1975 Legislative Session: 5th Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JUNE 17, 1975

Afternoon Sitting

[ Page

3591 ]

CONTENTS

Oral questions.

Agricultural loans for clearing assistance. Mr. Bennett — 3591

CUPE opposition to co-ordinate municipal bargaining. Mr. D.A. Anderson —

Status of Western Canada Lottery fund. Mr. Wallace — 3591

Dismissal of ICBC vice-president. Mr. McClelland — 3591

Mount Benson senior citizen housing project. Mr. Curtis — 3592

Assessment of oil shale on Queen Charlotte Islands. Mr. L.A. Williams —

Cassiar Asbestos dust counts. Hon. Mr. Nimsick answers — 3592

Oil shale potential on Queen Charlotte Islands. Mr. L.A. Williams —

Land Commission power to overrule development plans. Mrs. Jordan —

Substandard produce imported from U.S.A. Mr. D.A. Anderson — 3593

British Columbia Railway Company Construction Loan Amendment

Act, 1975 (Bill 27). Committee stage.

section 1.

Mr. Phillips — 3594

TUESDAY, JUNE 17, 1975

The House met at 2 p.m.

Prayers.

Oral questions.

AGRICULTURAL LOANS

FOR CLEARING ASSISTANCE

MR. W.R. BENNETT (Leader of the Opposition): Mr. Speaker,

seeing as how there are very few cabinet Ministers here today, I wonder if we could suspend the question period and add it on

tomorrow when there may be a complement of Ministers to provide

answers to questions.

DEPUTY SPEAKER: Order, please. Was the Hon. Member speaking on a point

of order? This cannot be done except by a motion.

MR. BENNETT: I see they've come in, Mr. Speaker. I would

like to address my question to the Minister of Agriculture. I

would like to ask the Minister if his department has advised

any district agricultural officers to process no further loans

for clearing assistance as of June 11, 1975.

HON. D.D. STUPICH (Minister of Agriculture): Mr. Speaker,

I'm not sure about the advice to the DAs, but a press release

was issued last week to that effect.

MR. BENNETT: Supplementary. Rather than no loan assistance

then, have farmers been advised to seek bank loans with a

subsidy from the government dropping the effective interest

rate to 8 per cent rather than 4 per cent?

HON. MR. STUPICH: Mr. Speaker, the press release that was

issued last week and that is public knowledge was to the effect

that the $4 million approved in estimates for this programme

has been used up, and that beyond that farmers are advised to

use the credit Act for whatever other borrowing they wish to

do.

CUPE OPPOSITION TO

CO-ORDINATED MUNICIPAL BARGAINING

MR. D.A. ANDERSON (Victoria): To the Minister of Labour, Mr. Speaker.

May I ask the Minister whether he has been approached by CUPE or whether to

his knowledge the Minister of Municipal Affairs has been approached by CUPE

to discuss the possibility of legislation to prevent the formation of a co-ordinated

bargaining unit by the B.C. municipalities?

HON. W.S. KING (Minister of Labour): Mr. Speaker, the answer

is no. I have received no such overture and I'm not familiar

with any of my cabinet colleagues receiving that kind of

overture.

MR. D.A. ANDERSON: Can I ask the Minister of Municipal

Affairs, then, Mr. Speaker? I thank the Minister of Labour for

his answer. May I ask whether he's been in discussions with

either the Union of B.C. Municipalities or any of the CUPE

people on the question of legislation to prevent the formation

of a co-ordinated bargaining unit by B.C. municipalities?

HON. J.G. LORIMER (Minister of Municipal Affairs): No, there

has been no such discussion, Mr. Speaker.

STATUS OF WESTERN

CANADA LOTTERY FUND

MR. G.S. WALLACE (Oak Bay): Mr. Speaker, I'd like to ask the

Provincial Secretary with regard to the Western Canada Lottery

if the Minister can tell the House if any money at any time has

been transferred from consolidated revenue to the lottery fund,

as provided for in

section 6(2) of the Act.

HON. E. HALL (Provincial Secretary): I'll take that question

as notice for the Member.

MR. WALLACE: Supplementary. Could I ask in more general

terms, Mr. Speaker, if some financial statement as of March 31,

1975, again as provided for in the legislation, will be tabled

in the House regarding the financial status of the lottery

fund?

HON. MR. HALL: I'll take that question as notice.

DISMISSAL OF THE ICBC VICE-PRESIDENT

MR. R.H. McCLELLAND (Langley): Mr. Speaker, a question to

the Minister of Transport and Communications regarding his

statement yesterday in connection with the Insurance Corp. of

British Columbia. I wonder whether the Minister could tell us

the details of the dismissal — termination — of Mr. Scrivener

and whether or not severance pay will be given to him and, if

so, how much?

HON. R.M. STRACHAN (Minister of Transport & Communications): Yes,

I will have to take that question as notice.

MR. McCLELLAND: Mr. Speaker, could I ask another

supplementary while he's taking that as notice? He gave some

information to the press but

[ Page 3592 ]

not to the House in his statement yesterday regarding the

number of claims which were serviced in Saskatchewan by the

firm with which Mr. Scrivener is connected. I wonder whether he

would tell the House the number of claims that were serviced

and the dollar value of those claims.

HON. MR. STRACHAN: I haven't got the figures with me, but I

recollect that there were 11 claims referred to that

corporation from British Columbia. There were a total of some

40-odd claims serviced by that company, others being referred

either by garages or someone else in the Province of

Saskatchewan. As I recollect the figure there was a total value

of claims of between $3,000 and $4,000, with the total

commission of less than $260. Those are general figures, not

exact figures, as I recollect.

MOUNT BENSON SENIOR

CITIZEN HOUSING PROJECT

MR. H.A. CURTIS (Saanich and the Islands): To the Hon.

Minister of Housing. Last week I directed a question to the

Minister concerning the proposed addition, or third stage, I

believe, of the Royal Canadian Legion Mount Benson senior

citizens' housing project in Nanaimo. At that time there was a

strong suggestion that the latest stage was perhaps in

jeopardy, at least for the time being, in terms of provincial

participation. I wonder if the Minister could today, having had

a few days to consider the matter, indicate if in fact this

project is going to be subject to delay as far as provincial

participation is concerned and, secondly, if some new

priorities or guidelines have been established with regard to

senior citizens' projects in the province.

HON. L. NICOLSON (Minister of Housing): Mr. Speaker, the

matter is under consideration.

MR. CURTIS: Can the Minister not be a little more specific

than that? Is the project likely to receive provincial approval

and move ahead, or is there bad news for the 145 applicants, I

believe, who have already indicated a desire to locate in this

new project? Incidentally, Mr. Speaker, there has been no

advertising of the fact that this project is going ahead. What

is the news for these senior citizens in the Nanaimo area?

AN HON. MEMBER: No news.

ASSESSMENT OF OIL SHALE

ON QUEEN CHARLOTTE ISLANDS

MR. L.A. WILLIAMS (West Vancouver–Howe Sound): Mr. Speaker, a question

to the Hon. Minister of Mines and Petroleum Resources. With respect to oil shale

deposits on the Queen Charlotte Islands, is the Minister's department or any

agency engaged by that department conducting an assessment of the extent and

economic viability of those deposits?

HON. L.T. NIMSICK (Minister of Mines and Petroleum Resources): None

I know of at the present time. They may have done years ago, but I don't think

there's any assessment being done at the present time.

CASSIAR ASBESTOS DUST COUNTS

HON. MR. NIMSICK: One further question. In answer to a

question by the Hon. Member for Oak Bay (Mr. Wallace) in regard

to Cassiar Asbestos: Cassiar has been closed down by the

environmental

section of the department for about one week for

high asbestos dust counts. It's back working, but further

checks showed that patchwork corrections are not the answer.

The company has agreed to install a new ventilation system in

the mill costing about $3 million, but this will not be

completed until 1976. In the meantime, respirators will have to

be worn.

The actual dust count for the last three months are as

follows for fibres per millilitre greater than five microns in

length. Crushers: March, 15.7; April, 7.6; May 6.3. The dryer:

March 34.8; April, 18.9; May, 20.9. The mill: March, 20.2;

April 21.1; May, 12.2. The figures indicate a general

improvement but are still higher than required, and we're

keeping right after them on it.

OIL SHALE POTENTIAL ON

QUEEN CHARLOTTE ISLANDS

MR. L.A. WILLIAMS: Supplemental to my question. In view of

the province's urgent need for a supply of crude oil, would the

Minister's department encourage groups in the private sector to

make an assessment of the oil shale potential on the Queen

Charlotte Islands?

HON. MR. NIMSICK: Very likely this would happen once the

legislation is passed placing the oil shale under the Petroleum

and Natural Gas Act. I don't know how soon that would happen,

finding out exactly the potential of it, because it would be

quite costly from what I hear they did in the United

States.

MR. L.A. WILLIAMS: Then do I assume the Minister is saying

that he would not object to people in the private sector making

an assessment once the legislation which is before the House

becomes law?

HON. MR. NIMSICK: No, I didn't say anything like that at

all.

[ Page 3593 ]

DEPUTY SPEAKER: The Member for Oak Bay on a

supplementary.

MR. WALLACE: I wanted to ask the Minister of Mines and

Petroleum Resources another question regarding....

DEPUTY SPEAKER: Order, please. I would request the Hon.

Member to defer to the Member for North Okanagan.

LAND COMMISSION POWER TO

OVERRULE DEVELOPMENT PLANS

MRS. P.J. JORDAN (North Okanagan): My question is to the

Hon. Minister of Agriculture. Would he advise the House if the

Land Commission has officially been given authority to overrule

specific development plans in a municipality when those plans

have been accepted by a qualified planner in the district, and

the plan was based upon a community planning report by a

qualified community planner, and has been accepted by the

public in that area?

HON. MR. STUPICH: The question, as I heard it, was: has the

Land Commission been given specific authority to overrule

particular plans? I don't know how I can answer that question

without knowing the details.

MRS. JORDAN: Perhaps the Minister would advise the House if

he is aware that there is now an appeal from the district of

Coldstream in the North Okanagan, requesting that the B.C. Land

Commission withdraw its recommendation to the

Lieutenant-Governor-in-council. The recommendation by the Land

Commission was that a caveat would require minimum density of

20 dwelling units per acre of high-density living. This is

completely contrary to the development plan of the area. Does

the Land Commission have official authority to do this?

HON. MR. STUPICH: Mr. Speaker, the Land Commission has

authority to make recommendations. I'm surprised at them making

recommendations with respect to high-density living since their

work is really with respect to the agricultural land reserve,

and that does not seem to be within the agricultural land

reserve from what you say. But they have authority to make

recommendations — everybody has.

MRS. JORDAN: A supplementary, Mr. Speaker. Do I take it from the Minister's

statement that the Land Commission should confine itself to dealing with moving

land in or out of the agricultural land reserve, and that it has no authority

to recommend to the cabinet, over the municipality, the density of an area?

HON. MR. STUPICH: No.

SUBSTANDARD PRODUCE

IMPORTED FROM U.S.A.

MR. D.A. ANDERSON: To the Minister of Agriculture: is he

aware of, or have any studies been done on the claim that

substandard produce from the States is in British Columbia

supermarkets, and that they are "using sprays and pesticides

that have been outlawed in Canada", but there is nothing to

prevent these vegetables and fruit coming into Canada? Has he

looked into this matter which was raised approximately a week

ago with Mr. Wickens of his department?

HON. MR. STUPICH: Is that a matter which the Hon. Member

raised with Mr. Wickens?

MR. D.A. ANDERSON: That was my fault, Mr. Speaker, I should

have given more background. It has been claimed by greenhouse

growers on Vancouver Island that local supermarkets are getting

American produce which is substandard and which would not be

accepted by the local marketing boards. In addition, this

produce has been subjected to sprays which are banned in

Canada. I wonder whether the Minister has any information on

this to report to the House.

HON. MR. STUPICH: I have no information on that to report to

the House, Mr. Speaker.

I have said on many occasions that, as one of the ways of

promoting consumer purchase of B.C. produce, that Canada's

regulations with respect to protecting the health of her

citizens are unequalled in the whole world, and that sprays,

insecticides and hormones that may be used in other

jurisdictions often are just not obtainable and may not be used

in the production of food in Canada. That is just one more

reason that people should be buying Canadian.

The import of food is completely controlled by the federal

government. On occasion products do come into the country that

are produced under conditions over which we have no control.

Until we know of the use of specific chemicals, insecticides or

hormones, and know that they are being used in the production

of such food, and make successful representations to Ottawa —

which is not always easy and is often time consuming — until we

are able to get the evidence and make such successful

representations to Ottawa, these foods continue to come in and

work against the health of the Canadian consumers, as well as

against the economic health of the Canadian producers.

[ Page 3594 ]

MR. D.A. ANDERSON: I think the Minister for that lengthy and

detailed reply. Could I ask him whether or not there is any way

whereby the local inspectors of the British Columbia Department

of Agriculture can move into supermarkets and seize produce

which is substandard or has been grown under conditions with

hormones, insecticides or whatever, which are not permitted in

Canada, or whether this is entirely a question to be solved at

the border? Is there any way in British Columbia where such

situations can be rectified by your B.C. government

inspectors?

HON. MR. STUPICH: Mr. Speaker, I suppose there could be a

way, but at present that sort of inspection procedure is

conducted entirely by federal government inspectors. When we

hear of cases, we do refer to the federal government inspectors

and ask them to get involved and do the inspection, but the

inspection process is federal.

Orders of the day.

HON. E.E. DAILLY (Minister of Education): Mr. Speaker, I ask

leave of the House to proceed to public bills and orders.

Leave granted.

HON. MRS. DAILLY: Mr. Speaker, committee on Bill 27.

BRITISH COLUMBIA RAILWAY COMPANY

The House in committee on Bill 27; Mr. Liden in the

chair.

section 1.

MR. D.M. PHILLIPS (South Peace River): At the outset, Mr.

Chairman, I would like to get a couple of things straight with

regard to this bill. I would like, for the information of the

House, just to state again that this bill was introduced for

first reading in this Legislature on February 28, 1975, and did

not come up for second reading until a week ago last Friday,

some several months later. I get just a little peeved when the

ex-director of the railway, the person who was fired by the

Premier, starts talking about the urgency of getting this bill

passed when the bill has been on the order paper for some

several months, since February 28, 1975. So I don't want to

hear that ex-director of the railway, the one who was fired by

the Premier, talking about the urgency....

MR. CHAIRMAN: I remind the Member that you are dealing with

section 1.

MR. PHILLIPS: Yes, I'm dealing with

section 1.

MR. CHAIRMAN: Order! We're on Bill 27,

section 1. I

recognize the Member for South Peace River.

MR. PHILLIPS: Well, yes, I am speaking.

MR. CHAIRMAN: I want to bring you back to

section 1.

MR. PHILLIPS: Mr. Chairman, we discussed several items under

this bill yesterday and the Minister of Labour (Hon. Mr. King),

the ex-director of the railway, had a far-ranging tirade

against the opposition, so the other thing that I would like to

remind the Chairman of is that it is clearly stated in Hansard

that anything we want to discuss under the British Columbia

Railway would be discussed under this bill. So I would just

like to remind the Chairman that we are allowed any questions

we wish to ask with regard to the British Columbia Railway

under committee stage of the bill, by order from the president

of the railway and the Premier, so that we understand each

other, Mr. Chairman.

MR. CHAIRMAN: Will you get back to

section 1?

MR. PHILLIPS: I just want to get a couple of things

straight. Yes, I am getting back to

section 1. We are

discussing the railway and I am discussing the bill and the

length of time it has been on the order paper.

MR. CHAIRMAN: Please deal with

section 1.

MR. PHILLIPS: Mr. Chairman, the purpose of

section 1 is to

increase the borrowing of the British Columbia Railway by some

$200 million. The Minister of Labour yesterday afternoon said

there is a great urgency in passing this bill because the

railway is not able to pay its bills, not able to advance money

to the contractors who are working on the railway, and not able

to pay their general accounts. Of course that brings up the

question: why is the railway in such dire financial straits

when shortly after the session began we discussed in this

Legislature the $25 million which was being advanced to the

railway? If the government knew that the railway was in such

dire financial straits, why did they not advance more money at

that particular time?

I discussed several times during the Minister of Finance's

estimates the fact that they were not able to pay their bills

on the railway. I asked him at that time if the railway was in

financial problems. I got no answers.

Mr. Chairman, one of the reasons for the urgency in passing

this bill, according to the Minister, is because the railway is

being poorly run — as a matter

[ Page 3595 ]

of fact, it is being run into the ground. One of the reasons

why this railway is being run into the ground is due to the

changes that have taken place in the management of the railway

since this government took over. Maybe this is the reason why

we need this $200 million to put the railway back on the

financial rails, as it were.

The Premier has stated emphatically that there was no

political interference with regard to the management of the

railway when I mentioned that five of the top management of the

railway had gone in the two and a half years since the Premier

took over. I am very disappointed that the Premier isn't here

to answer these questions. He said we would be able to ask him

any question we wanted during the debate on this bill, and here

he has flown away to New York and on his way to London on

another trip at the taxpayers' expense. Mr. Chairman, I would

just like to ask the Minister of Labour, who is carrying this

bill through the House, why the only director of the railway in

this Legislature, the Minister Without Portfolio (Hon. Mr.

Nunweiler), is not handling this bill. Here is a Minister who

has been fired from the railway trying to see this bill through

the House, when the only director of the railway — the Minister

Without, the Member for Fort George....

MR. CHAIRMAN: I don't think that has anything to do with....

MR. PHILLIPS: It has a lot to do with it, Mr. Chairman. It

has a lot to do with it.

MR. CHAIRMAN: It has nothing to do with

section 1.

MR. PHILLIPS: Well, it has a lot to do with the railway, Mr.

Chairman — a tremendous amount to do with the railway.

MR. CHAIRMAN: Order! Deal with

section 1.

MR. PHILLIPS: It has to do with the competence of the

directors that the Premier has appointed to the railway. I'm

dealing with the railway, Mr. Chairman. There's a director of

the railway, he's in this Legislature, and I'm asking the

Minister....

MR. CHAIRMAN: Order! Who's piloting the bill has nothing to

do with

section 1.

MR. W.R. BENNETT (Leader of the Opposition): Simmer

down.

MR. PHILLIPS: Mr. Chairman, let's not be....

MR. CHAIRMAN: Order! The Member for South Peace has the floor. I would

ask the Leader of the Opposition to be quiet.

MR. PHILLIPS: Mr. Chairman, let's not be picayune about

this. We're dealing with all aspects of the railway under

section 1. I'm asking the Minister of Labour (Hon. Mr. King),

that chairman who was fired from the directorship of the

railway, how come he's carrying this bill through the House

when we have the only director of the railway....

Interjection.

MR. PHILLIPS: He's not even a director now.

Interjection.

MR. CHAIRMAN: Order! Who's piloting the bill has nothing to

do with

section 1. That's obvious.

MR. PHILLIPS: Now, Mr. Chairman, the reason that....

MR. D.A. ANDERSON (Victoria): This is going to take forever,

Mr. Chairman, if you adopt that attitude.

MR. CHAIRMAN: Order! You're not even speaking from your own

seat. I would remind the leader of the Liberal Party that we

have got to have some order in this House. If you've got

anything to say, you say it from your own seat.

MR. D.A. ANDERSON: Yes, sir!

MR. PHILLIPS: Mr. Chairman, I appreciate you keeping the

House in order while I have the floor. I appreciate that.

What I want to point out is that one of the reasons we're in

such financial problems in the British Columbia Railway is

because the management has changed, and the present management

seems to have run that railroad into the ground.

Mr. Chairman, in spite of the Premier saying that there was

no political interference, the reason the railway management

was changed was on recommendation of one of the directors.

I have here a confidential report — evidently it's

confidential because the Premier, the president of the railway,

had never tabled it in this House. The report is from Swanson

& Associates, consulting engineers, Railway Appliance

Research Ltd., 640 Burrard Street, Vancouver 1, B.C. The report

is signed by one Mr. Swanson. It is this report that recommends.... The report, by the way, is dated February 26, 1973 — about

six months after the present president of the railway took over

and shortly after Mr. Swanson was set up as a director of the

company. Mr. R.E.

[ Page 3596 ]

Swanson, director, British Columbia Railway.

Mr. Swanson's report has a far-reaching effect on the

management of the railway. I'd just like to ask the Minister of

Labour if the recommendations in this report were carried

forth. Was that the basis on which Mr. Broadbent was

side-shuffled in the railway management? Is that the basis on

which Mr. Esterbrook was fired? Of all the recommendations in

this report, which of them were carried out? Did Mr. Swanson

charge the British Columbia Railway any consulting fees for

this report? If he did, was it paid to Swanson & Associates

or was it paid to Railway Appliance Research Ltd? Or was it

paid directly to Mr. Swanson? Did Mr. Swanson at any time

submit a bill for preparing this report? Was there any money

paid out to Mr. Swanson or to any of his associated companies

for this report? Were there at any time bills submitted for

this report and then withdrawn?

I'd like the Minister of Labour, first of all, to answer

those questions, Mr. Chairman.

HON. W.S. KING (Minister of Labour): Mr. Chairman, dealing

with the last question first: I suggest that that question has

no relevance whatsoever to the bill before the House, which is

a bill to provide operating revenue for the railway. The

Members of the opposition know very well that in public

accounts, at the year-end, they are fully entitled to question

the details of operation, all of the expenditures that are made

by the railway. As I mentioned yesterday, for the first time in

the history of this province there is an opposition Member on

the public accounts committee; he being the Member for Cariboo

(Mr. Fraser). I'm sure the Social Credit Party should have some

confidence in that Member, who is chairman of the public

accounts committee, to ensure that the....

MR. CHAIRMAN: I would like to remind the Minister that that

should be dealt with in public accounts, and is not really

section 1.

HON. MR. KING: Fine, Mr. Chairman. Then I would suggest....

MR. CHAIRMAN: The question was as much out of order as the

answer.

HON. MR. KING: I accept that, Mr. Chairman. That being the

case, I hope you'll also keep the opposition Members to the

intent of the bill in their questioning.

Now the Member raised a number of points. He said that he

wanted to know what the financial needs of the railway are.

Yesterday I announced quite clearly what the financial needs of

the railway are. There is a need for $10 million immediately.

There is a need for an additional $10 million by early in

July.

That's a matter of record in Hansard . This is for operating

revenue; it pertains to the construction of the northern

extension also, which was undertaken by the previous

administration.

The opposition has indicated they support this bill, which

clearly outlines to the House the method in which financing of

the railway will be undertaken. It is not a sham in any way; it

is not an attempt to hide from this House or from the public of

British Columbia the extent of the borrowing which the railway

has to undertake. We have repudiated the former system of

simply extending the share capacity in making hidden subsidies

to the railway. This is evident; it's on the table. The

opposition has indicated their support in second reading of

this bill for the principle of extending the additional

borrowing power.

I suggest, Mr. Chairman, that we get on with the needs of

the railway to ensure that the workers on the railway are not

in a position of having their pay cheques delayed and to allow

the railway to continue with their programmes of development

and service to the north central sector of this province. I

don't think it's a service to anyone to unduly delay this bill

on matters that have been canvassed in second reading — the

facts are on the table — or on questions that are properly the

business of the public accounts committee, and which can be

elicited at the appropriate time when the public accounts

committee sits. It's always been the practice that questions as

to the operating expenditures of the railway were elicited at

the end of the fiscal year under the public accounts.

MR. PHILLIPS: Mr. Chairman, as I pointed out to the

Minister, I didn't want to hear him. He continues his political

tirade again without the urgency of getting this bill when the

bill has been sitting on the order paper since February 28. 1

hope that the next time he starts talking about the urgency of

the bill you will call him to order, because the bill has been

sitting. I'm a little sick and tired, Mr. Chairman, of this

government creating crisis situations where they have to force

legislation through this House to rectify their own errors.

This is another case.

I'll state again that with regard to the relevance of my

questions to the bill, we were told — I'll find it in Hansard

for you if you'd like me to bring it up again, Mr. Chairman —

during the Premier's estimates time and time again and the

Leader of the Opposition and many Members of the opposition

were told by the Premier that we would be able to discuss any

questions we wanted with regard to the operation of the railway

under this bill. If the Minister of Labour in the Premier's

absence cannot stand the pressure of the heat, I suggest that

he pass the debate on to the Minister Without (Hon. Mr.

Nunweiler).

[ Page 3597 ]

MR. CHAIRMAN: Order.

MR. PHILLIPS: I'm a little sick and tired of the Minister of

Labour hiding under....

MR. CHAIRMAN: Order.

MR. PHILLIPS: Yes, Mr. Chairman.

MR. CHAIRMAN: Surely even that kind of a statement has some

limits. I want to keep the debate within the limits of the

bill. You had the wide-ranging discussion on second reading.

I'm responsible for keeping order and keeping things within

order.

MR. PHILLIPS: I appreciate that, Mr. Chairman. I certainly

do appreciate that. Mr. Chairman, if you would just ask the

Minister of Labour to answer the questions, we would get this

bill passed in a hurry; there wouldn't be any necessity of all

this debate. But when we ask questions all we get from that

Minister of Labour is a political tirade.

So I'd like to ask my questions again very simply. Was there

any bill submitted by Swanson & Associates or by Railway...?

MR. CHAIRMAN: Order. I'd like to remind the Member of

standing order 43. You're being tedious and repetitious.

SOME HON. MEMBERS: Oh, oh!

MR. CHAIRMAN: It's been said to you before that that

question should be properly asked in public accounts.

MR. PHILLIPS: No, no.

MR. CHAIRMAN: That's where it should be dealt with. I bring

you back to

section 1 of this bill.

MR. PHILLIPS: Mr. Chairman, it has to do with the operation

of the railway. If you wish to back down on the Premier's

promise, I'll have to let the public know. The Premier told us

specifically — I'll remind you again — that we could bring up

matters....

MR. CHAIRMAN: Order! You're dealing with

section 1 of this

bill. You don't need to remind me of anything that somebody

else said in the House.

MR. PHILLIPS: I don't need to remind you of the Premier's

commitments.

MR. CHAIRMAN: It's my responsibility to keep order. You're

section 1; I would like you to stay on

section 1.

MR. PHILLIPS: I would like to ask the Minister of Labour if

there were any moneys paid out for this report. I also asked

him if it was the result of this report that there were all of

those changes in the top management of the railway. It's a very

simple question; all he has to do is say yes or no. Were any

bills submitted for the report? Were they paid? If so, to

whom?

MR. CHAIRMAN: I remind you again that those are public

accounts questions.

HON. MR. KING: Mr. Chairman, I would agree with that

observation. That certainly is a public accounts question. But

on the off chance that the Member is concerned with some

accuracy in terms of statements that he makes and information

that flows to the House, I would like to correct him on some of

the statements that he has repeated.

In the first instance, I was not fired from the railway

board. I withdrew at my own request, as a matter of fact, and

that was announced to the House. The Members opposite may wish

to draw their own conclusions and interpret that and distort it

as they wish, but to accept his repeated distortions in the

House is not quite acceptable to me.

The other point, Mr. Chairman, that should be brought to the

Member's attention is it is true that this bill was introduced

many months ago, and at that time the opposition cry was that

the bill should not be brought forward for debate until the

annual report of the railway was filed. So the delay in

bringing the bill to the House was to some extent at the

request of the opposition also. I don't think anyone can deny

that more information regarding the operation of the railway

has been tabled this session than was ever the case before.

Now without going into the whole debate again — and I

certainly don't want to do that — I would point out that

yesterday the Hon. Member for South Peace River (Mr. Phillips)

drew certain conclusions regarding his

interpretation of the

Price Waterhouse report. He failed to mention all the

conclusions that were drawn from the Price Waterhouse report,

and certainly the conclusion which I read did clearly indicate

that there was a need to reassess the accounting procedures on

the railway.

I quote from page 2 of the Price Waterhouse report: "It was

recommended that the railway should conduct a comprehensive

review of the depreciation practices of the railway and develop

a clear statement of depreciation objectives and policies."

On page 4 of the same report the finding was, and I quote:

"The accounting systems in the BCR in the past have been

directed primarily towards the traditional role of reporting

financial transactions in a manner consistent with the

requirements of the uniform classification of accounts and of

the

[ Page 3598 ]

transport commissioners for Canada."

Now apparently the Member has interpreted that incorrectly.

It points out that that was the criterion set down, but it

certainly did not say that those practices were in fact

followed. Indeed, in the later report, the Peat, Marwick

report, the accountants of that firm, who are very, very widely

known and very, very well respected, put their reputation on

the line by finding and stating unequivocally that in fact the

CTC standards had not been met in developing those reports and

filing them with the House. So I don't think there should be

any confusion there. I just wanted to make that point for

clarification.

With respect to the precise expenditures of the railway, Mr.

Chairman, it is obvious that that is not a matter to be debated

in this bill. Certainly I do not have the entire details in my

possession in terms of the day-to-day expenditures of the

railway, and it is traditional that those matters be dealt with

under the public accounts committee.

What I do have, Mr. Chairman, that I feel perhaps I should

reveal to the House is an expression of considerable concern

from the central interior about the delay in approving the

moneys required for the railway's operation. There is a

telegram here addressed to the Premier, dated June 16, and it

says: "Dear Mr. Premier: We concerned citizens of Cariboo

deplore the continuous, unproductive and asinine filibuster by

the official opposition, creating a complete waste of time.

Please convey to them in the House our utter disgust, Concerned

citizens of Cariboo, at a meeting held in Williams Lake, June

15, 1975, Brian J. Northrup."

MR. BENNETT: Who signed it?

HON. MR. KING: Brian J. Northrup signed it.

This is the kind of concern that is being expressed, Mr.

Chairman, by people on the railway property who rely on the

railway for services to their community. As I mentioned

yesterday, last year, during the labour tie-up of a few weeks'

duration on the railway the Social Credit Members particularly

expressed deep concern, and I certainly accept that it was

genuine concern, about the delay in the operation of the

railway. I am certain that they are similarly concerned on this

occasion and will hence speed through this House the approval

of the additional financing that is necessary so that we can

get on with the job of running this railway.

MR. PHILLIPS: Mr. Chairman, that sort of makes me chuckle. Maybe we

should wire the people in the Cariboo and tell them that they can buy steamship

companies without legislation, that they can pay people on the resource review

commission without legislation, and yet when they run the railroad so far into

the ground that they have to wait for us to pass legislation because they can't

pay their bills, this government is more incompetent than we ever even thought

it was.

I want to tell you that if the Minister of Lands, Forests

and Water Resources were in charge of that railway, the bills

would be paid whether there was legislation or not. So I don't

know why we should be so concerned.

We'll wire those concerned citizens in the Cariboo and tell

them that we better put the Minister of Lands, Forests and

Water Resources as a director of the railway, because he sure

doesn't need legislation to spend government funds, buy acres

and acres of land in the Victoria area, buy a steamship

company, pay employees, go on a joy trip with it to Seattle and

back and pay all the expenses, Mr. Chairman.

He brought it up, not me. He doesn't need legislation. I'm

just refuting his remarks, Mr. Chairman, and I'll certainly get

back to the bill.

Interjections.

MR. PHILLIPS: Mr. Chairman, there are a couple of things

with regard to the operation of the railway and with regard to

Mr. Swanson as director. I feel that he has a conflict of

interest and I'd like the Minister's remarks on it.

The Department of Travel Industry has paid out money to the

company by the name of Railway Appliance Research Ltd.,

incorporated March 7, 1951, with registered offices at 1800

Toronto-Dominion Tower,700 West Georgia, Vancouver 1, and the

directors of this company are: Robert Eugene Swanson,

president, 5212 Granville Street, Vancouver; Dorothy Edwina

Swanson, secretary, 5212 Granville, Vancouver; and Ernest A.

Alexander, 6150 Cypress Street, Vancouver.

Now Mr. Swanson, who is a director of the railway and the

president of Railway Appliance Research Ltd., was paid out of

the public purse in 1973 — and I refer you to the public

accounts of British Columbia for the fiscal year ending March

31, 1973.... Railway Appliance Research Ltd. was paid

$26,520.

MR. BENNETT: I wonder what that was for.

MR. PHILLIPS: Mr. Chairman, this is a company of which Mr.

Swanson is the president. In the year 1974, Railway Appliance

Research Ltd. was paid a sum of $18,087. Now this, Mr.

Chairman, in my estimation is a complete conflict of interest.

I suppose that these sums of money were paid out for

refurbishing the Royal Hudson, which was paid for by the

Department of Travel Industry.

We have another instance, Mr. Chairman, a company called

Airchime Manufacturing Co. Ltd., which was incorporated on Nov.

25, 1954. They

[ Page 3599 ]

have their records office at 21-700 West Georgia, and their

registered office at 2000-700 West Georgia, Vancouver. The

directors of this firm are: George Wilber Piercy, president;

Robert Eugene Swanson, vice-president; Donald Ross Challenger,

secretary-treasurer. Here again, we have Mr. Swanson who is

the vice-president of this company. In the year 1973, Airchime

Manufacturing Co. Ltd. was paid out of the public purse $4,235;

and in the year 1974, Airchime Manufacturing Co. Ltd. was paid

$2,225. There was a new steam locomotive just recently

refurbished, of course, for which we haven't got the figures. I

have to ask: was Mr. Swanson or any of his companies involved

in this?

But, Mr. Chairman, we're talking about a conflict of

interest. Mr. Scrivener on the ICBC was involved in a company

operating outside of the province. I think there's a conflict

of interest here far more severe than that of Mr.

Scrivener.

MR. BENNETT: Far more.

MR. PHILLIPS: Far more severe, Mr. Chairman. We have a

director of the railway who was basically a political appointee

of the railway by the present Premier. He was relieved of his

duties as chief engineer in the Department of Commercial

Transport. As soon as the present government took over, Mr.

Chairman, he was appointed as a political director of the

railway, brought in a report which I referred to a short time

ago, a report which was recommendations to the Hon. David

Barrett, president of the railway, Premier of British Columbia,

recommendations for the complete change in the management of

the railway, recommending that Mr. Norris as general manager be

placed in full authority over all employees and all company

officials, other than Mr. Broadbent and his immediate

assistance. It recommends that Mr. Broadbent be

side-shuffled.

It is the political management and political interference

with the railway that has brought us to the sad and sorry state

of affairs that we are at today, where the cash flow on the

railway is such that we are unable to pay our bills. But, Mr.

Chairman, one of the directors of the railway is involved in a

complete conflict of interest. I think he should be relieved of

his duties whether he is a political appointee or not. He is

being paid. The companies of which he is president and

vice-president are doing business with the Crown. Even though

it is with the Department of Travel Industry, that train is

still running on the British Columbia Railway. Maybe it was put

in the Department of Travel Industry to sidestep a conflict of

interest, but there is definitely a conflict of interest

here.

I think that if we are going to get this railway back on the tracks, as it

were, we had better get political appointments out of there, get it back into

good management, or we will be subsidizing this railway — and not to the tune

of $200 million. We will have just seen the tip of the iceberg.

The losses that were made in the railway last year far

exceed almost half of the total losses of the past 17 or 18

years, even under the new bookkeeping system. Last year the

railway lost $32-odd million, the greatest loss certainly in

the history of the railway and, as I say, more than half of the

total loss over the previous 15 years. By statements that have

been made in this House, we know this year that the railway is

going to be in another loss position. We know that the opening

of the car plant which was supposed to have cost $5 million

eventually cost $8 million.

Interjection.

MR. PHILLIPS: Up to $9 million now? It is going to be in a

loss position this year. We know that the cars are not rolling

out of that assembly plant as was set up on the schedule. So,

Mr. Chairman, we do need a new look at this railway.

Interjection.

MR. PHILLIPS: Yes, we need to have a judicial inquiry into

the whole operation of the railway. It is all right for the

Premier to make an hour-and-a-half speech about a scandal on

the railway. The scandal on the railway is the way this

government has run that railway from a good operation

completely into the ground. That is the scandal on the B.C.

Railway. That is the scandal. The reason we have this problem

today is strictly because of the incompetence of the directors

of the railway and because of political interference by that

government — no other cause whatsoever.

When we have conflicts of interest such as I have tabled

here in the House, and when we have a man who, when he was the

chief engineer for the Department of Commercial Transport,

writing complete, glowing reports about the safety standards on

the railway, writing glowing reports about the operation of the

railway.... Then, as soon as he becomes a political appointee

on the railway, he does a complete 180-degree turn and condemns

everything that he praised before. This is a man who is pulling

the strings on the British Columbia Railway at the present

time. This is the reason why there is so much urgency.

I would like the Minister of Labour to explain to me how

this can be justified. If he feels there is no conflict of

interest, I would like him to advise me why he feels there is

no conflict of interest.

Were Mr. Swanson's companies involved in the restoration of

the engine that just came out of Coquitlam when he had charge

of the controls last week, he and the Premier...and so

gloriously rode

[ Page 3600 ]

down the rails? Were any of Mr. Swanson's companies involved

in the restoration of the particular engine and, if so, to what

extent?

There are funny things going on on the railroad, Mr.

Chairman, and we would like some answers. I would like the

Minister of Labour to justify that position now or stand up and

tell this House if Mr. Swanson is going to be relieved of his

duties.

HON. MR. KING: Mr. Chairman, it is quite obvious that there

are some political things going on on the railway. The Member

stands up and quotes from a confidential, internal report of

the railway. One can only speculate as to how that

confidential, internal report came into the hands of the Member

for South Peace River. So I suppose we are to accept that

perhaps there are some political games going on in certain

areas of the railway. As I understood it, they were the

Member's own words.

[Mr. G.H. Anderson in the chair.]

MR. H.A. CURTIS (Saanich and the Islands): Open

government.

HON. MR. KING: I think every business in the province

certainly makes assessments of management needs on occasion. I

don't think there is anything untoward about that unless one is

completely paranoiac.

The political interference pertains to that question as far

as I am concerned. Mr. Swanson was formerly chief engineer for

the Department of Transport and Communications. He was

appointed and aspired to that position under the previous

administration. How the Member can now conclude that appointing

a man who was previously in a very confidential position and a

very high position in this province, appointed by the previous

administration and thereby knowledgeable with respect to the

engineering needs and background of the railway.... How he can

conclude that that is a political appointment really boggles

the mind.

Now if it were Einar Gunderson I could accept their concern.

But they choose to forget that reports by independent firms

have demonstrated clearly that there was interference by the

previous board members. Mr. Gunderson in particular was

mentioned in the Minty report as failing to provide adequate

information on which the auditors could base their

investigations and reports. If the Member for South Peace River

(Mr. Phillips) were sincerely concerned about possible conflict

of interests, one would think that he might have spent some

time addressing himself to that question. He has chosen to

completely ignore that all down through this debate.

Swanson's position, or any other position, will come out in terms of the spending

of the railway when the public accounts committee sits to hear how the budget

of the railway has been expended.

AN HON. MEMBER: But that's a year later.

HON. MR. KING: Certainly it's a year later. That's always

been the procedure with respect to the budgetary items of the

railway — the budgetary spending.

As far as the Member's definition of what happened with Mr.

Swanson, he indicates that Mr. Swanson did some work for the

Department of Travel Industry in terms of preparing the Royal

Hudson and the museum train for operation. I'm aware of that. I

know that he certainly did, and he did an excellent job. He has

a good relationship with CP Rail. Both the locomotives involved

were former CP Rail engines and many of the parts necessary to

get those locomotives back into operation were found in either

the CPR scrap heaps or actually manufactured in some of the

machine shops. So I know that Mr. Swanson did a good job with

the cooperation of CP Rail in locating or making the parts to

make both those steam engines operational.

I'd be surprised if any Member of this House attacked the

policy of reactivating those steam engines because they

certainly bring back a good deal of the history of this

province, and have introduced to many of the young people, who

never had occasion to see a steam engine, what the pioneering

life in this nation was all about. I would think that rather

than attacking the considerably determined and positive efforts

of one Bob Swanson to assist in that programme, the Members

might be applauding his action.

If it comes to any allegation that the Member wants to make

about a conflict of interest as to payments a director received

from the railway for work performed for the railway, then,

certainly, he should raise that in a question to either the

president of the railway, to the executive vice-president or

before the public accounts committee. I would think that would

be a very serious allegation to make, and there should be some

basis of evidence for that kind of allegation because it is a

serious statement to make.

I don't think it is appropriate that those questions of how

the expenditures are made be raised in the debate on this

particular bill. We have had wide-ranging debate on second

reading of the bill — we're now in committee stage. I repeat:

the opposition has indicated quite clearly that they intend to

support this bill. Further delay, as they well know, seriously

impinges upon the railway's ability to do the job for the

people of the province.

MR. PHILLIPS: Mr. Chairman, I'm really astounded and

flabbergasted that the Minister of

[ Page 3601 ]

Labour is condoning this definite conflict of interest.

Whether the account was paid for by the Department of Travel

Industry, or whether it was paid for by any other part of the

government, the Royal Hudson is an integral part of the

railway. I'm not attacking the Royal Hudson as such, but we

have a definite conflict of interest because, as I say, maybe

this was put through the Department of Travel Industry. Who

pays for the Royal Hudson? Who pays for the operating? Do they

pay the British Columbia Railway for the operation of this

train?

AN HON. MEMBER: It's charged to the BCR.

MR. PHILLIPS: Does the Department of Travel Industry pay the

British Columbia Railway to operate this train for them? Who

receives the revenue? Mr. Chairman, these are all questions

that should be asked with regard to the operation of the

British Columbia Railway. We need some answers. As I say,

despite the very fact that the refurbishing of the Royal Hudson

was paid for by the Department of Travel Industry, it still

runs on the rails of the British Columbia Railway system.

Regardless of what government department, it still has to do

with the railway. Certainly it is the railway that has to do

with the operation of this. If the Minister of Labour just

wants to gloss over that and say that there was no conflict of

interest, then we know what to expect from this government in

the future. I think he is basically condoning this conflict of

interest.

The president of the railway had no qualms about filing

other confidential reports. Why did he not table the report

from Mr. Swanson? Was it selective tabling on his part? Did he

not want us to see this report? Was there something derogatory

in this report?

I would say that if Mr. Swanson, a director of the railway,

drew up this report regarding the management of the railway,

saying that there needed to be changes in the management of the

railway, the report should have been tabled in the Legislature

so all of us could have a look at it.

Was this report not tabled, Mr. Chairman, because it was a paid-for report?

The Minister hasn't answered that question. Was this report paid for? Were Swanson

& Associates or Railway Appliance Research Ltd. paid for this report? Was

Mr. Swanson paid for this report, over and above his regular director's fees?

That's a question that the Minister hasn't answered yet, and I would like the

answer to that. Is that the reason that this report wasn't tabled? What is so

confidential about this report? Why wasn't it tabled when the rest of the reports

were tabled when the Minister of Finance and president of the railway took an

hour and a half in this Legislature to unveil a supposed scandal on the British

Columbia Railway? He certainly dug up everything else he could that was damning

to the railway. He tried his best to bring up anything that was damning to the

railway.

Mr. Chairman, I just have to ask why this report was not

tabled. It is a complete revision of the management of the

railway, along with written recommendations as to who shall be

in what position. Is this a political document?

MR. CHAIRMAN: Could we come back to

section 1, Mr.

Member?

MR. PHILLIPS: Mr. Chairman, I feel it is the management of

the railway that has brought us to this financial crisis that

we have on the railway at the present time. This report from

Mr. Swanson....

MR. CHAIRMAN: That matter is for discussion under second

reading, not in Committee of the Whole.

MR. PHILLIPS: Well, Mr. Chairman, the point is on third

reading to get answers to questions that you don't seem to get

in second reading. It is amazing to me that the report would be

signed by R.E. Swanson, director of the British Columbia

Railway...

MR. CHAIRMAN: The matter is not relevant to

section 1, Mr.

Member.

MR. PHILLIPS: ...and yet would be on Swanson

&Associates, consulting engineers, stationery.

MR. CHAIRMAN: Would the Member please return to

section

MR. J.R. CHABOT (Columbia River): On a point of order, the

Premier was pretty emphatic on Monday, March 17, when we were

discussing B.C. Rail, when he said:

Mr. Chairman, I pointed out that there was a bill on the

order paper. I will be giving a full report when the bill is

called, and I anticipate a full debate on all aspects of the

railway including the boxcars, ties, the freight cars,

engines, engine drivers, the stations, the huts, and the whole

operation of the railroad under that bill.

Mr. Chairman, I want to suggest that that is exactly what

the Member for South Peace River (Mr. Phillips) is attempting

to do — discuss what the Premier suggested on March 17 would be

available to do when the bill is called.

MR. CHAIRMAN: In view of the length of time the Hon. Member

has in this House, he knows that discussion should properly

have taken place on second reading.

MR. CHABOT: Mr. Chairman, it is quite obvious

[ Page 3602 ]

that you haven't been in the House very long because if you

look back and think of second reading for one moment, you will

clearly understand that there is no opportunity of questioning

Ministers of the Crown under the second reading of a bill. It

is a question of giving your impression of the bill and its

ramifications. However, the Premier has said that we would have

a full discussion on March 17 — "We'll discuss the stations,

we'll discuss the huts, we'll discuss the engine drivers, we'll

discuss the engines, we'll discuss absolutely everything

relative to the BCR. There will be a full and open debate." And

that is exactly what we are attempting to do here.

MR. CHAIRMAN: That's what we had under second reading of the

bill, Mr. Member.

MR. CHABOT: Well, under the committee stage of a bill, Mr.

Chairman, this is the only opportunity. Are you, the Chairman

of the House, attempting to deny the Members of this assembly

the opportunity of questioning Ministers on their

administrative responsibilities, be it as a cabinet Minister or

be it as a director or ex-director of a railroad?

MR. CHAIRMAN: I am simply applying rules of committee and

keeping the discussion relevant to the

section of the bill.

Would the Hon. Member for South Peace River please

continue?

MR. PHILLIPS: Well, Mr. Chairman, I would just like to ask,

once again, and the Minister can ask — he was a director of the

railway at that time.... Here is supposedly a confidential

report by Mr. Swanson, who is a director of the railway, and

yet the report is filed on Railway Appliance Research Ltd.

stationery. Now I want to know if this so-called confidential

report was paid for by the government? Were there any

directors' meetings where this report was discussed? Who was

present at the directors' meetings? Was there an agreement to

pay Mr. Swanson? How much did he want for this report?

Mr. Chairman, this is a highly significant report because it

is the report that has to do with the complete restructuring

and reorganization of the railway, and it was done shortly

after Mr. Swanson was appointed as a director of the railway.

It was done even before the report of Mr. Sawyer.

This is dated February 26, 1973, and Mr. Swanson is

recommending far-reaching changes in the management of the

railway. Why was it necessary to have another report done by

Mr. Sawyer?

This was received in the Clerk's office on September 18, 1973. It was dated

July 17, 1973. It is a report on the status and management, controls and organization

of the British Columbia Railway. If Mr. Swanson was paid for one report, or

one of Mr. Swanson's companies was paid for doing a report on the management

of the railway, a report which this Legislature has never had the opportunity

of seeing, why was immediately after that another report commissioned by the

Premier by Mr. Sawyer? Mr. Sawyer says:

"This letter transmits my report on the status and

management controls and organization of the British Columbia

Railway, a

summary of which starts on page 10."

He goes on to say:

"Because of the detailed assignments to Price Waterhouse and

Swan Wooster, engineers, I have, as planned, focused my

attention on an overview of the management status and

considered the organizational activities of the operation. I

found them to be consistent in concept with most other

companies in North America, with the exception of data

processing. I have consequently recommended little or no change

in the structure to this section. This view has been confirmed

by my experienced advisers. In presenting this report, I have

concentrated on the future potential and the steps through

necessary and proper evolvement of the company.

"One such step concerns the organization, the concept of

which I have described in some detail by functions, not

departments. The recommended next step is to have the board

review these concepts and confirm acceptance, after which a

task group can be directed to describe and develop the

structure in detail."

Well, Mr. Chairman, there seems to me to be a.... This is

evidently a political report. This is the report that was

tabled in the Clerk's office, a complete report in detail on

the management and organization of the railway. I'd like to

know — maybe the Minister of Labour would explain — why the

Swanson report, which was done by one of his companies and yet

signed by him as a director of the railway — I can't quite

understand that — was never tabled in the Legislature. Maybe

the Minister of Labour would like to answer that question.

MR. CHAIRMAN: Shall

section 1 pass?

MR. PHILLIPS: Well, Mr. Chairman, I think that the Minister

of Labour has developed amnesia. Or is he not going to answer

the questions? Has he forgot, or does he just not know?

Yesterday afternoon in this Legislature the Minister of Labour

proved that he didn't know anything about the financial reports

or anything to do with depreciation, because he was all

confused when we were talking about the statement of detailed

accounts, which by the way....

MR. CHAIRMAN: Could we come back to

section 1, Mr. Member?

[ Page

3603 ]

MR. PHILLIPS: Well, we're talking about the British Columbia

Railway and that is

section 1. If you don't feel that the

operation of the railway has anything to do with the borrowing

of an additional $200 million, why, Mr. Chairman, we've then

reached a new low in this debate.

The detailed accounts of the railway were not filed in

accordance with the legislation on the books. The statement of

railway expenditures did not comply with legislation under the

Public Bodies Financial Information Act, which says they must

be filed within six months after the financial statement. These

detailed expenses were in direct contravention of legislation;

yet because it's the British Columbia Railway, the Minister did

not answer that question yesterday afternoon. Was it due to the

fact that there might have been some payments made to some

other of the company directors that these detailed accounts

were not filed? How does the railway justify not filing these

detailed accounts?

Once again, Mr. Chairman, I'd like to ask the Minister, the

man who is responsible for seeing this bill through the

Legislature, why the Swanson report was not tabled in this

Legislature? How much was paid for the report? Was it paid to a

director, was it paid directly to Mr. Swanson, or was it paid

to one of Mr. Swanson's companies?

HON. MR. KING: The Member has asked for information

regarding certain works done by Mr. Swanson, a member of the

board. Now obviously there are just a tremendous number of

expenditures which the railway will make in its day-to-day

operations out of operating revenue. To accept the Member's

demand that all of those expenditures be accounted for in

debating a bill which relates to the narrow question of whether

to approve further financing authority to the railway is

stretching one's credibility beyond all limits.

Obviously the railway must account for each and every

expenditure it makes. The appropriate time to do that is in the

public accounts committee where the entire railway management

plus their financial people will be on hand to presumably

provide the vouchers and to justify the expenditures that have

been made. But I think it's nonsense to suggest that every

expenditure or any particular expenditure which has been made

should be debated here.

Now it's true that in large measure the whole area was

covered in debate on second reading. Simply it went much beyond

the principle of the bill. But I have no intention of

attempting to identify and explain every expenditure that will

be made in the fiscal year for the railway. I've pointed out

repeatedly that we have a realistic public accounts system with

a Member of the opposition as chairman of that public accounts

committee.

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

HON. MR. KING: The Members did ask for some delay pending

the filing of the annual report on the railway. That report was

delayed in some part, as I understand it, due to other matters

that were under investigation on the railway and which were

subsequently tabled with the House.

So everything is clearly on the table, and the Member will

have an adequate opportunity to pose the kind of questions he's

putting here today. This is not the appropriate time, in the

committee stage, of considering the advisability of increasing

the borrowing power of the railway from some $440 million to

$650 million.

Now the Members of the opposition again have indicated their

support in second reading and supported this bill. I suggest

that to continue to delay it on questions that can certainly be

provided on a more appropriate occasion, either in question

period to the president of the railway or to public accounts,

is irresponsible and certainly an unjustified delay in

approving the continued operation of a very, very essential

service in this province.

MR. PHILLIPS: Mr. Chairman, I suggest that the statement the

Minister of Labour just made is completely irresponsible and

shows his complete ignorance of the legislation which says that

any public company must file a complete detail of its accounts

within six months after the financial statement. The Minister

doesn't seem to understand that. I'm not asking for debate.

It's contravention of legislation.

AN HON. MEMBER: What's that got to do with the bill?

MR. PHILLIPS: It's got a lot to do with the bill, because

we're talking about the operation of the railway. And here's an

ex-director of the railway...

Interjections.

MR. PHILLIPS: ...who doesn't even know anything about the

operation of the railway, trying to pilot this bill through the

House, not being able to answer questions. And the Premier runs

away on a joyride at the taxpayers' expense to London just

because he....

MR. CHAIRMAN: Could we return to

section 1, Mr. Member,

please? Could we return to

section 1?

MR. PHILLIPS: He took off on an expense-paid tourist trip to

England because he didn't want....

[ Page 3604 ]

MR. CHAIRMAN: Order, please! That has nothing to do with

this

section of the bill, and it's tedious and repetitious.

MR. PHILLIPS: I want to tell you.... Tedious and

repetitious! That Minister of Labour stood up and made the same

speech five times since the House started this afternoon. The

same speech! You talk about being tedious and repetitious! All

I want is some answers to some questions.

MR. CHAIRMAN: It seems to be habit-forming. Could we return

section 1, please?

MR. PHILLIPS: Mr. Chairman, I've asked the questions. You

know, we could pass this legislation so smoothly and so easily

if we'd get from that Minister of Labour a few answers. We'd

like to get this legislation passed. I'm going to have to tell

those people that we can't pass this legislation until we get

the answers, and the Minister is filibustering. The Minister is

filibustering the debate and the bill.

But this report is a very vindictive report, and Mr. Swanson

has every right to be vindictive because he was relieved of his

duties with the government in 1971 as chief engineer with the

Department of Commercial Transport. He was relieved of his

duties, presumably for a reason; so he has a reason to be

vindictive. So he comes out and this is his first vindictive

report, his first vindictive report against the railway.

Are we going to have a break? You're going to take over?

Well, maybe we'll get more answers out of the Minister of

Education (Hon. Mrs. Dailly) than we're certainly getting out

of the Minister of Labour.

Mr. Chairman, we do want some answers because we are

concerned about the future operation of the British Columbia

Railway. And as I've stated in this House, the top people in

that railway have either been fired or side-stepped or let go.

None of the team that built that railway into the smoothly

functioning operation it was are still there.

MR. BENNETT: The men who came up through the ranks.

MR. PHILLIPS: Men who came up through the ranks, men who

knew the railway, men who had organized it, men who were the

mucilage that held that railway together. Johnny Trask.

As a matter of fact, the Premier said himself that he tried to keep Mr. Trask

on that railway — said that he wanted him to stay there because he was a man

who had come up through the ranks, and who had built the railway into what it

was today. So what happened to him? Why wouldn't he stay? Political interference

by the political directors who had been appointed by this government? This is

why we have to have answers before we allow the railway to continue its downhill

slide.

This fall it was $25 million; now it is $200 million. What

will it be next year if this railway continues to go down the

rails on the same basis because of the political interference?

Is there nobody in either the directors, in the management of

the political directors of this railway who can take this

railway and put it back on the rails?

Mr. Chairman, I will ask again, and maybe the Minister of

Education (Hon. Mrs. Dailly) will answer. If I remember

correctly, I think the Minister of Education was at one of the

board of directors meetings when this report might have been

discussed. Maybe the Minister could tell me: was this report

paid for? Was it discussed in that board of directors meeting

she was at? Was it paid for? Was there a bill submitted? Did

Mr. Swanson ask to be paid for it? Did he submit a bill? Was it

one of his companies? Maybe the Minister would explain it to

me.

MR. CHAIRMAN: Mr. Member, I repeat: that is a matter for the

public accounts committee. Will you return to

section 1?

MR. PHILLIPS: No, it is a matter for the railway, Mr.

Chairman. If you think we can just gloss over....

MR. CHAIRMAN: The Chair has ruled it is a matter for the

public accounts committee.

AN HON. MEMBER: Oh, no, no. That's not true.

MR. CHAIRMAN: Please return to

section 1.

MR. PHILLIPS: Would you like me to challenge your ruling? I

won't challenge your ruling.

MR. CHAIRMAN: The Member always has that opportunity.

MR. PHILLIPS: Oh, no, I won't challenge your ruling.

MR. CHAIRMAN: Any Member.

MR. PHILLIPS: I'll just say that it really has, and the

House Leader knows that.

But, Mr. Chairman, I would like to have permission of the

House to file this report.

MR. CHAIRMAN: Is that a motion?

MR. PHILLIPS: I am asking you to ask the House for

permission to file this report.

MR. CHAIRMAN: You are asking for leave?

[ Page

3605 ]

MR. PHILLIPS: Yes. May I have leave to file this report.

Mr. CHAIRMAN: Technically, it should be asked for in the

House right after the committee rises.

MR. PHILLIPS: All right. I thought we had had permission to

file in committee.

Anyway, maybe the Minister of Education is going to give me

some answers. I see her making notes; maybe she is going to

tell me whether this report was paid for. Was there any bill

submitted that was withdrawn? Was it a paid report?

MR. GARDOM: I would just like to bring back to the attention

of the House, and the lady Minister, something which was being

discussed and upon which the Premier and president of the

railway failed to furnish complete or adequate information. I

am referring to the incorrect material concerning the railroad

which was filed in the B.C. Hydro prospectus which has been, to

a great extent, a subject matter of this debate.

The Premier indicated to the House that there was a

discussion between the Deputy Minister of Finance and the legal

firm of Messrs. Sullivan & Cromwell in New York as to the

advisability, in the viewpoint of the Deputy Minister of

Finance, of filing explanatory notes with the B.C. Railway

statement in this prospectus, which has proven to be an

incorrect statement, and which was, to the knowledge of the

government and to the knowledge of the railway, an incorrect

statement when this prospectus was filed with the SEC.

It was the position of the Premier that the legal firm in

New York informed the Deputy Minister of Finance that there was

not a necessity for such notes. But I would draw to the

attention of the House Leader that in the prospectus it states

that these New York firms may rely, as to all matters of

Canadian and provincial law, on Messrs. Macdonald, referring to

the Attorney-General, and Mitchell, referring to the senior

counsel for B.C. Hydro, and Clark, Wilson & Co., a firm in

Vancouver.

I would ask the House Leader if there is any information

available as to whether Mr. Macdonald, the Attorney-General, or

Mr. Mitchell, chief counsel for B.C. Hydro, or the legal firm

of Clark, Wilson & Co. have volunteered an opinion as to

the need for the filing of explanatory statements with this

somewhat fallacious report in order to have it effectively

comply with Canadian and provincial laws? That is the first

question to the Hon. House Leader.

The second one. I drew to the attention of the Premier that, under the Railway

Act of this province, it is prescribed as a duty that the board of directors

of the company have to keep adequate and complete records of all meetings of

the shareholders. I asked the Premier if he would file with the House minutes

of those meetings of the directors for the past five years. That was the request

I put to him.

His answer was neither in the negative nor in the

affirmative, just to the effect that we shall see. I would

respectfully request that the time to have these minutes filed

obviously would be during debate of this bill, which would give

an opportunity to put adequate light upon the matter.

Thirdly, under

section 279 of the Railway Act, there is a

responsibility upon this company to annually prepare returns,

but it is also very interesting to note that those returns are

to be attested by statutory declaration of the secretary of

the railway, or some other chief officer of the company, and

also by the statutory declaration of the president or in the

event of his absence, the vice-president or manager of the

company. I would ask whether or not such statutory declarations

were entered into by the present president or by the former

president of the railway, and whether or not the Hon. House

Leader (Hon. Mrs. Dailly), who is having the carriage of this

part of the debate, is prepared to file those statutory

declarations in this House. Three questions.

MR. GARDOM: Is the Hon. Lady prepared to answer?

HON. MRS. DAILLY: The Minister is back. He missed the first

two questions, but I believe he was here for the third one.

MR. GARDOM: Would you like me to reiterate?

HON. MRS. DAILLY: If you're not satisfied, you can reiterate

them. The answer to the first question is: not to my knowledge.

On the second one, I don't think there was a specific question

asked. The third one the Hon. Minister of Labour will be

prepared to make a comment on.

HON. MR. KING: I know the BCR is subject to the Railway Act,

but it's a highly legalistic question as to whether there are

certain exemptions under the charter and so on — I certainly

don't know. As far as I know it certainly is subject to most of

the provisions of the Railway Act anyway.

MR. GARDOM: Well, that was not my question. I would

respectfully assure the Hon. Minister that it is subject to the

Railway Act and it is subject to this section. There is nothing

precluding the responsibility of the secretary of the company

and also the president or the vice president or the manager of

the company, two people attesting under statutory declaration

the annually prepared return. That is mandatory under

[ Page 3606 ]

the statute; there is a responsibility under the statute to

have that happen. I would ask if it has occasioned, or if it

has not occasioned, why not? If it has happened, is the Hon.

Minister prepared to file that material in the House?

HON. MR. KING: Mr. Chairman, I'm certainly not prepared to

file documents in the House. I would suggest again that if the

Members want additional information, then they should make

requests either on the order paper in written form to the

president of the railway or the executive vice-president of the

railway. It's very obvious that some of the material filed with

this House in previous years was inaccurate. That's the whole

purpose of tabling the Peat, Marwick report as well as the

Minty report with this House. Because it clearly indicates that

reports filed with the House, although they were certified to

be in compliance with the proper accounting procedures and in

compliance with the CTC regulations for railway audits, did not

in fact so comply.

We have been busy ensuring that the accounting procedures

and the cost control methods on the railway were improved and

upgraded to reflect an accurate and true picture of the

operating costs of the railway. This whole area really pertains

to the cost that had been hidden because the accounting

procedures which were purportedly correct were not in

compliance with the accepted national standards. That's what

the whole debate revolves around. That's been debated and

that's been canvassed very widely and very adequately in second

reading of the bill. But in terms of requests for further

information — statutory declarations — I would suggest that the

Members make that request in the form of a written request on

the order paper or that they certainly make it in a verbal way

to the president or the executive vice-president of the

railway.

MR. GARDOM: I would have hoped that the Hon. Minister could

have conveyed the request for me. If he wishes to have it

prepared more formally, that could be attended to. But he is

fully aware of the fact that there is considerable

responsibility in supporting this financial statement by a

statutory declaration — a considerable responsibility. I just

want to know if that practice has been carried out, because the

mechanics for that practice and, as far as I can see, the law

requiring that is clearly set forth in our statutes. I wish to

know if our statutes have been followed by this administration

or by the prior one, for that matter. There is a responsibility

to follow this thing, and if it's not being followed the people

of this province should know why not.

Dealing with one other topic which the House Leader (Hon. Mrs. Dailly) referred

to, she said that she wasn't aware of the Attorney-General, the chief counsel

for B.C. Hydro, or Clark, Wilson & Co., a Vancouver firm, giving any opinion

as to provincial or Canadian requirements for the appending of explanatory notes

to this prospectus of B.C. Hydro that was filed with SEC dealing with the incorrect

B.C. Rail statement.

I'm asking the Hon. Minister: will he determine himself from

these three concerns — the Attorney-General's offices, those of

Mr. William Mitchell in Vancouver with B.C. Hydro, and Messrs.

Clark, Wilson & Co., a firm of solicitors in Vancouver — if

they have given such an opinion? Because it would appear to be

paramount, according to accepted accounting principles in this

province and in this country, that there should have been

explanatory notes filed with this prospectus. And they were not

filed. I personally find it very difficult to accept as an

adequate reason just an opinion over the telephone from a firm

of New York lawyers.

HON. MR. KING: I just point out to the Hon. Second Member

for Vancouver–Point Grey that the requirements of Macdonald,

Mitchell and Clark were strictly with respect to the Canadian

accounting of the railway. There is no requirement for foreign

borrowing in the U.S., other than the prospectus requirements

presented to the law firm handling the financial transaction

being met. It has been clearly established already that the

Deputy Minister of Finance indicated to that firm that there

was an investigation underway which might relate to, and in

some way alter, the outline contained in the prospectus.

Now despite that admonition from the Deputy Finance

Minister, the legal firm handling the financial transaction

indicated that they were quite prepared to accept the

prospectus, even in light of the caveat placed upon it by the

Deputy Minister of Finance.

I think it should be clearly understood that the

requirements for foreign borrowing do not relate to the

question the Member asked with respect to the legal firm's

requirements in the Canadian context.

MR. GARDOM: I don't wish to grab this bone too long, but,

Mr. Minister, it does say the New York firms may rely, as to

all matters of Canadian provincial law, upon the Canadian legal

advisers, the people whom I have named.

My question to you is: the statement is clearly incorrect;

did those Canadian legal advisers give an opinion to the Deputy

Minister of Finance as he received from New York, or did they

not? Did they consider it? That was the question. Can you

answer that?

MR. PHILLIPS: Mr. Chairman, I'm absolutely flabbergasted

that the Minister of Labour has not said something more on the

fact that we have a conflict of interest of one of the

directors on the railway — a

[ Page 3607 ]

definite conflict of interest where a director of the

railway is doing business with the government. Whether it be

the Department of Travel Industry or any other department, it

is still the British Columbia Railway and the Royal Hudson,

where thousands and thousands of dollars were paid to this

director, while he was a director of the railway, for doing

business with the Department of Travel Industry or any other

government department. It is still definitely on the railway.

The Minister of Labour gets up and condones the action, and

says that we should be thankful that the Hudson was restored.

It doesn't seem to matter to that Minister how we achieve our

ends. Whether we break the laws or whether we break the

regulations, it's no matter what we do as long as the end is

obtained.

Now there is a definite conflict of interest, more of a

conflict of interest here, definitely more of a conflict of

interest here than a director of the Insurance Corp. of British

Columbia having shares in a company way off in Saskatchewan.

Definitely clear-cut and more a conflict of interest here than

there is in that. What did the Minister of Transport and

Communications (Hon. Mr. Strachan) do? He acted swiftly and

surely. That's the way this Minister should do to see that

there is no more conflict of interest. Or, because it is the

railway, are we overlooking any conflict of interest?

I'm absolutely astounded. The Minister gets up and talks

about the need to rush this legislation through. I'll tell you

why he wants to rush it through. He wants to rush it through so

maybe we can hide some other things because we are certainly

not getting any answers here this afternoon.

AN HON. MEMBER: Closure!

MR. PHILLIPS: A definite conflict of interests. The Minister

says that we should be happy that the Royal Hudson is steaming

and showing the children. Well, I'll tell you, the Royal Hudson

could steam and huff and puff and show the children without

having a conflict of interest. Does this mean that any of the

Ministers of the government, because they want to attain an

end, can have a conflict of interest? Are we setting a new

standard in British Columbia, a new low of conflict of

interest?

If that Minister had the same concern for the public interest that the Minister

of Transport and Communications (Hon. Mr. Strachan) had, he'd move. He'd get

on the phone and he'd wire this to the president of the railway and he'd ask

him for instructions. He'd tell him to come home instead of running off when

the pressure's on. Why isn't the president of the railway here? Why didn't he

bring this legislation in before he went? It's been on the books since February

28. Why did he bring it in second reading where we didn't have an opportunity

to ask him questions? We couldn't get at him directly and he flies off to London.

MR. CHAIRMAN: That's been well canvassed.

MR. PHILLIPS: It will be well canvassed again, Mr. Chairman,

and the fact that the Minister of Labour's been threatening us

has been well canvassed.

I just want to read the first paragraph of this report of

Mr. Swanson:

"In accordance with your instructions at the board meeting of the British Columbia Railway, I am

submitting herewith an organizational chart setting forth a

shuffling of personnel in the area of management in the British

Columbia Railway so as to bring about a more satisfactory

relationship between management and the working forces."

What did Mr. Sawyer say? He said there was a good

relationship between the management, and this report was done

after Mr. Swanson's. Did Mr. Swanson have something to

vindicate the railway for after all his glowing reports of how

well it was, and how the management and personnel were working

together, how safe the railway was, and all of those glowing

reports that we read a year or two previous to this?

Again, how much was Mr. Swanson paid for this report? How

come the report is on Railway Appliance Research Ltd.

stationery and signed by Mr. Swanson as a director of the

British Columbia Railway? I would think that if a director of a

company were submitting a confidential report — highly

confidential report because the Premier and the president of

the railway chose not to file this report when he was trying to

file every other report that was supposedly damning to the

railway.... Why didn't the Minister file this report? If I

were a director of the railway, I would probably use the

railway stationery to file a report, but Mr. Swanson doesn't

use the railway stationery to file the report. He uses the

stationery of his own private company, Swanson &

Associates, consulting engineers, Railway Appliance Research

Ltd. Is this why this report was not tabled? Is it due to the

fact that Mr. Swanson charged the railway for this so-called

confidential report that the report wasn't tabled? If he did

charge, how much did he charge? If he submitted a bill and it

was later withdrawn, how much was that bill for? Why was it

withdrawn?

I would think that if I were working as a director of a

railway and asked by the Premier to do a report, as a director

of the railway it would be in my line of duty. Would I get

extra for doing this? Would I do it during board meetings, or

would I get one of my companies to do it, as seems to be the

case here? I would suggest that Mr. Swanson should have filed

this letter as the president of Railway Appliance Research

[ Page 3608 ]

Ltd., instead of a director of the British Columbia Railway,

because it's on their stationery. Now was some of that money

that was charged for this report hidden in some of these

expenditures which I've outlined here, and charged to the

Department of Travel Industry?

Now, Mr. Chairman, I want some answers from that Minister of

Labour! He was a director at that time. He was a director of

the railway at that time. We want some answers. Maybe the

Minister would tell me. I'll ask him once more: did Mr. Swanson

charge for this report and, if so, how much, and to what

company was the amount paid?

HON. MR. KING: Mr. Chairman, I indicated to the Member that

I'm not in possession of those facts and that the appropriate

time to elicit those facts is in the public accounts committee

hearing on the operation of the railway.

I must repeat, Mr. Chairman, that it's indeed fascinating.

This Member is prepared apparently to build any kind of straw

man to divert attention from the really serious indictment that

has been developed by the firm of Peat, Marwick and Associates

and by the comptroller-general for the Government of British

Columbia in reports that they filed, which have been tabled in

this House, and which show a scandalous performance by the

previous administration, by certain board members, and which

found, in reporting on the audit procedures of the previous

government, that indeed the practices were deficient. They were

unduly restricted in setting the terms of their audit by one

Einar Gunderson, a former board member, a political appointment

by the previous administration.

The report of the chartered accountants association of the

Province of British Columbia, which held a hearing on the

conduct of the firm of Buttar & Chiene, which had been the

auditors under the previous administration for many years:

"The panel having found unanimously that the said member,

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

professional conduct as alleged in paragraphs 1 and 2 of the statement of complaint

by reporting on and associating himself for and on behalf of the firm of Buttar

& Chiene with the financial statements and auditors report thereon for the

British Columbia Railway Co. for the year ended December 31, 1972, when he had

failed to obtain sufficient information to warrant the expression of the unqualified

opinion expressed thereon and therein, and that the said member has been incompetent

in professional matters within the meaning of bylaw 67A(3) in force at all material

times, and also of bylaw 68A(3) in force at the present time, as alleged in

paragraph 3 of the statement of complaint."

That is a judgment by the professional peers of the auditors

appointed under the previous administration. If I am to accept

the concern of the Member for South Peace River (Mr. Phillips),

then I could well question as to whether or not this

professional incompetency which has been adjudged by his

professional peers in the province was prompted by political

interference. I could pose that question with some

justification in light of the fact that the comptroller-general

indicated that improper restrictions had been placed on the

auditors by one of the former board members — a political

appointment and former Social Credit cabinet Minister, one

Einar Gunderson.

MR. CHABOT: How about Roland?

HON. MR. KING: It's really significant....

Interjections.

HON. MR. KING: It's really significant, Mr. Chairman, that

the Members over there become so strident in building strawmen

and speculating on the characters and on the professional

conduct of certain people without a shred of evidence that I

can determine, but completely choose to ignore the hard data

filed with this House which reveals a shocking and unacceptable

performance by the management of the railway, by the board of

directors and by the former administration. All of these

factors resulted in the hiding and the submerging of millions

of dollars of losses which have not been properly portrayed to

this House.

So it becomes apparent that the opposition sham — trying to

build strawmen to divert attention from what the real facts are

in this case, from their sorry and shoddy record of hiding the

true picture of financing on the railway from this House, which

had been called upon to finance it through what the former

Premier used to like to refer to as a system of "contingent

liabilities" and "the expansion of share capital" and so on,

which was nothing more than nonsense.... It was an outright

subsidy.

As far as the man Swanson was concerned, he was a high

official under the former administration's reign. Certainly

he's never been associated in any way politically with this

government. He was appointed to the board of directors in view

of his experience with the Transport department of the

provincial government and his knowledge of the railway. If the

Member is suggesting that he has evidence that that director

was paid money by the railway to do work....

MR. PHILLIPS: Tell us that he wasn't.

[ Page 3609 ]

HON. MR. KING: The point is, Mr. Chairman....

MR. PHILLIPS: The point is that you are responsible.

HON. MR. KING: The point is, Mr. Chairman, that the Member

is using that allegation. If that's all it is, a suggestion,

then that is an absolutely shocking statement.

MR. PHILLIPS: Answer the question.

HON. MR. KING: If the Member would make that kind of

suggestion on conflict of interest about perhaps something that

goes beyond simply being conflict of interest, without a shred

of any supporting evidence in this House, then I suggest that

politics has arrived at a new low in this province.

Interjections.

HON. MR. KING: That's toying with a man's integrity, with

his character and with his reputation. I don't think any Member

of this House should do that unless he has some support for the

kind of concern he's expressing.

I have pointed out that that does not in any way relate to

this bill as to whether to provide additional funding for the

railway.

MR. PHILLIPS: After you've gone on for half an hour.

HON. MR. KING: The Members of the opposition receive the

answer. They choose not to accept it because they're not

interested in getting on with the business of the railway.

Rather they hope to divert attention from the scathing

indictment inherent in the Peat, Marwick report and in the

comptroller-general's report. They want to divert the complete

attention of the public from those damning facts and build

strawmen. If you're concerned about any expenditures within the

fiscal year by the railway management or by the board in terms

of its conduct, the time to elicit that information is at the

public accounts committee, where those officers of the railway

and those directors will be available to give the kind of

precise information you're seeking.

Interjections.

HON. MR. KING: This is not a bill to provide an accounting of the daily

operational policy and the daily operational decisions of the railway. That

is obviously ridiculous. This is a bill to determine whether or not that railway

should receive additional borrowing power in order to enable the railway to

continue the expansion programme that was started by the previous administration

to meet operational costs, to fund the car shop at Squamish, and things of that

nature. These relate very dramatically to the economy of this province, to the

stability of this province, and to the welfare of its people. I am, quite frankly,

shocked that the Members are going to the extremes they are — playing frivolous

little games in an attempt to simply delay passage of this bill when it is so

important and so crucial to the interests of the whole northern part of the

Province of British Columbia.

MR. CHAIRMAN: The Hon. Member for South Peace River.

MR. PHILLIPS: Mr. Chairman, don't sound so disgusted —

you're supposed to be impartial.

MR. CHAIRMAN: Just tired.

MR. CHABOT: Go to bed then.

MR. PHILLIPS: If I belonged to your government, I would be

tired too. I would be tired of all of that political tirade we

just heard from the Minister of Labour who stands up and talks

about cooking the books, deliberately hiding and talks about

scandal.

HON. MR. KING: Who is supported by reports? What have you

got?

MR. PHILLIPS: Talk about scandal — I want to tell you, here

is a report from Price Waterhouse. There is not one word about

cooking the books or deliberately hiding. The railway made a

decision to change the practice of depreciation, yet the

Minister tries to bring it up as a big scandal. Oh, he tried.

And the Premier stood here on the podium — you would think he

was giving the Sermon on the Mount — for an hour and a half. He

tried to raise a scandal up out of the depths of the good

management of the railway. He fell flat on his face, and it's

coming back to kick him. That's why he ran off to London. That

is why he took off for London — because he couldn't stand the

pressure.

I want to tell you, Mr. Chairman, we are talking about the

railway. Well, that Minister of Labour, the ex-director, no

wonder he was let go, he doesn't know anything about the

operation of the railway. But, oh, when he was appointed I

remember the Premier in this Legislature saying that finally

we've got somebody on that railway who knows something about

the railway, and how he was going to be one of the greatest

directors there ever was. He stood in this House and he praised

the Minister of Labour, the first man to ever run the railway

who knows anything about the operation of the railway. Two

years later,

[ Page 3610 ]

what happens? The Premier cuts his legs right out from under

him and says: "Get out of here!"

MR. BENNETT: Today we know why.

MR. PHILLIPS: Yes, we know why.

The Minister of Labour pleads ignorance, Mr. Chairman. But

what does Mr. Swanson say? He says: "Dear Mr. Premier, in

accordance with your instructions at the last board of

directors meeting of the British Columbia Railway...." Was

not the Minister of Labour there as a director of the railway?

Do you mean to tell me that as a political director of the

railway the Minister of Labour didn't know there was a report

going on with regard to the all-important management of the

railway? Oh, how naive does the Minister think we are?

You know, Mr. Chairman, it is amusing to me. Yesterday

afternoon the Minister of Labour was like a steam engine that

had just been really shovelled full of coal — he was huffing and

puffing and blowing steam all over the Legislature. Today he is

like a steam engine that is coming in on the last mile of the

track and into the station.

MR. BENNETT: Out of coal.

MR. PHILLIPS: Out of coal, out of steam and there is no

pressure up. That is the same way with that whole government,

Mr. Chairman.

MR. CHABOT: No water in its boiler.

MR. PHILLIPS: That whole government is losing its steam

because they have gone off and they have burned up all their

coal. Now they are not only running out of coal, but they are

running out of money. That is the reason that not only the

railroad is short of money today, but that whole government is

broke, broke because of the wild, careless spending practices

of that government. We'll tell the people up in Cariboo.

I ask you once again, Mr. Minister. You were a director of

the British Columbia Railway — and don't try and hide under

public accounts. The chairman of the public accounts committee

will set you straight in just a moment. You were a director of

the British Columbia Railway, and you knew that this report was

asked for. I have asked you time and time again: how come this

report was tabled on the stationery of a private company and

signed by a director of the railway? Why was it not on company

stationery?

If you don't think that they were paid, all you have to do

is say yes or not. You know that there was discussion in a

board of directors meeting of that railway with regard to

payment of this account. You know full well, and you are

pleading ignorance. All you have to do is answer a simple yes

or no.

MR. CHAIRMAN: Would the Member please address the Chair?

MR. PHILLIPS: Was he or was he not paid for this report? You

know the discussion that went on in the board of directors

meeting.

MR. CHAIRMAN: Order, please. Would the Member please address

the Chair? It is normal procedure.

MR. PHILLIPS: Oh, I'm sorry, Mr. Chairman. I did neglect you

for a moment. I am terribly sorry.

Mr. Chairman, through you to the Minister of Labour: the Minister of Labour

knows full well that this controversial report was discussed in a board of directors

meeting which he was at. He knows that the payment of this report was discussed

in the board of directors meeting. All he has to do is stand on the floor of

this Legislature and give us an answer. And he can't hide behind that charade

of trying to get the legislation rushed through the House so we can cover all

this over in a sheet of motherhood so that we pay the bill, a bill that has

been on the order paper in this Legislature since February 28, 1975 — three

and a half months.

MR. BENNETT: They should have called it.

MR. PHILLIPS: I know why they didn't call it. The Premier

and president of that railroad, the man responsible for the

operation of the railway, didn't want to stay in this

Legislature while this debate was taking place, so he takes off

on a world tour at the taxpayers' expense. Talk about not

having enough money to pay the railway personnel! Maybe you

should divert some of the money that the Premier of this

province is using to tour the world at the taxpayers' expense.

Maybe you should have used some of the money that the Minister

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

used to buy — illegally used to buy — the Princess Marguerite

and acres in the harbour here in Victoria, to pay the railway

people.

MR. CHAIRMAN: Hon. Member, I'm trying to connect this with....

MR. PHILLIPS: Oh, no. We're not buying that, Mr. Minister of

Labour. We want some answers and we want them this afternoon.

Was there this Swanson report, yes or no? Was it paid for?

HON. MR. KING: Mr. Chairman, it would be very difficult to

rush everything through the Legislature in any undue haste with

that kind of strident Member in attendance. I'm sure that

nothing would be rushed through. I'm certainly aware that when

I....

[ Page 3611 ]

Interjections.

HON. MR. KING: Can the Member be silent long enough to hear

my answer, Mr. Chairman?

I'm quite aware that many reports on the railway were

requested after the new government took over. I indicated the

other day that there was a report regarding the engineering

standards on the railway. There was a report requested

regarding the safety factors on the railway with respect to

signal operations, with respect to the uniform code of

operating rules. There was also a report regarding the internal

management — the management organization on the railway. I

think that this is pretty normal. I think it would be a rather

irresponsible administration, in taking over a corporation of

that size, which did not undertake investigations to ascertain

the adequacy and the efficiency of the structures.

I can further inform the Member that in many respects some

of these investigations were undertaken after receiving

expressions of concern by people on the property. Certainly

that was true with respect to the safety factor. I had received

constant submissions and letters from the workers on the

railway expressing their concern over the adequacy of safety

provisions and, indeed, the report that was subsequently

commissioned by the chief rules instructor for the CNR and the

CPR made recommendations to improve the degree of safety in

operation.

Now what is so significant about making that kind of

assessment of the management organization on the railway? The

Member would have the House believe that there's something

untoward and something ominous about that kind of request. I

fail to see it. He can shout as loud as he wants, and he can be

as strident as he wishes, but it seems to me that that was the

responsible thing for the new administration to do.

As far as I know, there was no payment made to any member of

the board of directors, I've indicated to the Member, Mr.

Chairman, that....

Interjection.

HON. MR. KING: Mr. Chairman, one question at a time.

MR. CHAIRMAN: Order, please.

HON. MR. KING: I've indicated to the Member that as far as I

know there was no such payment. But we're debating a bill that

doesn't relate to the day-to-day operational matters on the

railway. If you want the kind of precise information, then you

would have to go to the president of the railway or the vice

president or through the public accounts committee.

Interjection.

HON. MR. KING: Well, you know, that's kind of an

irresponsible performance the Member put on. I remember shortly

after the election in 1972 the former Leader of the Opposition,

W.A.C. Bennett, who had been premier for 20 years, went on an

extended vacation and left South Okanagan without

representation.

Interjections.

MR. CHAIRMAN: Order, please!

HON. MR. KING: Mr. Chairman, I don't think we should get

into those kind of inane accusations...

MR. R.H. McCLELLAND (Langley): Let's not get into that.

HON. MR. KING: ...but if the Members want to indulge in it,

fine. But it's true that the Premier is on....

Interjection.

HON. MR. KING: Oh, what a tiresome Member that man is, Mr.

Chairman! What an utterly tiresome Member! You know, sometimes

I feel like taking him out and spanking him because he's such a

little nuisance at times. He gets up and gives long, wordy,

windy speeches asking for all kind of information and then sits

there and shouts like a banshee. I don't know what kind of

manners he learned at home, but perhaps he should be introduced

to some in this House.

Now the Premier is on government business on behalf of the

people of this province, and I accept that the opposition

Members dispute the right of this party to represent the people

of this province, but we were elected in democratic fashion.

The Premier is away on business out of the country. The former

Premier took similar trips. The former Premier even....

MR. PHILLIPS: Not when the session was on!

MR. CHAIRMAN: Order, please!

HON. MR. KING: Mr. Chairman, the former Premier took a

holiday while the session was on — when he was Leader of the

Opposition.

Interjections.

HON. MR. KING: In any event, Mr. Chairman, what kind of an

asinine debate to get into. We're dealing here with something

that's very important.

[ Page 3612 ]

I can only repeat again that the opposition has voted for

this bill in second reading. They've said: "Yes, we support the

principle." They canvassed every conceivable fact that was

raised in the reports that were tabled in the House, and

although they disputed some of those facts and chose to ignore

others, they voted in support of second reading of this bill.

They supported in principle the intent of this bill.

The bill is a one-liner: "Section 21 of the British Columbia

Railway Company Construction Loan Act is amended by striking

out $440 million and substituting $650 million." That's the

extent of the bill, Mr. Chairman. It doesn't pertain to the

operational practices of the railway.

The bill could have been presented earlier but it was

delayed, partially as a result of a request from the

opposition, until the financial report of the railway had been

brought down. True, that was delayed because other

investigations were underway. The House can't deny, Mr.

Chairman, that although some of these things were late, a more

accurate and a more total picture of the entire economic health

of the railway has been made available to Members.

In light of that, Mr. Chairman, I think it is simply

regrettable that Members continue to delay passage of this bill

when it means so much to the economic health of the citizens

that some of those Members even presume to represent. I suggest

there are ample devices for eliciting the precise information

they are asking for. They know how to accomplish that, and I

ask them to do the responsible thing and support third reading

of this bill.

MR. D.A. ANDERSON: The Minister quite properly said a moment

ago that the operational practices are not here for detailed

examination except as they refer, of course, to the need for

more money. But the operational costs are here for examination,

because it is not a bill — as was pointed out yesterday by the

Member for West Vancouver–Howe Sound (Mr. L.A. Williams) — only

for new construction. It is a bill to cover operating losses,

and this aspect, which was outlined at some length by the

Member yesterday, has simply not been answered by the Minister,

as far as I know, today and certainly not yesterday

evening.

The Minister did indicate that $10 million will be needed on

July 2, $10 million needed on July 15, and $15 million on

August 15, which is a total of $35 million in a six-week

period. Presumably these are to meet debts which have been

incurred and come due on those dates in that period.

Perhaps I could request that the Minister go back and break out this $210 million

for us in terms of how much is needed for operating deficits, whether it be

legitimately for higher wage costs, legitimately for higher fuel costs, legitimately

for any other higher interest rates or higher costs of that nature — as to how

much will be needed for the actual operation of the railway.

The vice-president of the railway has pointed out that funds

are needed to pay existing commitments, but he has also pointed

out that loadings are down. This is due not only to price

action, but to a general economic slowdown. I would like to

know whether or not we see at the present time, given that this

is June of 1975, increasing operating deficits as a result of

continuing freight car loading levels being down.

We really haven't had any report from the Minister on this

distinction between the money that is needed for actual

operation to meet deficits that are going to occur, and the

money that is needed for construction of extensions, however

wrongly or rightly they were analyzed when the decisions were

made to go ahead.

So can I ask the Minister at this time in committee, Mr.

Chairman, how much of the $210 million will be required between

now and the end of the year for operating deficits? I assume

$35 million of this comes off the top to pay for past debts for

operations, but maybe I am wrong. Maybe he can comment on that.

How much, however, will be needed for operational deficits, and

how much of the whole $210 million can be considered as a chunk

of money to be used for construction and extending the railroad

and turning it into something bigger than it presently is?

Having given me that information, perhaps the Minister would

request from his assistants what the operating deficit would

have been had freight car loadings and economic activity been

unchanged between 1974 and 1973. In other words, how much of

the extra deficit could be broken out in terms of the declining

economic activity of the railroad and how much of the deficit

was this business of fuel, interest rates, wages — in other

words, costs? How much was a loss on the revenue side? How much

was an increase in the cost side? That again is a breakdown

that is needed on the operational aspect of this particular

loan.

In

summary then, first, break the $210 million figure in

terms of the operating deficit to meet the actual operations of

the railroad and the construction part of it. Second, take the

operating chunk and break that down in terms of how much is a

result of extra costs and how much is the result of a loss of

revenue.

HON. MR. KING: Mr. Chairman, I think the Member can

appreciate that in terms of budgeting for the year's operation

it is a projection of anticipated cost. Naturally the

operational costs are going to relate in large part to what

happens to the economy. I'm informed there is an indication

that there is an upturn in housing south of the border, which,

of course, we are heavily dependent on in terms of our

[ Page 3613 ]

forest products export. Some 80 per cent, I believe, of

B.C.'s wood products are exported to the U.S. market. So if we

see an upsurge in terms of the domestic home-building market in

the U.S., then of course that could change the operating cost

picture dramatically in terms of the revenue loads that are

shipped and so on. Of course, as the volume increases,

additional operating costs are experienced too. But by and

large the profitability has had a pretty bad year in terms of a

depressed market, in terms of inflated interest costs and so

on. That's general all over the North America continent.

A good part of the funds are related to the northern

extension. It has been indicated to the House that those costs

are going to be a good deal beyond what was anticipated because

of inadequate engineering studies and surveys in the first

instance. What they may be is another question. The Member is

aware that there is litigation underway with respect to some of

those contracts on the northern extension. Perhaps that could

be a factor in the outcome there, We can't really speculate on

that.

The car plant at Squamish again, is getting underway. We

anticipate there will be quite a work force there. So it is

difficult in any precise way to break down what the

expenditures will be. I just gave an outline yesterday of the

financial needs by date deadlines. I'm afraid that's all I can

possibly do at the moment.

MR. D.A. ANDERSON: Mr. Chairman, I have no wish to suggest

the debate be adjourned, but when you vote $210 million and we

can only get a breakout of $35 million, which is meant, as I

understand it, to meet obligations which come due on certain

dates — July 2, July 15 and August 15.... We have no breakdown

other than that. When we have no breakdown as to whether or not

that $10 million on July 2 is for new construction or for

operation, no idea whether the $10 million on July 15 is for

new construction or for operation of the actual line, no idea

whether the $15 million is for new construction or the actual

operation, I would suggest that the Minister adjourn the debate

and come back with at least rough figures.

I fully appreciate that there are many imponderables: the

U.S. market, the price of lumber, whether the car factory at

Squamish works out, whether there are wage settlements, whether

the price of oil goes up. I know full well that there are lots

of imponderables, but that's why I asked the question of the

Minister. He is meant to answer; he is meant to know a little

more about this than I do. I am quite willing to have him give

me figures which perhaps I in my financial innocence would be

unable to concoct on my own. That's the purpose of asking the

question: to try and find out something.

There must be some sort of breakdown somewhere in BCR indicating how much of

the $210 million left over will be put to new construction. There must be some

breakdown somewhere in BCR as to how much of the $210 million is going to get

lost — totally lost — in meeting operating costs. There must be some indication

in BCR as to what revenue losses can be expected. These things just have to

be; otherwise the railroad is being run in a way which would indicate we should

not vote a penny to it. We should cut our losses and close it down and turn

it over to some other outfit — CN or CP. I don't recommend it, certainly not.

But certainly in this House we must be given some indication of how much of

the $210 million is going to go to construction and how much is going to go

to meet operating deficits.

I have looked at the information put forward, in particular

the information in the Swan Wooster report. It appears that we

are going to be met with another bill of this nature next year.

We're going to have to put up the borrowing of BCR next year,

from what I can gather. But naturally, if I get a better

indication from the Minister as to what will be needed for

operating losses, I will be better able to judge whether or not

this amount of money perhaps should go up another $100 million.

Who knows? Maybe it's necessary to raise it, because it

certainly will not meet cost obligations of the BCR as I

understand them from what has been tabled by the Minister with

respect to operations and with respect to new construction.

Mr. Chairman, I have taken another two or three minutes of

time debating and the Minister has had an advertising

conversation with some of the experts of the railway. Perhaps

at this stage he'll be able to answer the questions I asked a

few minutes ago.

HON. MR. KING: Mr. Chairman, the point in this House is not

just to answer questions but it's whether or not the Members

across the way accept the answers.

Now we have a board of directors on the railway and they

have, indeed, approved the budget for 1975. Normally, the House

then at the end of the fiscal year of the railway queries the

policies and the expenditures of the railway, which are set by

the board of directors. That's their purpose and their

function.

I could give some indications about the ballpark figures

that we see in terms of the northern extension, but I have some

trepidation about making that kind of guesstimate in terms of

construction costs. I indicated to the Member earlier that

there is litigation underway with respect to whether or not the

railway properly indicated to the contractors the amount of

work involved in placing their tenders. We have an indication

that the initial engineering surveys were based on improper and

inadequate engineering studies. I don't know whether there's a

relationship

[ Page 3614 ]

here, but there could well be, and I would be very hesitant

to start estimating the possible additional annual costs

involved there, when that could relate in some way to a

relationship between the contractor and the railway. I think

the Member understands what I mean. It's pretty difficult to

give those ballpark figures, but the railway through public

accounts will certainly be called upon next year to justify the

expenditures and the policies that they've made. At that time,

the House will be in a position to determine and to judge

whether or not additional and higher funding and borrowing

power should be invested in the railway.

MR. D.A. ANDERSON: I can appreciate that this will be before

the public accounts committee next year, and I can appreciate

that at that stage we will have a retroactive look at the

losses, as undoubtedly there will be losses on the railway

system. But we're asked in this bill not to do anything

retroactively; we're asked to increase the borrowing to take

care of future requirements. It's not, I think, wrong to

request some statement from the government, however tentative,

on future costing. Clearly you haven't got enough in this

increased borrowing to cover the extra cost of extension. It's

clear that you're going to have to ask for more money in the

future. That's fair enough, as you're only asking for one

year's supply for the construction, but there must be some

indication of the break of this $210 million between operating

revenue to meet operating deficits and revenue needed for

construction purposes.

There's just no way that the Minister doesn't have a

reasonable idea on this. He can hedge it around as much as he

likes depending upon the result of lawsuits, but please, Mr.

Minister, it's not good enough to ask for $210 million for two

very different purposes and to give us no indication of how

much goes in each direction.

HON. MR. KING: Mr. Chairman, I can only repeat that that's a

normal function of the board of directors. I don't think it was

ever anticipated that the House would play that role.

MR. D.A. ANDERSON: I get more and more confused, since the Minister

fails to answer each question in turn. It's not a question of the House playing

the role of the board of directors; it's a question of the House getting information

upon which they can determine whether the credit of the people of British Columbia

should be extended for straight office rating deficits or, indeed, extension

of this railway. There are a whole pile of imponderables. I recognize the Minister's

problem to give definitive figures, and let me have it clearly on the record

that I'm sure any reasonable Member of the House recognizes precisely the same

thing. There's no way you can give us definitive figures when there are so many

uncertainties in the future. But there must be some indication from the railway

as to how much they're going to need of this to meet operating deficits.

We appreciate the annual reports that come out, but when you

come for money to this House you should be giving us some

indication of the future. The annual report is fine. To look on

the operations in detail, as the Minister has rightly pointed

out, is what we should be doing in public accounts with the

people from BCR other than the directors. But when you come to

the House and ask for money in anticipation, you're going to

have to give some indication as to where it's going, because

you've asked for money in one bill for two totally separate

things. You've lumped them together, and you've not even given

us the most remote ballpark figure as to the breakdown. I would

venture to guess that the breakdown may be somewhat more than

$50 million to meet operating losses, and I would like to know

whether that guess of $50 million, approximating $1 million a

week of losses on BCR, is accurate. Perhaps the Minister could

comment, if that is the only way we can get any discussion

going on how much of this $210 million is for losses.

HON. MR. KING: Mr. Chairman, that is the kind of thing on

which I am not prepared to speculate. What the cost and losses

are can only be revealed after the fact. That is the normal

custom of the House in terms of revealing what the performance

was in public accounts. I think it is a matter of record that

under the previous administration, in arranging financing for

the railway, no itemized budget was ever presented to the House

in terms of what they proposed the expenditures would be on. I

fail to see where it would benefit the Member in any great

degree, in terms of his determining whether or not to support

the bill, if I told him that 60 per cent of the money was going

to be used for operational costs and the remaining 40 per cent

for construction. I don't know how that would help him — or

vice versa, for that matter. I am simply using those figures as

an example. I can only say that, really, the appropria