

He did a visual and personal check of the railroad. And what

was the

summary of the 1968 report, Mr. Speaker?

"It can be reported that the Pacific Great Eastern Railway

is being properly maintained and its facilities improved and

expanded commensurate with the growth of British Columbia so

that it is in safe operating condition and the public interest

is being properly served."

He has done a complete report, which I won't read here, on

the total construction, expansion and extension of this

railway. In 1969 again, Mr. Speaker, he signs a report dealing

with the railway. Again his conclusion:

"It can be reported that the Pacific Great Eastern Railway

is being properly operated and maintained and is serving the

public in a safe and proper manner.

(Signed)

Robert E. Swanson, "

In 1970, he again has done a complete report, visual

inspection....

MR. SPEAKER: Would the Hon. Member face towards his

microphone? It is hard for Hansard to pick it up.

MR. BENNETT: Yes, Sir.

MR. SPEAKER: Thank you. I assume you wanted it on the

tape.

MR. BENNETT: Here is a quote out of the 1970 report. He

says:

"This line is laid with 85-lb. rail and is in a much-improved

condition over the past year. The track and structures are

adequate for the type and volume of traffic and it will serve

its purpose until the extension imposes heavier traffic and

speed is increased as urgency demands."

This is where he deals with the way a resource revenue railway is constructed:

early standards, building up those standards and grades as the loading factor

and the necessity for speed for that loading factor are required, dealing with

the railway on a proper resource-economic basis. He deals with the grading completed.

He talks about the northern extension from Fort St. John to Fort Nelson, a distance

of 250 miles: "Progress can be reported."

"Inspections were made during the

year on various phases of this construction. In one case, reports of improper

drainage by a farmer were investigated and corrections made.

"In another case, reports of problems at level crossings

were investigated and corrective measures were ordered to be

put into effect.

"During the annual inspection trip, the construction was

inspected and level crossings were checked.

"It can be reported that two major grade crossings in the

Fort St. John area have been signalized, and signals were in

operation at the time of the inspection. Mackenzie Avenue, when

signalized, incorporated a flashing forewarning sign to

vehicular traffic on the north approach."

He goes on. This is the type of detailed report he made year

after year. Mr., Swanson, in whom the present government has

enough confidence, with his knowledge of the railway, after

giving it a clean bill of health both as to construction

standards and extensions year after year.... Reports were

available to them as Members of this assembly to question and

check.

The conclusion of the 1970 report:

"It can be reported that the Pacific Great Eastern railway

is being properly maintained, properly operated commensurate

with serving the public in a safe and proper manner.

"It can also be reported that the extensions of this railway

are being located and constructed in a proper and efficient

manner.

(Signed)

Robert E. Swanson, Engineer."

Now here we have the new director, a director who is playing

an important

part in the direction of this railway, who for

years in his professional capacity and with the responsibility

that he has had in the Department of Transport giving this

railway an acceptable rating. Not only the construction and

extension, but the principle of that type of construction and

extension has been praised in his report year after year after

year. This is the gentleman who was a director of the railway

in 1972 when the railway, apparently during that period when he

was a director, had an insufficient audit, that being the only

year mentioned in the board of inquiry of professional conduct

of the chartered accountants. Yet this gentleman has had a long

history of inspecting this railway and knowledge of this

railway. Certainly he should have been in a position to advise

the other directors if all of the information wasn't being

provided to the auditor. Or maybe there was some reason for

restricting it. I don't know. But he was a director, and the

president of that railroad was

[ Page 3329 ]

the Hon. David Barrett.

Again in 1973, the next fiscal year, we have the same board

of directors, the same president, Hon. David Barrett. The

directors are the Hon. William S. King, E.F. Roland, R.E.

Swanson. They have dropped some. But, you know, we had the same

type of financial report, except this report under this system

of accounting had gone on for many years. The excuse given for

the first loss pointed out the style of accounting that the

railway had conducted with the type of depreciation they had

allowed.

The reason given for the losses on the railway weren't

faulty construction; they weren't faulty planning. The reasons

the new vice-president of the railway, Mr. Norris, gave — he

says:

"While the railway established records in many important areas in 1973, gross revenues and the net

profit from operations accruing at a record pace prior to

August were affected drastically during the final months of the

year by a series of developments: strikes on the national

railways; two strikes of 12 days duration on the B.C. Railway;

wage settlements which were retroactive to the beginning of the

year; and an extremely critical car shortage."

He doesn't mention any other reason for the loss that year.

The directors and the accountants still haven't questioned the

accounting procedures; in fact, they're still reasonably happy.

Perhaps 1973 was a mistake. Maybe in 1974 the railway will be

in profit. They don't have to look for alibis. They don't have

to rewrite history in order to explain a larger loss in 1974.

At that time they're still confident.

Now the government, in somehow...

AN HON. MEMBER: What was the report on Dease Lake?

MR. BENNETT: ...trying to deal with Buttar and Chiene — we

have statements by the Premier the other day. Following on the

resignation of Buttar and Chiene, new auditors were appointed:

Messrs Peat, Marwick, Mitchell and Co., chartered accountants

of Vancouver. This firm is one of the partnerships forming the

international family of Peat, Marwick, Mitchell and Co. The

Canadian partnership is owned by the Canadian partners. They

have an extensive background involving a number of major audit

clients in transportation and transportation-related fields,

including the Canadian National Railway.

They've already been stung by their last auditors; they were in charge when

the audit in question, that the Premier quoted, was conducted. And whom did

they appoint to clean it up? Peat, Marwick. Lo and behold, Peat, Marwick. This

is the same Peat, Marwick, and here I have an

article from Business and Finance .

It says: "Fraud at Penn Central." "The shareholders are suing the directors

and the accountants of Penn Central." And who are they suing? "Peat, Marwick,

Mitchell and Co., the company's former auditors, filed false financial statements

for the railroad." (Laughter.) Peat, Marwick, Mitchell and Co.

Interjections.

MR. BENNETT: That's the new auditors.

I make no attack on Peat, Marwick. I only point out that the

Premier the other day, in attacking Mr. Walker, in attacking

Buttar and Chiene, made a great to-do about an international

reputation. I only bring some publicity regarding that

international reputation to this House.

AN HON. MEMBER: Were they convicted?

MR. BENNETT: Now I would like to deal, Mr. Speaker, with

other comments and statements of the Premier.

The Premier talked about reports, and development of the

railway, and how it's been predicated on information from

reports. I have here a report of the B.C. Railway dated June,

1973. It says: "British Columbia Railway Comparative Analysis

Vis-à-vis Canadian National, C.P. Rail, Algoma Central,

Northern Alberta, Ontario Northland, Quebec Northshore." It's

by the research and development department of the British

Columbia Railway. This is June, 1973. What did they say?

Well, they compare the management of the B.C. Railway with

other railways. They compare it, and where do they get their

comparisons from? They get them from Statistics Canada; they

get them from annual reports of the other railways; they get

summary statistics, financial statistics: equipment, track and

fuel; operating traffic. The special sources of information in

this analysis are listed below, and they list many categories.

I believe that the people they quote and the statistics they

quote are unimpeachable. They deal with, as I say, the Canadian

National, the Canadian Pacific, Quebec Northshore, the British

Columbia Railway, Ontario Northland, Algoma Central and

Northern Alberta.

What they say is that the prime criteria in deciding which

railways to include in the analysis was the availability of

statistical information. Statistics Canada's publication

presents information on nine railways operating in Canada,

including the BCR. That's why these railways were included. But

what do they say?

They compare these railroads on average freight revenue per

mile. The British Columbia Railway average freight revenue is

$633 a ton. CP Rail and CN Rail, which are national lines, have

a higher average — $755 and $810. But Algoma Central has $284,

Northern Alberta $478, Ontario Northland $306,

[ Page 3330 ]

Quebec Northshore $190. B.C. Rail per ton mile is 2.38 cents

- this is where we're getting better revenue per ton mile. CP

Rail only gets 1.3, the CN 1.36, Algoma Central 1.68, Northern

Alberta 1.61, Ontario Northland 1.70 and Quebec Northshore

0.74. The B.C. Rail, with its history of sound management and

the people who built the railroad and directed it — I'm talking

about the working people of that railroad — should be proud of

a report like that. They compare more than favourably; they

lead all the other railroads in Canada in revenue per ton

mile.

What about in other areas? We have areas like operating

expenses — very important to the success of a railroad, Mr.

Speaker. Road maintenance, equipment maintenance, traffic,

transport and general — these are the costs that make up a

railroad. What is the operating ratio of expenses to revenue on

the B.C. Rail; It's only 77.3 per cent, while the Canadian

Pacific has an expense ratio — this is the actual operations —

of 89.5, Canadian National 96.3, Algoma Central 69.6, Northern

Alberta 97.3, Ontario Northland 94.3, Quebec Northshore 67.5.

That's very interesting, Mr. Speaker, because it shows that of

all the railways only one has a better expense ratio to revenue

than the BCR. It was profitable by analysis.

In a short while I'll be making a chart available....

Interjection.

MR. BENNETT: This is in the government's own report — BCR's

own report.

Now I want to talk about depreciation expense as a

percentage against gross revenue. The Quebec Northshore has a

gross revenue of $53 million, depreciation of $5.5 million — a

ratio of 10.5 per cent; the Canadian National has gross revenue

of $923 million, depreciation expense of $96 million — a

depreciation of 10.4 per cent; B.C. Rail had gross revenue of

$37.9 million, depreciation expense of $3.9 million and a

depreciation ratio of 10.3. It's all consistent and all in line

with the Canadian Pacific, the Canadian National, the Ontario

Northland, the Quebec Northshore and other railroads, showing

that consistently in this report done in 1973 within the B.C.

Railway, using unimpeachable sources, this railway was not only

well managed, but it was one of the best darn managed railroads

in this country and a railroad in which we can take pride.

I wonder why this statistical report wasn't tabled the other

day.

I also want to quote from the Minty report. Depreciation has been much a point

in discussion by the Premier the other day. The Minty report states in

section

12: "In this regard since 1956 the company has used for depreciation purposes

rates employed by the Canadian Pacific Railway in its own operations." Apparently

there's something wrong with using depreciation rates the same as the Canadian

Pacific. Apparently now we can try to divert attention from the major loss in

1974 and 1973 and the tragedy that has struck this railway since 1972. That's

not good enough — we have to rewrite history. We have to rewrite it to make

our case a little better; we have to rewrite it for political advantage, no

matter if we touch the people who worked for years to build this railroad. Forget

the politicians — all of us must take the abuse. But how about the working people

within the railway? How do you think they feel, those who are active now and

those who were active before, with this type of political attack destroying

their reputations, to try and save a government that is declining, and that

has a history of losses in ICBC and other areas? I find it shocking, shocking

that last Friday the Premier of the Province, in an attempt to save a government

and his party from going down the drain, in a last-ditch attempt to rally the

forces who've lost confidence in his leadership, resorts to this type of attack.

SOME HON. MEMBERS: Shame, shame!

MR. R.H. McCLELLAND (Langley): He's trying to save his own

political face.

MR. BENNETT: Mr. Speaker, selective reports and selective

reading from selective reports was his attack. Selective

reading from selective reports not even recognizing who was in

control of the BCR as the directorate when poor Mr. Walker of

Buttar & Chiene had his unfortunate experience of not doing

a sufficient audit. I didn't hear the Premier telling the

House that the other day. Not at all. He would have left the

impression that there was some other president and directorate

in control of the railroad when that insufficient audit took

place.

Now the Premier made some reference to the Leader of the

Opposition in regard to a very real concern we had that was

expressed to us by the working people of this railroad that

there had been political interference in the middle management

of the railroad. As you may recollect, Mr. Speaker, late last

fall there was a strike on the railway. The Premier was not

here; he was off in Japan and Hawaii sunning himself while the

economy of this province ground to a halt. The Premier wasn't

here to deal with it, either as the Premier or the president of

the railway. So I, as Leader of the Opposition, having three

MLAs representing constituencies vitally affected, dispatched

them on a task force to meet not only with the railways, but

also with municipal officials and others along the length of

that line to determine the trouble and see if we could get the

railway moving and bring some prosperity in advance of

Christmas to the people of the interior.

The report they brought back was a report directly

[ Page 3331 ]

quoting the men on the railway when they met with numbers of

them, not individually but in large groups, and that charge was

their charge. That charge was part of the report. Their

concerns then became our concerns, and we expressed them. We

are still concerned, and that charge is valid. I believe the

working men of the railway.

HON. MR. BARRETT: Name names!

MR. BENNETT: It's unfortunate that the Premier and president

of the railway was sunning himself in Hawaii, right in front of

Christmas, when this tragedy struck the railway.

Interjections.

HON. MR. BARRETT: Name names!

MR. BENNETT: Mr. Speaker, the Premier filed a list of senior

and middle personnel, he says. He said there's been no changes.

Well, I tell you, there's been a shuffling around in that

railway. Why, I have here a report — R.E. Swanson and

Associates, February 26, 1973.

HON. MR. BARRETT: It's filed with the House.

MR. BENNETT: "Dear Mr. Premier," it starts out. It's

addressed to the Hon. Premier. "In accordance with your

instructions at the last board meeting of the B.C. Railway, I

am submitting herewith an organizational chart, set forth as

shuffling of the personnel in the area of management of the

B.C. Railway."

HON. MR. BARRETT: Of course!

MRS. JORDAN: Shuffling the deck!

MR. BENNETT: Mr. Speaker, a report by Mr. Swanson. He says

there was a shuffling and a jiggling. He even made a

recommendation. We've got all sorts of charts: move from column

A to column B; eliminate this position. You don't fire; you

just wipe out a position. All sorts of charts.

Mr. Speaker, I wonder what we paid for the report. It would

be very interesting to know what we paid for this report.

Perhaps the Premier will tell us how much this report cost.

Perhaps the Premier will tell us.

HON. MR. BARRETT: You tell us. You make the charge, you tell

us.

MR. BENNETT: Here were the changes that were started.

HON. MR. BARRETT: The Sawyer report was filed too. Why don't

you refer to that?

MR. BENNETT: Oh, yes, then there's also the Sawyer report.

I'll deal with that. There were personnel changes on the

railway.

HON. MR. BARRETT: Name one that was political.

MR. BENNETT: In the Sawyer report we get all sorts of

quotes. The Sawyer report has some very interesting things

contained in it, Mr. Speaker. Right off the beginning he says:

"The BCR has developed into a large organization with an

important role to play in the economic life of the province."

It says: "Since a recent organization development,

responsibility at the top has become divided, causing gaps in

structures."

I guess the first reorganization wasn't enough. We need

reports on another. But he confirms this and says other things

about the BCR:

"A review and comparison of operating criteria between the BCR and six other railway systems in

Canada indicate that the BCR obtains a relatively high rating

performance. Of the 16 points of comparison, BCR is judged as

above average in six categories, below average in just two

categories, with the remaining eight as average."

That is pretty good, pretty good for a railway that is under

attack. Pretty good for management that the Premier says tried

to mislead the public, management who were on the board of

directors before he was there, but have since disappeared. Are

any of the working men of the railway?

It also goes on, and I quote from the Sawyer report:

"An alternative which incorporates the present BCR into one or both of the national systems was

rejected after considering recent history. It seems unlikely

that the extensive recent developments of the BCR, with

consequent overall development of the province, would have

occurred had the priorities been allocated in Ottawa or

Montreal rather than in Victoria."

It says that British Columbia must keep control of our own

resource railway, but they go on to say that there is room for

cooperation. In this report they go on to say that there is

room for cooperation.

I am pleased to say that memorandums of intent as late as

1971, and which came after years of discussion, were the

forerunners of what should be a good rail agreement for the

northwestern part of the province — good if it doesn't call for

just loans from the federal government; good if the province

keeps control of its own railway; good if we can keep a

[ Page 3332 ]

British Columbia thrust and meet British Columbia needs

rather than become a feeder for the national railways who have

no concern for what must go hand-in-hand with the development

of this railway, the economic resource development of this

province.

I want to go on because another report that was quoted by

the Premier was the Touche Ross report — again, selected quotes

from selected reports. But I would like to quote from the

Touche Ross report because they identified what the problem is

in B.C. right in the beginning, in the introduction. They must

have known something. Of course, this report just happened.

They did know something, didn't they? They say that the Dease

Lake extension must be evaluated within an extremely complex

context of railway, public policy and economic

considerations.

Translated, that means that the railway must forge north

along with the province having an aggressive, responsible

resource policy that will allow for the expansion of this

industry to provide the economic base and the load factor for

the railway. That is what they are saying.

Yet we know now that Bill 31 has destroyed the possibility

of a large part of that load factor. Do you know what that

means? That means that the extension which this government has

been continuing, extolling, saying they are in favour of, and

asking more money for, is threatened because the very load

factor upon which it was predicted has been attacked and

destroyed by the actions of this government which hasn't had a

public resource policy to go along with the expansion of the

railway.

We have quotes all the time. Many were quoted in the debate

on Bill 31, but in The Province on June 10, here is a quote

that sums it all up: "Government Cutting Own Throat on

Railway":

" R. H. Seraphim, a Vancouver geologist–engineer

consultant, pointed out that had the

potential mines already known been developed, they would have

provided a daily 43-car freight train of output for BCR to

haul.

"Government policy discouraging the development of mining in B.C.

has removed what might have been a substantial reason to complete

construction of the Dease Lake extension of the B.C. Railway. Economic

justification for the extension, which Premier Barrett said last Friday

the province has no choice but to complete, vanished with the mining

prospects, Mr. Seraphim contended."

Well, they didn't just vanish last Friday, and this situation hasn't been there.

This extension has been going on since the new directorate took over in September

of 1972. They have been aware of the extension of the railway, and they must

have known in their minds and their hearts what they were going to do to the

mining and resource industries of this province. But they kept the extension

going, and at the same time they put the thumbs down on the mining industry

and the resource industries. They haven't developed a responsible public policy

to go along with the extension of the railway.

Mr. Speaker, if there is a tragedy, if there is a political

cover-up, if there is incompetence, if there is something about

which the public should be concerned, it's that very fact. That

has been going on for two and a half years. You can't hide

behind the election battles of the '60s and stay away from

accountability of two and a half years of tragedy, because the

losses, the overruns, the trouble started when the government

changed and the directorate changed on the B.C. Railway. Make

no mistake about that! You only have to read the balance sheet

and the reports and find out the costs, because they all have

taken place since the fall of '72. The contracts and the

extension had just started; the contracts were only awarded in

the summer of '72. If the new directorate taking over in

September were concerned and on the job, they could have made

changes. They've had the opportunity; they've had two and a

half years. But now that the chickens have come home to roost

they rewrite history. They rewrite history, they get selective

reports, they give incomplete accountings of reports and they

try to create a smokescreen.

Let me tell you, governments in the past, the government

today and governments in the future will be accountable. All of

them will make mistakes, but I hope all of them have the

courage to live with their own mistakes and not attempt to

rewrite history and not attempt to selectively read reports and

not bear the accountability and responsibility for destroying

the economic facts and reason for the extension of the railway

in the first place. They have destroyed the economic reason for

this railway taking place. That economic fact and the

destruction of the mineral industry and the lack of confidence

in the forest industry is a very real reason why we should be

considering greatly the bill before us of some hundreds of

millions of dollars going into a railway in which the

government of the day has destroyed the very reason for its

being. It's more than just the continued expansion; it's the

very prosperity of British Columbia itself.

There has been a lot of discussion about whether the right

route was chosen — all sorts of reasons about incomplete data

and incomplete reports. There have been different reports about

routes — I even have a press release here that deals with the

routes and suggests that they were the right routes for the

extension north. This is a press release — July 23, 1973 — from

the Minister of Lands and Forests (Hon. R.A. Williams). What

does he say in his press release? He says: "The routes selected

...." He said:

"Four alternative routes and rail systems were considered and examined in the planning

[ Page

3333 ]

of the northwest British Columbia rail system. A task force of

provincial officials provided resource commodity data and development projections

for the region. A consulting team retained by the Minister of Transport undertook

a mathematical analysis of the results. The routes selected — route four in

the B.C. Rail location study was proposed by the province on the basis of maximum

access to known and estimated forest and mineral resources of the northwest

quarter of British Columbia."

This is the rail system that is cited in the agreement; this

is the rail system that was already under construction. It

reaffirms the selection of the route.

MR. FRASER: Aha! He didn't tell them that.

MR. BENNETT: What else does he say? He talks about the

impact of rail extensions into northwestern B.C. He talks about

the reason for the extension. "Two very large copper properties

lying in the Stikine River basin will benefit from the

extension. These are Stikine Copper on Galore Creek and Liard

Copper on Shaft Creek." We know who got shafted; we know who's

up a creek. It's the people of the Province of British

Columbia.

He goes on to say about the prospects for asbestos, for

coal. By George, even in those days they trotted out the copper

smelter! I haven't heard much about that lately.

The right route was selected. Here we have, on the basis of

that, the joint transportation development programme in

northern British Columbia. This is an agreement in principle. I

know it was based on a lot of study that didn't start in the

fall of 1972. It goes back to discussions between the CN and

the Government of British Columbia. Then it was signed with the

former Transportation Minister, Mr. Don Jamieson. Hopefully,

Mr. Speaker, this will be a good agreement for British

Columbia. But this agreement has been in doubt, although I know

the Economic Development Minister (Hon. Mr. Lauk) has

resurrected it lately, because last year the Premier was

threatening the CNR, saying: "We'll break the agreement. We

won't go ahead." There are reports in Hansard — I don't want to

go into that because it may come up later in the debate.

Another thing the Premier did the other day was read into

the Blues a very controversial thing, and that was part of the

court record regarding charges on the B.C. Railway dealing with

a court case. He was properly questioned by the Second Member

for Vancouver–Point Grey (Mr. Gardom). I'd like perhaps to read

from the defence. Here is the defence...

Interjection.

MR. BENNETT: ...in the Supreme Court of British Columbia

between M.E.L. Paving and the B.C. Railway Co. and Joseph S.

Broadbent, defendant. Statement of the defence of the

defendant, Joseph S. Broadbent:

"

(1) The defendant denies generally each and every

allegation of the facts contained in the statement of claim,

except paragraphs 1, 2 and 4, which are admitted."

In answer to the paragraph dealing with the statement of

claim, the defendant said that he was an employee of his

co-defendant, but he ceased to be so employed in the month of

October, 1973.

"The defendant denies being negligent as alleged, or at all.

The defendant says that if he were guilty of any of the acts or

omissions alleged, which is not admitted but denied, then such

were not the approximate causes of the damage claimed by the

plaintiff, or, alternately, the plaintiff could, by the

exercise of reasonable skill and care, have avoided the

consequences thereof.

"The defendant denies being fraudulent as alleged, or at

all.

"The defendant denies that he conspired against the

plaintiff as alleged, or at all. The defendant denies that the

plaintiff suffered any loss or damage as alleged, or at all,

and put it to the strict proof thereof.

"Whereupon the defendant, Joseph Broadbent asks that the

claims of the plaintiff be dismissed with costs."

Now I didn't come to plead the case. I only am reading

documents of record. I am neither a party in the case nor am I

a lawyer in the case, but I merely read into the record these

statements of defence in contrast to the statements for the

prosecution that the Premier read. I will not read the

statement of defence put up by the British Columbia Railway

because it's too long, but I'll table it.

Interjections.

MR. SPEAKER: I just want to point out to the Hon. Member

that of the allegations that were made in the plaintiff's

claim, alleged fraud, the statement of defence denies this. So

far, so good. But I hope we won't go any further because...

MR. BENNETT: I said I wasn't going any further.

MR. SPEAKER: ...once that was done before in a case that

was quite famous in this province, and the court held that it

was contempt of the court to republish those pleadings. I think

the Members will remember that case in 1955.

[ Page 3334 ]

MR. BENNETT: I surely am concerned, Mr. Speaker, because I

think we have to be concerned about statements that are made

and will be made in this House in regard to a case between a

contractor and the B.C. Railway, which belongs to the people of

the Province of British Columbia. I would hate that any

information put forward by the Premier may prejudice the case.

I would hope that in seeking political advantage he hasn't

prejudiced the province's case — B.C. Railway's case. I would

hope, when this trial takes place, that we don't find out that

he's prejudiced the case for political advantage. The people of

the province would hate to see that.

MR. SPEAKER: I think the Hon. Member should be careful. He

should not venture into any judgments on the case

whatsoever.

MR. BENNETT: I just said I hoped that wouldn't happen.

MR. SPEAKER: In a way you're stating it by indirection.

Interjections.

MR. SPEAKER: Order, please. Would the Hon. Member pursue

another matter?

Interjections.

MR. BENNETT: Yes, Mr. Speaker.

One of the reports that was widely quoted in the Premier's

speech was the Wakeley report. This is the Premier's lifeline

report along with the Hanrahan report, reports that were

developed.... One was developed between January 8 to 30, 1975.

"We need information quick; get a report." The Wakeley report

from January 30, given February 27. You know — reports developed

in a hurry to give the lifeline for the defence which was going

to be manufactured to cloud the public and create a smokescreen

for another loss in a Crown corporation of British

Columbia.

You know, Mr. Wakeley even says in the report in a letter to

Mr. Norris: "Attached herewith is a report on the history of

the line from O'Dell to Dease Lake, as requested. In the short

time available to me I have done the best possible job I'm

capable of, but I'm certain that a project of this nature would

take at least six months."

Interjections.

MR. BENNETT: "Take at least six months." And this was a

report that was drafted in a hurry.

MRS. JORDAN: A typewriter job.

MR. BENNETT: Manufactured in a hurry.

Interjections.

MR. BENNETT: This report deals with engineering facts that

happened long before Mr. Wakeley came to the railway.

It deals with situations, a lot of it on hearsay, that were

developed than things that happened long before it became part

of the railway. Here is the report, and I would say that this

report, both in the time and because of the fact that Mr.

Wakeley, with due respect, was not with the railway nor was the

engineer who was responsible for the railway still with it,

dealing with those facts that this report deals with in the

years in the early and middle 60s.... Unfortunately, that

gentleman was killed, is not available.

The Premier quoted from this report, and I would like to

quote from it. Here's a quote from the report. It says:

"Although no documentary evidence is available to support the statement that the route selected

followed basically the route recommended in the Wenner-Gren

British Columbia Development Commission report dated December

15, 1959, the railway as constructed appears to follow this

proposed route."

The government has these studies of Colonel Bingham that was

part of the Wenner-Gren studies. Now you may question the fact

of Wenner-Gren, but these studies...

HON. G.R. LEA (Minister of Highways): Oh, no!

(Laughter.)

MR. BENNETT: ...the studies that were done — and I think that

the Minister was at that time probably in the Yukon — the

studies that were done in relation to that company and taken

over by the province...

HON. MR. LAUK: He found out we were building a monorail.

MR. BENNETT: ...proved to be — this was a railway study —

proved to be very exacting and very precise in regard to the

construction and the outcome of the construction of the Peace

River dam. Those engineering reports were found to be, and have

proven to be exacting and precise, more precise than the

reports that were prepared for other projects.

Along with that report, the Bingham report, an adviser to

Mr. Bingham was Mr. Mitchell, who was chief engineer of the BCR

prior to Mr. Wakeley. He assisted Mr. Bingham in the

preparation of this study, and this study, in all its

completeness, became the

[ Page 3335 ]

basis for all the northern studies and loadings that came

after. This study has been available, and while it is not held

in the BCR over the possibility and the early days of a

threatened action and suit for the report because the people

wanted more money than the province paid, this report has been

in the possession of the Government of B.C. and available and

part of all the reports and all of the surveys that came after.

This is the report that preceded it.

Yet Mr. Wakeley, in this quick report, the hurry-up report,

the save-the-Premier report — "save and give me some last

vestige of credibility as my credibility declines around the

province...."

MR. PHILLIPS: The people hate him.

MR. BENNETT: Yet there in this report is some mention, and

this report is available. This report was available, but Mr.

Wakeley, with his short history with the railway, didn't know

this, and even admits to the ignorance of such a report being

the basis for reports when all he had to do was ask the people

who worked in that railroad, who came up through the ranks, who

had really been responsible for this success. He should have

asked them, because they knew it was there. That's a mistake,

an oversight, but what will happen when you are charged with

getting a hurry-up report, the lifeline report, the bail-out

report for the Premier?

Here we have a speech or a presentation, call it what you

will. It was given to this Legislature last Friday —

inconsistencies, partial reporting, selective reporting,

reporting of events that didn't occur as alluded. Here is a

railway of which we have reason to be proud. Here is a railway

that has had a successful operating ratio for years. If we take

the normal graph of operating ratio, we realize that this

railway, from 1960 through to 1972, never went out of the 70

per cent range in expenses as part of the revenue. But in the

years with the new president, the new directorate, the new

ways, expenses have climbed, in the end of 1973, to 84.2, and

the end of 1974, 109 per cent of revenue. Now that's on the new

accounting. Under the old accounting it would have been 129 per

cent and 100 percent.

None of the railways in Canada operate on that type of

over-expenditure. For one period even the CNR, with all the

things we know about it, only went to 103 per cent. All

railroads operate under 100 per cent, but not the BCR with the

new president and the new director and the new smokescreen and

the new overruns and the new tragedies.

Now, Mr. Speaker, if I thought the NDP were going to be

re-elected, I'd vote against this bill.

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: I'd vote against it because I would know that with the policies they have and have had,

they would continue to destroy the economy and destroy the

reason for this railroad.

Their resource policies have destroyed more than the economy

of this province, destroyed more than the expectation of our

people. They have created unemployment and have brought into an

uncertain future the rail line that has built this province,

that created that prosperity. Make no bones about that, Mr.

Speaker! This railway was at the heart and the root of the

prosperity that has fed this province and brought us to where

we are today.

Now, Mr. Speaker, we are at the crossroads. It is

hypocritical of this NDP government to continue to construct

after destroying the very reason for the railway. It is

hypocritical to get up and speak on this bill when for two and

a half years they have been destroying the resources that would

be carried by this railway.

AN HON. MEMBER: Hear, hear!

MR. BENNETT: But I am going to support the bill...

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: ...because I know this government will be

beaten! This government will not survive!

SOME HON. MEMBERS: Oh, oh!

MR. BENNETT: This government will not survive! In their

defeat, Mr. Speaker, and with their defeat, Mr. Speaker, not

only will the railway be the winner, but the province will be

the winner, the people will be winners, and the future

generations will know....

MR. PHILLIPS: Get back on welfare.

MR. BENNETT: The future generations that will live with the

success of this province that has only stumbled with their

incompetence will be thankful that we had the courage not only

of the convictions that this railroad should go ahead, but

confidence in the people to defeat the government that

destroyed its future.

HON. MR. BARRETT: Even the independents won't buy that.

MR. SPEAKER: The Hon. Minister of Transport and

Communications.

MR. FRASER: Pipsqueak, go to your own seat! Minister of

Pipsqueak, go to your own seat.

[ Page 3336 ]

MR. SPEAKER: Order, please. Members are not permitted to

speak from other than their seat.

MR. FRASER: The Member is yakking over there.

MR. SPEAKER: Order, please. And other Members are not

permitted to call other Members "pip-squeaks." So would the Hon.

Member desist from his expression?

MR. FRASER: You know what I am talking about.

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

Communications): Mr. Speaker, that was a speech that sounded as

if it had been written by a committee that had no terms of

reference....

AN HON. MEMBER: There is old ICBC himself.

HON. MR. STRACHAN: Let me tell you, no matter how hard you

try, you'll never reach Bennett senior....

MR. SPEAKER: Hon. Members, a point of order.

HON. MR. BARRETT: Mr. Speaker, the Leader of the Opposition

(Mr. Bennett) came in the House and asked the House purposely

not to interrupt. We accepted that request.

MR. BENNETT: You did interrupt.

HON. MR. BARRETT: Oh, don't be silly! We sat in silence.

Interjections.

MR. SPEAKER: Order. I recall the government Leader (Hon. Mr.

Barrett) interrupting the Leader of the Opposition on a point

of order that had to do with a charge of deliberate misleading,

if that is what the Member is referring to. But I gather that

most of the speech was heard without too much interruption. I

hope that the Hon. Members of the opposition will extend the

same courtesy on the other side.

HON. MR. STRACHAN: Now can I proceed, Mr. Speaker?

MR. SPEAKER: I hope so.

HON. MR. STRACHAN: Thank you. It was only the second sentence.

No matter how hard he tries, he still is not as good a flimflam artist as his

predecessor, Bennett the Senior. He tried very hard, he went all over the lot,

he accused the NDP of everything under the sun, but he failed to get to the

nub of the issue that was raised by the Premier last Friday — the fact there

was a cooking of the books of the PGE prior to 1972. That was the nub of the

issue! It really wasn't about the Dease Lake extension or any of the other things

he talked about. The fact was there was a cooking of the books prior to 1972!

A man whom we are told was a financial genius came up with this. The fact that

the charge against the chartered accountant was based on the 1972 annual report

doesn't alter the fact that in each preceding year, there it was. I have read

it. In each preceding year, exactly the same thing. The evidence is in there

from 1957 on. This House was fed false figures. False Figures! Phony books!

Interjections.

HON. MR. STRACHAN: Run out! Run out! Go on! Run out! Go on!

On your way! Run! Run! Go on! Run! There you go! There you

go!

MR. SPEAKER: Order, please.

Interjections.

MR. SPEAKER: Order, please. Could we have order, please?

AN HON. MEMBER: Shove him out! Shove him out!

AN HON. MEMBER: Wild guy! He's a wild man!

HON. MR. STRACHAN: By the sound of my voice, let me tell him

what I had to tell his father once: go outside and spit up the

crow feathers. Spit up the crow feathers! He is still spitting

them up since last Friday when he had to sit there....

Oh, he's back! Good! You got rid of some crow feathers, did

you? Good.

You are spitting up the crow feathers after two and a half

years or two years of absolute falsehoods against this

government — absolute falsehoods. Everything we've done you've

attacked. But you didn't get to the nub; you ignored completely

the Minty report. You ignored it completely.

"Mr. Minty noted among other things that there appeared to be little or no internal or external audit

check on millions of dollars spent annually" — not just one

year, spent annually — "on construction of the B.C. Railway

engineering. He recommended that the external auditors not be

unduly restricted in settling the terms of their audit

engagements, as appeared to be the case in the past." That's

the Minty report.

Interjections.

[ Page 3337 ]

HON. MR. STRACHAN: Yes, in the Blues, The Price Waterhouse

report revealed that this great jewel in the previous

administration crown had in fact cumbersome, inefficient and

inadequate financial accounting and control practices — in one

instance the cost of 1,000 freight cars bought in 1971 for

$16.3 million was written off as a charge to equipment rentals

over 15 years. That means we're still paying for it.

AN HON. MEMBER: That's right.

HON. MR. STRACHAN: That means we're still paying for it. One

of the factors in any change of the cost-earning ratio — we're

still paying for it.

What else was said that you didn't apply yourself to? The

accusation you made in this House, once when the Premier wasn't

here....

Interjection.

HON. MR. STRACHAN: No, no. You wait and see.

Interjection.

HON. MR. STRACHAN: I want to read the quote from the Leader

of the Official Opposition (Mr. Bennett) when Buttar &

Chiene resigned. You said they resigned "because they weren't

prepared to change the auditing procedures because of the

mounting losses that the railway wished to hide this year."

Prove that charge. You didn't attempt to prove it tonight and

you couldn't.

Interjection.

HON. MR. STRACHAN: You said they resigned because "they

weren't prepared to change the auditing procedures because of

the mounting losses that the railway wished to hide this year."

Prove that one.

I'll give you something else to prove. You said: "The

question of B.C. Rail's senior and middle management...."

You referred to that. On December 1, 1974, you were demanding a

royal commission to investigate political changes involving those

employees. Name one employee — name one...

AN HON. MEMBER: Name one!

HON. MR. STRACHAN: ...instead of just standing there like

that. Name one instead of going on the way you did.

Interjections.

HON. MR. STRACHAN: The Minty report indicated that Einar

Gunderson, the former railway director, had restricted the

auditors in their work prior to 1972, not just 1972, and so it

goes right on — it goes right down the line.

Interjections.

HON. MR. STRACHAN: Mr. Speaker, we heard this Leader of the Opposition

tonight saying that what we had done was destroying the development of the north.

That railway went ahead without one economic report, without a single economic

report. You can't name a single economic report, no economic studies, no engineering.

He talked about the importance of the railway.

Interjection.

HON. MR. STRACHAN: He talked about the importance of the

railway, and, Mr. Speaker....

Interjections.

HON. MR. STRACHAN: Mr. Speaker, I have supported every

single bill in this House for the Pacific Great Eastern railway

for more than 20 years.

MR. G.B. GARDOM (Vancouver–Point Grey): Blindly.

HON. MR. STRACHAN: Not blindly. I believed that the reports

we had been supplied with were honest reports. I believed they

were honest reports.

Interjections.

HON. MR. STRACHAN: I was wrong. I was wrong.

Interjections.

MR. SPEAKER: Order!

Interjections.

HON. MR. STRACHAN: But, Mr. Speaker....

Interjections.

HON. MR. STRACHAN: I believed the reports we had been

getting were honest reports. I believed that railway was

important to open up the north and central British Columbia. I

supported the Pacific Great Eastern railway bills.

Interjections.

[ Page 3338 ]

MR. SPEAKER: Order, please.

Interjections.

HON. MR. STRACHAN: Could I have a little order, please, Mr.

Speaker?

Interjections.

HON. MR. STRACHAN: I've listened to what's been said.

MR. SPEAKER: Order, please. I think a certain amount of

barracking is all right, but you're really overdoing it, don't

you think; The Hon. Second Member for Vancouver–Point Grey (Mr.

Gardom) — if the Hon. Member wants to continue heckling,

perhaps he could do it outside.

HON. MR. STRACHAN: The Leader of the Opposition talked about somebody

rewriting history. History is revealed with each passing year. That's what we

had on Friday: history as it was, not as it was told to us at the time. What

we'd like to be able to do is not rewrite history but rewrite some of the contracts

we were saddled with. That's what we should be able to do, but we can't do it;

that's one of the problems we face, too.

For that man — this so-called Leader of the Opposition — to

talk about having faith in the future of this province, that he

would like to see it opened up, that if he thought we were

going to be the government he would vote against this bill —

that's reprehensible.

He talks about decentralization. What a shallow statement

from a group of people who have opposed every measure of this

government directed towards decentralization of the growth and

the gravity of this problem to try and bring some balance into

the province.

Had they been the government of this province in the last

three years, the whole weight of growth and population in this

province would have finished up almost solely in the lower

mainland of British Columbia. And let me tell you, Mr. Speaker,

that had they been the government, the railroad would be closed

down between the north and the south. And the CNR would be

closed down from Prince George to Prince Rupert. Had we not

been the government there'd be no Cellulose and the whole....

MR. McCLELLAND: He's a fumbling old man. A fumbling old

man.

[Mr. Speaker rises.]

MR. SPEAKER: Order, please! Will the Hon. Member please withdraw the

statement that he just made which is an insult to any Member of the House? Calling

a Member of this House a "fumbling old man" is an insult and despicable. Will

you kindly withdraw it?

[Mr. Speaker resumes his seat]

MR. McCLELLAND: I withdraw, Mr. Speaker.

MR. SPEAKER: Thank you.

MR. McCLELLAND: An insult to old men.

HON. MR. STRACHAN: Thank you, very much, for obeying the

rules of the House in that courteous manner, as you always do.

Mr. Speaker....

MR. McCLELLAND: Go on with your harangue.

HON. MR. STRACHAN: Oh, look who's talking about a harangue!

My goodness! I won't return the kind of talk that that man has

given to this House ever since he came here. Thank God he won't

be back again. He's a one-timer. And he deserves to be a

one-timer. He deserves to be a one-timer! With what you've done

to this House, you do. You make me sometimes ashamed to be a

Member of this House. You make me ashamed to be a Member of

this House. A good many times.

MR. SPEAKER: Would the Hon. Member proceed with his remarks,

please?

HON. MR. STRACHAN: Mr. Speaker, had that group been the

government of this province, we know that the deals that were

going ahead at that time would have meant the closing of the

two pulp mills in Prince Rupert, would have meant that the

logging industry related to them in that whole Terrace area

would have been gone without the impetus of the Minister of

Lands, Forests and Water Resources (Hon. R.A. Williams) that

kept that going and provided the developing economy for the

movement of chips. Eurocan would have been closed down; and

that whole northwest

section of this province would have been

ghost country.

AN HON. MEMBER: They opposed Can-Cel.

HON. MR. STRACHAN: Yes, they opposed it. They've opposed

every single thing we've done to bring growth and balance to

the Province of British Columbia. And for them to stand up and

say that if they thought that we were going to be elected, they

would vote against the bill.... Now what sort of thing is

that? What sort of way is that to approach any piece of

legislation?

It's a bitterness and a hatred and a dislike and a

[ Page 3339 ]

failure to bring into this House a real feeling for the good

and the benefit of this province.

MR. BENNETT: Rubbish!

HON. MR. STRACHAN: I supported this railway because I

believed in this province. I believed in its future,

irrespective of government. And that's what I've always

believed. And on that I've based my every action in this House — for the good of the province, irrespective of who was in

power at the time, how ruthless they were, how they pushed the

House around, how cruel they were to the Members. I never

allowed that to interfere in my duty to this province. My duty

to this province is to keep that B.C. Railway going and to keep

some balance in the province. You've not only done this

province harm tonight; you've done yourself harm, you've done

your party harm and you won't be back and you shouldn't be

back.

MR. G.H. ANDERSON (Kamloops): Mr. Speaker, I don't intend to

take too much time in this debate because I think the main

issues have been pretty well covered. They've been covered over

and over again by various Members at various times. I intend to

support the bill at the time of the vote. Although there's been

a lot of recrimination back and forth from both sides of the

floor, a lot of it justified, I have to say at this time that I

think one of the finest things the previous government did was

to complete that railroad that, as many people used to say,

started nowhere and ended nowhere. So at least it was completed

from Squamish into North Vancouver and then to Prince George,

which made the link-up that was very necessary. I would

certainly compliment the previous government for that. It was a

good decision. It was a decision that had to be made and it was

made. Once again, I compliment them for it.

One of the things that we have not argued about tonight at

all in any way is the necessity for the British Columbia

Railway in this province. All Members from all sides of the

House from all parties — not one has said that these extensions

shouldn't have been carried on or that the railroad shouldn't

have been improved, or shouldn't have been extended. It's

necessary to develop the resources. If we're ever going to open

up the heart of this province, and especially the north, we

have to have that transportation system.

I agree very much with the Minister of Economic Development (Hon. Mr. Lauk)

when he said that railroads do not make money. Of course they don't make money,

unless it happens to be the CPR that owns the downtown heart of Winnipeg and

the downtown heart of Regina and the downtown heart of Calgary. Marathon Realty

is wheeling and dealing in all this land that was given to them at the time

they built it. That, of course, never shows as a profit for

the railway, and they continually petition the federal

government for subsidies and they always get these subsidies,

continually, year after year, in ever-increasing amounts. But

they have been making money with the real estate operation.

Unfortunately, B.C. Railway didn't get these large land grants

so they are in a position that they have to operate at a

deficit.

I was a little heavy-hearted listening to the debate today,

Mr. Speaker, because although the Member that I succeeded from

Kamloops (Mr. Gaglardi) didn't carve himself too much of a

niche in this province as far as the public is concerned, the

previous Premier did. I'm speaking now of Maxi-Bennett. I was

very disappointed to hear the speech from the Leader of the

Opposition. I won't call him Mini-Bennett, as I don't think

that would be parliamentary, but it certainly wasn't

Maxi-Bennett standing in his place tonight, or the debate would

have taken a very different turn, I would think.

We heard for so many years about the financial genius of

this man, this monetary wizard. I remember one time, about a

year and a half ago — I'm sorry she's not in her seat — the

Hon. Member for North Okanagan (Mrs. Jordan) paid him that

great compliment when she was comparing him to our previous

Premier. She said he's a man who really knows business: he

knows money, he knows finance he can walk a straight fence with

both ears to the ground. Remember that, Hon. Members? It's in

Hansard . That was one of the better speeches that she's made in

this House.

But the previous Premier did have this reputation; he had it

with many people who are not necessarily Social Credit, but he

did have it solidly with the old-line, steady Social Credit

supporters: you could always depend upon him to pull us out of

any financial trouble we got in. He was a genius at the money

game, and on the wheeling and dealing and the financial

gambling he could always be counted on to bring British

Columbia out ahead. After the report on the Columbia River was

tabled was when the cracks started to appear in the foundation,

Now that this report has been tabled, we find that an idol is

falling — and it is an idol; not one of mine necessarily, but

an idol of many people in the province is tumbled to the

ground. We find that instead of the sagacious businessman we

had a snake oil salesman — one of the old style snake oil

salesmen, sometimes called hucksters — book cookers that can

twist facts around and hide them in ledgers and limit the

investigation of the auditing company so that no one really

knows what's going on at all until we've had these

investigations by two different companies.

What I'm very curious about is: when these directives were

sent out, and when these limitations were put on, where was the

board of directors? Was it a one-man board of directors? Was it

a board of

[ Page 3340 ]

directors being told and dictated to and ordered by one

person, or weren't they all there when these decisions were

made? This is something that I would like to have some answers

for, and I hope when the Premier closes debate that perhaps

some of this will be brought to the floor of this House.

We heard the Leader of the Opposition giving fact after fact

after fact as he drew red herring after red herring after red

herring across the trail. He talked about ton miles; he talked

about various other weights; he talked about Sukunka coal and

Yukon coal. As a former engineer, I know that when you burn

coal properly it's smokeless but it certainly wasn't burned

properly tonight because there was a smokescreen laid in this

Legislature like it's never been laid before. As far as ton

miles are concerned, I am concerned about whether there was a

heavyweight on that board of directors who was leading the rest

around by the nose.

I think that since we've had this second incident come up —

an incident that will certainly go a long way to destroy the

faith of long-time Social Crediters in the previous government

of this province — they will be deserting them by hordes in the

very near future, and certainly by the next election.

I would like to see the same type of investigation into the

department that was run for so many years by the previous

Member for Kamloops. Every time I drive around the highways of

this province, and around my own riding, and find the way they

crack up I wonder what we've done on the contracts. Were the

bases properly put under the roads? Were they up to

specifications? I think that if I can get a little more

information, one of these days before too long in this House I

will be asking for an investigation into those contracts. Were

they followed? Was the proper material used? I would feel quite

sure, after driving up the Cariboo trail and some of the others

that have been breaking up for the last five years, which

started in some cases a year or two after they were built, that

we could have the same type of situation that went on in the

Highways department in this province as has gone on in the

railway.

Mr. Speaker, I said I'd be brief, but I just felt that I had

to stand up and take my place in this debate and reiterate that

last Friday an idol fell in this province, and it is going to

be reflected in the next election.

MR. D.E. SMITH (North Peace River): Mr. Speaker, I think that we've

had an interesting evening. As we listened to the debate, really what is being

said by the Members of the NDP and the Premier is that, in his opinion, one

firm of auditors is superior to another. But this evening we've also listened

to the fact that the firm of auditors which he seems to feel has superior knowledge

to do a better job have at times stubbed their toes, as people in business and

in every profession occasionally do. That has been reflected in an

article that

was quoted this evening by the Hon. Leader of the Opposition (Mr. Bennett).

So when we try to base the arguments and the debate on not

only the reliability of the auditors, but also on the rail use

of the PGE — now known as the B.C. Railway — on an auditor's

report and an auditor's statement, I think we miss the whole

purpose and point of the debate of this bill, because basically

the debate on this bill is to provide additional funds to a

railway which is a resource development railway. It has never

been classed as anything else. I suggest to you, Mr. Speaker,

that it will be many, many years yet before it will progress to

the stage of a mainline railway from one extremity to the other

and be looked at on the same basis as the CN or the CP.

I know from first-hand experience that a deliberate decision

was made to extend the railway north from Fort St. John to Fort

Nelson in as quick a time as possible. That was a deliberate

decision by the directors of the B.C. Railway. Why was that

decision made on that basis? I suggest to the Members of this

House that it was made upon that basis to provide a service to

a new, developing area, to the community at Fort Nelson which

really wanted to see that railway there as quickly as

possible.

There is great potential in the Fort Nelson area; there

always has been. The thing that was frustrating the development

of the area was the fact that everything had to come in and out

by very expensive transportation methods, mainly trucks. And it

is not an economical way to move freight in; it certainly is

not an economical way to move raw resources to the market.

As a matter of fact, Mr. Speaker, I suppose in the last

number of years since the building of a dehydration plant at

285 for separating the sulphur and liquid products from the

natural gas before it was fed into the pipeline to supply

British Columbians and the export market, the companies

involved had to burn off hundreds of thousands of dollars worth

of chemical because there was no market for it and no means of

getting it to market. That chemical was sulphur, and it was

burned off in the smokestacks. It had to be because there was

no way of economically transporting an oversupply of sulphur,

because we were in a position of oversupply, to a market that

would be available. It would have had to go at least to Fort

St. John and then by rail from there to the coast, and it was

just not economically possible to do that.

So immediately, as the railway was extended to Fort Nelson,

a market developed for that one product alone from the plant.

That was only one of the things that happened. It also made it

possible for a viable lumber industry to locate in an

extremely

[ Page 3341 ]

resource-rich area.

It was possible for two business people who had a number of

years experience in the lumber industry to move from Prince

George to Fort Nelson and start a sawmill, a plywood chipping

complex that will see an investment this fall of better than $4

million in plant and equipment — Tackema Lumber Co.

It is also interesting to note that the first wood processed

through their plant and the first logs sawn will come from the

Indian people's land at mile 295. This particular tribe of

Indians has already sold a substantial amount of timber to

Tackema Lumber, who in turn have taken them into the

corporation as shareholders and retained a small percentage of

the profits from the sale of timber to purchase those shares.

The remainder goes to the Indian people themselves. So don't

ever try to suggest to people who live in the Fort Nelson area

that the extension of the railway is a pipedream or that it was

foolish, because they know the value of it.

True, there have been problems, but I would like to draw to

the attention of this House the fact that of the 250-mile

extension from Fort St. John to Fort Nelson, about 200 miles of

it — close to that — is through extremely difficult terrain,

muskeg country, Mr. Speaker, country where we have not had the

previous experience in engineering and building a railway in

that type of country to know exactly how to handle the

conditions.

How do you float a track across 20 feet of muskeg, which is

a continually floating mass of material? They found out ways to

do it by building a pad and building a base; and literally the

railway in places does float. It is rough, and for years you

will not be able to compare that line to a mainline

transportation standard. But, Mr. Speaker, it does the job. It

hauls merchandise from the Fort Nelson area to the markets. It

hauls back the goods that people require to stay in business

and to operate their firms in that part of the country at rates

that are far more competitive than anything else they have ever

experienced before.

It is also possible that that railway will be the key to a

vast development beyond Fort Nelson and into the Arctic via

river transportation. At the present time, a tremendous complex

goes out of Great Slave Lake up through the Northwest

Territories and into the Mackenzie delta area through Alberta.

It is not unreasonable to believe that a good portion of that

merchandise originates through the ports in the City of

Vancouver, as it does.

Why ship it all the way to Alberta, to Edmonton, up over a resource development

railway in Alberta, across Slave Lake, and into the Mackenzie River system when

it would be easier and simpler to ship that merchandise from Vancouver over

the B.C. Railway to Fort Nelson and put it onto river barges at that particular

location? There is good reason to use that route, Mr. Speaker, because of the

fact that the river system in that particular part of the country opens up 10

days to three weeks ahead of the system which uses as part of the route Great

Slave Lake, for the simple reason that the ice goes out of the rivers in northern

British Columbia before the ice is out of the lake. In order to get merchandise

from one side of the lake to the other, the barges, unfortunately, have to cross

the lake. They can't do that for 10 days to three weeks later than they can

if they go the Fort Nelson route.

So that is a potential market that will open up as a result

of a resource-oriented railway built by the previous government

and taken over now as part of the assets of the province by the

present government. That is what it was intended to do. There

could have been a decision made by the previous government, I

suppose, to take their time on the Fort Nelson extension, to

build 50 miles a year. With the weather conditions and the

construction conditions that we have, it wouldn't seem entirely

unreasonable to a better standard. The only difference is, Mr.

Speaker, it would have taken five years to get there instead of

less than two. As a result, the people in Fort Nelson would

probably still be waiting for the railway to reach that

destination, So that was a conscious decision made by a

previous administration for the benefit of the people who live

in the north, I think it was the right decision, even though we now have

to spread money on re-laying some of the track and in

relocating some areas where we have had extreme difficulty with

grades. What is new about that? Every railway in Canada at one

time or another has experienced those problems. They are still

having those same types of problems from Prince Rupert to

Prince George, and they will have each and every year.

So it seems to me that when we talk about the value of the

B.C. Railway to the Province of British Columbia, we don't

equate it....

Interjections. (Laughter.)

MR. SMITH: That's a good joke; I'll stop till they're

finished.

MR. SPEAKER: Order, please.

Interjection.

MR. SMITH: It's a good joke; I'll wait until they're

finished, Mr. Speaker.

It seems to me that we do not equate the value of a railway

to one auditor's report as compared to another. We equate the

value of the railway to the people of British Columbia in terms

of what it has meant to the communities along that line as it

branched northwards and then up to Fort St. James

[ Page 3342 ]

and eventually to Dease Lake. We equate it with the growth

of Prince George and the communities beyond Prince George on

the eastern side of the mountains: the community of Mackenzie,

the communities of Chetwynd, Hudson Hope, Fort St. John,

Taylor, Fort Nelson and Dawson Creek, all of which have

experienced tremendous growth as a direct result of the

extension of the B.C. Railway.

The Peace River country has not only given us a market for

lumber products, which we did not have before on a competitive

basis, it has allowed the mills up there to put in chippers and

as a result send their chips to Mackenzie where there is a

market, at least for some of them. It's allowed every farmer in

the Peace River country to expand his operation and become more

stable as a result of that because of the fact that the railway

was available to haul feed grain and other grains to market.

All we have to do is reflect back to last year when the railway

strike was in effect and see what happened to some of the

communities, including the community of Fort St. John, caught

at a time when all of the farmers in that country wanted to

ship grain to market. The market was there; the only thing that

was a problem was that the railway was out on strike.

It was estimated that about 35 cars of grain a day would

have left the Fort St. John area, and a similar amount from the

Dawson Creek area, to markets which were available had the

railway been operating. Instead of that, we sat there with

plugged elevators for months as a result of the backlog that

developed. Farmers couldn't get paid for grain they couldn't

sell, and when they can't get paid their creditors have to wait

a little longer. So it becomes an intricate part of the

economic fibre and life of those communities. It has been part

and parcel of the development of northern British Columbia.

I think that we really should reflect on that point in

speaking to this bill, because if we really believe that all of

British Columbia has something to offer, and we really believe

that small communities of 10,000 to 25,000 population scattered

throughout the length and breadth of the province are

preferable to 2 million or 2.5 million people living within a

radius of 25 miles of the ocean, then we must develop the

transportation links. But that's only one part of it, and this

has been referred to by previous speakers. That is, a railway

can only haul the merchandise in that is required by the

economy of that area, and they can only haul to market the

products that are manufactured or produced out of that

particular area.

We can talk about secondary industry as long as we desire in the Province of

British Columbia. There's never a debate about development takes place on the

floor of this House that somebody doesn't bring up the matter of secondary industry

and how negligent the previous government and the previous administration was

in this respect and how great the potential is, but I suggest that if we look

at and analyse the picture properly in this province, we will remain a producer

of raw resources for some years to come, particularly in northern, north central,

northeastern and northwestern British Columbia. This is the basis of the livelihood

of those communities.

I'm sure that there is a great potential there untapped and

even unknown at the present time. Certainly with respect to

coal deposits we have ample knowledge already to assure that

particular industry as a viable one in terms of the product

available for many, many years to come, and of course there are

many deposits we have no knowledge of.

I don't think we know really what our supply of asbestos is

in the Province of British Columbia, except for that which is

in the immediate area of Cassiar.

We have a potential for a number of viable copper

operations, mills that will refine their product and ship a

semi-refined product to market, all through British Columbia

and particularly through the north.

There is a deposit of low-grade iron ore immediately

adjacent to our eastern boundary. What the value of it is in

terms of productivity I don't think has ever really been

properly catalogued yet, but we know it is there and it may

have extremely valuable commercial development ahead for that

particular deposit. Certainly if we compare its value to what

we used to think about when we talked about coal deposits in

relation to their markets just a few years ago it may have far

greater potential than we have ever really known.

There is ample water in northern British Columbia to develop

industry. We have ample hydro-electric power. As a matter of

fact if it wasn't for the Peace River Dam at the present time a

great part of British Columbia would be suffering blackouts or

brownouts almost every night of the week, because it is a known

fact that 50 per cent of the power developed and put through

the B.C. Hydro system comes from Portage Mountain Dam.

Interjection.

MR. SMITH: Oh, I think so. Just sit around and listen. You

may learn something and I think we are going to be here until

11 o'clock, so....

AN HON. MEMBER: I can't stand the heat. (Laughter.)

MR. SMITH: You can't stand it? (Laughter.) You'll have to

leave. He got up and made his remarks last Friday, and since

then when we get down to discussion of the real merits of the

B.C. Railway, he can't stand it.

But it has been and will continue to be one of the

[ Page 3343 ]

great resource development vehicles for all British

Columbia. It is unfortunate that many of the people in the

province don't appreciate the real value of the railway. I

suppose that because of statements made by the Premier last

Friday some will be quick to accept his argument and jump on

that as a reason why we should not grant funds for any more

extensions for the B.C. Railway. Even the Premier doesn't

believe that, but some people will and some people will use

this as an argument.

It is not an argument that is in keeping with the economic

life of this province. There is no way of determining in

advance the exact problems that a newly developing railway will

encounter. There is no way of predicting accurately in advance

the exact amount of material that will be used.

I recall the development of the railway in our sister

province, right across the border from us.

[Mr. L.A. Williams in the chair.]

It is good to see you in the chair, Mr. Speaker.

I recall the problems, the trials and tribulations of a

development in northwestern Alberta, a resource railway, Mr.

Speaker.

AN HON. MEMBER: The NAR.

MR. SMITH: No, not the NAR. No, this was built by the CN to

serve newly developing resource areas out by Grand Cache out by

Grande Prairie. You know what happened there, Mr. Speaker? They

ran into exactly the same type of construction problems, or

very similar construction problems, as what we experienced on

the extension of the B.C. Rail.

They ran into the fact that regardless of how accurate their

engineering was before the project, they found that they had

underestimated the quantities of material that would have to be

moved in order to build a substantial grade. As a matter of

fact they even ran into a lawsuit on the particular matter as

to whether the contractor was eligible, or should receive

payment for the extra material that he had to move over and

above what was bid in.

So it is not unusual to run into these problems on the

construction of a railway. Without reflecting on what might

happen on this one, all I can say is that these problems exist,

that regardless of the engineers employed, or the method of

determining quantities, it is very seldom that the job works

out precisely with the engineers' calculations. As a matter of

fact, in most instances there is a tremendous overrun in the

amount of material that has to be moved as compared to what was

originally suggested when the tenders were called on the

specific project.

Let's not forget that this is a resource-development railway, that it was built

for a specific purpose — to service and bring northern British Columbia into

the main stream of this province. In that respect, it has done a remarkably

successful job.

SOME HON. MEMBERS: Hear, hear!

MR. SMITH: If anyone doubts that, let him talk to the people

serviced by the railway in that part of the country, and find

out what they think about it. Because it is there, the country

has probably developed three to four times as quickly as would

have happened without the railway.

At one time northeastern British Columbia looked at the rest

of the province and said that as far as B.C. is concerned, they

don't even know we exist. Our total economy is tied to the

Province of Alberta and it will always remain that way until we

get proper communications and transportation links developed to

the other parts of British Columbia. Slowly but surely that

happened — first of all, with the Hart Highway, and then with

the extension of the B.C. Railway.

It was then, and only then, that the basic potential of the

Peace River country really came into its own. Even the farming

potential was inhibited before that time — strangled, held back

because there was no available market for grain that could be

produced in light quantities at a lesser cost right across the

border from us in the Province of Alberta. It was only after

the extension of the railway, when the farmers of the Peace

River country were able to ship feed grain from that part of

the country to the Cariboo, to the Kamloops area and to the

lower mainland, that the grain industry really developed in

northern British Columbia.

Now we have Fort Nelson developing on the same basis.

They'll not become the same agricultural community as the area

south of them, but they have a far greater potential in terms

of timber, in terms of mining, and in terms of petroleum

resource development, Hopefully, a lot of the byproducts from the petroleum

industry can be semi-refined in Fort Nelson, shipped by rail

to, probably, a synthetics or plastics plant, and will be the

basis of a secondary industry. I don't see it happening in that

particular community for a while yet. But these are the things

that have developed British Columbia, and will continue to do

so.

The railway is a vital lifeline to the north. Regardless of

the problems that may be experienced in building the line, in

retaining it because of slides and unpredictable weather and

soil conditions, it will still be there to serve the people of

British Columbia. It will require capital expenditures from

time to time and it will require new rolling stock, provided we

retain the outlook that the resources of the north must be

developed.

[ Page 3344 ]

MR. BENNETT: That's right.

MR. SMITH: The only thing that is inhibiting the railway and

the northern part of British Columbia at the present time, the

future of that part of the country, are the policies of the

NDP.

MR. BENNETT: Yes, right. They're a threat to the future of

the province.

MR. SMITH: On one hand, they say they want to develop the

railway. On the other hand, they enact policies that destroy

development that is already there and frustrate anything that

would take place in the future.

MR. BENNETT: Shocking!

MR. SMITH: Mr. Speaker, it is a shocking situation. That's

true, it is a shocking situation, because that is exactly what

is happening in far too many instances in the north right now.

Fortunately for the people of British Columbia, it is not going

to last too long. There is a solution.

MR. BENNETT: That's right.

MR. SMITH: The solution will be spelled out loud and clear

by the electorate in the next election.

AN HON. MEMBER: Hear, hear!

MR. SMITH: That is the way...

MR. BENNETT: Help is on the way!

MR. SMITH: ...the problem will be resolved. The B.C. Railway will continue to operate for the betterment of

the people in the Province of British Columbia. The only thing

that will be missing are the Ministers who now occupy the

cabinet benches under the NDP banner.

MR. BENNETT: Thank goodness!

Hon. Mr. King moves adjournment of the debate.

Motion approved.

MR. SPEAKER: I'd like to advise the Hon. Members that the

visiting parliamentary group from the Yukon have arrived this

evening. They are here overnight and we'll be seeing them, I

hope, in the morning at the public accounts committee meeting,

which they're interested in seeing, and also at 10 o'clock for

estimates, which they are also interested in seeing.

Interjection.

MR. SPEAKER: I have no comment on the comment.

Interjection.

HON. MR. HALL: I think that we'll follow the practice of

today and deal with Water Resources, then go to Highways.

Hon. Mr. Hall moves adjournment of the House.

Motion approved.

The House adjourned at 10:54 p.m.

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