November 19, 1981 ALBERTA HANSARD 1717 LEGISLATIVE ASSEMBLY OF ALBERTA Title: Thursday, November 19, 1981 2:30 p.m. [The House met at 2:30 p.m.] PRAYERS [Mr. Speaker in the Chair] head: INTRODUCTION OF BILLS Bill 100 Chartered Accountants Amendment Act, 1981 MR. HYNDMAN: Mr. Speaker, I ask leave to introduce Bill No. 100, the Chartered Accountants Amendment Act, 1981. The purpose of this short Bill is to clarify the existing authority of the Institute of Chartered Accountants of Alberta to effectively conduct mandatory practice reviews of the work of its members.

The Bill does not change the existing situation respecting fields of practice of the various accounting bodies of the province of Alberta. [Motion carried; Bill 100 read a first time] head: INTRODUCTION OF SPECIAL GUESTS MR. STROMBERG: Mr. Speaker, I would like to take this opportunity to introduce to you 36 students from the Edberg school, located in the Camrose constituency. They are represented by grades 7, 8, and 9, and their teachers Mr. Rowswell and Mr. MacKenzie. In discus­ sions with the students, they informed me that they hope to come here again next year and be able to drive on pavement on the new 956.

They are seated in the visitors gallery, and I ask them to rise and be recognized by this Assembly. MR. ISLEY: Mr. Speaker, it's my pleasure today to introduce to you, and through you to the members of the House, a group of distinguished gentlemen from the municipal district of Bonnyville. With us today, and not mentioning any roads, are reeve Stanley Baik from the MD of Bonnyville, councillor George Hutskal, who also serves on the provincial agricultural development board, councillor Don Sinclair, councillor Nick Kalinsky, munic­ ipal administrator Roy Doonanco, and assistant adminis­ trator Ray Compo.

They are seated in the members gal­ lery, and I ask that they rise and receive the welcome of the House. MR. L. CLARK: Mr. Speaker, it's a real pleasure for me today to introduce to you, and through you to this Assembly, a group of 35 grade 9 students from Samuel Crowther high school in Strathmore. Strathmore, in the heart of the Big Country, is the fastest growing area in the Drumheller constituency, and one of the fastest grow­ ing in the province. They are accompanied by their group leader Mr. William Murray, Mrs. Shirley Aschenbrenner, and Kathy Fullerton.

Kathy, I might add, is a new teacher who has just come to Alberta from Ontario to make her home here. I ask them to rise now and receive the welcome of the House. MR. BRADLEY: Well, Mr. Speaker, on the third try perhaps I'll be successful. It's a distinct pleasure today for me to introduce to members of the Assembly some visi­ tors from the constituency of Pincher Creek-Crowsnest who are visiting the Alberta Association of Municipal Districts and Counties meeting in Edmonton. They are the reeve of the municipality Mr. Hilton Pharis, council­ lor Tom Ferguson, councillor Joyce McFarland, and her husband Ken.

I ask them to rise and receive the welcome of the members of the Assembly. head: ORAL QUESTION PERIOD Constitution — Aboriginal Rights MR. R. SPEAKER: Mr. Speaker, my question is to the Premier. It is with regard to the process the Alberta government will use in dealing with aboriginal and treaty rights of the Indian, Inuit, and Metis people. Could the Premier indicate at this time what steps are going to be put in place so full consultation and discussion can take place between now and the proposed constitutional con­ ference next year with regard to this matter? MR. LOUGHEED: Mr.

Speaker, we're in the process of having some discussions with representatives of the Metis Association of Alberta and, tomorrow, with the Metis Settlements. We would welcome discussions with other native groups. The process is to attempt to consider the provisions discussed within a newly revised Canadian constitution, to clarify and understand the nature of the requests and, at the same time, to identify what's involved pursuant to the answers I've previously given in this Legislature.

Perhaps while I'm on my feet, for filing with the legisla­ tive office and hence for the availability of the members of the Legislature, I could table two copies of the notice of motion given by the Minister of Justice yesterday in the federal House of Commons with regard to this revised constitution. MR. R. SPEAKER: Mr. Speaker, a supplementary ques­ tion to the Premier with regard to financial support for the discussions and representations, specifically by the Metis people, because they are the responsibility of the province.

Has any consideration been given toward financial assistance in that area to assure that full discus­ sion goes on and that a financial barrier doesn't prevent those discussions? Is the government considering some financial help? MR. LOUGHEED: Yes, Mr. Speaker. Previously, on Monday of this week, we gave that financial undertaking. We may not be able to come to an understanding, although I'm encouraged by the nature of the discussions. We have made it absolutely clear that the discussions should not in any way be subject to any financial limita­ tions the Metis Association of Alberta may have. As the hon.

Leader of the Opposition quite correctly put it, under our constitution, the basic responsibility for treaty Indians lies with the federal government. But with regard to the Metis people within this province, there's a clear responsibility on the government of Alberta.

1718 ALBERTA HANSARD November 19, 1981 MR. R. SPEAKER: Mr. Speaker, a final supplementary question in this area with regard to the Alberta govern­ ment's position on aboriginal rights. Will the government be putting together an in-house type of task force? What will the structure of the body be that will try to define aboriginal rights from a provincial point of view? MR. LOUGHEED: Mr.

Speaker, at this stage, there has been a task force involving the Attorney General and representatives from his department, the Minister respon­ sible for Native Affairs, the caucus committee chairman, the MLA from Edmonton Mill Woods, and solicitors from the Department of the Attorney General. That has formed the task force that has been working during the course of this week. I may be able to expand upon that further, depending upon developments, during the course of the question period tomorrow. Rights of Disabled Persons MR. R. SPEAKER: Mr.

Speaker, the other question area I wish to cover today is with regard to some of the frustrations of handicapped Albertans. I would like to direct these questions as well to the Premier. I understand there was a request to the Premier from some disabled groups to appoint an independent task force to study the issues of concern of disabled persons. I wonder if the Premier has considered that matter and is prepared to respond. MR. LOUGHEED: Mr. Speaker, I'd have to refer that question to the Minister of Social Services and Commu­ nity Health. MR. BOGLE: Mr.

Speaker, on October 22, I believe, a letter was received in the Premier's office from four groups representing disabled Albertans which requested a task force and made a number of other points. Because of the complexities of the letter and the other departments involved in terms of responding to its contents, the letter has not yet been responded to. But I might mention that that should be done within the next week to 10 days. MR. R. SPEAKER: A further question to the minister, Mr. Speaker. One concern of the groups was the com­ munication with government, a government cabinet committee or beyond the minister.

Has any consideration been given to re-establishing the joint MLA/handicapped committee to look at various concerns and problems, so there is a communication system between the Legislature and handicapped groups in the province? MR. BOGLE: Mr. Speaker, the hon. leader is referring to another piece of correspondence by the Alberta Action Groups for the Disabled, who have requested the re- establishment of the old MLA task force committee. A response recently went to that organization advising them that that would not be done.

The process we encourage all groups to follow is to meet with members of the various opposition parties in this Assembly from time to time and with the government caucus, in this particular case the caucus committee on health and social services, which is very ably chaired by the Member for Calgary North West. MR. R. SPEAKER. Mr. Speaker, a supplementary ques­ tion to the minister. One of the requests in that letter of October 28 was to meet with the Premier and the cabinet of the province.

Is the minister, on behalf of those consumer groups, arranging that meeting so that com­ munication can be brought forward to the government? MR. BOGLE: Mr. Speaker, in the response I forwarded to the president of the organization, I indicated that I would certainly be prepared to meet with the organiza­ tion, as I have in the past. MR. R. SPEAKER: Mr. Speaker, the request was to have a meeting prior to November 30 with the Premier and the cabinet. Is the minister saying that the meeting will be with the minister only, or will it take into consid­ eration a meeting with the Premier and other members of cabinet?

MR. BOGLE: Mr. Speaker, no specific request has been made by the group in terms of other ministers they might like to meet with. It would not be practical to expect the Premier to be involved in such a meeting on that kind of notice. Certainly we would want to ensure that (

a) there's a recognition that the caucus committee route is open to all provincial organizations within this province, and we encourage groups to use that route, and (

b) when organi­ zations have a request to meet with specific ministers — and in this particular case, meetings in the past have involved my colleague the Minister of Labour, as well as the Minister of Education, on one occasion I believe, because of the nature of the agenda to be discussed — once we receive the agenda proposed by the Action Groups for the Disabled, we'll better be able to assess which ministers and MLAs should be involved in such a meeting. MR. R. SPEAKER: Mr. Speaker, a supplementary ques­ tion.

Could the minister take on a commitment that the meeting will be arranged prior to mid-December of this year and not held over until early 1982? MR. BOGLE: Mr. Speaker, I certainly will commit that once a specific request is made with a proposed agenda, it will be responded to immediately. Tax Incentives for Farmers MR. MANDEVILLE: Mr. Chairman, my question to the hon. Minister of Agriculture is with regard to changes made in the capital gains tax when the federal budget came down.

Has the minister had any representation from farm groups with regard to the capital gains, where now they can't spread their payments over a number of years? I'm thinking of farmers especially. MR. SCHMIDT: No, Mr. Speaker. MR. MANDEVILLE: A supplementary question, Mr. Speaker. This capital gains is going to create a serious problem with fathers selling to their sons. Will the minis­ ter be meeting with officials of ADC to see if anything can be worked out in this area, as far as spreading the capital gains over a number of years? MR. SCHMIDT: Mr.

Speaker, we've made a request for documentation so we may have the opportunity to study how the implications would affect the future land transac­ tions between father and son.

November 19, 1981 ALBERTA HANSARD 1719 MR. MANDEVILLE: A supplementary question, Mr. Speaker. Since he brought the budget down, the federal Minister of Finance has had some small concessions each day. Would the minister consider meeting with the federal Minister of Finance and impressing upon him how seriously this is going to affect our farmers as a result of not being able to spread capital gains over a period of years? I'm thinking of a father selling a farm to his sons or to the family. MR. SCHMIDT: Mr.

Speaker, I'm sure that comments in regard to the budget as it would affect Albertans, including those in the agricultural industry, would be better transmitted by the Provincial Treasurer to his fed­ eral counterpart. MRS. OSTERMAN: A supplementary, Mr. Speaker. I ask that the minister please make that same appeal on behalf of mothers who may want to transact land deal­ ings with their daughters. MR. MANDEVILLE: A supplementary question to the hon. Provincial Treasurer.

Is it the intent of the Provin­ cial Treasurer to make a request to the federal Minister of Finance with regard to the capital gains situation faced by farmers across Canada, especially in Alberta? MR. HYNDMAN: Yes, it is, Mr. Speaker. As hon. members know, next Monday and Tuesday there will be a meeting of the 11 ministers of finance and provincial treasurers in Halifax.

At that time, I intend to make representations to the Minister of Finance with respect to that item, and other items as well which relate to the removal or reduction of tax incentives which would ad­ versely affect the investment climate in Alberta. Home Mortgage Corporation Loans MR. R. SPEAKER: MR. Speaker, my question is to the Minister of Housing and Public Works. I have that correct today. I've been informed that applications under the Alberta Home Mortgage plan are piling up in Calgary and processing is delayed because of a lack of staff and personnel to deal with them.

I wonder if the minister could confirm that and indicate what steps are being taken to eliminate the backlog. MR. CHAMBERS: Mr. Speaker, I think the Leader of the Opposition should check with the Member for Olds- Didsbury, who asked me that very same question yester­ day, but I don't mind repeating it. There has been a backlog. The Home Mortgage Corporation is operating with a very efficient staff. We've faced a very unusual year, you know. We're looking at either financing or building over 24,000 housing units in this province.

Be­ cause of the high interest situation created by the federal government, we've been in the position of suddenly hav­ ing to provide that extra service. I suppose the alternative is to double the staff of the Home Mortgage Corporation, but I don't think that's responsible. I think the staff of the mortgage corporation are doing an excellent job. We've looked at every possible way to speed up processing, and it is happening. The time required to process an applica­ tion has been reduced appreciably since last spring. I'm quite pleased with the progress.

I'm hopeful that interest rates will come down, and we'll have the private sector back in in a major way next year. I don't think it would be responsible to increase in a dramatic way the size of the Home Mortgage Corporation at this time when we're hopeful that the private sector will be back in. MR. ZAOZIRNY: Mr. Speaker, a supplementary to the minister.

Quite apart from speeding up the processing of applications for loans, can the minister advise what steps are being taken to try to speed up the actual disbursement of funds from the time all the security documentation is in place and the request for funds is made, given that it's presently taking upwards of six weeks to actually get the mortgage funded,

whereas with commercial lenders you're looking at approximately seven days and the net result is an interest cost to home purchasers? Are some steps being taken to try to speed up the actual funding of the loan from the time the security is all in place and the lawyers have completed their work? MR. CHAMBERS: Mr. Speaker, we're looking at that area and every area where we can improve efficiency. Again — and I've spent quite a bit of time on this subject — considering the tremendous volume of applications, we have made marked improvements in the time.

I would also point out, as I did to the Member for Olds-Didsbury yesterday, that we're talking about public funds and very large subsidies involved. I think it's natural that it's going to take a little longer to process applications than perhaps it would take in a normal private-sector mortgage. MR. R. SPEAKER: Mr. Speaker, a supplementary ques­ tion to the minister. I understand this question on the subject was not asked.

Has any consideration been given to transferring staff from the Edmonton office to the Calgary office on a short-term basis to pick up the backlog or, in turn, bringing some applications to the Edmonton offices, which I understand are not under the same pressure as the Calgary offices, to get the work up to date? MR. CHAMBERS: Yes, Mr. Speaker, that's one alterna­ tive we're looking at. In fact, we're considering a number of areas and have made considerable progress. We're certainly aware of the problem.

I can assure members that the process will be speeded up, recognizing the very large volume of applications in Calgary. MR. GOGO: Mr. Speaker, a supplementary to the hon. minister for clarification, with regard to the time it takes. Could the minister confirm to the House that one reason it takes longer for the Alberta Home Mortgage Corpora­ tion to process mortgages compared to the private sector is that in 90 or 95 per cent of all applications a subsidy is involved in the mortgage and, as a result, it takes addi­ tional time? MR.

SPEAKER: The hon. member has made a represen­ tation which I'm sure the minister has duly noted. The hon. Minister of Housing and Public Works would like to deal further with a topic dealt with previously in another question period. Rental Investment Incentive Plan MR. CHAMBERS: Mr. Speaker, in response to a ques­ tion from the Member for Bow Valley yesterday with regard to the Alberta rental investment incentive pro­ gram, as to the number of units. I've checked that out. The total units processed to the end of October this year are 7,900 that have benefited from the plan.

1720 ALBERTA HANSARD November 19, 1981 Cattle Industry MR. R. SPEAKER: Mr. Speaker, I have a question for the Minister of Agriculture. It's with regard to the pro­ gress being made on a support policy or stop-loss pro­ gram for the cattle feeders and cow-calf operators in the province. I wonder if the minister could bring us up to date as to whether there will be an announcement shortly. I understand before the end of the year . . . Are enough details in place so that a more specific date can be announced today, or can any further details be given to the Legislature? MR. SCHMIDT: Mr.

Speaker, I think we have stated both within and outside the Legislature that we are now in a position to complete the total review of the informa­ tion before us. We had promised to make an announce­ ment in regard to whatever direction and the findings of those reviews by the end of the year. We'll be able to meet that deadline. ORDERS OF THE DAY MR. HORSMAN: Mr. Speaker, I move that Question 148 and Motion for a Return 147 stand and retain their places on the Order Paper. [Motion carried] MR. SPEAKER: With regard to Question No. 148, I might say that I'm somewhat concerned about its length.

To save space and printing on the Order Paper, perhaps it could be shortened, because it's the same question with regard to a series of years. All we would need is one statement of the question, then list the number of years. head: WRITTEN QUESTIONS 141. Mr. Sindlinger asked the government the following question:

(1) What were the Alberta Heritage Trust Fund securi­ ties that were sold over the last three years at a net loss of $60,282,000;

(2) What was the date of purchase and the date of sale of each of these securities;

(3) What was the purchase and sale price of each of these securities;

(4) What was the interest rate and maturity date of each of these securities;

(5) If other securities were acquired as a specific re­ placement for those sold, what were they, when were they purchased, what is their interest rate, when do they mature, and what price was paid for each? MR. HYNDMAN: Mr. Speaker, in the view of the government, this is not an appropriate question and would not be acceptable because it asks for detailed, specific, buy/sell transactions. We've already had a de­ bate in this Assembly, when the heritage fund Act was debated, with respect to the degree of detail that would be provided.

Hon. members will recall that in 1976 when that debate took place a number of amendments were considered and made. They provided that there would be a list of securities under

Section 6 of the Act, and there would be a

summary by types under

Section 9 of the Act. There was no suggestion and the Act does not relate to any detailed or specific buy/sell transactions. In the past, I've explained that we're not really looking at what should be described as losses here. The implica­ tion in the question relates to something that is a loss. There was a sales loss of about $60 million over three years balanced against a net profit of over $1.5 billion over that three-year time. I think it should be pointed out that every well-managed bond portfolio has properly made some of their loss decisions over the past three years with a volatile market.

The whole procedure and all the background with respect to realized and unrealized losses was contained in the documents I tabled before the select committee on the heritage fund. As well, I think the impression in the question that there is some cause and effect relationship between the recommendations of the Attorney General with regard to the records and the so-called $60 million sales loss should be cleared up. Of course, the Auditor General makes it very clear that there is no cause and effect relationship at all. Mr. Speaker, essentially what we're looking at here is a measurement of performance.

I think that's what the hon. member is looking for in asking the question. Of course with respect to this or any similar kind of fund, a measurement of performance is not made by reviewing individual transactions on a buy/sell basis but rather looking at such things as the yield over a span of time, the rate of return, the market values, the terms to maturi­ ty of the securities, or the list of holdings on a specific date. The key information of that kind has been provided in various reports and supplementary information which I made available to the committee.

So I urge the Assembly and suggest that the question should not be answered; it's not appropriate. MR. SINDLINGER: Mr. Speaker, I believe the docu­ ment to which the Provincial Treasurer has just referred is the one I have in my hand. It's from the Provincial Treasurer to Dr. Ian Reid, MLA, chairman of the select standing committee on the Alberta Heritage Savings Trust Fund, dated September 11, 1981. It contains various items of information for the committee, one of which deals with this particular question; that is, realized losses on sales of investments.

Actually it's just a general discussion of the subject and doesn't deal specifically with the question asked here on the Order Paper. In regard to providing details of this nature, I think this document provides a precedent for providing such information to the Legislative Assembly. Indeed.

Section 5 of this — the pages aren't numbered — gives a list of

Section 9 securities held by the trust fund as at March 31, '81. It goes through a great deal of detail in regard to government of Canada bonds, direct and guaranteed, the coupon rate, the average yield to maturity, the maturity date, the par value, and the amortized cost. It goes on for five pages, in which are listed various types of instru­ ments, including promissory notes, banker's acceptances, guaranteed investment certificates, et cetera, as well as giving the names of institutes or agencies which issued them — Scotia Mortgage Corporation. National Bank. Crown Trust, Alberta Gas Trunk. Barclay's Bank.

Royal Bank, et cetera. Mr. Speaker, if the Provincial Treasurer can see his way clear to giving us the

Section 9 securities holding on a particular date, it seems it would follow that the Provincial Treasurer could also identify these other par­ ticular instruments on which a loss of $60 million was

November 19, 1981 ALBERTA HANSARD 1721 incurred. This particular information, which is randomly selected, is really of no value unless it can be measured against something else. The problem we have in assessing the net loss on the sale of marketable securities is that we don't know what they were. What the Provincial Treasurer is saying may be true, that they were sold at a loss in this instance so they could gain more over here.

Nevertheless, until we are told specifically what those sales and acquisitions were, there's no way the watchdog committee on the heritage fund can really assess those things and determine whether or not what the Provincial Treasurer has said is true. MR. R. SPEAKER: Mr. Speaker, I'd also like to speak in favor of this question. MR. SPEAKER: May I just intervene. We're not dealing with a motion; we're dealing with a question. However, the hon. Provincial Treasurer has in effect opened debate on the topic by giving reasons for not answering the question. He doesn't have to give reasons.

He can just refuse to answer it. Having given those reasons, it would seem to me that, in fairness, other members ought to be permitted to enter the debate. But of course the debate can't lead to a vote because there's no motion before the House. As all members know, the only vehicle for debate and a vote is a motion. MR. R. SPEAKER: Mr. Speaker, my . . . MR. MUSGREAVE: On a point of order, Mr. Speaker. Rather than engage in debate, perhaps we should have a motion on the floor so that we are debating legitimately. MR. SPEAKER: We'd also have to unanimously waive notice. MR. MUSGREAVE: Mr.

Speaker, that would be available. MR. SPEAKER: Someone would have to frame a mo­ tion. The government doesn't have to give reasons for not answering a question. If a motion is going to be moved that says, don't answer it, it seems to be a little redundant. MR. HORSMAN: On a point of order, Mr. Speaker. Standing Order No. 33 might be one way of dealing with the matter before the Assembly in order to permit a debate.

If in your opinion, a question on the Order Paper put to a minister of the Crown is of such a nature as to require a lengthy reply, he [meaning you] may, upon the request of the Government, direct the same to stand as notice of motion and to be transferred to its proper place . . . upon the Order Paper, the Clerk of the Assembly being authorized to amend the same as to matters of form. MR. SPEAKER: I agree there's no question. But I had no request from the government to do this. In addition, we have already had debate on the question.

Were we to transfer to the Order Paper under Motions Other Than Government Motions, it would go to the bottom of the list. Unless the session lasts longer than it may, some members will have had their say and other members won't get it. MR. R. SPEAKER: Mr. Speaker, speaking to the forum that is before me, I'll comment on one area of the Provincial Treasurer's remarks in terms of reconsidering whether the question be answered or not, the comment with regard to not accountable for the buy/sell activities in this Legislature.

As a member of the Legislature and of the watchdog committee, I can only make the point that in order to really decide whether the activities in terms of the investments of the Heritage Savings Trust Fund were well carried out, were made in a proper fashion, that the concern of the Auditor General in the management letter directed to the Provincial Treasurer that talks about con­ siderable scope for fraud or possibly collusion, where it discusses that type of thing — the only way we can satisfy ourselves in the end result is to have specific kinds of information on a specific topic.

The question raised here is specific, asking specific types of questions with regard to the buy/sell activities and other items identifying transactions that occurred. Mr. Speaker, the only way we can make a judgment is to have that kind of information. I'd certainly like the government to reconsider it on that basis. MR. NOTLEY: Mr. Speaker, with respect to question 141, I would urge the government to reconsider the posi­ tion they've taken on it.

The more we can move from the general to the specific — it's well and fine for the Provin­ cial Treasurer to stand and say one has to judge this on the basis of the overall performance, $1.5 billion profits against $60 million lost. But that doesn't answer the question of what happened to the $60 million. I think the hon. Member for Calgary Buffalo is absolutely correct. We are not in a position to make any kind of judgment on that $60 million loss unless we know precisely what the securities were which were sold and what was done with the money in terms of purchasing other securities.

We've had comments in this Assembly about the work of the people in the department, both their integrity and their competence being impugned. In my judgment, that has certainly not been the case. But in terms of knowing for sure on this important question, we must move from the general to the specific. That is essentially what the hon. Member for Calgary Buffalo is questioning. I don't think there's any doubt that this information would be in the public interest. In my view, Mr. Speaker, there's no doubt that it would clear up this issue once and for all.

Then it wouldn't just become the realm of political de­ bate. We would know specifically what the securities were; we would know the day they were sold; we would know what was purchased in their place. Just going back to the comments by the Auditor General, the Auditor General has indicated that he has reviewed, I believe, 78 per cent of these investments. That's fair enough. I certainly appreciate the comments that gentleman has made.

But the more assurance and details we have on the specifics — and not 78 per cent, but 100 per cent — the better we are able to clear up this matter to the satisfaction of Albertans, whose money it is and whose loss it is as well. Mr. Speaker, I would say that the government would be well advised — some detail, no question; no small inconvenience; no small difficulty, no doubt, in obtaining this information.

But if the government is serious about cleaning and clearing up any misunderstanding over this matter, then the way to deal with it is to honor the request and move from the general debate we've had for the last while to the specific information which is being

1722 ALBERTA HANSARD November 19, 1981 requested. That information, once tabled, would deal with the question once and for all. MR. MUSGREAVE: Mr. Speaker, during the delibera­ tions of the Heritage Savings Trust Fund committee, it was made very clear how this particular loss arose; that was simply because some bonds had been purchased at around $100 each and, because of the disastrous situation that developed in the interest rate market, particularly in the western world, a year later they're worth about $88 apiece.

As the market situation deteriorated even further, they were worth about $50, or roughly half of what was paid for them. This has been made very clear to members on many, many occasions. But we still hear talk about loss and unexplained loss. We should be telling the people of Alberta that investments were made that, in light of circumstances that developed later, weren't the wisest in­ vestments. But we're not alone. People throughout the world have done this. What we are doing, though, and what the hon.

Member for Calgary Buffalo is doing, and what I challenged him on in the committee, is that maybe there has been theft, fraud, or misappropriation. Mr. Speaker, the Auditor General made it very clear that his department had spent more than a normal amount of time auditing the heritage fund, for the simple reason that it was so important to the people of Alberta, and that he had found no evidence of fraud. Certainly he made suggestions that could improve the system within the heritage trust fund and the management of the fund.

But he made it very clear that there was no fraud, no evidence of anybody stealing any money. Yet we have the hon. Member for Spirit River- Fairview saying we have to tell the people that no money was stolen. There was no money stolen. It was a bad investment, and that's it simply; a bad investment only because of the disastrous situation in the money markets throughout the western world. Anybody who would take the time to read any newspaper or any

article on it would know what has happened. To suggest that we are trying to hide from the people of Alberta is preposterous. That's the kindest word I can use, Mr. Speaker. It's absolutely preposterous. MR. SINDLINGER: On a point of order, please. I'd like to correct an inaccuracy just indicated by the Member for Calgary McKnight, and that is that I have said from time to time that there is theft or fraud. I made it very clear to the member in committee what I've said, and I've said it time and time again. I have never said I think there is theft or fraud.

All I've ever said is that the Auditor General has written that there is considerable scope for collusion, and I repeat that again. Until the other mem­ bers, particularly this member, come up with evidence to the contrary, I think he protests too much. MR. MUSGREAVE: Mr. Speaker, on the point of order. The implication to the public is that there has been a loss. The man on the street thinks a loss means something has been stolen. MR. SPEAKER: As hon. members know, a disagree­ ment between hon. members as to facts doesn't give rise to a point of order.

I respectfully suggest that with some remarks that apparently are about to be made by the hon. Member for Edson, we might conclude this somewhat irregular debate. DR. REID: Mr. Speaker, rising on the irregular debate we are having on a question, I'd like to clarify some things that have come up from remarks made by other members about the occurrences on hearings and discus­ sions in the select standing committee on the Alberta Heritage Savings Trust Fund Act this summer and fall. First of all, the hon.

Member for Calgary Buffalo is specifically asking about certain investments because a loss of some $60 million was incurred over three years, approximately $40 million of that during the year that was under review by the standing committee. During that same year, there was an investment profit or income to the fund of some $750 million. During the three years he mentions, there is an investment income exceeding $1.3 billion.

Surely if one is going to investigate the invest­ ments by the investment committee handling the Alberta Heritage Savings Trust Fund on behalf of Albertans, one has to look at both sides of the ledger, losses and profits. I'm not an investment expert or an economist, but at least I ask for advice from experts. I have spoken to people in the Investment Dealers' Association and in that industry. It is amply obvious to anybody in that industry that if they get all the details of investments performed on behalf of Albertans, it would be very easy to detect the investment strategy used.

I've been told by members of the Investment Dealers' Association that that quite easily could cost the fund 2 per cent in the income to the fund from its investments. As government or as members of this Legislature, we have the responsibility to act as trustees for Albertans, investing Albertans' money. In that process, we have to take some responsibility and look after the interests of those Albertans in the best way possible.

To my mind, it is not in the best interest of Albertans to release to the investment community the strategy behind the investment of those funds and thereby potentially penalizing Alber­ tans to the extent of some 2 per cent interest. [interjec­ tion] For the benefit of the hon. Leader of the Opposi­ tion, I'm discussing the total strategy, including income and the profits as well as losses. One cannot look at one side without looking at the other. The other point I'd like to clarify is that in his remarks, the Member for Calgary Buffalo seemed to indicate he had obtained another document.

The document he read from is from the Provincial Treasurer to me and to the members of the standing committee, and was passed on to all members of the standing committee. That docu­ ment listed the one-day window promised in this Legisla­ ture by previous legislators during discussions on the Alberta Heritage Savings Trust Fund Act when it was brought to the Legislative Assembly.

I would further like to clarify a partially abbreviated quotation from the Auditor General's remarks in front of the standing committee: Our tests were to the extent of 78 per cent of those losses, for instance, which means that every transac­ tion was compared with market of that particular day. In most cases, the bonds were sold for higher than market. If anybody is indulging in collusion, the word mentioned by the Member for Calgary Buffalo, I doubt if they would be selling anything above the market on the basis of collusion.

These losses that have been mentioned in this irregular debate on a question are the ordinary losses suffered when one sells fixed rate bonds at a time of increasing interest rates. One has the option of retaining those bonds and having the value decrease, or of getting out of that

November 19, 1981 ALBERTA HANSARD 1723 investment and into a more profitable one. It would appear that decision was made in view of increasing interest rates and the decreasing value of the bonds. It was a good investment decision, as the other ones have been. 144. Mr. R. Speaker asked the government the following question: Were copies of the publications "Energy Issues for the People of Alberta" or "Constitutional Issues for the Peo­ ple of Alberta" distributed to provincial governments.

Alberta municipalities, or any other organizations and, if so, did the province receive any compensation for the provision of such copies? MR. McCRAE: Mr. Speaker, I would like to accept question 144 and file a response thereto: head: MOTIONS OTHER THAN GOVERNMENT MOTIONS 222. Moved by Mr. Notley:

Be it resolved that the Assembly urge the government of the province of Alberta to implement immediately a pro­ gram designed to proffer to Alberta's beef producers, including cattle producers and cow-calf operators, a one- time-only payment of $40 per head for all calves, cows, and cattle sold in calendar year 1980, and that such program be modelled on the proposals of the Alberta Cattle Commission. MR. NOTLEY: Mr. Speaker, in leading off debate on Motion 222, I'd like to take a moment to outline for hon. members some of the other programs available elsewhere in the country for cattle producers.

I raise that because one of the reasons I think we have to move forward with some kind of assistance to cattle producers in this prov­ ince is the competitive position of Alberta cattle produc­ ers compared to producers elsewhere in the country. We've seen that programs have been introduced else­ where in Canada. The Saskatchewan beef stabilization program commences January 1, 1982. The qualifications are based on a minimum of 10 cows. The maximum herd size would be 200 cattle. Any beef producer can enrol up to 90 per cent of his herd within the above qualifications.

The program is organized through what's called a beef stabilization board. The board is the actual seller. It administers the plan under the Act. It's composed of six farmers nominated by various farm groups and appointed by the minister. I think it's important to underline, Mr. Speaker, that the people on the board are nominated by farm organizations in the province of Saskatchewan and then appointed.

The benefits to the farmers: for all cattle sold that were enrolled under the program, the farmer receives from the beef stabilization fund 100 per cent of the cash costs involved in bringing the cattle to slaughter weight, including feed costs, and 55 per cent of the non-cash costs. For the information of members, that would include depreciation on machinery, replacement of stock, interest on investment in barns, et cetera, amor­ tized over the whole herd. There is a cost to the farmers because it's a voluntary stabilization program.

For every animal sold under the terms of the program, the farmer pays into the beef stabilization fund 4 per cent of the price received for the animal. That's matched by an equal 4 per cent from the government of Saskatchewan. The position of the Saskatchewan government is appropriate, and that is that this plan is going to stay in place until a national program comes into effect. We have programs in other jurisdictions as well. As members are probably well aware, for every head of fat cattle sold in the province of Ontario, the farmer receives a flat $40 from the provincial government.

For every feeder sold, the farmer receives a flat $20 from the provincial government. Mr. Speaker, we have plans in other provinces too that I should just note in passing before welcoming debate from other members of the House this afternoon. In the province of British Columbia, we have the income assurance program that was brought in in 1974 by the New Democratic government of that province. Basi­ cally, when the price received per head falls below the cost of production, the farmer receives the difference from the program.

I might just mention that not too long ago, I was at a meeting in Spirit River sponsored by the Alberta Cattle Commission. Several producers were over from the B.C. side of the border. The startling difference in the proceeds to the producer under the B.C. plan compared to the situation in Alberta was rather graphically drawn to the attention of farmers attending that meeting. I might also point out, Mr. Speaker, that notwithstanding the change of government that occurred in 1975, the income as­ surance program for beef producers has been continued by the Bennett government in British Columbia. Mr.

Speaker, I should make this observation. In this House in 1975, when we discussed assistance to cow-calf producers — at that time, the request was for $40 per head — I recall that many people said, well, it's fine for B.C. to bring in a program because British Columbia represents a very small part of the cattle market. That's true. On the other hand, B.C. represents a much larger

section of other types of agricultural produce, including fruit-growing, that come under the B.C. income assurance program for agriculture. So, while B.C. has a small part of the cattle production of this country, it's somewhat larger in other areas. The income assurance program has been extended to those other areas. Simply because we have a larger percentage of the overall production in the country, in my judgment, does not justify inaction on the part of the government here.

The province of Quebec has a host of specific pro­ grams, ranging from government assistance for the capi­ tal costs of setting up a feeder operation to actual stabili­ zation programs for slaughter of cattle.

While money loaned from the heritage trust fund to the province of Quebec is for Hydro-Quebec, nevertheless it seems rather strange that we're loaning money to that province at interest rates as low as 11 per cent so the money which would otherwise have to be borrowed to finance their hydro schemes can come from Alberta, yet they can come in with a program of assistance for farmers and as yet we have not moved in that direction. Manitoba had a stabilization program. It was cancelled two years ago. Perhaps that might have had something to do with the results several days ago. But, Mr.

Speaker, I don't want to be unduly provocative in my remarks, except to say that in the election several days ago was one of the largest swings in rural Manitoba that we've seen in a long time. Mr. Speaker, I could outline the position of various farm organizations on this. The major argument the hon. Minister of Agriculture has presented to the House is that there are differences in the position of farm organizations

1724 ALBERTA HANSARD November 19, 1981 and that until those differences are brought together, the government can continue to review and review and re­ view, until such time as farmers go broke. Mr. Speaker, we're all well aware of the fact that if you've got the National Farmers Union on one side and Western Stock Growers on the other side, there is certain­ ly a nuance of difference between those two positions. I'd be willing to admit that. But what I think has to be argued, and correctly so, is that as a result of Cattle Commission meetings throughout the province, we are moving rapidly towards a consensus.

There will be dif­ ferences over the extent of the coverage, whether it should be $40 a head or $40 and $20 for calves, whether it should be paid in 1980, whether it should be part of a national meat authority, or whether we should stay away from that concept. There are going to be differences. But the important point to stress at this time is that as a result of the initiatives taken by the Alberta Cattle Commission, we are moving toward a pretty clear consensus. I saw this at the meeting I attended in my own constit­ uency. It was a meeting sponsored for all the cattle producers of the Peace River country.

As well, the five elected members of the Legislature were invited to attend. People came from the different groups, and they came with sharply different perspectives. The debate began at 8 o'clock in the evening and carried on until almost mid­ night. But at the end of the meeting, they had arrived at a position which insisted that at the very minimum there should be a payment for 1980. Mr. Speaker, I want to say just a word or two about the question of the 1980 payment, and then several obser­ vations on the longer term approach advanced by the Alberta Cattle Commission that I think are particularly relevant.

The reason I make reference to the Alberta Cattle Commission is that it's not just a question of a short-term program of $40 a head. One could argue whether that should be for calves, cows, or whether there should be some split, as in other provinces. But the Cattle Commission has made other proposals. I want to come to that in a moment. The point I'd like to make now is with respect to the reasoning behind the 1980 payment.

From my recollec­ tion of his statement some five weeks ago in the Assem­ bly, the Minister of Agriculture pointed out that this government was opposed to a payment on a retroactive basis for cattle marketed in 1980. At first glance, that seems to me to be a fairly reasonable proposition. If you're bringing in a program, why don't you apply it to current marketing rather than going back in time.

As members of the Cattle Commission explained in Spirit River — and, I'm sure, elsewhere in the province — the difficulty is because if we bring in an income assurance program on Alberta cattle production in 1981, the American cattlemen's association has indicated to the Cattle Commission that they will lobby the Reagan gov­ ernment to cut down the import of American cattle to the United States. That could have very serious consequences on the marketing of meat products in the United States from this province.

In the view of the Cattle Commission, the only way around that is to look at this 1980 market­ ing, this retroactive concept, even though very few pro­ ducers would find that as a first choice. Mr. Speaker, I want to take just a moment to explore that question, because it's rather shocking to me that we would find that the ability of the government of Alberta or of cattlemen in this province to develop an income assurance program is being jeopardized by the position of the American cattlemen's association.

Frankly, the deci­ sion as to what we do in this country, in this province in particular, to assist our producers seems to me to be our business and not the business of cattlemen across the border.

The reason I want to stress it, especially with the Minister of Agriculture present this afternoon, is to recall for members of the Assembly the much-vaunted state­ ments made in this House in 1976, 1977, and 1978 that there would be no more export of natural gas to the United States unless we had ironclad guarantees of entry to the American market for cattle and boxed beef that was either produced or processed in the province of Alberta. The hon. Premier couldn't have made his posi­ tion any clearer in 1976, 1977, and 1978.

In 1976, he visited a number of officials, governors, senators, and lobbied officials of the American adminis­ tration. In 1977, the Vice-President of the United States. Mr. Mondale, was in Edmonton. I remember the com­ munique that came out after that particular luncheon meeting. The whole question of entry for Alberta cattle in the American market was underscored.

Whatever unde­ rscoring of the issue took place for political reasons we now find somehow didn't make a great deal of difference because we now have the cattlemen's association in the United States saying that if you people in Alberta do something we don't like — you produce almost half the cattle production in this province — if you bring in an income assurance program, even if you apply a $40 payment for 1981, we're going to lobby Mr. Reagan to close the border on Alberta cattle. Mr.

Speaker, I wonder where in heaven's name all these negotiations that we were told about with the price of increased natural gas export to the United States have ended. I refer hon. members to statements made over and over again in this Legislature during that period of time. In any event, four or five years down the road we find the situation where American cattlemen are telling us, you can do something but it has to be done on a retroactive basis. There isn't any doubt in my mind, Mr.

Speaker, that very few producers, especially producers in the northern areas of the province, are overly happy with that pros­ pect. If that's the situation we face in the short run, no one wants to jeopardize our markets in the United States; indeed, perhaps we have to follow that course and, at the same time, pursue new initiatives with the United States government on the market for Alberta cattle in the United States. It might well be worth looking at ar­ rangements in terms of exports of energy products in the same sort of quid pro quo way we saw advanced a few years ago in the House. [Mr.

Purdy in the Chair] Mr. Speaker, a number of objectives are set out in the position proposed by the Cattle Commission. I want to say that, generally, I can agree with some: I have certain differences over others. There probably has to be a much greater move toward a system of orderly marketing than the Alberta Cattle Commission would support. Neverthe­ less, when we're talking about short-term solutions, I think we have to start some place.

The objectives of the Cattle Commission are fairly straightforward: any pro­ posal must be neutral in the market place, must enhance the province's natural comparative advantage, must not endanger access to the United States market, and there must be long-term adjustments necessary in maintaining an efficient industry. Mr. Speaker, I want to deal with several of the long­

November 19, 1981 ALBERTA HANSARD 1725 term proposals made by the Cattle Commission that I support quite strongly. Certainly we have to endorse a comprehensive national beef promotion program. There has been a drop in the consumption of beef in this country. Over the long haul, increasing beef consumption is in everybody's interest, whether people support supply management or whether they're in favor of the open market system. There should be no problem there. Simi­ larly, expansion of our market development efforts — and I think we have done some work there; no doubt about that.

But additional work is probably necessary. On that score, Mr. Speaker, we had a lot of debate in this House about the role of the Alberta Export Agency. Frankly, there were many problems with the old Alberta Export Agency. The fact that it was perhaps not as effi­ ciently managed as it could have been stands the test of the passing months and years. All one has to do is look at the discussions we had in Public Accounts to recall some of the problems of the Export Agency.

But having said there were serious problems in the administration of it, the fact of the matter was that the concept, in my view, had some considerable merit. I would ask the Minister of Agriculture to seriously consider whether the time has not come for us to renew or re-establish an Alberta Export Agency. However, I think I could suggest to him that in staffing it we be a little more cautious than we were before.

One of the excellent proposals contained in the Alberta Cattle Commission's long-term solution assessment is a new agricultural lending policy: The [Alberta Cattle Commission] has been studying credit policies in other countries — especially the U.S. — and is making recommendations to Provin­ cial and Federal Governments on programs that would increase the availability and lower the cost of both short and long term credit. I would say, Mr. Speaker, that if we're serious about the long-term success and health of the livestock industry, dealing effectively with that is an important initiative we should follow.

It isn't good enough for some hon. members to stand up and say we have the ADC. The Alberta Cattle Commission know we have the ADC. What they're saying to us is that there has to be a new agricultural lending policy, one that goes somewhat be­ yond the rather limited scope of the Agricultural Devel­ opment Corporation at this time. Mr.

Speaker, in concluding my remarks on the motion before the Assembly, I think it would only be appropriate to draw the attention of hon. members — I'm sure they've had an opportunity to review the proposals contained in A Review of the Meat Industry in Alberta by the former Deputy Premier of the province. In that particular pro­ posal, the former Deputy Premier said that the province should provide a one-time payment, on an equitable basis, to cattle production sectors to provide temporary stability until the agricultural products insurance com­ mission, as recommended, comes on stream.

Well, we still have the hon. Minister of Agriculture studying this mat­ ter. While we have some indication that we'll have action by the end of the year, we have no indication as to whether that action is simply going to be extra promotion or whether there will be a one-time payment as Dr. Horner has recommended. A number of other points are worth noting: an agricul­ tural research foundation to be established with a com­ mitment of $200 million from Alberta's Heritage Savings Trust Fund — a far cry from the very limited Farming for the Future investment we've made to date.

A provin­ cial Crown corporation, Alberta Meats, to expand and capitalize on domestic and international markets — es­ sentially a reinstitution of the Export Agency. The prin­ ciple contained in the Export Agency is good, notwith­ standing, as I say, some of the administrative problems I alluded to. An agricultural products insurance commis­ sion to develop and operate actuarially sound voluntary income programs for meat commodity producers . . . The major problem we have to deal with in assessing Dr.

Horner's recommendation is this difficulty we have with American cattle producers and the impact that such a move would have on the U.S. market. I think this is where we have to see a little more insistent position by the government, support some of the tough talk and the strong position taken four or five years ago: no more gas until we get a nailed-down, ironclad commitment on cat­ tle exports to the states. But I haven't heard that recently. Finally, Mr.

Speaker, I think it would be appropriate to observe that the first recommendation the former Deputy Premier makes, a Pioneer Two Lands Commis­ sion to put 10 million new acres of land into agricultural production in Alberta, in my judgment is a very exciting proposition and one that is consistent with recommenda­ tions for a number of years from the watchdog committee on the heritage trust fund. I'm sorry to see that the Associate Minister of Public Lands and Wildlife isn't in his place. Notwithstanding our continued recommenda­ tions on this matter and a recommendation contained in Dr.

Horner's report, we are still moving at a snail's pace when it comes to opening up public lands. We still have inspections lagging months and months and months be­ hind applications. We still have frustration. Just the other day, I had a person call me from the High Level area expressing no end of concern with the roadblocks and the bureaucracy slowing down the process in an area where we still have literally tens of thousands of potential acres that could and should be opened up on an efficient basis.

One of the ways of encouraging young people in the agricultural industry at this time is to make more imaginative use of our public lands and open some of them up. At this stage, with land prices being what they are, especially close to our city — even farther out, as you travel beyond the bounds of the Edmonton and Calgary metropolitan areas, we now have land prices in excess of what the land can realistically produce. It is pricing young people out of agriculture as a way of life. With those comments, Mr. Speaker, I would invite reaction from hon. members of the House.

It seems to me that no solution at the moment is perfect. Having had an opportunity to discuss this with Unifarm, the National Farmers Union, and the Christian Farmers Federation, as well as with people in the Cattle Commission and live­ stock producers in the Stock Growers' Association. I'm as aware as the minister that it's difficult to find a solution that will have everybody marching according to one drummer. But that's not really the request at the present time. It seems to me that the request of both Dr.

Horner and, in a modified way, coming out of these meetings held through the province is for a short-term program which will provide temporary assistance, will form the basis of longer term initiatives where there can be agree­ ment, and then on some of the more controversial aspects — supply management and these sorts of things — obviously there will have to be continued debate and discussion. We're not going to get agreement. There's no doubt about that. But that doesn't mean that while we wait for agreement on these other issues, we do nothing

1726 ALBERTA HANSARD November 19, 1981 in the meantime. The message I get and, I'm sure, other members are receiving as well is that there is a problem here that must be addressed in the short term. There is a program which, however modified, is widely supported in the short term. In my view, Mr. Speaker, what we need from the government at this time is a commitment for action, at least to that extent. MR. THOMPSON: Mr. Speaker, I'd like to speak against the resolution, but before I start, I'd like to congratulate the Member for Spirit River-Fairview for commending the government on opening public lands.

I suppose Thursday is the day he's in favor of it; Wednes­ day is the day he's against Odyssey. We'll keep that in mind. Before I get started, I'd like to say that all rural members — in fact, I think most members of the House — are very well aware of the problems in the cattle industry. This last summer, I was at about six or seven public meetings, and there's no doubt that a lot of desperate people out there are caught in a real bind. The livestock industry in Alberta is one of the main bases of our agricultural economy, and it has been ever since the province was opened up.

We're very fortunate here in Alberta, and almost every time I speak I reiterate the balance we have between grain and livestock production in this province. We slaughter 42 per cent of Canada's cattle, and raise two thirds of the feed grains of the country and consume 60 per cent of them here in Alberta. So there's no doubt in anyone's mind that these two industries are integrated and that, in the long run, we need a healthy livestock industry in Alberta. We have problems. There's no doubt about that. In 1952, the cattle population in Alberta was 400,000. In 1980, it was 1.3 million.

We've had a considerable in­ crease in that less than 30-year period. Not only that, lately we've had a decrease in consumption of meat. We've gone from 113 pounds in 1977 to 88 pounds last year. So there is a squeeze in the area. But basically, it's a phenomenon that has happened all over North America. We're not alone in Alberta; the same thing is happening in other provinces in Canada and in the United States. So I really am concerned when I hear the member talking about not really paying any attention to the U.S. market.

Here in Canada, we have in our favor a balance of payments of $200 million a year in exporting meat to the United States. I think we have to keep that market. If we don't, we will have a disaster in the cattle industry. We've had disasters in the cattle industry before. We had one in 1907; we had a real one in 1919. I can remember 1952 when the foot and mouth disease hit this country. It was a real crisis. So crises aren't new to the livestock industry. They've weathered them in the past, and I'm sure they'll weather it this time.

What I basically have problems with in this resolution is using 1980 as the base to set for payment. In 1980, the cattle feeders had a really bad year, but the actual cow- calf producers had a good year. I have real problems when we go back as far as 1980 to use that as a year to pay across-the-board to all cattle producers. It just doesn't make economic sense to me. I have problems with the resolution there. Another thing I have problems with is that I feel this resolution has to be more specific.

It's very general, and I can't really go along with an across-the-board $40 pay­ ment, whether it's cull cows, Holstein calves, or whatever. I have problems in that area too. But I do think the member is right when he says we have to look at long­ term solutions. I think there are alternatives, Mr. Speak­ er. We have to look at ways to put an assurance program out there that cattle people can live with and that the Americans will accept.

The only way we can do that is to work with the cattle producers and come up with some­ thing that's acceptable to the industry, that government can live with, and that the Americans can live with. I think we can do other things. He was right in mentioning that we should look at the Horner report, because there's some real merit in some of Dr. Horner's suggestions. I think we should try some kind of co­ operative program with the cattle industry to promote beef. We see the egg and dairy people who have done a real job in promoting their products, and I honestly think we can do something in that area.

Basically, Mr. Speaker, I think we have to look at long-term programs, not ad hoc programs. We've had two or three of these since I've been in the Legislature. As far as I'm concerned. I urge all hon. members to defeat this resolution. MR. STEWART: Mr. Speaker, this afternoon the hon. Member for Spirit River-Fairview has brought a subject for debate that I think every rural MLA would feel was pertinent to his constituency. Our livestock industry is probably the one industry that practically every rural constituency, with hardly any exception, is involved in.

There's no doubt the discussion this afternoon is per­ tinent to an issue that is of great concern out there. I guess we also have to remember that the livestock industry has travelled in cycles since time began, and supply and demand have certainly established the price with utter disregard for what the cost of production is at any given time or place. Also there is a great divergence in the way the industry has carried on and the type of industry carried on throughout this province.

Certainly from the dryland of the southeast part of our province to the Peace River area, there's a tremendous difference as each geographic area carries on its industry in a little different fashion. In the northern part of the province, we have a predominantly cow-calf type of operation in a lot of the smaller herds that are affected strictly by the feeder market.

As those cattle move through the industry, they end up in feedlots, a lot of them in the southern part of the province, where they take advantage of the produc­ tion on irrigated land that makes the cattle-feeding indus­ try in that area more attractive than in some other areas. Through the ingenuity of a smaller group of people, a cattle-feeding industry has developed that by sheer num­ bers has developed an efficiency and a quality of product that is recognized in the market place.

As evidence of this, the marketing of most of the cattle from those large feedlots in Alberta is done on a bid basis by packers throughout all this province and several pack­ ers in Saskatchewan who have to come here for the product because it isn't being fed out in the numbers they require in their own province. A type of sealed bidding has developed that is cost efficient and, recognizing the quality from one feedlot to another, packers are able to save a tremendous amount of money in buying their needs through that style of marketing.

It's recognized that the market ebbs and flows with the demand of the consumer. A few years ago, we hit a peak of about 122 pounds per capita. At present, we're down to about 88, recognizing that other products, through their advertising and the fact that they're putting a product on the market that may be slightly less costly, have changed the eating habits of some of our consumers.

November 19, 1981 ALBERTA HANSARD 1727 I think our generation changes have also had an effect on that. Our younger population, probably more con­ scious of the dollars they spend on food than the older generation, are able to get by with a quarter pound hamburger

whereas the older generations were tradition­ ally roast eaters who consumed considerably more of the product in a given week than a lot of our younger people are doing today. Our fast food outlets have promoted and pushed that type of product, along with poultry, to the extent that we may never see the same consumption of beef per capita we have in the past. I think we have to recognize this. Alberta is by far the greatest exporter of beef anywhere in Canada. With our small population and 40 per cent of the production, we obviously are an exporter.

We've seen Quebec and British Columbia try to become self- sufficient in beef to the detriment of our opportunity to export to them. I guess it's a free country, and people have governments in those provinces trying to develop their own industries, trying to encourage self-sufficiency in as many products as they can. We've had very little positive encouragement from the federal government for this industry. Most of the pro­ grams brought out have been very little help to the producers in times of oversupply. Basically, that's our problem today. We're in a North American market whether we like it or not.

When there's an oversupply of beef in the North American market, certainly Canada is no different from anywhere else. Whenever the opportu­ nity arises, the consumption of beef in eastern Canada takes advantage of oceanic beef to fill the demand for lower grade beef from that source at a cheaper rate than we can produce it. I think the Member for Spirit River-Fairview analysed quite well what has taken place among the people in industry over the last months.

There have been a lot of meetings and, by and large, they've been constructive, for the simple reason that each organization had its own pet theory and solution to the problem several months ago. Out of the discussion of these many meetings has come a resolution that we don't want a subsidized industry. We want something that will stand on its own two feet, and we want to keep the market place as the guide for supply and demand. Any short-term solution by the government to this problem will not resolve it.

Certainly a long-term program that will give some sort of stabilization the producers themselves can participate in is the ultimate goal of most of the producers in this province. We recognize that the cow-calf producer is at the bottom of the chain and ultimately suffers any losses incurred on the finished beef market, and it's reflected in the price they receive for their product, which is their calves.

Certainly we as a government have to recognize that in crisis situations we have to react, because the other provinces that are producers in Canada have seen fit to instil extra money into the industry in an effort to be self-sufficient. Consequently, in this province our people in beef production are working at a disadvantage. I don't think we want to get involved in a game of who has the biggest budget to solve the cattle industry problem, be­ cause overproduction is not a solution.

We have to get out and find a market for the production that's in excess of what the Canadian market will absorb, and certainly we have to look to the Americans for some of this surplus production. We also have to find markets that will take specialized products that can be produced and marketed in the various parts of the world where choice beef sells for much more per pound than we as Albertans would care to pay for it. All these meetings in the last couple of months have resulted in a resolution and recommendation that the government is prepared to work with.

These meetings of the Cattle Commission have only just been completed. Recommendations from them will be taken into consid­ eration. For my part, Mr. Speaker, I believe I would rather wait an extra month or two and come out with a program that's acceptable to all producers in Alberta than come out with a program that wouldn't be properly accepted by the industry. I hope this contribution will clear up in the minds of some people in this room that we don't believe in totally subsidized agriculture. It can stand on its feet, but there are crisis situations that have to be taken care of. MRS. CRIPPS: Mr.

Speaker, I'm pleased to enter this debate. Looking at the motion, it only addresses a short- term solution. Although the member talked about the long-term problem, the motion addresses a short-term solution. Having been in the beef industry for the last 22 years, I think it isn't just a short-term solution, it's a long-term problem that recurs. If I go to 1974 when we had the same type of situation, we were looking at emergency situations at that time. Because the long-term problem wasn't addressed, in 1981 we're again back in the same situation.

If one thing stands out in my mind from 1974, it is the fact that Air Canada put out a tender for a beef contract during 1974-75. That contract asked for oceanic beef only. If I can remember rightly, that's the lowest period we've had since we started farming and raising cattle. At that time, a Crown corporation in Canada advertised for oceanic beef. To this day I can't stand to eat anything on Air Canada, and if I can fly any other way, I will. To get to the motion, I believe there are a number of problems in the beef industry today, along with many other industries.

One I recognize in my constituency is the increasing interest rate and the problem that has caused to the farmers in the area. In the last couple of years, it has doubled payments. I've had farmers tell me that they're paying $20,000 in interest. Quite frankly, they can't pay the interest, let alone the other payments. But that's a problem because of the federal government. It's certainly one that we can't be asked to solve by a short- term solution which, in the long run, isn't going to serve the long-term problem.

Along with the problem of high interest is the disad­ vantage that western feeders have because of the Crow rate. I'd like to remind the Member for Spirit River- Fairview that in my estimation, he is one of the problems in the Crow rate. That encourages the feeding of our cattle in eastern Canada rather than in western Canada. In fact, it's cheaper to ship raw products to eastern Canada than finished products. I just can't believe that we can ship the live product at a cheaper rate than we can ship boxed or refrigerated beef.

This isn't only a problem in the cattle industry; it's also a problem in feed grains, oil seeds, and manufactured goods. We send them all east at preferential rates. When I was in eastern Canada this summer, in Newfoundland I found that they suffer exact­ ly the same kind of preferential rates to the west as we suffer to the east. So something is the matter with the whole rail freight situation. The problem caused in the beef industry today is going to reflect in the small towns in Alberta because of a decrease in the marketing power of the average small farmer. This is going to cause a recession in small towns.

1728 ALBERTA HANSARD November 19, 1981 Machinery dealers, grocery stores, department stores, and automobile dealers are all feeling the effects of the de­ crease in agricultural prices. This in turn causes a reces­ sion in these towns and, again, maybe the interest will become the straw that broke the camel's back. I was at a car dealership last Monday, and in October they suffered the worst year in 15 years, I believe, of car dealing — and October is their good month. So there's definitely a problem in the whole area.

In his state of the province address, the Premier indi­ cated that it was the intention of the Alberta government to ensure that 42 per cent of the beef market today, which is Alberta, will be protected. On occasions, the Minister of Agriculture said that the government in this province will not stand by and see our beef production eroded. This does not mean that there's an easy solution to the problem. But it does mean that the government is not going to see the 42 per cent, which we now have, eroded. Last week, I was at a Cattle Commission meeting at Winfield.

That meeting showed again that there is not an agreement between the cattle producers on what should be done to solve the problem. One person running for director said, you know, the government doesn't pay any attention to agriculture; it isn't doing a thing for agricul­ ture. Quite frankly, it doesn't matter what we do for agriculture, it's not reported. In fact, of all the things I've said about agriculture, the only thing ever reported was when I recently criticized fertilizer prices. I'll tell you, that got some reaction, but not because it was agriculture.

The next speaker said the government shouldn't do a thing. They should just keep their hands off. We'll hang on to the cow's tail, and we'll come through. MR. L. CLARK: He'll pull you out of the mud, will he? MRS. CRIPPS: Then a motion was proposed to imple­ ment a marketing board, and that was defeated. It wasn't unanimously defeated, but it was defeated. So there isn't a consistent position of the cattlemen. Quite frankly, the motion that was defeated was the only formal recom­ mendation made at that meeting. So two situations must be considered. One is the short term.

As you know, the Cattle Commission suggested a 4 per cent subsidy across the board, a once-only subsidy, retroactive to 1980. That suggestion was given considera­ tion by this government. The cattlemen themselves scuttled it, if I remember rightly. I'd like to say that the Cattle Commission is the only organization that has said, look, we have to help every segment of the industry. We have to look at the whole industry, not just parts of it. Some problems are inherent with marketing boards, and that suggestion was made and keeps recurring. We have an egg marketing board and a milk marketing board.

They are providing a stable income to the producers. But, Mr. Speaker, these producers haven't even received an increase in their production levels that keeps pace with the population of the province of Alberta. If our popula­ tion has increased 5 per cent over the last two years — and it's increasing faster than that — we certainly haven't got a 5 per cent increase in our total Canadian allotment for milk or eggs.

If the same held true for our cattle marketing board, and the province of Alberta now has 42 per cent of the Canadian share, the ultimate outcome would be that we'd lose part of our Canadian share of the cattle market. In my estimation, this is one of the most critical areas we have to assess when discussing marketing boards. I think those people in favor of marketing boards have to recog­ nize that as one of the major problems. Certainly, Alberta cattlemen can compete on a fair and equitable basis with any cattlemen in Canada.

But the implementation of subsidies in other provinces has erod­ ed that fair market basis. The Member for Spirit River- Fairview mentioned the B.C. program. We had company from B.C. last week, and they're not even sure they're going to get a payment this year. If they do, it's going to be vastly reduced from last year. Actually, it supposedly isn't a subsidy any more. They pay $7.50 per head on cows in an assurance program. There's no set rate what that will insure them for. They pay $4.50 a year for 400 to 800 pound stock. But they're not sure what they're going to get this year.

They said they were under the impression that the board is short of funds and they may have a vastly reduced payment. If, as the member suggests, the government reacts on a short-term basis with a once-only payment — and I presume he's not talking about an annual payment here; at least the Cattle Commission didn't suggest an annual payment — that only solves the problem for today. As I said before, Mr. Speaker, I believe it's only fair that we look at the long-term problem. The long-term problem is markets. The beef producer must have the markets avail­ able in order to ensure a return on his production.

The importance of trade with the United States cannot be overemphasized. The possibility of a west coast market in the United States has eluded us for years. In my estima­ tion, it's questionable whether we'll ever get into a signifi­ cant supply of the west coast market. The American cattlemen can supply that market. I think they'd be very vocal if they saw the Alberta cattlemen intruding on their market. There is, however, a vast market potential in Europe and the Pacific Rim. By contrast to U.S. markets, those markets cannot be totally supplied from their own agri­ cultural sector.

I believe this is one area we can look at and make some inroads into. I know the Hon. Horst Schmid, the Minister of State for Economic Development — International Trade, the Hon. Hugh Planche, the Minister of Economic Development, and the Hon. Dallas Schmidt, the Minister of Agriculture, are actively work­ ing to promote this trade in Europe. I think it's very, very important that we use every avenue at our disposal to do that. However, I understand there are mammoth mounds of red tape which we have to cut through in order to get into those markets.

The European Common Market has just allowed 10,000 tonnes of U.S. and Canadian beef into that mar­ ket. However, there is no central selling agency from Canada or Alberta which can take advantage of this opportunity and promote Alberta beef in the European countries. I believe it's critical that somehow we have a central selling agency which can take advantage of such opportunities and promote Alberta beef throughout the world. I want to emphasize this.

If you've got two or three packing companies, the Alberta Cattle Commission, and the Western Stock Growers all going over to Europe and presenting a different point of view, trying to get into a market without a concerted effort. I don't think it'll work. I think we have to have some sort of concerted effort. Maybe the Member for Spirit River-Fairview was referring to that in his comment about a marketing agency of some sort. When we were in Amsterdam, Colorado beef was fea­ tured on hotel menus. In Essen, it was Nebraska beef.

They were featured outside on a great big poster that said: We serve prime Colorado beef. Nowhere in Europe

November 19, 1981 ALBERTA HANSARD 1729 did I see Alberta beef featured. Without question, we've got the best beef in the world. All they have to do is taste it, and we'll have a market. I believe there's unlimited opportunity if we take advantage of the product we have and actively market it. The problem is compounded of course because the federal government has jurisdiction over export trade. At the recent GATT negotiations, agriculture was used as a tool, not as a high priority export item. I believe we have to use agriculture as a high priority export item rather than a negotiating tool.

The other long-term problem which needs to be ad­ dressed, and I mentioned it before, is the cost of shipping beef to Montreal, which accounts for a good portion of our market. Because of the Crow benefit, dressed beef is more important to ship than live animals. Again, this has to be resolved. I guess the long-term goal of this govern­ ment must be to ensure that beef producers have the economic advantage that we have naturally of producing, processing, and feeding beef in Alberta. It might be possible to establish forward marketing to European countries, but in this case we'd have to assure a supply of beef.

At the present time, that's impossible to do. We just simply can't ensure a supply of beef. Another long-term problem is the availability of agri­ cultural funds at reasonable rates of interest. The Cattle Commission has been working hard to develop funding proposals which would have agriculture assisting agricul­ ture. This might be possible through the development of an agricultural trust bank, in which agricultural land sales or the moneys from cattle sales could be deposited, and then dispense funds through this trust account. The only way that would be possible is if tax benefit accrued to the depositor.

Again, we're looking at a federal jurisdiction. The federal government would have to negotiate an agreement whereby this was possible through tax privi­ leges. With the latest budget that came out last week, it doesn't look like that's a desirable goal of the federal government — just the opposite. [Mr. Speaker in the Chair] With regard to the consumer — and I guess that's one of the most important people in this whole beef problem — it's important to remember that the consumer buys food with cash, not credit cards.

From an agricultural point of view, I have to think that's one of the most important areas of consumer purchasing and of the way the consumer sees agriculture. They don't see the price the farmer gets for the animal. They see what they're paying on the shelf. They notice any differential in the cost of the product because they buy that product with cash, probably weekly. If they believe that price dif­ ference is unjustified, they retaliate by buying another product. Mr. Speaker, I guess we're our own worst enemies because we criticize each other.

We not only say it's because grain prices are high; we criticize other areas within our own industry. I'd like to quote the feuding between farm organizations and within the industry. For example, the price of beef goes up a little bit and everybody starts talking about it. The purebred man points his finger to the commercial man — the commercial man, at the feeder — the feeder, the wholesaler — the wholesaler, the packer — the pack­ er, the retailer — the retailer, the trucker. Everybody within our industry is pointing his finger at some­ body and saying he's the guy responsible for the price going up.

If everybody in the industry says that he's responsible for the price going up, what is the consumer expected to believe? The price of automobiles goes up $500 and what happens? The big executives of [Ford Motor Com­ pany] don't point their fingers at the workers — the workers, pointing at labor — labor, at aluminum — aluminum, at steel — steel, at labor — labor, at energy . . . and saying: "They're the ones who are responsible." The automobile makers simply say the [price of an automobile] has gone up $500. And we accept it.

We may complain about it, but we don't say that everybody in the industry is responsible. The second problem I believe we have in consumer merchandising is that the consumer does not have a choice in beef. Cattlemen sell cows, heifers, and steers. They're all processed differently, and we certainly get different prices for them. But the consumer does not have that price differential or preference of meat on the shelves. Maybe we should look at the beef grading sys­ tem, and maybe it should be changed so the consumer has a preference, and if he prefers a cheaper cut, has that available.

The consumer tends to buy fresh meat rather than frozen. Certainly frozen meat is easier to process and cheaper to store, because fresh meat must be mar­ keted immediately. At the meeting I was at, the suggestion was made that the beef dollar is competing with fur coats, holidays, motor homes, and motor boats. Indirectly, it is. The reason is that beef is purchased with cash and these other things are purchased with credit. You have to pay the credit at the end of the month, and you buy food with what's left over. As I said before, the motion only addresses the short- term problem.

I believe the long-term problem is even more important. It's high time for all industry, not each one pointing at the other segment, to sit down and work toward a long-term solution. This would have to involve industry, provincial government, and federal government, because some of the long-term [solutions] have to be in export markets. I have confidence that we can all work toward a common goal of market stability and a reason­ able return to our cattlemen, thus ensuring a viable agri­ cultural sector in this province.

I believe it is more important than what this motion suggests, which is the short-term goal, to address that long-term problem. Thank you. MR. ISLEY: Mr. Speaker, I welcome the opportunity to participate in debate on Motion 222. If there has been one single subject I've been involved in, in more meetings and discussions in the last three months in rural Alberta, it has been the beef industry and the problems therein. I agree with the hon. Member for Spirit River-Fairview in that he is at least identifying and discussing a current problem in agriculture. My agreement with him tends to cease at that point.

I suggest that the solution he pro­ posed shows the same lack of research and logic that many other positions of the the hon. member demon­ strate. He spoke in the House earlier about the Saskatch­ ewan plan put in by his idols across the fourth meridian as something extra special. I think many people are led to believe that Saskatchewan producers are receiving pay­ ment on cattle for the past, which is totally incorrect. I have a news release from the Minister of Agriculture in Saskatchewan, the Hon. Gordon MacMurchy, dated September 15, 1981.

I'd like to review briefly the main points of the Saskatchewan stabilization plan. It applies

1730 ALBERTA HANSARD November 19, 1981 only to slaughter beef, grades A, B, and C. Secondly, it's aimed at the producer. The maximum number of basic herd you can register is 200. You can buy an additional 50. The maximum you can stabilize is 250 head in any given year. I think the key is point 7: Producers enrolling between now and Dec. 31 will be eligible for stabilization coverage on animals sold after Jan. 1, 1982. So we're talking about a stabilization program that kicks in next year. The beef counterparts in Saskatchewan at this point in time are not receiving anything for 1980 or 1981.

If I look now at the specific proposal of the hon. Member for Spirit River-Fairview, to pay out $40 per head for every calf, cow, and head of cattle sold in 1980, I'd like to point out to him a couple of inequities I see developing with that type of program. If you check market prices on November 13 a year ago on a 500 pound steer calf, the top-enders were bringing 93 cents. Today they're bringing 76. If you take that 500-pound calf and calculate the price the producer received in the fall of '80, he received approximately $465. Yet, the producer who sold the same sized calf this year is receiving $380.

I have a little difficulty supporting a program that says we're going to give it to the producer who made the most money. I don't think any rural MLA here had unhappy cow-calf producers in the fall of 1980. They may not have been super happy, but I think most of them felt they were getting a fair return in that year. The other real inequity I see in the proposal before this House is the discrimination it would take against the primary producer who decided in the fall of 1980 to carry his calves through the winter and background them at least until spring or maybe even off the grass the follow­ ing summer.

His neighbor down the road who sold his 1980 calf crop in the fall got a fairly good return. He decides to keep them, pumps more feed and costs into them, and sells them in the spring at a lower return. This program doesn't give him anything. It gives the advantage to the person the market place gave the advantage to. I was very pleased to see that the hon. Member for Spirit River-Fairview was starting to quote the Alberta Cattle Commission as a bit of an authority. I think he's creating a dilemma for himself.

I would like to take a look at the September issue of The Alberta Cattle Commission magazine, where they state very clearly: Resolution of the Crow Rate problem remains vital to the survival of the Alberta livestock feeding indus­ try. . . . We also wish to see a more efficient domest­ ic feed grain marketing and pricing policy that will treat our own grain users as a priority market for Prairie feed grains.

I can't help but wonder how the hon. member can say, on the one hand, that what the Alberta Cattle Commis­ sion is saying is correct and is the advice we should be taking and, on the other hand, when it comes to the Crow rate he and the parties he tends to represent and associate with intend to do everything they possibly can to retain a Crow rate which is probably one of the greatest causes of the problems we're facing in the livestock industry in this province. But the hon. member across the floor doesn't have to be logical. I could quote you some other examples of this same type of discrepancy.

He tries to imply in his remarks today that by lending money to other provinces through the Canadian investment division of the Heritage Savings Trust Fund, somehow we're putting that province in a position where it has cheap money and can turn around and subsidize agriculture and give it an unfair competitive edge against us. Surely, for the length of time the hon. gentleman has been here, he should realize that that province is paying as much interest to our heritage fund as it would be if it had borrowed that money somewhere else in the market. It's paying a commercial rate.

Another example of inconsistency: today he criticized the government because we're not opening public lands fast enough. Yesterday, the important things on public lands were the fish, the fauna, the trees, and the birds. But today they have no importance. The important thing today is to get out, tear up the land, and put it into agricultural production. I don't know, Mr. Speaker. I have problems with that type of logic. I would like to look briefly at the proposals of the Alberta Cattle Commission. It's interesting to note that in their November issue they did not propose the $40 1980 payment.

They proposed a one-time retroactive support payment to all cattle producers. I think they were pre­ pared to leave the details if it was a direction we were going to move to . . . MR. SPEAKER: I regret interrupting the hon. member, but the Thursday afternoon time reserved for discussion of Bills other than government Bills has arrived. head: PUBLIC BILLS AND ORDERS OTHER THAN GOVERNMENT BILLS AND ORDERS (Second Reading) Bill 258

An Act to Amend The Auditor General Act MR. R. SPEAKER: Mr. Speaker, on a point of order. Could the acting House leader indicate at this point in time whether the government will debate this specific Bill until it is brought to a vote, either this afternoon or this evening? MR. HORSMAN: Mr. Speaker, it is the intention of the government to provide unanimous support, at least from the government side, to a continuation of the debate on this Bill during the evening sitting, until such time as the matter may be resolved by way of a vote. That can be done now or at the adjournment time at 5:30 p.m. MR.

SPEAKER: I suppose that implies that we now have unanimous consent to move that Bill to the top of the list. Is it agreed that Bill No. 258 will be moved to the top of the list, ahead of Bill No. 201? HON. MEMBERS: Agreed. MR. R. SPEAKER: Mr. Speaker, Bill 258,

An Act to Amend The Auditor General Act, is to require the gov­ ernment of this province to do public business in the public. First of all, I'd like to speak on the purpose of this Bill. It's an amendment to The Auditor General Act, which will require the Provincial Treasurer to table in this Assembly all management letters. At the present time, the Provincial Treasurer can do it on an optional basis: he may table them or he may not. With this amendment, Mr. Speaker, it will be very clear that any management letters that come from the Auditor General to the Provin­

November 19, 1981 ALBERTA HANSARD 1731 cial Treasurer or to other ministers in the government will be tabled in this Legislature so the public can scrutinize the public business, the expenditures of the Heritage Savings Trust Fund, or any other expenditures by the government of Alberta. I believe it is incumbent that this government should support that kind of objective, doing public business in public. At the conclusion of my remarks today, Mr.

Speaker, I'd like to bring forward evidence which indicates great support over a long period of time by this government on that very principle, support that was in place 10 years ago that today we find is not in place. Over the last four or five weeks, the Provincial Treasurer has argued in three different areas that he cannot table management papers in this Legislature. He raised three arguments with us. What are they? First of all, management letters are audit working papers. The Provincial Treasurer says that Sec­ tion 27 prohibits him as the Treasurer of this province from tabling the documents.

I'd just like to relate to that point for a few moments, because it relates to the whole aspect of whether management letters can or cannot be tabled optionally at the present time. If this Bill is passed, it will be compulsory for the Provincial Treasurer to table them here in this Legislature. Let's look at management letters and audit working papers. In this Legislature a few days ago, I tabled a page from the handbook of the Canadian Institute of Char­ tered Accountants. In that handbook, it pointed out very clearly that there is a difference between auditor working papers and management letters.

If we look at

Section 12 of The Alberta Heritage Savings Trust Fund Act, it says that the Auditor General is the auditor of the trust fund. The appointment is a bare appointment, unreserved in any fashion, barring anything to the contrary in the applicable legislation. The term "Auditor" should be con­ strued in the grammatical and ordinary sense. And I quote from the book called Terminology for Accountants of the Canadian Institute of Chartered Accountants, 1976, page 11. The Construction of Statutes by E.A. Driedeger is another document I'd like to quote from.

On page 2, they say: A person who conducts an audit, either in an inde­ pendent capacity or as an employee [is an] (internal auditor). Thus, Mr. Speaker, the appointment of the Auditor General should be treated as a normal audit engagement, subject to those additional powers and responsibilities of the Auditor General set forth in The Auditor General Act.

Indeed, the tenor and substantive reason for the creation of the Auditor General is for: improving the accountability of the government, not only to this Assembly but to the people of Alberta, with respect to the collection, management, and use of the people's funds. Mr. Speaker, that is a quote from the hon. Mr. Leitch, Hansard, October 26, 1977, page 1693. Sections 18 and 19 of The Auditor General Act, pre­ scribing the production and content of the annual re­ ports, further confirms the view that the Auditor General must audit in accordance with generally accepted auditing standards.

Both the 1980 and 1981 annual reports of the trust fund and the annual report of the Auditor General for the year ended March 31, 1980, contained wording which is taken virtually verbatim from the form of report suggested in the Canadian Institute of Chartered Ac­ countants handbook,

Section 5400.16. As we all know, in our report to the Legislature there is a standard form of reporting. I'd like to read that section, by Douglas W. Rogers, Auditor General of this province: My examination was made in accordance with gen­ erally accepted auditing standards, and accordingly included such tests and other procedures as I consid­ ered necessary in the circumstances. Mr. Speaker, therefore the use of the term audit working papers, as contained in

Section 27 of The Auditor General Act, must take on the meaning commonly used in the accounting profession. I'd like to quote from The Construction of Statutes by E.A. Dreideger, page 8. He says: There is a principle that when the legislature selects technical words to convey its meaning it is in general to be supposed that it uses them in their technical sense. Audit working papers, Mr. Speaker:

Section 5145.01 to

Section 5145.08 inclusive of the CICA Handbook describe the purpose of working papers and documents which are normally included in working papers.

Section 5145.05(

e) indicates that copies — and I'd like to stress that, Mr. Speaker — of letters or notes concerning audit matters reported to the client are nor­ mally included in working papers.

Section 5145.07 indi­ cates that audit working papers are the property of the auditor. I agree with that. It goes on to state that during the course of the audit, an auditor may acquire posses­ sion of records which are included within his working papers, but which belong to the client, such as corre­ spondence with taxation authorities. From the wording of

Section 5145.07, it appears implicit that such docu­ ments may form part of working papers but are not the property of the auditor. There is no specific reference to correspondence which may pass from the auditor to his clients. Therefore, Mr. Speaker, it's clear to me that a copy of a letter written by the auditor to the client may form part of the working papers, but the original — the original, Mr. Speaker — would be the document that would go to the Deputy Provincial Treasurer, the Provincial Treasurer, a minis­ ter, or a deputy of that respective department.

That origi­ nal document in the hands of the client, in this case the government of Alberta, would certainly not form part of the working papers. Mr. Speaker, that is clear to me, based on the hand­ book of the Canadian Institute of Chartered Account­ ants. There is a significant difference between the man­ agement letter we are requesting in this Legislature and the audit working papers the hon. Provincial Treasurer talks about that are to be protected for the Auditor General of this province. I agree with that.

I would not in any way want to violate the principle that audit working papers are the property of the Auditor General. That is accurate and correct, and is a long-standing precedent and convention known in Canada and throughout the world for a long period of time. But to say that the letter received by the client is part of the audit working papers is not accurate, by the evidence of the handbook of the Canadian Institute of Chartered Accountants. Mr. Speaker, that argument doesn't hold water.

At this point in time, as an inserted comment, I can only say that the Provincial Treasurer has control of the management document and other documents in his de­ partment and, if he wishes, could table it in this Legisla­ ture. But to this point, the Provincial Treasurer has attempted to stand behind a definition of audit working papers that doesn't hold water in any way. The papers can be tabled. However, after we pass this Act and accept it in this Legislature, it will be compulsory that all

1732 ALBERTA HANSARD November 19, 1981 management letters from the Auditor General to any minister or the Provincial Treasurer become public in­ formation in this Legislature. At that point in time, public business is done in public. Argument number two carried on by the Provincial Treasurer is that if the Auditor General can't produce them, he can't. I wonder how that argument holds water. If we look at a manual as reference, The External Audit One: Concepts and Techniques, by R.J.

Anderson, FCA, 1977, we find that working papers generally contain the auditor's record of some of the plans he made, the procedures he performed, the audit evidence he obtained, and the conclusions he drew in arriving at his final report. That's the definition of working papers. The description the manual contains of the characteristics of good work­ ing papers,

Section 16.1.2, under the subheading "Com­ pleteness", omits any reference whatever to correspond­ ence from the auditor to the client. That's very important, Mr. Speaker. It omits any reference from the auditor to the client providing recommendations on management controls. In addition, the text comments on the confiden­ tiality of working papers. A review of

Section 3.2.7 from that same manual confirms the general confidentiality imposed upon the auditor. Mr. Speaker, there are a number of reasons for the imposition of confidentiality on auditors. From the text and the Canadian Institute of Chartered Accountants' handbook, it appears clear that there is no restriction whatever on the client using as he wishes any information he has received from the auditor. So how can the Provin­ cial Treasurer hide behind the Auditor General of this province? The confidentiality is imposed on the auditor, not on the client. The client can use the information received as he wishes.

Exit conferences took place with regard to the management papers that we want here in this province. Other discussions took place. A final

summary paper was put together in terms of a manage­ ment letter sent to the Deputy Provincial Treasurer. Because of his position, the Auditor General can hold the matter in confidentiality. But the client has the right to do what he wishes with that information. So, Mr. Speaker, I can't agree with the second argu­ ment of the Provincial Treasurer, that because the Audi­ tor General can't produce the documents, the Provincial Treasurer can't produce the documents. Evidence does not show that to be the case. The Provincial Treasurer has control of the documents in his possession.

If the government wishes to be open and present all data here in this Legislature, those documents can be produced for the information of either this total Legislature or the select committee. To this point in time, the Provincial Treasurer says we as legislators do not need the information about what goes on behind the scenes in the investment of billions of dollars in Alberta. Mr. Speaker, we don't agree. That's the second argument. We don't agree with the Provincial Treasurer's argument, nor do we agree with the position he has taken in not providing us with information.

What's the third argument the Provincial Treasurer has used in this Legislature and outside this Legislature? The Provincial Treasurer has said that if he released the information, it would weaken management controls and safety. First of all, we must realize the problems we're dealing with. We're dealing with some $8.5 billion dollars in a Heritage Savings Trust Fund. We're dealing with $6 billion in General Revenue. In the next few years, we'll be dealing with more billions of dollars of public money.

Specifically, in the case at hand that we're debating, we're dealing with a realized loss of $60 million in bond investment. Mr. Speaker, there's a real need for this Legislature to know what goes on behind the scenes so we can assure ourselves and the public that everything is all right in good old Alberta, that everything is just fine. Before we leave this Legislature, that is one of the as­ surances we must have in 1981. The legislation with regard to the Auditor General is really different in Alberta.

Every other province of Cana­ da has legislation that requires the Auditor General to present all findings to the Legislative Assembly and to present information with regard to essential information and records. Mr. Speaker, why is it different in Alberta? Why did the government bring in an Auditor General Act that closes the door to that kind of information to legisla­ tors.

There is no Act in Canada such as 19(5), that says the Auditor General can send management letters and, if they find that everything is okay, the information or the fault or mismanagement of government does not have to be revealed in this Legislature. No other statute in Canada takes that approach to the use of the Auditor General. The other provinces believe in public business being done in public. I'd like to look at some of those Acts for just a few moments.

First of all, the statute of Nova Scotia with regard to essential records, where all the information that is neces­ sary and should be provided to the Assembly is provided. In

Section 7(d): essential records are maintained and the rules and procedures applied are sufficient to safeguard and control public property. This is one of the responsibilities of the Auditor General. With regard to essential records, the province of On­ tario says: In his annual report in respect of each fiscal year, the Auditor shall report on [this is compulsory] . . . such matters as, in the opinion of the Auditor, shall be brought to the attention of the Assembly including, without limiting the generality of the foregoing, any matter related to the audit of agencies of the Crown or Crown-controlled corporations or any cases where the Auditor has observed that [and this is

Section 12(2)(f)(ii)] . . . essential records were not maintained or the rules and procedures applied were not suffi­ cient to safeguard and control public property or to effectively check the assessment, collection and pro­ per allocation of revenue or to ensure that expendi­ tures were made only as authorized. So, Mr. Speaker, in Ontario, another fine Conservative province, we have essential records along with the discus­ sion with regard to the rules and procedures applied being made available in the Auditor General's statement. As well, Mr. Speaker, we have the Revised Statutes of British Columbia 1979 with regard to essential records and the reporting of financial statements. In

Section 8: The Auditor General shall report annually to the Legislative Assembly on the work of his office and call attention to anything [anything] resulting from his examination that he considers should be brought to the attention of the Legislative Assembly includ­ ing any case where he has observed that . . . (

b) essential records have not been maintained: Mr. Speaker, we want to know what the essential records were behind the realized, actual loss of $60 million in this province. In the reports of the auditors general of the other provinces, we would find out. In Manitoba, for example,

Section 13(1)(1)(

b) reads: Each report of the Provincial Auditor under subsec­

November 19, 1981 ALBERTA HANSARD 1733 tion (1) shall call the attention to anything [just anything; there are no exclusions] that he considers to be of significance and of a nature that should be brought to the attention of the Assembly, including any cases in which he has observed . . . (

b) that essential records have not been maintained or that the rules and procedures applied have been insufficient We'll find out about it. All that will be brought to the Legislature. In this province, we had a management document that was finally released to us through various means. We found out that essential records had not been maintained and management procedures in place were insufficient. We wouldn't have known about that. Supposedly it was rectified, but that's not good enough. Public business must be done in public. Mr. Speaker, what does the government of Canada say about essential information and records?

Section 2: Each report of the Auditor General, under subsec­ tion (1) shall call attention to anything [there it is again: anything, everything] that he considers to be of significance and of a nature that should be brought to the attention of the House of Commons, including any [any] cases in which he has observed that and (

a) talks about accounts, (

b) essential records have not been maintained or the rules and procedures applied have been insufficient to safeguard and control public property . . . Well, Mr. Speaker, we're asking for essential records in this Legislature. That's the government of Canada. New Brunswick: The Auditor General shall report annually to the Legislative Assembly and shall cite each case where . . . there has been a deficiency or loss through fraud, default or mistake of any person . . . the circum­ stances ought to be reported to the Legislative Assembly. In other words, everything is reported to the Legislative Assembly.

Saskatchewan says the same thing as well: The Provincial Auditor shall report annually to the Legislative Assembly the results of his examinations and shall call attention to every case [there aren't any left out] in which he has observed that . . . It goes on to talk about various items and areas. I bring attention to 26(

d) of that section: an expenditure was made for which there was no authority . . . Here is a new area of information we haven't raised in this Legislature in this debate that has gone on for just about four weeks; that is, the case with regard to the traders buying and selling. What was the cost of each one of those trades? What expenditure was made with regard to the trader carrying on those various activities with the bonds? That's an expenditure of government. At this time, we have never had any information or detail of that kind of background; not one iota of information.

Is there authority for that kind of expenditure? Where does the Provincial Treasurer get the authority to pay for the investments out there, for bonds. There must be some payment to those investment houses. We don't know what happened with regard to the $60 million that was a realized loss. How much did it cost the government and the taxpayers of this province to lose $60 million? We can't even find that out. We have no ac­ counting; none at all. The government doesn't even have to tell the people of the province, to whom they are responsible, how much it costs to lose $60 million. That's unbelievable.

Earlier, we heard a great speech in this Legislature about the government making billions of dollars in terms of investments and how great things were. But we can't even find out how much it costs to make that money. We can't even find out that kind of information. It can be hidden and kept away from us. It makes us rather suspi­ cious. So that's why I have to bring in a Bill that says, look, all management documents — at least that's a little closer to finding out the truth and all the information in terms of government management. Let's go on to the province of Prince Edward Island.

What does it say in the little province of Prince Edward Island? The Provincial Auditor shall report annually to the Legislature the results of his examinations and shall call attention [there's the key word] to every case in which he has observed . . . Then it goes on to talk about items which he observes as an Auditor General, such as: (

a) any officer or employee has wilfully or negli­ gently omitted to collect or receive any money belonging to the province; (

b) any public money was not duly accounted for and paid into the Consolidated Fund, (

c) any appropriation was exceeded or was applied to a purpose or in a manner not authorized by the legislature [that would all be in his report]; (

d) any expenditure was not authorized or was not properly vouched or certified: (

e) there has been a deficiency or loss through fraud, default or a mistake of any person: or (

f) a special warrant authorized the payment of any money, and to any other case that the Provincial Auditor considers should be brought to the notice of the legislature. "Every case", "to any other case" — that's completely inclusive of all information. All findings of mismanage­ ment or inadequate management are tabled in the Legis­ lature. Public business is done in public in that little province of Prince Edward Island, where the Fathers of Confederation set out the British North America Act and sections 91 and 92, a constitution that lasted for 114 years. And we're not changing the ground rules too much.

But right in that little province that was really the heart of democracy and public business in Canada, they still have ground rules which talk about public business being done in public. Well, Mr. Speaker, I wonder how we got misled in the west. I wonder why we feel that because we're govern­ ment, because we're a large government, because we have 73 out of 79 seats, we can withhold and not disclose information to the public, to the taxpayers. These words are for the Provincial Treasurer to recall: "information to the taxpayers".

I'll recall those words to the Provincial Treasurer within half an hour because of the significance, because I know that the Provincial Treasurer is a champ­ ion of the taxpayer in this province and wants them to know all the information. But that isn't the way it exists. We as legislators can't really get all the information. We've been trying to do that for four weeks. Okay, that's the little province of Prince Edward Island. What does it say in the statutes of Quebec? The Auditor-General shall each year report the re­ sults of his examination to the Minister and point

1734 ALBERTA HANSARD November 19, 1981 out any irregularity [any] he has observed which in his opinion should be indicated. The Minister shall lay the report of the Auditor- General before the [National Assembly] not later than the 31st of December . . . Mr. Speaker, all becomes public; all is presented again in the national assembly. I can go back over these statutes and look at the province of Nova Scotia. Its Act says: The Auditor General shall report annually to the House of Assembly the results of his examination and call attention to every case in which he has observed . . .

That's the function of an Auditor General: to observe. I think I earlier related to the province of Ontario with the same type of information. The province of British Columbia: I can only repeat that in

Section 8, the Auditor General shall call attention to anything resulting from his ex­ amination that . . . should be brought to the atten­ tion of the Legislative Assembly . . . There, public business is done in public. Mr. Speaker, that's what other provinces in Canada say. Back to the original argument: how then can the Provincial Treasurer stand in his place in this Legislature and say that when we as legislators, in the opposition and the members of the Conservative government — and the hon.

Member for Calgary McKnight hasn't got the in­ formation but he rests assured that everything is great in good old Alberta. I don't know what assurance he has unless he has inside information the rest of us in this Legislature haven't got. But if I were in one of the other provinces, I could obtain all that information. There wouldn't be any such thing as confidential management letters between the Auditor General and the Provincial Treasurer.

If all material, all management letters, all documentation of whatever the Auditor General is faced with is presented in legislatures in other places and in the House of Commons, why not here in Alberta? If management controls and safety in other provinces are not affected — they do the same things as we do here in the province. We don't have an inside track on the management of economic affairs or public business. If it doesn't affect the openness that prevails in other parts of Canada, how can it affect the management controls and safety in this province? There is just no way at all, Mr. Speaker.

To me, we can ask for only one thing; that is, full disclosure, just as it is in these other provinces. The

section in the Act which says the Provincial Auditor in various cases cannot disclose some of the information is a little unfair to the Auditor. I'd like to talk about that for just a few minutes, but I'd like to conclude the other part of my speech. On three counts, the Provincial Treasurer has at­ tempted to say to us in this Legislature that the argu­ ments he has given hold water, are substantial, are rea­ sons for government to not give us the information, and the argument that management letters are audit working papers. Conclusively I disagree with that argument.

Se­ condly, I disagree with the argument that because the Auditor General can't produce the information, the Pro­ vincial Treasurer can't. The management letters are in the hands of the Provincial Treasurer and, under present leg­ islation without any amendments, it's his discretion, his option, whether or not he tables them. The responsibility lies with the Provincial Treasurer. The third reason the Provincial Treasurer gives is that we will weaken man­ agement controls and safety.

I can only conclude that if other provinces are functioning well, there's good ac­ countability or an accountability in the other provinces, and the system isn't weakened there that I know of, then why can't it work in Alberta? I just can't understand that at all, Mr. Speaker. Now what about the fact that these management letters go from the Auditor General to the Provincial Treasurer or other ministers? First of all, I want to say that I have full confidence in the Auditor General of this province. Mr.

Bill Rogers is an excellent Auditor General, takes full responsibility for all his actions, has unquestionable honesty, and has good intent in all his actions as Auditor General. I am not in any way being critical of actions or responsibilities he has taken in his new position. I think, though, that we as legislators should look at the Act which we have asked him to administer, the ground rules by which he carries out his responsibilities and functions.

If we in this Legislature, and the govern­ ment when they brought the Act in and designed it, would have looked a little closer at the Act so that these management letters could go from the Auditor General to the Provincial Treasurer and supposedly be kept behind closed doors, that the Legislature could not obtain all information about all cases, maybe the government would have reassessed its position.

That's what I'm saying today: we should reassess that position and change The Auditor General Act so that there are no behind-the- scenes management letters; that all findings, all observa­ tions, are brought to this Legislature.