Manitoba Hansard — 63 Page 1737 (Sitting 67, 27th Legislature, 1st Session)

27-1-67

Manitoba — Debates (Hansard)

THE LEGISLATIVE ASSEMBLY OF MANITOBA 2:30 o'clock, Monday, April 29th, 1963. Opening Prayer by Madam Speaker. JIIIADAM SPEAKER: Presenting Petitions Reading and Receiving Petitions Presenting Reports by Standing and Special Committees MR. B. P. STRICKLAND (Hami ota): Madam Speaker, I'd like to present the report of the Committee on Privileges and Elections. MR. CLERK: Your Standing Committee on Privileges and Elections beg leave to present the following as their first report. Your committee met for organization and appointed Mr. Strickland as Chairman.

Your committee recommend that for the remainder of the Session the quorum of this committee shall consist of seven members. Your committee, after discussion, also recommend that it be reconstituted at the beginning of the next Session of the Legislature to carry out the duties assigned to the committee by the Resolution of Mr. Paulley introduced on March 22, 1963, amended on April 9, 1963, and agreed to in the Legislature on April 23, 1963. Your committee has also agreed that Honourable Mr. Lyon, Messrs.

Cowan, Froese, Groves, Johnston and Paulley will meet informally during recess after prorogation to prepare material for the Standing Committee on Privilege.s and Election when reconstituted. All of which is respectfully submitted. JI.'IF!. STRICKLAND: Madam Speaker, I beg to move, seconded by the Honourable Member from Souris- Lansdowne, that the report of the committee be received. 1\lhdam Speaker presented the motion and after a voice vote declared the motion carried. JIIIADAM SPEAKER: The adjourned debate on the proposed motion of the Honourable the Minister of Education.

The Honourable the Member for Elmwood, MR. s. PETERS (Elmwood): Madam Speaker, I'd like to apologize to the House for being out of the House on Friday. I didn't do it intentionally; it was quite by accident that I wasn't in the House when this item came up. I thought that I should say a few words on this motion, Madam Speaker, as I was one of the members of the committee and we voted with the govern ment on certain issues in this committee, and I think we should state our reasons for doing so.

If you recall, Madam Speaker, not too long ago the Honourable Member from Lakeside and my Leader got into quite a debate on the tender bid system and my Leader thought that it should be looked into and the Honourable Member from Lakeside said that he thought it was a good system, and I think I might agree with him on this occasion. The very first time that we voted in committee with the government against the motion made by the Honourable Member from St.

George that we be allowed to look into the books of the contractor -- have their auditors summoned and the income tax papers of the company brought before the committee -- we voted with the government on this occasion because we felt that we would be setting a precedent that would be pretty dangerous because, in my opinion, we were given information that this contract was let. There were five bids on it; the people bidding the lowest bid received the contract.

They also made an alternate of a stated fee plus cost; and we felt that under the system that we are living --because we are living in a democracy and this is the system that we have to live by where the majority rules, and lots of times we feel that if we were the government that maybe perhaps we would have done our own hauling, but that is not the point in question here. The point is this, that this job was put out on tender and the lowest tender got it at $23.10 a ton and the highest bid, I believe, was somewhere in the neighbourhood of $35. 00 a ton.

To me it boiled down to this, that if we were to vote to have the books of the company opened, then in future anybody could get up in this House, make a charge, set up a committee, and then you open up the books of that company to see how much money they made, and I think that would be a very dangerous precedent, Madam Speaker, and the reason that I adjourn the debate is to state our reason why we voted this way. The Honourable Member from St. George made charges.

They're very serious charges, and I don't know what basis he laid them on, what information he has that we do not have, but in my opinion and the opinion of people in our group, there wasn't enough evidence submitted to substantiate the charges. MR. R. 0. LISSAMAN (Brandon): Madam Speaker, I would like to add a word to this debate. April 29th, 1963 Page 1737

(Mr. Llssaman cont 1d) • • • . • • I think that no one in this House would disagree with the fact that in 1960 a water haul certainly was necessary and in 1961, because there was no guarantee that the road would be finished. Mr. Guttormson has made certain statements in this House - pardon me, the Member for St. George -- and I would like to refer to his charges in passing.

When he has completed making his challenge he then says, 11I propose to prove it to the House as to how it was done. 11 Now, Madam Chairman, I think the first thing that any member of this House should consider is really what is the basic question at issue here, and I believe that the basic question is simply this: Is the tender system the proper prudent method to award govern ment business on, or is there a better alternative? Now it boils down to a question as simple as this. There can be no other answer, because certainly the work-- water haulage -- was let on a·.tender basis.

It•s the normally accepted procedure of bodies spending public money and normally it entitles, almost always, that body to freedom from criticism once competitive bids have been received on an equal basis and the contract has been awarded, and it's also recog nized as the proper procedure for business and private moneys being spent.

Now in reference to the matter of the tender system, just a few nights ago in this House - on April 15th, to be exact, Madam Speaker -- we had the Honourable Member from Lakeside defending the system and, if I may do so, I'd like to read from Hansard just what the Honour-= able Member for Lakeside had to say regarding the tender system and I1ll break into his speech; if the Honourable Member thinks I'm taking him out of context why I wish he would object if he so believes: "I remember a case, and it was on the road that's been talked about tonight -- that part between the Junction of No. 1 and 4 in Gladstone, and tenders were called and tenders were accepted in good faith, but it turned out that tenders had been called on the basis of gravel being supplied from a certain pit, which was known in that area, but one of these free enterpris ing contractors had gone out and scurried the area himself and found an alternative source of supply that was closer. 1' Here he's pointing up the advantage of the tender system in that it puts people on their toes; they try and use their head as well as their knowledge of the affair to give the best price available, because obviously if they don't give the lowest price they don't get the tender.

Then later on he says, 110f course if we had somebody with the prescience of my hon ourable friend and the Transcona people, that always know what is the right thing to do, we wouldn't have any trouble, but we other common mortals" -- and I want you to pay particular attention to this -- "we other common mortals, we sometimes find these complications that even matters of that kind are a bit disturbing, but I can assure my honourable friend that he can find in almost every kind of the tendering business, whether it be grading, or gravelling, or blacktopping, or con.crete; that he can find some real variations, and that•s one of .the good things about the tender system -- the open tender system -- that you usually under the free en terprise system get somebody in there who has an idea that he 1s going to be able to do a more efficient job than the other fellow, and you get a good tender, and provided you•ve got the in spection service to see that it1s done well, in my opinion that's the right way to do it," Now, Madam Speaker, I wonder if these charges by the Honourable Member for St.

George are really felt by this entire group to be honest, sincere charges because here we have an ex pression of one of the -- certainly one of the most respected members in his group, one of the oldest members in his group, who has had experience for years in the tender system, speaking up for the tender system; and the Honourable Member for St. George criticizing it, because after all this is the only true criticism that could have been.made of this particular award. This is the method whereby all public money is spent.

Now let's leave that issue for the time being and see why there was a degree of urgency in awarding this contract. And I want to refer here to the necessity of power in this province.

Older members in this House will remember when every little local business almost, had its little local steam plant and its steam engine which generated power for the industry, Well those days are gone and we have in Manitoba a central power plant which takes the place of all these little local steam engines, and because this is now looked upon as the power plant of the entire province, the province can at no time run the risk of being short ·in reserve of power in case industry needs that power, and certainly if we didn •t have a reserve power and be planning always for the future we would be discouraging the normal and proper development of this province; and I would like to again refer to some words of the Honourable Member for Lakeside when he was Premier of this province, in February 7th of the. 1951 Session, and he said, ''lt is the view of the government that the most important problems Page 1738 April 29th, 1963

(Mr. Lissaman cont 'd) ...... which are to come before this Session will relate to water power and electrical energy. I would go further and state that, in my opinion, these problems are as important to the future economy of this province as any problems which have confronted this House throughout its entire 80-year history.

" And then he goes on from the technical, ad ministrative, financial, legal, and political viewpoints, "No Legislature in the history of this province has been called upon to cope with problems which are more complex, intricate, dif ficult than the power problems which the government will ask the Legislature to consider dur ing this Session. r r A little bit further on I think there •s another very important passage in his speech when he says -- and I have broken off and I am jumping into another part of his speech: 11The intro duction of electrical energy in great quantitites requires large and costly installations which necessitate enormous capital investment over a considerable time to develop.

As an example, I might remind honourable members that well over $20 million will be invested before Pine Falls project is completed and that approximately four years will have elapsed between the time that engineering designs were commenced and the date upon which this plant will be in full production. " And I would like to remind members here -- I 'm breaking off his quotation - I'd like to remind members that this project at Grand Rapids was in the order of $135 million to $145 million so you could amplify this statement.

Then he goes on: "I should also remind them that unless future developments are put under way in the meantime, our supply position will be worse on the day we finish Pine Falls than it was on the day the project was started. " Now this gives one some idea of the urgency, the continual planning ahead, and when a decision time has been reached and the decision made, then there is definitely that urgency and drive to get on with the job.

Now then, the decision had been made, November 159 if I recall correctly from committee; a transaction for power was obtained from the Saskatchewan Government which made if feasible to commence the Grand Rapids job. Now if there were any truth in the charges of the Honourable Member for St.

George -- and one might almost suppose there were because he was quoting transportation costs against transportation in this case plus a lot of other items; for instance this covered hauling, hand ling, loading, unloading, storage, docks and all facilities -- but in addition to that, Madam Chairman, there was a great deal more entailed in this than just that.

I would hazard a guess that the uncertain element in this contract would far outweigh the uncertain element, let us suppose, of building a road, for example, because anyone taking a contract like this would have to consider the natural hazard of losing a barge or two, running aground or being sunk, and let's look at what some of the other bidders who bid on the same general scheme figured that those extra hazards and -- I'll have to be honest here -- their extra profit they anticipated might have been, but certainly they were figuring the extra hazards.

Now from the winning award, the Drake- Pears on the lowest tender at $23. 10, the next lowest bidder was MacNamara, and his figure of $24.65, which meant that for every ton hauled he figured that there was a greater hazard than Drake- Pears on had figured to the extent of another $1. 55 a ton; and we go on up the line -- J. S. Quinn: he figured the extra risk was worth $3.99 more per ton. We get up to Brown and Rutherford; they figured that the hazard that they couldn't foretell or foresee what those hazards were, were worth in addition to what the lowest bidder got another $12.88.

V/ell the highest bidder of all, Selkirk Silica, figured that this extra risk was worth $13.12. Now I've qualified that before I spoke; extra hazard plus whatever profits they intended to make beyond the lowest bidder.

And when you look at it in this light, consider all the nat ural hazards that they ran -- and we had pointed out to us one small hazard that even the low est bidder didn't anticipate and that was having the navigation buoys removed at an earlier season, but you see there were many hazards to be calculated and personally I woo.ld -- being a conservative type of person it probably wouldn't excite a bit of suspicion if this wouldn't have been one of the lowest bidders considering all the hazards. But in addition to all this, in going for this water contract, Manitoba Hydro bought more than this, even.

It bought the certainty of a method of delivery of these goods, and you heard the officials of Manitoba Hydro say that all things being considered, even having hindsight now, the ability to look back upon this episode as our friend from St. George is viewing in its entirety from a position of looking back and being critical of things that have been done, they would still insist that road alone wasn •t enough, wasn •t a good enough guarantee to finish this April 29th, 1963 Page 1739

(Mr. Lissaman cont•d) ••••• job in the time that was necessary, and certainly I don '1: need to explain to this House after it having heard the member for Lakeside •s words when he was · Premier on the urgency of some of these projects, so there can be no question that, in addi tion to the road haulage, the water haulage method was necessary as a back-up. Then too, there was a doubt as to when the highway would be finished. We heard the member from St. George say that contractors were told this job must be finished in 100 days, but who is going to say what nature will permit you to do?

All the words in the contract under the sun wouldn't have mattered if we 1d have run into bad weather last summer. Then it just wouldn •t have been built in 100 days. It might have taken 200 days or two years, because you•ve only got the summer season to build. So I think, Madam Speaker, that almost all intelligent people would agr,ee and realize that the member from St.

George has, by picking out certain figures out of the year, has concluded that too much money had been made when after all this isn •t an issue at all, but let us assume that there is something to the argument that an unconscionable profit was made, and I don't agree with that concept of the problem at all, but let•s just look at that phase of his argument for a moment. W e heard the counsel for Drake-Pears on admit of his own free will of the probable pro- . fits of Drake-Pearson, and he said somewhere between $320 , 000 and$350, 000.00. Now, here's a very important point to look at right here.

He made this admissioi:t while the demand that the company's books be tabled -- he made this statement not knowing that five minutes after he 1d made it the books might have been demanded by the committee, and do you think · people of that calibre are going to make a statement and five minutes later be proved to be telling untruths? I contest, Madam Speaker, that the profit in this instance must lie very close to that given by Mr.

Hunter as counsel for Drake-Pearson, and so of the two estimates - well I won•t say estimates; this is a fact; I'm quite willing to accept that a man isn't going to perjure himself or lay himself open to perjury five minutes later -- but betwee!l the estimate the Honourable Member for St.

George has made and this admission of fact, then I myself am not going to listen to a bunch of poppycock from a man who has no closer approach to the situation than hindsight; I'm going to listen to a counsel who is well-respected, who had some thing to lose and has made a statement very different from that of the Honourable Member from St. George. This is my belief in the matter, and I think all thinking members when they give this a moment's thought mu$t agree that this is so.

You know, Madam Speaker, this whole situation as I heard more and more of the facts in committee, completely disgusted me, and I would like to give the House a comparison that I think is quite parallel, that if I were to charge some private individual of being a crook and a thief and that he 1d been stupid and so I throw him into court, and then when I got him at the court•s mercy ••••.• say now, 11Would you provide me with the evidence? 11 when previously I had said I was going to prove that he was such and such; and this is what•s happened in this case, and I think it's rather a bad thing that this House can•t reprimand people and meas ure out some form of punishment to people who bring such flimsy charges, frivolous charges, and after saying they•re going to prove them it's found that they can•t prove anything, but I know, of course, that this would be wrong too, because this House can't punish people for this sort of thing because in some instances the individual might have a really justifiable case and even though the circumstantial evidence made the House believe that he had nothing, he might still nevertheless be right, because this is not a court of law, and I suppose for that reason, much as I regret it I have to accept the fact that this House cannot reprimand a member, but personally I believe that such should be the case barring the reasons I've given, but there is this comment I must make, that the member may proceed to punish himself because we all know the old fable of the boy who hollered ''Wolf" continually, and I believe, Madam Speaker, that the Honourable Member for St.

George will holler "wolf" so often that the public will begin to realize the kind of statements 'he makes -- irresponsible, unbacked by fact -- and that day may be very close now, because you can•t go on making these kind of claims for ever and be adjudged to be a sensible, sincere representative. And then of course on the other side of the ledger, or at least another item which we should consider in the matter of these fivolous charges as I claim, is what of the cost to this province, to the people that he's supposed to be representing?

I daresay the cost of this thing will run iirto many thousands of dollars, to say nothing of more or less at certain times almost paralyzing Manitoba Hydro with a project of Page 1740 April 29th, 1963

(Mr. Lissaman cont 'd) ... ... this nature under construction. Many of these men have to be on call from Grand Rapids for decisions and sitting here in committee is not conducive to getting this contract completed. And then of course there •s the other cost, the cost of -- sup posing people who do not !mow the facts as presented to us in committee but think there might be just some little grain of truth in what the Honourable Member from St. George is implying, Then there •s a great cost to Manitoba Hydro and to the government -- that hint of suspicion; and I think the whole incident is deplorable.

I think the honourable member has made a state ment that he has disproved himself. He said that he would prove it and he had nothing to prove the facts and I believe, Madam Speaker, that the Honourable Member for St. George in this case has been nothing but "whistling in the wind. " MR. J. M. FROESE (Rhineland): Madam Speaker, I had hoped that I would probably speak some time later on in the debate, after hearing some other ·members speak on the re port.

However, I would like to make my comment at this time in connection with this report, First of all, I listened with a great deal of interest to the Honourable the Member for Selkirk the other day when he spoke on this report and he drew into question the matters of this committee when he stated that the committee had no right, no authority, either to deal with that matter or to set up its own terms of references as it did. I would have liked to wait until some other members had spoken and to have this point clarified to me.

However, I will reserve my decision as to whether voting concurrence or non-concurrence on this report until I have satisfied myself on this point. The member for St. George still maintains that he can prove his charges or allegations provided certain conditions are met. In a way, I feel sorry that conditions weren't met so that there would leave no doubt in anyone •s mind as to the situation. To me, this whole thing boils down to a few matters. One, is the matter of risk, the facts of risk; secondly, the mat ter of government or Crown agencies.

I think these are some of the principal points in this report that I have some misgivings on.

First of all, I feel that the officials of Manitoba Hydro acted quite re�ponsible, in a re sponsible way, since they would naturally protect themselves in matters./of this type and big bentures of this type where large amounts of moneys are being spent for capital purposes, I think they only did their duty when they took the various actions as stated in the report on Page 3, and I would just like to state that one paragraph -- 14 -- "Your committee is satisfied that with respect to water haulage Selkirk to Grand Rapids, Manitoba Hydro (

a) called for pub lic tenders for the work in accordance with normally accepted practice; (

b) received five tenders and four proposals for such work, and (

c) accepted the lowest tender submitted after having satisfied itself that the contractor was capable of performing the work and that the said lowest tender was reasonable under all circumstances. " I listened with a great deal of interest during the hearings and also on this very point, whether proper investigation had been made as to the lowest bid, whether it was a reasonable bid. And here again, I come to the point of risk. l think the bids would have been much lower if there hadn't been such a large amount of risk involved.

All the matter of risk was insured to the highest possible degree, in my thinking, And this is what adds to the cost of such pro jects, and that's why the bids are as high as they are, That's why some people, if they bid on it and if luck is with them, they come out on this side and probably make good earnings and, for that matter, large earnings too.

So that this whole matter involves around the factor of risk, and I, for one, feel that if this had been a private company, private enterprise, that they would have assumed more risk; and that as a result of that the cost w�uld have been lower, and that savings could have been effected and passed on to the consumer. Now, to me it seems the whole trouble arises out of the matter that Manitoba Hydro is a government agency, a Crown agency, and because of that, of its very nature, that we have this before us today.

Members of this legislative body are entitled to !mow the score on this matter, and it is their duty and responsibility to find out if matters are gone into question, to know the truth and to !mow the -- have an accurate statement on such affairs. And I for one do not feel that money is wasted when such committees are called into action. Certainly, I think it was a big eye-opener to many of the members of this House, to get an inside into the operations of Manitoba Hydro and how they perform.

However, I in a way object that this had to come about by first having to make charges or allegations in order to get down to some of April 29th, 1963 Page 1741

(Mr. Froese cont1d) .•..• these facts. I hope that some other method can be brought into being so that members of this House will get first-hand information and all that they desire·, and not have to go to such measures as this; because I feel that this just creates hard feelings and not too much is gained by it. Then I also wished to bring one other item to the attention -- and that is the IJ:Jatter of third parties of the contract.

I feel in a way that we have to protect third parties in any contract, in any government contracts that they go into, because if we didn't do that we would leave our selves open to, I think, a lot of trouble. We 1d soon find ourselves in a position where we wouldn't receive this; so that we have to exercise some measure of constraint in this way and to protect innocent third parties. However, I've got to come back to this other point once more, and I feel that this govern ment should not get into so much business, and that we should rather have less governme nt agencies and monopolies than more.

During this session we will see the creation of four more agencies, and I think this is wrong. I feel that we should steer away from these government agencies, because we will get into more and more trouble as we go along. I'm sure as these government agencies grow larger and older, that from time to time we will have to make checks.

And certainly we do not want to embarrass any people who should not be embarrased, and we should not be involved, If this had not been a government agency, I still feel that if it had been a private enterprise, that they would have assumed more risk and that as a result, savings would have been effected, I think this matter was also brought to bear in committee by Mr. Tuckwell1s statement that he felt that savings could have been effected in the work that. they had done that tenders had been called for. Now, coming to a conclusion, I do not want to blame any Hydro officials.

After all, they were just doing their duty and they protected themselves to escape any blame that might re sult from such a large venture. On the other hand, I wish to reserve my decision on this re port until I have heard and satisfied myself on some of the legalities of this committee, and if I do -- will concur -- it will be under protest, because I feel this government should get away from government agencies; and if I do not see my way clear, I naturally will oppose it.

I think that just about covers the points I had to raise, and since I only have one opportunity to speak on this bill, !hope that I covered most of the points. MR. LAURENT DESJARDINS (St. Boniface): Madam Speaker, I would like to move, seconded by the Honourable Member for Carillon, that the debate be adjourned. HON. STE RLING R. LYON, Q. C. (Attorney-General) (Fort Garry): Madam Speaker, be fore the question is put, perhaps I might be allowed to make a statement with respect to the motion for the receipt of the report that is presently before the House.

I believe it was Sir Winston Churchill who once said: "It's a deplorable thing that when persons are engaged in acute political controversy they sometimes allow their language to be rather the means of giving relief to their feelings than an actual description of the facts. " Well, Madam Speaker, having had ample proof of the wisdom of this proposition demonstrated in the speeches from the Liberal benches, I shall attempt not to emulate their example. I propose, Madam Speaker, to deal with the facts surrounding the entering into of the water haulage contract to Grand Rapids in 1960.

And I may say, Madam Speaker, that I embark on this task with no misgivings, con fident in the knowledge which is now the property of all of us, that we •re willing or capable of reading and paying attention to it, that.the charges by the Honourable Member for St. George have been incontrovertibly proved false, utterly without foundation, and thereby irre sponsible and indeed unworthy of an elected representative of this House. The weight of evidence against his, allegations, Madam Speaker, is staggering, and is insurmountable.

Furthermore, he and his own colleagues failed miserably, if indeed they even attempted, to discredit the witnesses from Hydro on any of the material points they documented in their case against the charges of negligence and sheer incompetence in this contract. That •s when the hearings neared their conclusions and his case had long since evaporated. My hon ourable friend took refuge in what for him was !l predictable course, the dramatic retreat which was nothing more than a cloak to cover his own humiliation.

His remarks last Thursday on the motion to receive the report were little more than a recapitulation of what he had earlier said, without backing of a scintilla of evidence. Of course, he blamed the government for allegedly throttling his evidence and whitewashing the report, a charge that is almost as ludicrous as his Page 1742 April 29th, 1963

(Mr. Lyon cont•d) ..•..•• • own deportment throughout this whole matter. Like the immature and the spoiled child who loses an argument and then screams, "liar! cheat•. liar! "t he mem ber apparently has convinced at least himself that repetition of a hollow charge somehow lends proof, dignity and importance to it. Well let us then, Madam Speaker, go back to the member's original charges made on March 6th and as reported in Hansard of that date. I think these should be read into the record again because it is from this foundation that the committee proceeded upon its investigation.

He is reported at page 43 of Hansard of that date as saying as follows, 11I have a shocking ex ample, 11 and I ask the members of the House particularly to note the adjectives -- well-turned, well-turned legman •s adjectives -- 11I have a shocking example, not only of the failure to plan its highway construction, but further of failure to have any co-operation, any co-ordination, between the various branches of government.

Madam Speaker" -- I1m continuing the quote - "through sheer incompetence; through complete failure to understand basic business concepts, through negligence in protecting the interests of Manitoba, and by total failure to plan its own -affairs ahead, this government has thrown away nearly $2 million of our own taxpayers 1 mon ey.

" And listen to this quote in particular -- "I propose to prove it to the House as to how it was done. 11 And there then follows a series of allegations based upon certain obviously rapid calculations based on, in turn, hearsay or other information which in essence turned out to be largely inaccurate. But he continued on over the page -- page 44 -- and said, and I want this to be back in the record again, "Even the government's own engineers had told them the road would be ready by the end of 1960.

Despite this information this government still went ahead negotiating, and signing, in that same year, this four-year contract for water transpor tation. 11 And at the bottom of the same page -- "This is a direct waste of $2 million of the money of the taxpayers of the Province of Ma nitoba, because this government did not plan. In addition to this" -- and listen to this -- "In addition to this, 11 says he, 11the truckers of this province lost the opportunity to get the business. 11 In addition to this the truckers of this pro vince lost the opportunity to get this business.

A very pregnant statement. 11This, Madam Speaker, 11 he continues, "is the story of what happened in the past. One would think that after this shocking performance 11 and so on, and then he carries on again; he carries on and further on that page he says, 11I see no indication that the truckers of this province will be given a fair chance of this work." -- and he was referring to the subsequent negotiations; and he concludes by saying, 11I challenge them 11 -- meaning the government -- "to investigate and make public this whole sorry mess. " .

Well that, in essence, was the substance of the member's charge on the 6th of March. From it all I suppose we can deduce this, that his case was that a road alone to Grand Rapids was sufficient transport for a project even of the magnitude of $140 million, and the second arm of his case might well be that the failure to plan was a legitimate charge because the road was not in place when the project began.

Well, Madam Speaker, although it may take me a few moments, I propose to show how Manitoba Hydro came to answer these allegations of the honourable member; came to answer him, as I have mentioned, without being disturbed on cross-examination or having any of their acts in any way upset or for that matter even ques tioned, when they came to lay before this committee of the House the whole question of how the planning had proceeded up to the time of the decision to proceed with Grand Rapids in the late fall and early year of 1959 -1960 and the decisions taken consequent upon that determina tion which led in turn to the building of the road, the entering of the water haulage contract and so on.

I would refer honourable members first of all, Madam Speaker, to the evidence of the General Manager of Manitoba Hydro, Mr. W. D. Fallis, on the 2nd of April, which appears on page 18 of the transcript of the proceedings from that day. ''The concept of the Grand Rapids Hydro plant" -- starting on page 17 at the bottom, 11 essentially as it is now being constructed, was detailed as early as 1953. The CNR was approached for an estimate on the cost of building a railway into the site in 1955 and the cost of a highway was estimated at the same time.

The economics were substantially in favour of construction of a road, although "back-up" for a road was necessary. " That's the first reference. Turning over again to pages 23 and 24 of the evidence; again Mr. Fallis speaking about the necessity for this water-haulage contract: "ln planning the construction of Grand Rapids April 29th, 1963 Page 1743

(Mr. Lyon cont•d) •••••••• Manitoba Hydro's opinion, based on experience , and concurred in by a number of major contractors with whom the project was discussed prior to tenders for the general work being called, was that the matter of transportation of materials and equipment required during the time that could be allowed for completion of the work was the major hazard to the rigid

schedule that would have to be maintained for first power in November of 1964. The discussions with major contractors also confirmed the expectation that they would consider the cost of transportation by far the greatest contingency involved and to be provided for in esti mating on any tender that required firm unit prices, if this type of tender were to be called for.

Manitoba Hydro, for its part, wished to avoid having the general contract on a cost-plus basis." Again on page 24, 111n the matter of transportation, the desirability from Manitoba Hydro's standpoint of a highway to Grand Rapids, both while the plant was under construction and after it was in operation, had been apparent from the first consideration of this particular site. rr Again on pages 25 and 26, 111n addition, Manitoba Hydro was of the firm opinion that it would be completely unrealistic" -- completely unrealistic , and I repeat those words, ''to predicate the vital

schedule for a project of this size on the assumption that the remaining im mense tonnages could be moved over a gravel road yet to be constructed and which would then be open to all of the usual hazards of spring break-up, heavy rains, etc.

" Carrying on, at the bottom of page 25, 11Before preparing the call for tenders on the move ment of freight to Grand Rapids, Manitoba Hydro had made a general survey of the existing transportation and loading facilities on Lake Winni peg, and had concluded that any successful tenderer for water transport would have to acquire considerable new equipment to meet the requirements. 11 'Car rying on, on the same page, "Scheduling the water transportation over four seasons had the further very real advantage, in the judgment of Manitoba Hydro, of pro viding at the proper time insurance against the hazards of road transport, not only as they might arise on a new highway, but as they can be encountered on any gravel road, particularly in the spring or during periods of heavy rains, The most economical scheduling of the work calls for heavy concrete pouring during the summer months and considerable added cost would be involved if major quantities of the cement required were moved to the job by truck during the winter and storage facilities for it had, in consequence, to be provided.

" Carr ying on, on page 29, ''I further note, Mr. Chairman, that the question arose in the House of the added cost of the Grand Rapids project if the work were delayed for any rea son, with the result that power does not become available from that source until, say, No vember, 1965. Such a contingency would, of course, leave us extremely vulnerable to the possibility of power shortages during the winter of 1964-65 and, in addition, on a basis of our estimates would result in additional capital costs for interest during construction of some $4.8 million.

Added to this there would be other overhead cost increases arising from such matters as the necessity of maintaining construction camps an extra year, providing construc tion power for the added time, supervisory labour, etcetera." Then he went on to explain that already on the basis of their estimated cost it was antici pated that savings had been achieved on the over-all project which could amount to as much as $14 million, and that •s to be found on page 29 at the bottom, Madam Speaker, and I wori't burden the House with a full reading of the whole paragraph, Coming to Mr. Fallis'

summary about the need for the water haulage contract; No. 1, page 30 of the same date, he said, "We must plan to provide power under the worst conditions that can reasonably be foreseen and provided aga inst. " This is the number one requirement that you •ll recall was given, and is given, by Manitoba Hydro to all of its executive officers when embarking upon a project of this kind.

Again, on page 31, after outlining the problems that they had gone through in the four previous plants that had been built by Manitoba Hydro, all of which, by the way, were brought in on time, by utilizing exactly the same methods that were used, and the same degrees of skill and the same skillful people who were used with respect to the Grand Rapids project, Mr.

Fallis went on to say, "These experiences and possibilities were not only known to us, they were equally well known to virtually all major contractors. :Furthermore, large tonnages had to be transported to Grand Rapids during 1960 while a road was under construction. This is why in our judgment it was desirable for Manitoba Hydro to accept responsibility for transport to the Grand Rapids project and why some 11back-up11 Page 1744 April 29th, 1963

(Mr. Lyon cont 'd) . . • . . . transportation facilities were essential for the protection of the con struction schedule. 11 Madam Speaker, if Mr. Fallis' statements were not enough I refer honourable members to the statements of the Chairman of the Manitoba Hydro, Mr. D. M. Stephens; Volume 3 of the evidence taken on April 16th, 1963. If honourable members wish to follow, it's page 64 and 65 first of all, where he refers to this contract, the necessity for it, the necessity for dual transportation facilities going into the project site.

He says -- he outlines first of all the experience that they went through at McArthur Falls, at Kelsey and so on and so forth. "Now the point I really want to make, " and I'm quoting here, Madam Speaker, "The point I really want to make, Mr. Chairman, is to suggest this to you, that had our dispositions been such, our arrangements been such as to permit us to cope with average conditions, with normal conditions, I am suggesting we would have lost our

schedule at Pine Falls; we wouldn't have had that power available when it was needed; we would have lost our

schedule at McArthur; we would certainly have lost the

schedule at Kelsey, and we would have failed in the functional obligation that the Legislature had cast out to us to provide power for the needs of the Pro vince. Had we failed at Kelsey, 11 continuing the quotation -- "Had we failed at Kelsey we would have interrupted the mammoth

schedule of our customers, but we did not fail. " And further, on page 65, he says, 11When it comes to the security of power supply that is, having the power available, because it takes two or three years to get it, you will make such arrangements as may be necessary to permit you to cope with the worst conditions -- that can possibly be fore seen and provided against.

" Again at Page 70 of the transcript of evidence from the same date: "1 do not recall, " quoting again, 111 do not recall anyone ever suggesting that to me in the circumstances of 1960, but I believe I know myself well enough to know how I would have reacted if they had sug gested it. I would have asked; Do you know for sure that the road is going to be completed and available for all of 1961? Do you know how you are going to get the five thousand tons up there in 1960?

Do you know for sure that we will not encounter, if we have the road, do you know for sure that we will not encounter conditions such as were experienced in 1949, the Fall, and through weeks and weeks of 1950, because we had to provide against the worst conditions that can reasonably be foreseen and provided against, and we encountered those conditions. And if one cannot conceive of this happening again I say they have a short memory. I would have to ask, '' continues Mr.

Stephens, '•Do we know for sure that even if the road is available and encounter these conditions that it would stand up under the 1950 conditions when certainly highway 11 didn't stand up? Do we know it will stand up to the mammoth tonnages that are in volved in this job?

Certainly Rettie," referring to James Rettie, "knowing the Terms of Reference that we placed upon him,never suggested that we rely upon road transport exclusively, but I am quite sure that if he did, 11 and I'll ask honourable members to listen to this from the Chairman of Manitoba Hydro, 11I am quite sure that .if he did, and knowing the experiences that I had oarticioate:l in, and if he had recommended that we rely entirely upon road transport, without something to back it up, I would have been the one to have thrown it out as not having been in conformity with my own edict that he be ready to cope with the worst conditions that can be foreseen and provided against.

"Now this facility, Mr. Chairman, " he continues, 11to be told to cope with the worst con ditions that could be foreseen and provided against, this facility does not come cheaply. You don't get it for nothing. It costs money. At Pine Falls it costs us extra money to. know that we could cope with a bad flood if we got one. We got the flood; we coped with it. But supposing we had just gone along with average conditions, or supposing we had put those provisions in and incurred average conditions, the hindsighters could certainly have come along and said we spent a lot of money.

" And that 1 s a very interesting paragraph, Madam Speaker, and so he continues on with his evidence as to the validity of this contract. If I am reading extensively, it is because I think this evidence is important, Madam Speaker, and this evidence should be before all members of the House who weren't privileged to hear it, because it was during this committee hearing that Manitoba Hydro was able to expose and lay bare before the committee all of the planning, all of the thinking, all of the rationale that went into their preparations and their acceptance of the undertaking at Grand Rapids. I quote this from Mr.

Step hens, because he's a very frank person -- the bottom of page 73 April 29th, 1963 Page 1745

(Mr.

Lyon cont'd) ••••.• of that same date he said "I have not been able to work out figures that would come out any more than that, but I would like to put it to you this way, that if in a $140 million project or thereabouts that was being scheduled, as it was scheduled primarily to m·eet a power-on date at a particular time, if someone had come to me and said; Stephens will you accept a charge on this of $1 million or $1. 2 million, whatever it is, to protect your edict to be complied with in order to let us assure against or be ready to cope with the worst conditions that we can reasonably foresee or provide against, if r had been asked that question and having satisfied myself that this $1 million or $1.2 million was the most economic means of complying with this edict, I would not only have permitted its inclusion, Mr.

Chair man, I would have demanded it. I would put it to you this way, 11 continues Mr. Stephens, "I would far sooner stand in the position I am standing in today providing I am not accused of wrong-doing or under the table dealings or some of those sort of things, but to justify the con cept of this water haulage contract, if that is the sense in which I stand before you today, that this is a thoroughly enjoyable exercise compared to what it would be to stand here in 1965 and try to explain to this committee why

Section 3 and those other clauses saying what they did, that I have brought on a power shortage or a power shmozzle in Manitoba to save. less than one percent on the cost of this project, in comparison it is a thorough delight to stand before you supporting the basic philosophy and thinking behind this, compared to what it would be if we gambled the power solvency of Manitoba and lost. 1 1 Mr. Rettie had evidence along a similar vein, Madam Speaker.

I would refer honourable members to the evidence of the afternoon session of April 16th, 1963, at pages 63 to 64, and there they will find the opinion of the Chief Project Executive Officer with respect of Grand Rapids; the man who had brought in these four other plants on time, and who had coped with these situations before and had overcome them; one of that team who is providing to Manitoba the cheapest electricity in Canada and giving to our Hydro utility in Manitoba one of the finest reputations on this continent. Here 1s what he has to say in response to the allegations of the member for St. George.

He was talking about the road; he said at page 63, 11We were gratified the road was finished well ahead of schedule, 11 -- as it was. 11This did provide us with added security during 1961; however it was my opinion when the new road was in place we could not rely on it as our sole means of transportation if we were to maintain the

schedule laid down in view of the very great tonnages to be moved. 11 And then he talked later on about the load limits, the load limits on the road and so on, on page 64 -- and all of these items, Madam Speaker, are important but I don 1t wish to read them all into the record because they are before us in the evidence, and l'in trying as best I can to pick out only the highlights of this incontrovertible evidence that was presented to the committee. Page 67 -- again, he said, 11As mentioned earlier we were not prepared 11-- we were not prepared -- 11to predicate our construction

schedule on only one means of transportation to the site, and we concluded approximately one-half of the estimated tonnage would move in by each of the road and water transportation routes. 11 Again, Madam Speaker, in the transcript of evidence, Page 72 of the same date, talking about the price that was tendered on this water haulage contract. ••The lowest price tendered, $23,10 per ton, was not out of line with prices paid by Manitoba Hydro for water transportation between Selkirk and Gra nd Rapids during previous years, that is from 1953 to 1960.

During the investigation work which we had been carrying out we used an established carrier, Selkirk Navigation; we made deals with the fish companies to use their boats on the return haul, bring ing fish into Selkirk, and we used them for hauling cement up for test grouting and one thing and another and in that way we did transport quite a lot of materials to Grand Rapids prior to 1960, and this price of $23.10 was not out of line with the prices we paid at that time, 11 Again, Madam Speaker, carrying on with the evidence of Mr. Rettie on the same date after 8:00 p,m. page 13 of the transcript: 11Mr.

Chairman, this concludes my detailed presen tation, rr I'm quoting -- 11but I would like to sum up my remarks by offering the comment that with regard to the very rigorous terms of reJerence mentioned by Mr. Stephens, which were handed to me, and from the vantage point of 1960 and today, I do not see how we could have accepted responsibility for the handling under the worst foreseeable conditions without such provisions as were made under the water transportation contract. '' And finally, Madam Speaker, when he was giving evidence on the 16th of April, Tuesday, Page 1746 April 29th, 1963

(Mr. Lyon cont1d) ..•.• at 9:30 in the evening -- later on that same evening -- he made this comment because it's a question that has been raised, and a legitimate question when one gets in and learns the facts of the situation. He was asked 11What about a two-year contract? Why did you go for a four-year contract? Why didn •t you go for a two-year contract? " Page 10 of the evidence of 16th of April 9: 30 p. m. Question: rrwell why was the water contract limited to two years ?" Let1s see, who was asking that question ......• Mr. Guttorm son, the Honourable Member for St.

George, 11Why wasn't the water contract limited to two years? 11 says the member for St. George . Answer, 11Well, Sir, I can only repeat what I said before, as far as I am person ally concerned and I think others that worked with me on this project felt that we could not rel y on this highway continuously, nor would we want to think that it was our only means of transportation to that project. I just cannot buy that concept and I could not buy it in 1960, and I am still not prepared to buy it. I think there are conditions that can happen even yet that will knock that road out.

" That is the evidence of the officials , of the people who have br ought in these hydro plants for over the last 13 to 15 years , who have had to come with all of these eventualities. They were giving you the background, giving the committee the background as to why they went into this dual transportation system, and Mad- am Speaker, it made sense. · Now he says there was a failure to plan the road. The road should have been in place . There was a failure to plan it obviously when the contracts for the road weren •t called till the summer of 1960.

Well without repeating all of the evidence that was given in the committee, Madam Chairman, all I can say is that the record is replete yvith statements by Mr. Rettie and others of the co-operation and of the co- ordination between the Department of Public Works and Manitoba Hydro concerning the road in this construction, and in any case the complaint of the Honourable Member for St. George really is not that the road was built too quickly but that -- not that the road was built too slowly, but that it was built too quickly.

He attempts to take advantage of Manitoba Hydro because the road, by a combination of good circumstance s, was completed or largely completed in 1960 and was able to take winter traffic in the late fall of 1960, even though further gravelling and surface work had to be done in 1961 and the bridge wasn't completed until late fall of 196 1. But I don't know if that•s his charge or not. At one moment it was that there was no planning, the next moment it was that there was too much planning because the road was completed too soon, and therefore you should have got out of the water contract.

Well, Madam Speaker, the road was authorized in the winter of 1959 with 196 0, was as I mentioned utilized by trucks in late 1960 even though the final grading and gravelling had to be done in the summer of 196 1. The bridge across the rive r was not completed and opened lliltil the late fall of 16 1. This was a road-b uilding wonder; 112 miles of road built north of Gypsum ville through moss and tundra and swamp and gravel and every other condition that you can imaginably conceive; 112 miles and they laid this basic roadbed in the one summer.

He makes much of that fact, the honourable member, because the Department of Public Works called for completion in 100 working days . Well, the department knew -- the department places in all road contracts an outer completion date but the term that is interesting is the definition of the term "working days, 11 and I re ally hesitate to take the time on this matter except that it was raised by the Honourable Member for St.

George indicating that he had no conception of how these things go on, and so if the rest of the honourable members will permit me, I think he should be edified, because in these contracts "working day" is defined, 11 and for the purp oses of the contract a working day shall be defined as .......• 11 and this is the definition from the Specs of the Grand Rapids Highway project. 11 Any day other than a Sunday, statutory holiday or a day when on the highway work is prohibited by the terms of the contract, on which in the opinion of the engineer atmospheric ancj/ or highway conditions are such that at least 60 percent of the contractor's total earth-m oving equipment measured in terms of theoretical capacity is able to work at least seven hours during the construction period between 7 a. m. local time or the time the contractor •s operations norm ally commence, whichever is the earlie r, and 6 p. m. local time, theoretical capacity shall be the struck capacity of a scraper, or in the case of a bulldozer, half the number of cubic yards of the average sizms craper that the tractor, in the opinion of the engineer, is capable of operating.

" In other words, they lay down a definition of what a working day is. This is in common in all of the contracts. And of course an outer limit April 29th, 1963 Page 1747

(Mr. lzy'on cont1d) ••••• is put m1 the contract, but the fact remains that no firm commitment could be given -- could be given -- as to whether or not that road would be completed in 1960. The engineers in the Department of Public Works are not weather prophets.

Any contractor on a road job -- and I shouldnrt have to educate the honourable member to this extent -- but any contractor is subject . to Acts of God, weather being included in that term, and that is why you have such descriptive terms of working days, because a contractor should not be penalized because he is unable to work because of conditions over which he has no control. It's a very simple proposition. I apologize for taking the time of the House to explain this. This was one of the best building seasons as it turned out, Madam Speaker, in recent years. The work was done.

No one could or did give any assurance in 1959-60 that this would be.s o. In fact, completely to the contrary of a statement made in this House, and which I have just read for the honourable members, Madam Speaker, on March 6th. I ask them to turn back again to the evidence of Mr. Fallis, given on the 2nd day of April, Page 44 . ..,emember, Mr. Guttormson ? I think we should refresh our memories on this point, because it •s interest ing to see how the allegations stack up against the facts. And here's a priceless example. Quoting the Honourable Member for St. George on the 6th of March.

Quote: 11Even the govern ment's own engineers have told them the road would be ready by the end of 1960. Despite this information, this government still went ahead negotiating and planning in that same year this four-year contract for water transportation. " Unequivocal? Quite an open statement and allegation •. No question about it at all in the mind of the honourable member. Let •s listen to the facts. Turning first of all to the statement of Mr.

Fallis -- I'm sorry, page 25 of the transcript of his evidence of April 2nd: "With the decision made in December 1959 11 -- read ing from the bottom of page 24 -- "as a result of the capacity purchase. from Saskatchewan becoming available, to proceed with Grand Rapids rather than provide for additional power from Selkirk, plans were laid for the surveying of the highway during the fall and winter of 1959-60 and for the construction of the 117 miles of new road to get under way in the spring of 1960.

No guarantee could be given at that time that such a road would be completed in one season, in fact, there was concern as to assurance that the road would be completed in 1961. 11 Those are the words of Mr . Fallis. I don 1t have to repeat again the words of the Honourable Member for St. George. Mr. Rettie, in his evidence -- and I refer the honourable members to the transcript on the 16th of April, 1963, Mr. Rettie, in his evidence at pages 10�13, deals with the same point.

Answer -- and this is at the bottom of page 11 -- 11And the best assurance that were given was that it would be completed by the end of 1961. " Question: "Is it not a fact, Mr. Rettie, that in the road contract, there was a penalty clause if the contractor failed to build the road within a certain time limit?" Let us see who is asking these questions. Mr. Guttorm son, the Member for St.

George.Answer: 111 am not aware that there was this clause in the contract, there could have been, but I am not aware of it, I don't have access to the contract, I did not have access to the individual road contract, and I wouldn •t know sir. As I say, we were involved in negotiations for the road but this is a matter that was handled by a depart ment of the government and the

schedule that was given to us was that the road would be com pleted by the fall of 1961. 11 "Can you tell me who gave you that information, that it would be completed in 1961, 11 s.aid the member for St. George. Answer: 11The Department of Public Works. " Question: "Did you get this information in writing? 11 Answer: 11I am going by memory. I don't think it is in writing, sir. We attempted to get it in writing. 11 "Do you know who told you that? What member of the Department of Public Works advised you or your department that the road wouldn't be constructed until the fall of 1961 ? -- said the member for St.

George. Answer: "W ell, we have contacted both the Deputy Minister and the District Engineer for the area ..• ", and so on. Well, let me just finish that -- 11the District Engineer. for the area and this was the indication that was given to us, this was the

schedule that was set up. Of course, the bridge again, we knew -- I know this is beside the point in a sense, but it certainly wasn't intended to be finished before the end of 1961 11 -- he's referring to the bridge -- "and wasn't finished before the end of 1961. " Madam Speaker, I' ve taken some time on that one point -- the contrast ; the statement by the Honourable Member for St. George given in this House, with some of the evidence that was Page 1748 April 29th, 1963

(Mr. Lyon cont •d) ..•... given before this commi ttee by those who know the Mani toba Hydro, In any case, I suggest Madam Speaker, that this whole point, as with a large number of his allegations, becomes academic when the full impact of the Hydro evidence is considered. The absolute necessity for power in the fall of 1964; the contract

schedule ; the absolute require ment for back-up transportation as a protection against the eventualities that we •ve all heard of, that were liable to obstruct the reaching anything that was liable to obstruct the reaching of this fall of 1964 goal, I mention these things only to indicate that the sworn facts of the situation in this instance as in others are diametrically opposed to the baseless allegations of the honourable m ern ber. Now, to deal briefly with the comm ittee hearings, There are a few points I think that should be covered before I conclude. First of all ... ... .

MADAM SPEAKER: I would like to warn the honourable member that he has four minutes left of his tirn e . MR . LYON: Madam Speaker, I1rn speaking for the government benches on this occasion, First of all, dealing with the committee hearings, Madam Speaker, The Honourable Member for Selkirk spoke the other day, and I listened, I must say, with a great deal of interest in what he had to say.

He is a member who comma nds the respect of other members of this House and when he speaks, we all listen to what he has to say, I think he raised some interest ing points with respect to the comm ittee being properly constituted, term s of reference not being laid out in the House. But I would remind the honourable member that we do have a recent precedent for just the action that was taken.

And I refer of course to the Comm ittee on Public Acc ounts which was called in 1960 or 1961 to hear certain allegations that had been made by the Honourable Member for Lakeside, the details of those allegations which were not made known really to the Comm ittee until such time as we assembled in committee and we then nro ceeded to dispose of th'O! matters before us, So we do have a recent precedent for that, but I thank him nonetheless ±or raising the point, because certainly it is one that is worthy of con siderati on.

But, I say that it Joes not in any way impair or cause detriment to the validity of the hearings that were conducted on this matter before the Standing Committee on Public Utilities and Natural Resources. Bad any objection of this nature been raised before the ma tter was transmittad tc the comm ittee, I think it might well have been dealt with in the House. But I believe .

Madam Speaker, tnat having allowed the ma tter to go to the comm ittee where terms of reference were then laid out, we are, as a lawyer would say "now estopped 11 in challenging the validity of the hearings before the committee, or challenging the jurisdictional setup under which these hearings toe"-: place . As I say, I was interested very much in the remarks of the Honourable Member for Selkirk for this reason, that he dealt with a legitimate point, as he always does.

He dealt with a legitimate point of procedure, And it is most interesting to see that he dealt with a proct:dural point rather than with the substance of argument of what trans pired in the committee and the weight of evidence that should be applied, or the weight of evidence that was given in response to the charges made by the Honourable Member for St. George, As I say, I have a great respect for his judgment, and the fact that he did not deal with the substance of these charges by the member for St. George is a ma tter of some consid erable interest. MR . T.

P, HILLHOUSE, Q, C, (Selkirk): ...... interrupt the Honourable Minister, but I wonder if he would permit a question on that particular point that he raised regarding the precedent that had been established last year. My question is, is it not a fact that our rules of procedure were amended recently, whereby we took out the reference to the usage and customs of this House, and substituted the usage and customs of The House of Comm ons of Canada? MR .

LYON: Maybe so, Madam Speaker, but I believe the commi ttee in ques tion, and I'm subject to correction because I don •t have the journals in front of me -- I believe that the corn rnittee in question was a Standing Committee of the House , just as is the Commi ttee whose report we are dealing with today, and that precisely the same procedure was adopted there as here. We proceeded to hear charges without having any specific terms of reference outlined to the com mittee at all, But I come now to deal with another point that has been raised by the member for St.

George -- raised in the committee and raised the other day when he spoke to the House on the motion to receive this report , I •m referring now to the charge of withholding evidence that has April 29th, 1963 Page 1749

(Mr. Lyon cont'd) .... ... been bandied about in the committee and by the honourable member with some gay abandon over the past few weeks. He refers in particular, or did refer in partic ular the other day to the capital and operating statement that was the alleged hidden document that he was unable to get his hands on.

Madam Speaker, without going through all the evidence again, because it is burdensome on the House -- but without going through all of the evidence, I suggest that the transcript is equally clear; that never at any time was an undertaking given that this document would be produced under the Order for Return, because it was simply not producible under that Order. The evidence of Mr . Thompson, the counsel for Manitoba Hydro, is clearly on record in the transcript in that regard.

Now, the second question arose as to whether or not that document, not being producible under the Address for Papers, could be called by the committee. And of course the answer clearly was "yes 11, if the committee saw fit to do so. But this document fell within the ambit of those other documents and requests that were made to pry into the internal affairs of the Drake-Pearsori Company. My honourable friend would like to make much of the fact that he did not see the document. But I suggest with respect, Madam Speaker, that the reason he did not see the document was founded on principle.

He did not see the document because the com mittee dealt in principle with the question as to whether or not the private affairs of this Com pany, in the absence of some contractual obligation, or in the absence of some statement of impropriety on the part of the Company, should be laid bare to any and all in order to satisfy the demands of the honourable member for some sort of witch hunt. Well, Madam Speaker, the committee decided in its wisdom, and very properly, that this would not be the case, and that's why the document wasn•t produced.

My honourable friend can take whatever succour he wishes from the headlines that he got out of it but that's all -- that's all that remains to him because the issue was decided as a matter of principle that this company's books would not be opened in the absence, as I have said, of impropriety or some other serious charge. Do I have to refer, Madam Speaker, the members of the committee to the statement by the counsel for Manitoba Hydro, in his summing up statement with respect to this document?

I think all of the members of the committee who were there -- and this took place after Nap oleon 1s last retreat -- all of the members of the committee who were there heard this state ment by Mr. Thompson, and I refer honourable members to it, the evidence of Thursday, April 18th, page 22, 23, quoting from the transcript -- •Now there were some procedural matters at that hearing and there 'was some cross-ex amination of Mr. Fallis n -- and then he carries on to describe the cross-e xamination. •And as it turned out that cross-e xamination of Mr. Fallis," continuing the quotation, •insofar as Mr.

Guttormson was concerned, was limited to trying to find something out about a certain document which he alleged had been improperly withheld by Manitoba Hydro or by the Government in this Return from the House, and I tried to establish that this was a document not producible under the Order for Return and was not within the Terms of Reference of this Committee, and at a later stage I said: I would like to lay before the committee the circumstances under which this document came into possession of Manitoba Hydro, the purposes for which it was intended, the confidential nature of it and then if this Committee saw fit to order its production, it would be produced.

Mr. Chairman it is here, it is here, "However, he says, "my purpose in referring to this is that of course the moment anyone makes a suggestion that a certain document is being withheld then of course it becomes a hidden document and there are improper connotations attached to the with holding, and I am sure .that Mr. Guttormson was fully aware that all of those connotations would be fully picked up by the people whose duty it is to report on these t:m.nsactions " -- and at this point I pause to say, Amen. "And, Mr. Chairman, this is not any backhanded slap at the Press, " continues Mr.

Thompson, "it is their function to report, and when an issue becomes an issue about a document that somebody thinks he should have and some people think he should not have, .the general interest is: What is the document? So I knew at the time that by saying that the document was not producible that it would arouse a certain amount of public interest and of course so it did. Again I emphasize there is no suggestion on my part of attaching any blame to any news agency that referred to the events of the day in respect to that document. I also say, Mr.

Chairman, that the easier thing for us to do, the easier thing for us to do, as the Honourable Mr. Campbell pointed out, the easiest thing for us to do was to say, "Here it is, it may be confidential, it may not be pertinent to the enquiry, it may delve into somebody's Page 1750 April 29th, 1963

(Mr. Lyon, cont'd) .... private affairs but here it is. " Those were the words of Mr. Thompson. "lt might have been easy, n he continued, "lt mig ht have been the easy thing to do but it was the wrong thing for Manitoba Hydro to do because we are doing business with ma ny ma ny people and we are going to do business with ma ny ma ny people involving trem endous ma tters of impor tance and trust, and if we volunteer confidential information to this Comm ittee or anyone else concern ing other people 's affairs then we are acting impro perly Mr.

Chairman, and we chose not to act imprope rly in that regard, " And there he was using the pronoun "we " in reference to the commi ttee ; the comm ittee which decided only on the negative votes of the honourable mem bers. of the Liberal opposition not to see the document. In any case, he still talks about this document. Had he had his ear cocked in the comm ittee he would have heard and he can read now in the transcr ipt what the document referred to. Why was there all the fuss over the document? Why did the Hydro want the document in the first place ?

In order that they could continue their negotiations on the under-runs for 1960 and 196 1, What were they trying to determ ine?

They were trying to determine what portion of the under run could be attributed to capital and what portion to operating and they were trying to arrive at a figure whereby they would pay to the contractor his continuing costs on the under-run and then at the time of the actual delivery of the goods, whether it be that year or late r, they would pay him the balance , the ope rating costs , in order that he would then have the full price of $23. 10 for the goods that he had transported, and in order to do this they 'asked for an received a confidential document to which they were not entitled.

They didn •t accept the inform ation that was in the document; it said, you remember, $17. 58 I believe it was for capital and the bal ance for operating, Hydro finally came to an agreemen t with them whereby they would pay $17. 00 as the capital factor and the balance of $6. 10 for operating. But what is the purpose of it all ?

This is the secret, or hidden document my honourable friend still persists in talking about even though he knows what it is; but it seems that if you can drag any red herring across the trail it is sufficient to satisfy the conscience of the honourable member opposite , Well I suggest, Madam Speaker, that is not good enough for this House.

Let us mo ve for a mom ent to the charge that he ma kes and repeats and made in the com mittee and repeated again here in the House that he has been throttled, nnot permitted to exam ine his witness, " There is a clarion cry if ever I heard one , In this country u11 oer British justice I am not permitted to examine my witnesses. I am not permi tted to call those people that I want and to get this evidence out. Trot out all of this nonsense that 's been going on be hind our backs over at Manitoba Hydro, says he.

That •s a great way to put it if you•re com pletely able to disregard the facts and are blinded to the logic and to the principle of the sit uation that was discussed in the commi ttee. Here was a ma tter of principle, We •ve discussed it, The Honourable Member for Brandon discussed it; the Honourable Member from Elmwood got up today and explai.ned why his group voted the way they did. A ma tter of principle was involved.

The principle was clear, The principle was clear that in the absence of charges of impro priety or in the absence of a contractual obligation -- and there was no such contractual obligation -- what right did this comm ittee have , merel y on the say so of the member opposite, the Member for St.

George, to facilitate his witch hunt into every nook and cranny of this water haulage transportation to see if he could find one scintilla of evidence to back up his base charges, There was the principle involved -- the principle of an innocent party on one hand repre senting all of the people in Manitoba who do business under contract with the government for the lowest tender; and on the other, the rights of one member to conduct a witch hunt. There 's the principle.

And the comm ittee decided the principle the right way; the commi ttee decided that it wasn •t going to fall victim to this type of nonsens e; it wasn •t going to permit one member to water .jown its principles ; it wasn't going to permi t one member to ma ke a laughing stock out of 11 s com mittee proce edings. It wasn •t going to permi t one member to prejudice for how long . we don •t know all of the business dealings that government and Hydro and all of the other branches of government do with the thousands of contractors across this province and across this country.

There was the principle involved, It •s not just good enough to say that his evidence was throttled ; there was a principle involved here even though the honourable member mi ght not have been aware of it. Madam Speaker, it was at just about this point that the bulk of the evidence from Manitoba Hydro had been in. It was clear I think to mo st reas onable members of the comm ittee that April 29th, 1963 Page 1751

(Mr. Lyon, cont1d) •••• there was little if any --little if any? -- there was no substance to the allegations that he had made, And so what did he do ? He shifted his ground, He started in on this attack on the profits of Drake Pearson. This was to be the next ground of attack on this great witch hunt, He said that he wasn't investigating Hydro in effect; he didn't use these words; he wasn't investigating Hydro but he shifted off them ancl he. said let's get over to these fellows Drake-Pearson ; I want to see their books; I want to see their income tax returns; I want to examine their auditors and so on.

Was this the purpose for which the committee was called? Do you remember the member sitting in that committee, Madam Speaker, when objection was taken when he sought subpoenas for the income tax people, the auditors and the chief exec t:.tive officers. Objection was taken by Mr . Hunter, the counsel, for Drake-Pearson and he got up to state his objection to the committee and I think we should be reminded of his words at that time. This was the evidence of the afternoon session of April 16th. Mr. Hunter started out -- Mr.

Chairman asked if the gentlemen were there from Drake-Pearson and I want hon:.. oilrable members of the committee who weren •t there -- I want them to listen to this evidence because it is most instructive. Mr. Hunter, page 3 of the evidence - "Both these gentlemen are here. It is not concerning those subpoenas I am addressing my remarks now, it is with regard to the request made by Mr. Bowlesfor three subpoenas, one for each of the auditors of the companies and one for the Dominion Government. I 'm not speaking for the Dominion Gov ernment.

I can speak sofar as my clients are concerned that they are strongly opposed to having their auditors or their income tax returns brought before a public body such as this . Now as I understand it this committee inquiry started as a result of certain allegations, as Mr. Bowles said, about some lost money. There was at no time any suggestion I have seen in the papers or the transcript or sitting here this morning that there was anything. improper on the part of either the Pearson Construction or the Drake Construction Company.

I don•t think there has been any allegation of impropriety or fraud or falsification and I think that should be cleared up and I am sure Mr. Guttormson would admit that he has made no such allegation. " And he looked at the Member for St. George and he said, •That is correct? " And the Member for St. George: •Correct. • Mr. Hunter then continued on, •Who is on trial and for what? Are the two construction companies on trial and if so for what; after the allegation that was made as I understand it this morning in hearing Mr. Thompson and Mr . Stephens?

The allegation that has been made, this was an unwise contract from the point of view of Hydro. You pro bably paid more for your tonnage than you would have. Now it is not up to my clients to have to defend or explain why the Hydro entered into this contract. My clients we re one of several who were invited to tender on this project " and so on.

No allegations of impropriety on the part of Drake or Pearson Company and yet my honourable friend wanted his witch hunt to extend that far; to see if he could possibly fish, even one bit of a carcass of evidence out to support the baseless charges that he had made in this House.

But the committee wouldn •t let him do it; and the committee acted properly and with propriety and with dignity in carrying out its functions and the functions of all of the members as elected representatives in this province. •I was throttled" he said, "I wasn't allowed to call my witnesses. • That ; ...•. all of the discussion that went on in the committee as to the rights of innocent third parties to have their affairs kept private. Wasn't it Mr. Stephens, or was it Mr. Thompson who said that some of the competitive companies would give their eye teeth to see the internal workings of certain companies.

I ask my honourable friend, when he goes back to his place of employment with the Winnipeg Free Press, would he like to ask them whether, because they enter into a con tract with the government, would they like to have all of their books looked into to see whether or not this is a fit and proper contract -,-to see what their profits were in the contract? I ask my honourable friend to ask that question of some of his superiors to see whether or not he would get the same answer that he got in the committee. \\ell, there was more discussion. There was a statement made by the Premier of Mani toba.

It was one of the finest statements that I have heard on this point of principle and I think it -- part of it at least, should be read to this House, because it explained the position of the government -- no, l'm not going to say it explained the position of the government -- it explained the position of the members who were willing to give this matter a fair and a reason able hearing and all of the members of the committee with the exception of the Liberal Members were able to do that. Page 1752 April 29th, 1963

(Mr. Lyon, cont•d), ••• Madam Speaker, what did the Premier say? Before the questioH was put on the question of whether or not subpoenas should be given to compel the auditors, compel the income tax people to come in before this committee and lay bare all of the internal workings of the com pany. Here •s the statement that was made, page 23 of the evidence April 16th, afternoon session. "Mr. Chairman, I think before this question is put I would like to make some obser vations because I think we •re being asked to decide now what is really an important and far reaching decision.

What we decide this afternoon will certainly, I think, break loose from any precedent that we have established in the past ill. the examination by this legislature or by its comm ittees of matters of concern, and will establish a precedent for the future which I think we must consider carefully, and I would not like this vote to be taken or the matter to be de cided by the committee until at least there has been some consideration of the important matters which I think are involved because they go far beyond -- in my opinion they go far beyond what ever temporary advantage might accrue to one side or the other in the discussion of this ques tion that is before us, " And then the Premier went on to discuss the relationship of a Crown corporation to the government and pointing out that the government accepts responsibility for the actions of the Croon corporations even though it is not privy to the immediate decisions that are made, even though as in this case it was not a partner or a contracting party to the contract that was entered into.

It has to accept the ultimate responsibility for the creatures for its own emination. He said on Page 25, •I want to make it quite clear, • Carry on, l'm sorry on Page 25- •As I begin what I have to say on these points, I want to make it clear we recognize that law or no law, the ultimate responsibility must rest with the executive branch and that is the con stitutional doctrine which I think all here would be happy to support, Now we come to the particular matter which is under investigation and the particular point which is before this committe e this afternoon, which I think requires careful consideration.

I think it needs to be looked at in the long view. I have always held the view that it is never wise to take easy advantage if one sees one, It often happens events prove that that kind of victory is hollow and one would have eschewed it if experience is any teacher. Regardless of all that there is a very very important consideration we must decide and I think that briefly put it is the mo ral right, the moral right in the public interest of a body such as this to investigate innocent third parties.

I think that is the nub of the question that is before us today and that is a very very important consideration indeed because while I really do not think that I would care to make an argument against the power of this committee or indeed of the legislature itself to make an examination of the affairs of innocent third parties, I think that before we do so we should fully consider the factors that are involved.

I confess that when this matter was raised in the legislature and when I gave the assurance I did give at that time and which I subsequently repeated I had in mind the activities of Government and the Manitoba Hydro Electric Board, Members will recall who were in the House at the time, that I spec ifically stated I had no knowledge of the activities of the Drake or Pearson people.

If anyone asked me I suspected they had made a profit, that is what they were in business for; and sec ondly the Hydro had protection in matters such as this,. the same protection every Government organization has, namely the question of an open tender, a tender in which several or a num ber of people are invited to bid, and on which tenders are opened in the proper way and the lowest tender accepted, and then as I saw it then and as I see it now, is the protection Crown corporations have in respect to prices they pay for anything they contract to buy, " And so he continues on that the public tender was called here and so on.

Now, on Page 28, and I want the Honourable Members to remember this portion of it, of his statement at that time. He said, "Incidentally if your curiosity prompts you to examine whether or not the contractor made an unconscionable profit, you have the statement by a rep presentative here today, I think most of us would be inclined to accept this statement, being the man he is in the community, " And ther·e he was making reference to the fact that while Mr.

Hunter stood up before the committee and objected to the issuing of the subpoenas which would lay bare the affairs of his client, he nonetheless said that he was authorized by his clients to give a projected estimate of their profit running in the nature of 320 I think it was to $350,000, as contrast again with the allegations made by the Member for St. George of some April 29th, 1963 Page 1753

(Mr. Lyon, cont •d. ) •••• $2, 000, 000. Here again though is the Premier page 28 dealing with this principle , "As far as the Gov ernment is concerned the easy thing for us to do is say, Let•s call everybody and see every thing ".

The honourable member for Lakeside with his years of experience -- and the longer I have this particular post the more I appreciate what experience is -- it is something you can never buy, you can only accum ulate it by the actual living of life -- and from his experience he this morning put his finger on the nub of the decision which is before us now, and that is ,· the difficult dilemma in which we find ourselves, particularly as a Government, in saying that we should not look further into the ma tter when it may be said, it may be said, that the reason why we did not wish to pursue this line of activity is because we are afraid of it or because we think it covers up something we do not want to disclose or we think it is cutting off a proper examination of facts which ought to be opened to the public .

Now, in that situation the easy thing to say would be to produce the documents . That is the easy decision too. If you want a nice easy political decision that is the one to ma ke be cause no one will criticize you then. But is it the right decision under all the circumstances considering the precedent we will be establishing in investigating the activities of innocent third

partie s? Go after the Government all you ea n, tear the Hydro apart, that is the job of the opposition; more power to them, but where should discretion and I think a mea sure of justice call on us to stop? I have pondered this as you can im agine because it does not require any great perspicaci ty to see the direction this inquiry might take and the kind of information -a nd discussions that might co me, and it has a certain feeling for politics you unde rstand .

The opposition might very well -- and I am not being critical in this -- decide to pursue the matter as far as they can in respect to this and the political consequences of suggesting that there should not be any limit to our investigation; and I have pondered what ought to be our moral position because that is what it boils down to in connection with the decision which is before us now. I have come to the conclusion that failing some charge of impropriety of wrongdoing against these third parties that I ought not to support the suggestion that we should call for these subpoenas as put forth.

I know that it is not going to look very good in the newspapers and it will probably be made to look rather uns atisfactory in the House, " -- his powers of prognostication were accura te -- 11 but weighed up, my judgment is that without attempting to hide behind any technic ality -- they go by the board in this decision at this time and this place -- I am not persuaded by the evidence presented so far that we would be justified for calling for the information which has been demanded by subpoenas this afternoon. " The statement continued, 11 Now sir, I have said it and that is my considered view.

If further information is developed which would cause me to revise that opinion I leave myself free to do so, but on the basis of the facts that have been presented to us now I urge upon the mem bers to consider the implications of what they propose at this moment, and if any way can be found with dignity on the part of those concerned to abandon this request I would hope it might be pos sible. 11 -- It was imposs ible -- 11 but I thought that I should not let this matter go to a vote without saying something of my view of the imp ortant decision which this committee is now called upon to ma ke. 11 , Madam Speaker I commend that statement to the House because I agree with it, because I think it was a good statement, a fine statement of the principle that was involved here.

I read it to the commi ttee, to the. House this afternoon because I couldn •t improve upon it; I doubt if any member in this House could improve upon it as a statement of principle which should guide the actions and the directions of members of the {)Ommittee in deciding the matter that was then before us. I' ve gone to the length to describe this ma tter and the decision that was made because my honourable friend can still stand-up in this House -- as he probably will, his only deterrent being his conscience -- He will still stand up in this House and say he was throttled.

Well I say, Madam Speaker that if he was throttled, he was throttled on a ground of principle and if he continues to raise nonsense of the kind that he has before this House principle will down him again and will keep downing him until he begins to learn what it is . Now Madam Speaker, the comm ittee agreed not to pursue this line of questioning with the Drake Pearson Company, for very good reason, for the argum ents that were given. This is the throttling the Honourable Member speaks of. This is the whitewash he speaks of -- the decision of the committee Page 1754 April 29th, 1963

(Mr. Lyon, cant •d. ) • • • . supported by all members of that committee except he and two of his colleagues, or was it three who were there at the time, The committee said they weren't going to conduct or help the honourable member conduct his witch hunt to look for his evidence into private affairs. I say Madam Speaker, that if the committee had ruled otherwise it would have been a sorry day for principle , for propriety and for the public life of Manitoba -- but in my honourable friends terms this is only a "whitewash" and a rrthrottling".

The power he so ught to serve his own questionable errl was righ tly not granted, Madam Speaker. How easy it is now to stand up before the Legislature, before the public of Manitoba and scream "throttled, I was throttled; I was whitewashed".

If one wishes to disagree and to disregard the deleterious effect that this move might have had upon all people who do public business with the Government of Manitoba or Hydro or any of the other committees -- had the co:rnmittee agreed to this decision it would be a pas sport to continued irres ponsibility and a blot I suggest on all who participated in that decision, My honourable friend talks about a rrgagrr Madam Speaker.

If the government had wished to gag the honourable member it would never have called the committee in the first place, No committee would have met, Does he have such little faith in the fellow members of the legislature of Manitoba? His fellow members of the New Democra tic Party; the fellow members on this side of the House to say that they are all ciphers, that they are going to be voting to cut him off without any· ref erence to the rights and wrongs of the matter?

Because that •s the implication of the statement that he •s made, he was "t hrottled" -- and because he was "throttled " the rest of us all become ciphers moving at the crack of some invisible whip. That•s the way he looks at it, Fortunately there are 56 other members of the House who can see the other point of view, at least I hope there are. Madam Speak er, I regret his lack of faith in the intelligence, and may I say the integrity, of all the other members who are not fortunate enough by his light to share his partisan views.

I totally reject the proposi tion that his party has a monopoly on determining the justice of any situation in this House or outside of it, Lastly Madam Speaker, concerning the charge s. He charges the government with full res ponsibility for this contract.

Again this is an academic point because the evidence shows it was a contract entered into by Hydro in fulfillment of their statutory obligations under the Manitoba Hydro Act, a contract for which the government ultimately bears res ponsibility -- no question about that at all, We accept respo nsibility for the acts of all of the boards and commiss ions of government; we have to, the executive branch have to, even though the executive branch does not participate in, is not close to the actual working decisio ns that are made.

Madam Speaker, the unfortunate position in which the honourable member finds himself is this : he can keep on crying the government did this, the government did that as long as he wants, but the facts of the situation are that he must prove Hydro wrong before he can get at the government, and that was a pretty tough situation in which he found himself. He would like to be able to say, "o h you fellows in Hydr o, you•re a good bunch of boys; it•s that bad bunch behind you we want to get at.

" But he couldn •t do it, Hydro wouldn •t let him do it; common sense wouldn't let him do it, He seemed to have some rational whereby and he did, he stood up in this house the other day repeated the same silly charges all over again, a re capitulation of nothing, all over again; said that the government had done this that and the other thing. Well Madam Speaker, these things don•t bother us coming from tlat source. They really don't. But all of the other honourable members will realize the significance of the position which he found himself.

Hydro had to be proved wrong before the government was wrong, He had to show that Don Stephens was wrong -- the man who has been Chairman of the Hydr o-El ectric Board since 19 51, He had to show that Bill Fallis was wrong :-- Bill Fallis who has been the Chairman of The Manitoba Power Commis sion for I don't know how many years -- and now the General Manager of the amalgamated Manitoba Hydr o.

He had to show that Jim Rettie was wrong, the man who br ought in four plants prior to this, the man who probably in one evening watching a ten-minute television show would forget more about electrical power than my hon ourable fr iend ever knew. He had to prove that he was. wrong, He had to prove , Madam Speaker, that Mr. Bateman, and all the executive officers of Manitoba Hydr o were wrong, and that he was right, before he had a chance to get his grasp ing hands on the throat of the govern ment, Well, he never got by the first line of attack.

He had to prove, Madam Speaker, that the Board of Manitoba Hydro were wrong, were negligent, were surel y incompetent, were April 29th, 1963 Page 1755

(Mr. Lyon, cont 1d). ... acting without any co-operation or co-ordination with the other bran ches of government when they entered into this contract. He had to prove that Messrs. Stephens and Fallis and Thompson and Mr. Sprague and Mr. Burns who were on the Board at the time the contract was entered into, were all wrong, that his assessment of the situation -- his and Mr. Tuckwell•s, I forgot to mention him .,--his and Mr. Tuckwell's assessment of the sit uation were better than all of these gentlemen who have been in this business all their lives.

Well, that was a pretty mean task that he set himself to; and that he stumbled and fell before he really even got underway is completely understandable. He had to say as well, Madam Speaker, that the present Board of Manitoba Hydro, Mr. Stephens, Mr. T. 0. Peterson, Mr. Bill Parker, Mr. Lissaman, the member for Brandon, Mr. Ron Burns, the Deputy Provincial Treasurer of Manitoba -- he had to say that they were wrong too, because these are the ones who are permitting the continuance of this contract, when he says that it shouldn •t be going on. Well, Madam Speaker, he was wrong.

He couldn't prove them wrong and the evidence ended up that he was wrong. He was wrong about Hydro. He was wrong in his allegations that a dual transportation system wasn't needed. He was wrong in his allegation that a road alone would have been sufficient to permit the construction of this huge project at Grand Rapids . He was wrong, and so wrong. There wasn't a tittle of evidence in his favour all the way through the piece.

We can only wonder, Madam Speaker, what further windmills this local Don Quixote is going to tilt at in the future, his mind embroiled as it is in the mesh of half-truths, rumours and beer parlor gossip which are his stock-in-trade. His irresponsibility, Madam Speaker, has placed a cloud over the operations of one of the finest utilities in the country, a utility that is giving and that is continuing to give the highest standard of service to the people of this province that they could possibly expect from any professional people in this field.

No matter how overwhelming the rebuttal has been; no matter how based the charges have been -- and they have been based big -- the reply unfortunately never catches up with the first dramatic headline-grabbing type of charge that is becoming so customary with the Honourable Member opposite. He has placed in jeopardy the professional reput ations of these invaluable men on Hydro. I don't know what he has done to the morale of Manitoba Hydro yet because I haven't had the opportunity to assess it; but I know this, he hasn •t done them_ much good.

His charges have cost the taxpayers thousands of dollars, but I'm not going to labour that point, because it•s the duty of a legislature or the committee of the legislature to look into reasonable and responsible charges that are made by reasonable and responsible members. This matter is really of no account because when there's a real matter at issue the legislature must look into it.

But I suggest that there is a tremendous onus on the conscience of all members of the House, and it is fulfilled, with one notable exception, by all members of the House, to ensure that lE fore they cause this machinery of investigation to be put in motion that they have at least a prima-facie case to make. This is an onus of conscience that rests on all of us every day that we sit in this legislature. My honourable friend unfortunately, Madam Speaker, made no such case; he made no such prima-facie case at all. Heaven alone knows whose purpose or interest he was serving in making these charges.

It has certainly been demon strated that he was not serving the public interest in the widest and highest sense of that term when he made these charges. This matter was first debated in the House, Madam Speaker, in 1961. The Honourable Member for Lakeside, I believe, raised the matter on the estimates of the Department of Public Wo rks, asking questions of the then Minister of Public utilitie s, a debate by the way in which the Member for St. George didn •t participate at all.

The answer that was then given by the Minister of Public Utilities, now the Minister of Welfa re, was pretty much on all fours with the answer that I gave the Honourable Member on March 6th, outlining the question of back-up, question of insurance, what Hydro was buying, the necessity of meeting this rig orous schedule, and so on and so forth. The same answer has now been given under sworn evidence before this Committee of the House by the senio!" executive officers of Manitoba Hydro; been proved in evidence I would suggest with respect, Madam Speaker, beyond any reasonable question.

In criminal law we must prove a matter beyond any reasonable doubt. In other words you-must -- before you can convict a man you must have an abiding conviction to a moral certainty of his guilt. Well, Madam Speaker, I'd suggest that anyone of us here Page 1756 April 29th, 1963

(Mr. Lyon, cont•d) ...• in the House today can have an abiding conviction to a moral certainty of the complete baseless nature of the charges made by the Honom:able Member for St. George. Hydro has certainly proved that they are living up to their responsibilities to the public and providing an adequate power supply by the most economic means available to all of the people of Manitoba. Hydro have demonstrated savings of about $14 millions on this contract by the words of Mr.

Fallis himself, over the estimated cost, to say nothing of giving protection by the water contract of interest charges arising from a delay of another potential, 4. 8 millions of dollars I think they estimated it at. All of these facts the member and his group conveniently overlooked. It almost seems that if their appetite for headlines can be met the facts and the truths of the situation are of no consequence at all. Let•s see what the reaction is in the news papers ; that seems to be the gu iding light.

Madam Speaker, I conclude my rem arks this afternoon by reiterating, first of all, that this water contract was needed for 1960 and for 1961 to get this great project underway, and it was subsequently needed as back-up to ensure that the rigorous

schedule for the building of Grand Rapids could be met. These are not my statements; you don •t have to accept them from me. This is the sworn evidence given before this Committee by the chief executive officers of Manitoba Hydro. Madam Speaker, the second point -- that was proved in evidence -- the second point, the water haulage was called for by a public tender and the lowest bidder was accepted. That, Madam Speaker, was proved in evidence.

The third point, the contract guarantee transportation for 1960 when none other was available and try to back-up thereafter at a minimal premium for insurance on an undertaking of $140 million. That, Madam Speaker, was proved. There was no impropriety or fraud alleged or proved on the part or Hydro or any other party. That, Madam Speaker, was proved. It was shown that Hydro acted prudently throughout this whole piece, in the whole transportation negotiations and what followed sub sequently. Madam Speaker, I suggest with respect that that was proved.

F1nally, I suggest Madam Speaker one item that was also proved was that the charges by the Honourable Member from St. George were false and without substantiation in any material particular whatsoever. And that factor, Madam Speaker, was amply proved . Madam Speaker, truth it is said, is generally the best vindication against slander. The Honourable Member for St. George has dealt libera lly with the slander. My few words this afternoon on the report which they support I suggest with respect deal with the truth of this situation.

MR · DESJARDINS: Madam Speaker, I would move, seconded by the Honourable Member for Carillon, that the debate be adjourned. Madam Speaker presented the motion and after a voice vote declared the motion carried . . . • . • • Continued on next page April 29th, 1963 Page 1757

HON. DUFF ROBLIN (Prem ier) (Wolseley) : Madam Speaker, I beg to move, by leave of the House, and seconded by the Honourable the Minister of Industry and Commerce, that Madam Speaker do now leave the Chair and the House resolve itself into Committee to consider the resolutions standing in my name. Madam Speaker presented the mo tion and after a voice vote declared the mo tion carried and the House resol ved itself into a Committee of the Whole with the Honourable Member for St. Matthews in the Chair. MR . ROBLIN: Mr.

Chairman , His Honour the Lieu tenant-Governor, having been in formed of the subject matter of the proposed resolutions, recommends them to this House. MR . CHAIRMAN: Resolution No. 1. Resolved that it is expedient to bring in a mea sure to repeal the existing statute imposing a tax on the users of mo tive fuel and to substitute therefor new legislative provisions to impose a tax on the purchasers and users of mo tive fuel, and to provide for the collection thereof. MR . ROBLIN: Mr .

Chairman , the members will recognize that this implem ents the proposal in the budget with respect to the colouring of mo tive fuel. The entire Act is being re-written because it is considerably out-of-date with a lot of amendments and what not, and there are a great many detailed provisions in it which are by and large on all fours with the principles on which the Act is now being administered. One big change is of course the provi sion to colour this motive fuel in respect of those who seek a tax refund. MR. CHAIRMAN: . The Honourable Member for Lakeside. MR . D. L.

CAMPBELL (Lake side) : It's the opinion of the people who would be adminis tering these Acts that the mo tive fuel one, which I presume is the one that means diesel oil -- is it -- that it needs, not a separate act but a separate resolution. MR . E. R. SCHREYER (Brokenhead): Mr. Chairman , I don't know if this is the right time to raise the question, but I suppose it would expedite matters. I was wondering if it is intended in the proposed legisla tion to do away with the rebate system. Now that we're going to have colouring of gas, it would seem obvious that the rebate system is no longer necessary.

But, as I say, it only seems implicit. I'd like to hear from the First Minister if that is the fact of the matter; and secondly, I suppose my question is really no different from the question of the Member for La keside, just what was the necessity of having two separate resolutions be fore us in this form? MR. SAUL CHERNIACK (St. John's) : Mr. Chairman, I'd like just an opportunity at this time; and only for a few minu tes, to deal with this question of taxation on motive fuel - diesel fuel -- in relation to its purpose.

It seems to me that there are two theories about the use of it and one is that it provides general revenue for the needs of the province; and the other is that it is needed to pay for the highways of the province. I want to point out that I think that this is the opportunity to alleviate the Load on the real property taxpayer of Greater Winnipeg insofar as the fuel that is used by the Transit System in this area.

If the purpose of the tax is to provide general revenue for the province, then insofar as it is now clearly established that the Transit System is and will continue to be in a deficit position and thus be subsidized by the real property taxpayers of Metropolitan Winnipeg, then in effect there are revenues coming to the province which come indirectly, but come, from the real property taxpayer of Metropolitan Winnipeg.

If, on the other hand, it is considered that this revenue is to contribute to the cost of the construction of highways, then I would suggest that it is proper that the province should share this revenue with the Tr'ansit System which actually uses highways within the system alone and not the highways of the province. I think it is clearly established that Transit is an essential part of the life and economy of the Metropolitan area and its need has been recognized in United States much more so than here in terms of Federal Government contribution.

I would suggest that it is only proper that it be recognized by this province insofar as the taxation is concerned, in that the province ought not to be deriving revenues from the use of the motive power in the Transit System nor should it be getting it, as I say, indirectly from the real property taxpayer who is now subsi dizing Transit. It is no longer attributable to the users of this fuel in that I think it is pretty well esta blished and recognized that it would be harmful to raise the cost of transportation in the Transit System so as to make it self-supporting.

In effect, it would just succeed in keeping people _off Page 1758 April 29th, 1963

(Mr. Cherniack, cont1d) .•... the Transit System rather than making it available to their use. I would suggest that the proper means of recognizing this need and the proper relationship of the coloured fuel and the coloured gasoline , which is now being submit ted as being an allevia tion of the cost to the farmer and to the users of the various tax-free motive power , should also be given to the people of the Metropolitan area of Winnipeg and of Brandon. I think they too share in this request, so tha t they too should get the benefit of it. MR.

ALBERT VIE LFAURE (La Verendrye): Is it the wish of the government to colour diesel fuel as well or does this apply on gasoline only? MR. ROBLIN: Mr . Chairman, if I can deal with the points that have been raise d, I answer in the affirmative to the Honourable Member for La Verendrye. To the Member for St. John's, let me say tha t he has raised a problem which is coming more and more to the fore in the last few years and it is one that bears examination.

I have been asked before now by the Metropolitan Council to relieve them of this tax on gasoline, and as things stand at the present time we have not acceded to that request. However, I would be the last one to try and ignore the problem because it exists and perhaps it may have to be dealt with further.

I think this is a matter which I trust the Royal Com missi on on Local Government Organization and Finance will consider, because when you relieve any particular body of a tax, even though I'll admit that we do it in many instance s, it does raise with it a whole host of problems of incidence of taxation and of other matters that go along with that, that I think have to be considered rather carefully.

So I have said, I think in my latest reply to the Metropolitan Corporation, that this is a matter I would suggest they raise with the Royal Commi ssi on and have it reviewed from that angle when preconceived notions such as the ones I might have would be ruled out of the picture and they could take an object ive view of the question. So I don't ig nore his suggestion; I simply say that I don't think it's appropriate for me to deal with it at the present time. Speaking in reply to the Honourable Member for Brokenhead, by and large the rebate system is abandoned by both these resolutions .

I will point out, however, when the details of the Bill are down that there are some peculiar kinds of rebate in question where some form of docume ntation will be necessary in order to qualify. They are inconsequential but there are some and I should mention it but by and large it's done away with. Speaking to the ques tion about the dual reso lutions raised by the Honourable Me mber for Lakeside, I can say that at the present time this matter is regulated by two separate sta tutes. It is considered by the legal people that we should have two statutes and consequently you need two resolutions . MR.

CHAIDMAN: Resolution be adopted? -- Passed. Reso lution No. 2. Resol ved that it is expedient to bring in a measure to repeal the existing statute imposing a tax on pur chasers of gasol ine and to subs titute therefor new legislative provisions to impose a tax on pur chasers of gasoline , and to provide for the collection thereof. MR . ROBLIN: Mr. Chair man, the same remarks I made on the first occasion really apply to this one as well. MR .

RUSSELL PAULLEY (Leader of the New Democrat ic Party) (Radi sson): There is just one question I would like to direct to the First Minister in connection with the remarks that he did make. If I heard him correctly, he mentioned that he would suggest that Metro raise the ques tion of tax exemption for their Transit Board with the Royal Commi ssi on investi gating Metro at the present time.

Did my honourable friend infer from his statement that if the Com mission does recommen d that they be relieved of the neces sity of taxation on the gaso line and fuel oil that they use that it will automatically be granted by your government? MR. ROBLIN: Mr. Chair man, I'm afraid I'll have to say that it must be considered within the context of the whole financial problem. MR. GILDAS MOLGAT (Leader of the Opposition) (Ste. Rose): Mr. Chairman, I'm sorry I wasn't here at the introduction of the first resolution so I didn •t get the opening com ments of the Min ister.

Could he tell us when this will take effect and what will be the method of control that he intends to use to see to it insofar as the colouring and so on. MR . FROESE: Just one ques tion and that is , will the dealers be reimbursed for the collection of these taxes? Is there going to be any change in tha t regard ? MR. CAMPBELL: Mr. Chairman, my ques tion I think is contained in the one that the April 29th, 1963 Page 1759

(Mr. Campbell, cont'd) .•.•. Honourable Leader of this Party asked, but I would be interested to hear particularly with regard to the question of checking through people on the highway. I recall that this matter had been looked at on several occasions in the past and this always seemed to me to be the ground that would offer a lot of difficulty and would entail, from the in formation that we had at that time, approximately as much expense as would be saved by the other method. I presume that that has been checked and I'd like to hear the results. MR . ROBLIN: Mr. Chairman, dea�ing with these points.

The Act will be invoked. in sofar as the colour is concerned at the time when we have been able to complete all the arrange ments with the people who sell gasoline to put this into effect. Actually, the machinery is rather simple because what happens is that the government supplies a supply of colouring mat ter with an identifying agent, which has nothing to do with colour, so that if the colour is lost you can still identify whether or not this is allegedly this tax-free gas.

This colouring matter is supplied to those who are in the gasoline distribution system at the point where the bulk dealer comes into operation and he is supplied this material and he is responsible, if my memory is correct -- there are a great many details in this Bill and we'll come to them in due cou.rse -- but he is responsible for its proper use. Now this system is susceptible of a very clo�e audit because it is known how much colour is required for how many gallons of gaso line, and that can be checked against the number of coloured gallons that are alleged to be sold by the person concerned.

This is the system that is in use in the Province of British Columbia and it has proved itself, I think, reasonably effective as a system of doing this and has in volved the least capital expense or inconvenience to the trade or the public in respect to the matter, and that is the plan which we intend to use. So with respect to the matter of control of the colouring agent, that is how that is handled, in very rough terms. I cannot say exactly when this will come in because we have to have discussions with the trade and find out exactly when they can co-operate with us in this respect.

I should say it will be some little time -- it's very hard to be more precise. I know that doesn't really say very much, but we just have to do the best we can to get it into effect relatively soon. The collectors will continue to receive the reimbursement they do now. There's no change in that situation, although the fact that they don •t charge for the tax reduces the amount of money available, because it's on a percentage basis with respect to the gasoline that is coloured.

Now with respect to enforcement in the hands of the general public , this is done by highway checks as a rule and it has been demonstrated to our satisfaction that in the three other provinces where this is in effect, that it is not too onerous on the public or too expensive a task to keep a reasonable check on this kind of thing. Now we have a lot to learn no doubt, but our information is that this can be done with reasonable efficiency. MR . VIELFAUR E: ....•.. the First Minister right that the colouring will not be done at the refinery but on the agent's premises or in the truck at the time of delivery? MR .

ROBLIN: My honourable friend will have to allow me to be ·a little uncertain about this because I'll have to check the Act and, as I say, it's got a lot of clauses in it. My recollection is that it's done by the bulk dealer at the bulk station. MR . J. P. TANCHAK (E merson): Mr. Chairman, I presume that the government needs more money and that's why this resolution is brought in mainly, or chiefly, and the Premier had said previously in his Budget he expects to collect more money, a certain amount more , just by the fact of colouring this gasoline.

Now I'm going to speak on behalf of some of the farmers, or most of the farm ers. I'm one, as a side-line, a farmer too, and I resent this when somebody comes up and says that we should be able to collect a little more money, because to me this implies that our farmers are more or less cheats. I will not accuse the Minister of saying that, but I simply state that that's what it implies.

I think we should accept the fact that our farmers are not cheats, and if that is not the case why this Bill is brought in, because the farmers are all honest, there fore, I would suggest that this colouring was not necessary at all -- (Interjection) -- Then why colour it? · I wonder is it possible that the present government is. simply acting because certain com panies have asked for it, certain organizations -- I can mention a few, the ATA have asked for it, and I'm not accusing it for the certain oil companies -- or on its own initiative. I would say that this Bill creates, when it �ecomes a Bill --

an Act -- will create a certain amount of Page 1760 April 29th, 1963

(1\ir. Tanchak, cont'd) ...•• hardship on the farmers because most of the farmers would like to have gasoline right on their farm for the use of their trucks and for the use of their tractors or trucks -- for the use of their trucks and tractors before it goes on the highways. Now if they use the tractor on the farm, they would have to use coloured gasoline.

If they want to use gasoline in the truck, for which they are excluded or they took so many gallons.off in the past, they would have to have another tank -- two tanks -- one coloured and one not coloured, because they would have to use gas, not coloured in the trucks, especially if they get out on the highway they have to. So that's where it will create a hardship because it would necessitate the pur chase of two tanks -- extra additional expense -- (Interjection) -- No, the farmers are more progressive now. They don' t use drums anymore, too much spillage, and they hardly ever use drums.

They would rather have -- drums are only forty gallons -- so I would say that this would create more expense to the farmer. 1VIR. CA1VIPBELL: 1\ir. Chairman, I was going to ask if the government, in checking this matter with the Province of Saskatchewan, had formed any est

Document details

Collection	Manitoba — Debates (Hansard)
Citation	27-1-67
Type	hansard
Volume / chapter	27th 1st hansardpdf 67.pdf
Language	en
Format	pdf
Source	PROVINCIAL
Identifier	71361d76c870b270c98b2efedf79045259d5dc14

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