1973 Legislative Session: 2nd Session, 30th Parliament

HANSARD

The following electronic version is for informational purposes

only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

FRIDAY, APRIL 13, 1973

Morning Sitting

[ Page 2697 ]

CONTENTS

Morning sitting Statement Unexploded bombs in Vernon area. Hon. Mr. Hall —

Mrs. Jordan — 2697

Mr. D.A. Anderson — 2697

Mr. Wallace — 2697

Routine proceedings

An Act to Amend the Civil Service Superannuation Act. (Bill

No. 159). Committee stage.

Mr. Gardom — 2698

Hon. Mr. Cocke — 2700

Mr. Wallace — 2700

Mr. Richter — 2702

Mr. Smith — 2702

Hon. Mr. Hall — 2703

Mr. Morrison — 2704

Division on amendment — 2704

Mr. D.A. Anderson — 2704

Hon. Mr. Hall — 2706

Mr. Williams — 2707

Mr. Wallace — 2708

Hon. Mr. Barrett — 2709

Mr. Gardom — 2710

Division on amendment — 2710

Division on

section 15 — 2710

Report and third reading — 2710

An Act to Amend the College Pension Act. (Bill No. 160).

Committee stage.

Mr. McClelland — 2711

Division on amendment — 2711

Mr. Curtis — 2712

Hon. Mr. Hall — 2712

Mr. D.A. Anderson — 2713

Division on amendment — 2713

Mr. D.A. Anderson — 2713

Hon. Mr. Barrett — 2713

Mr. D.A. Anderson — 2713

Division on

section 14 — 2714

Report and third reading — 2714

An Act to Amend the Teachers' Pensions Act, 1961. (Bill No.

161). Committee stage.

Mr. McClelland — 2714

Division on amendment — 2714

Mr. D.A. Anderson — 2714

Hon. Mr. Cocke — 2715

Mr. Curtis — 2715

Division on amendment — 2715

Division on

section 17 — 2716

Report and third reading — 2716

An Act to Amend the Municipal Superannuation Act. (Bill No.

162). Committee stage.

Mr. McClelland — 2716

Division on amendment — 2716

Mr. D.A. Anderson — 2717

Mr. Chabot — 2718

Mr. Gardom — 2718

Mr. Williams — 2719

Mr. Curtis — 2720

Division on amendment — 2720

Division on

section 27 — 2720

Report and third reading — 2720

FRIDAY, APRIL 13, 1973

The House met at 10 a.m.

Prayers.

Introduction of bills.

HON. E. HALL (Provincial Secretary): Mr. Speaker, I ask

leave of the House to make a statement regarding the tragic

affairs in Vernon.

Leave granted.

HON. MR. HALL: Mr. Speaker, I and the department staff

contacted Col. David Carr, the commanding officer of the

Canadian Forces base in Chilliwack, with respect to the Vernon

situation as reported in the newspapers, particularly the

statements of Col. Carr. He stated that the tragic accidents

were isolated incidents and the explosive device was brought

down from the hills. He said that he sent three recommendations

to the Minister of National Defence.

Those recommendations are:

(1) Put up more warning signs to warn the public to keep

away from the area;

(2) Have an educational programme through the schools in the

community with respect to the area and the need of not

trespassing;

(3) A sweep of the area would not do any good, as the area

consists of 31/2 square miles and it would take 40 men two

months to complete it.

He further stated that it is now up to the Minister of

National Defence to make his decision.

We told Col. Carr that the government is most perturbed with

respect to this matter and urges that everything be done to

make the area safe. We are not satisfied — I repeat, we

are not satisfied — with those statements. To that end,

further communications have gone to the Minister of Defence in

Ottawa as follows:

"The Government of the Province of British Columbia urges

you to have a complete sweep made of the Vernon military area

where the tragic accident occurred last Sunday, and to take all

of the steps to assure the complete safety of the area." Signed

by the Provincial Secretary.

MR. SPEAKER: The Hon. Member for North Okanagan.

MRS. P.J. JORDAN (North Okanagan): On a point of privilege,

Mr. Speaker. With your permission I would like to publicly

compliment the Provincial Secretary (Hon. Mr. Hall) on the

assistance that he has offered on behalf of the government to

the people of the Vernon area, to the family and to myself as

MLA.

I hope the House will support the Provincial Secretary and

the government in their efforts to insist that this request is

complied with by the federal government to ensure that as much

as possible such a tragedy will not happen again.

While I recognize through the Premier's statements that the

government cannot take active participation in my claims to the

federal government on behalf of the families that have been

bereaved not only in this incident but before, for financial

compensation, I would hope the Provincial Secretary would use

as much support in whatever avenues he can in the government

without involving him illegally in any way in the support of

this claim on behalf of these people. Again, I would like to

thank the Provincial Secretary.

MR. SPEAKER: The Hon. Second Member for Victoria.

MR. D.A. ANDERSON (Victoria): Yes, Mr. Speaker. This party

fully supports the statement of the Provincial Secretary. We

endorse the idea of a further sweep although, of course, it is

never possible to be 100 per cent sure that every device of

this type is recovered, no matter how much sweeping is

done.

At this time we should mention that it is not isolated. It

may in this instance be military material but we do have an

extensive mining industry in the province — at least at

the moment — and there are devices and caps being used

there that are extremely hazardous to children. I trust that

this object lesson, tragic though it is, will lead to a

tightening-up in all the areas such as the mining industry as

well as this military so that in other aspects as well we can

make the province a safer place for our children.

MR. SPEAKER: The Hon. Member for Oak Bay.

MR. G.S. WALLACE (Oak Bay): Thank you, Mr. Speaker. This

party would also certainly pay compliment to the Provincial

Secretary for his firm attitude in insisting that every attempt

be made to make the area safe. When we hear so much about

unemployment it is very distressing to find an indifferent

attitude by the army towards the time and effort which would be

required in a sweep. I'm very pleased and this party strongly

supports the government taking the firm attitude that nothing

less than a determined effort to sweep the area will be

acceptable to this House.

Orders of the day.

HON. D. BARRETT (Premier): Mr. Speaker, I move the House

proceed to committee on bills.

[ Page 2698 ]

Motion approved.

HON. MR. BARRETT: Adjourned debate in committee on Bill No.

159, Mr. Speaker.

AN ACT TO AMEND THE

CIVIL SERVICE SUPERANNUATION ACT

(continued)

House in committee on Bill No. 159; Mr. Dent in the

chair.

section 15.

MR. CHAIRMAN: I recognize the Hon. Second Member for

Vancouver–Point Grey.

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

the motion that is now before the House that we were dealing

with at length yesterday evening, I would like to reflect on

the too infrequent but most pleasant interludes that we've had

this session. That was the interchange of ideas and the

economic attitudes that were expressed last night. One spirit

prevailed in the House last night and that was the desire that

this system and this place both work.

You know, Mr. Chairman, the Members left whistling —

some for the very first time. They felt functional and

productive and even happy. We found last night that reason

conquered emotion, intelligence vanquished invective and there

was a passion for performance in this Legislature. It was a

really nice spring feeling, Mr. Chairman, a really nice spring

feeling.

Yesterday evening the former Premier had, I think, his

finest hour since I've been in the House and I would like to

congratulate him. He was advocating economic caution. The new

Premier — he too was advocating economic caution. But

over and above that he urged the need to hedge for growth. He

talked about flexibility and sort of inferred that he didn't

want to be fenced in. The old Premier was wary of equity in

today's market; the new Premier was wary of it but not to the

same extent.

[Ms. Young in the chair.]

But I'd like to make this point: all levels of government

today are hammering at equity via taxation and via controls.

Until such time as the new values are sorted out, I think

caution in equity should certainly not be disclaimed.

We talked a little bit about parity bonds and we trod very

frankly, but gingerly. I think it's a flirtation experiment.

There're not any problems but I don't think that they should be

a long-time lifestyle for B.C.

In any event, Madam Chairman, last night the consensus was

caution. The amendment that has been proposed by the official

opposition provides a vehicle for caution. An amendment that

will be proposed a little bit later on this morning by the

Second Member for Victoria (Mr. D.A. Anderson) will, in my

view, provide a better vehicle for flexibility but still

emphasize caution.

Investment cautions and the laws of investment caution are

not new. They're historic and they're well-reasoned. They come

from long-practice rules which you find in the law of trustee

investments. Those are investments in which trustees —

say, the holders of assets and funds for others, guardians for

infants, executors of estates, comity for patients, managers of

portfolios for people's investment, public trustees, insurers'

moneys and investment plans — all of those things you

find are covered by the law of trustee investments.

Under the law of trustee investments there is no carte

blanche authority to invest. These laws of trustee investments

came about via our common law and our statutes. There's about

200 years precedent. Rules must be there. This has been the

consensus over about a 200-year period. If a power is not going

to be exercised, the power should not be granted.

Madam Chairman, legislative powers do not rely upon the

continued existence of any well-meaning individual. When

granted, they're there to be used by…

Interjection by an Hon. Member.

MR. GARDOM: …by anybody, as the Member says —

whoever is authorized to use the power. That person can use the

power only within the confines of it. So if you give a carte

blanche power you are giving a carte blanche authority to

somebody to exercise carte blanche power.

Here, within your bill and within the

section that we're

complaining about now, you have eliminated any confines. There

are not any checks. There are not any balances. There are no

parameters, viable or otherwise.

You've heard of the right-of-way rule in driving. It's on

the statute books. Some people might say, "Well, I want to take

it off because I'm not going to go ahead and violate it. I'm

going to be cautious." That's fine and dandy, Madam Chairman.

But we've got to remember that there are other drivers and they

may not be as cautious as you. Or indeed, you as a driver may

have a change of personality and you may not be as cautious as

you have planned to be at the outset.

All of these points have been considered very carefully over

the past 200 years. In the law of trustee investments powers

were given that set definite guidelines and definite

parameters. They

[ Page 2699 ]

eliminated the opportunity or possibility of

an opportunity for any kind of funny-farm actions or funny-farm

investments.

What we're talking about here are trust funds. They're trust

funds just the same as the illustrations that I have been

giving. I say that we need built-in safeguards against judgment

errors. That's what it is: built-in safeguards against

judgment errors. There's nothing wrong with a person mucking up

their own investment portfolio if they choose. But they don't

really have the right to do that with somebody else's. We've

got to go ahead and legislate against the possibility, as best

we can, of judgment errors. As I've said, there is a 200-year

precedent on this point.

As I mentioned a few seconds ago, even apart from the

question of judgment errors there can indeed be personality

changes. The power can be exercised, albeit genuinely but still

improperly, and poorly exercised. Our present Minister of

Finance could perhaps slip on one of his dad's old banana

peels. He could get a nasty burnp on the temple and end up with

a very different attitude than he has today. But if the power

is unfettered to start with it remains unfettered, to be dealt

with as the person controlling it deems fit.

Sure, errors will eventually come to light, but after the

fact and after the loss. That's why we have this historic

precedent. That's why we have specific laws that have been

reasoned and have been thought out and have been practised for

about 200 years concerning trustee investments.

There's another point and this is the last point that I wish

to make. That's the safeguard of open debate Your measure

precludes that. The amendment provides the openness of debate

for desired programmes. Let me illustrate. I'd much appreciate

the attention which I know I have of the Hon. Minister of

Finance. I'd like to give two illustrations here, with no

acrimony and no condemnation at all, but just illustrations of

human nature at work.

It takes a Grand Vizier to fool a Grand Vizier. The new

Premier said last night that there would not be any win or grin

for him. That's fine and dandy. I think win or grin would be

the last thing that one would have ever expected from the

former Premier, even he himself. But that's life and these

things can happen. But the power of public debate saved the

loss there. The power of public debate was available because a

measure such as yours was not on the statute books. The only

route at that time was the public route. It was not possible

for an executive decision to be made and happen. The only route

was the public route.

The second illustration I want to give on this point is the

Commonwealth Trust situation. The denial and the statutory

unavailability of report initially precluded public debate.

That created loss, which we all well know in the House. But

also, the power of public debate prevented future loss.

You will recall that it was found that the company was

conducting its business in a manner that was contrary to the

public interest. But the fact could not be brought to the

attention of the general public by virtue of the legislation

that was in this House. But the power of public debate

prevented the second loss to the taxpayer because it became

necessary to utilize a legislative vehicle — which is not

here — to find funds for the proposed loan of $3 million,

I think it was, to that company. Fortunately, that loan was

never given. If it had been given, there would have been

another $3 million bath.

But the power of public debate was there and, I'm sure, the

power of public debate prevented those funds being

advanced.

Interjection by an Hon. Member.

MR. GARDOM: Well, there's no way that the $3 million would

have saved anything. Another $3 million would have gone down

the drain, as has proved to be the case.

With respect to the illustration I've given here, in a bill

such as yours we don't find these built-in checks and balances

and the public route may not be available, by virtue of what

I've discussed this morning. In concluding, Madam Chairman, I would say that trust funds

are trust funds and trustees are trustees. We have a trust fund

here and we have a trustee. Trustee investments require

built-in legislative protections. They've been too long and too

effectively practised. They have had built-in checks and

balances. Those built-in checks and balances should not be

eroded with an open-end, carte blanche, blank cheque route.

That is what we have here. This is why we're requesting…

Interjection by an Hon. Member.

MR. GARDOM: Does that disturb you? Why? It doesn't disturb

me in the slightest. I'm not saying there's going to be an

abuse of power but the opportunity for the abuse is here.

Mr. Minister of Health, you've had experience in the life

insurance field and you know that premiums constitute trust

funds. I could assure you, Mr. Minister, that had you been

sitting on this side of the House and had there been a

different government and had this particular measure been

proposed, you would have been one of the first advocates to

make the points that I've made this morning, as would the

Premier and the Provincial Secretary. I know these fellows too

well. I've almost lived with them for six years. There's no

question of a doubt that they would be doing that.

[ Page 2700 ]

I'm very much in favour of the amendment that is now being

proposed. I'm more in favour of the amendment that is to be

proposed later on this morning by the Second Member for

Victoria.

MS. CHAIRMAN: The Hon. Minister of Health.

HON. D.G. COCKE (Minister of Health Services and Hospital Insurance):

Madam Chairman, what the opposition are asking this morning is that we place

the government in a more restrictive position than what you would place a trustee

or an employer where an employer has a salaried service pension plan.

My

interpretation of the federal Act, Mr. Member, who is

also a lawyer, is that this plan is subordinate to the federal

Act and therefore must invest in the kind and at the

percentages allowed by the federal Act.

So therefore if you would allow a normal employer to invest

in common shares, why would you not have the same kind of trust

in the government? Now the employer, if there are — that

is the employer or trustees — must make up losses, if in

fact they enjoy losses…

Interjections by some Hon. Members.

HON. MR. COCKE: Madam Chairman, the fact of the matter is

why should not government be a normal kind of employer? If we

give that kind of latitude to employers why wouldn't we give

that kind of latitude to the government? As far as I'm

concerned, there will be no losses. The likelihood of losses in

a plan of this magnitude is so absolutely infinitesimal —

and the people across the way know it…we know something

about this area. We've watched the mutual funds over the last

number of years. We've seen how the bottom has fallen out of a

great number of them. We know the hazards of the market.

What we are talking about here is some investment for the

Province of British Columbia which is long overdue, long

overdue. The power has been in the east. Now, do you want to

keep it in the east? If you want to be that restrictive, then

we are going to enjoy the same kind of unemployment, lack of

progress and growth that we've enjoyed in the last number of

years.

Ms. Chairman, this is a well-thought-out amendment to the

Pension Act and I support it fully, and had I been on the other

side I would have kept my mouth shut.

MS. CHAIRMAN: The Hon. Member for Oak Bay.

AN HON. MEMBER: There's no amendment put.

AN HON. MEMBER: This is an amendment to the Pension Act and

there's no amendment being discussed right now.

Interjections by some Hon. Members.

MS. CHAIRMAN: Order. Order. Order! I have asked for order.

The amendment that we are dealing with reads — it was

submitted by the Hon. Member for Langley to

section 15 to amend

as follows: "section 15 by deleting subsection (3)(

d) and

relettering." That is the amendment we are dealing with.

I recognize the Hon. Member for Oak Bay.

MR. G.S. WALLACE (Oak Bay): Thank you, Madam Chairman. I

appreciate you informing me which amendment I am speaking

about. Certainly when one sits around the chamber it can become

a puzzle to know exactly what we are talking about

sometimes.

But as a member of the Conservative Party, I suppose it

would be most seemly that I should talk about caution in

investing other people's money; and certainly as a Scotsman I

was always brought up to count the pennies.

I also enjoyed the debate we had last night in which the

former Premier and our present Premier exchanged their basic

views on the investment of money, particularly civil servants'

money.

I haven't been here many years, but the few years I have

been here I've never heard the former Premier talk with such

frankness about his attitude to the financing of the affairs of

this province.

Time after time on the very crucial financial matters of

this province, the former Premier used to sit in that chair

across the way and smile, and smile, and smile, but he never

ever got up and spoke in the open, frank manner and in depth as

he did last night.

As Premier of this province he used to avoid discussion on

such sensitive areas of financing as his parity bonds. He

always repetitively told us that they were as good as cash in

hand, and I agree with that. But last night people like myself

who know very little about the intricacies of financing found

it very stimulating and all around me I heard comments that

this was perhaps the best debate we had had this season.

The frankness of the former Premier was matched by the

frankness of our present Premier. I think that if this is what

you mean by open government, then we are certainly looking

forward to more exciting days. I think the people of British

Columbia can feel more confident that they will become better

informed about not only the philosophy of this government, but

its practical financial decisions and the ways in which it

intends to use, in this particular instance, the money which

civil servants pay toward their pension plan.

Again, as a Conservative, I feel that this government should

exercise a very definite measure of caution for the simple

reason, as was pointed out by

[ Page 2701 ]

the former Premier, that the whole monetary system around

the world seems to be in the shakiest of positions. Again I

make it quite plain that I don't profess to understand all the

ramifications of the world monetary system. As one who reads

the world journals in the kind of language for the layman which

is described in Time magazine, it's very clear that those who

know most about financing and world economics are living very

much in an uncertain world. People generally, citizens in every

industrialized country in the world, have a real feeling of

fear and uncertainty.

God forbid that we should have any depression, but the word

is mentioned all too often these days by the experts as being a

possibility.

Tremendous emergencies seem to erupt and all these financial

experts suddenly, as the former Premier said, have to get going

in the middle of the night to emergency meetings in different

European countries, or in New York. It leaves the ordinary

citizen like myself very uncertain and apprehensive about how

well the financial stability of the world is at the present

time.

I think if that kind of world situation doesn't engender a

feeling of caution, goodness only knows whatever will. We are

all living in a smaller world and the interdependence of

countries in the form of trading blocs has become so obvious to

most of us that we all know very well that isolationism is gone

forever, and probably never was a sound policy for the United

States or anybody else.

We are living in such a smaller world, where countries are

so interrelated and so interdependent that we know very well,

and the present Premier mentioned this last night, that we

can't hide from the fact that we are very dependent on what

happens financially elsewhere.

He pointed out that this small corner of North America can

do very little to influence these very powerful world monetary

forces.

So against that general background I would have to say that

there is a rigidity that the present Premier is trying to

loosen a little bit. While I respect his well-intentioned

motives for trying to be less rigid, against the general

background of financing that I mentioned I would have to ask

the question as to whether this is the appropriate time to

start being a little more adventurous in investing pension plan

money in common stock.

My decision is that this is not the time, and from the kinds

of opinions that we have from the experts and from the feeling

that perhaps we are reaching a point where the stock market may

begin to decline again, this is not the opportune moment for

taking more risks.

The whole question of inflation was mentioned by our present

Premier. While I agree in part with what he said, that

government has to try and provide some hedge against inflation

for the pensioner, it is also a fact that the people who are

the working members of society in a time of inflation

continually contribute as inflation increases.

It's automatic that they continually contribute larger

amounts of revenue to both the provincial and federal coffers.

While this doesn't prevent the erosion of the dollars already

in the pension plan, it does give the provincial government

opportunity by other mechanisms to give the pensioner increases

by one means or another, direct or indirect.

I think this has been shown by the actions already taken by

this government. I would perhaps review my harsh criticism of

the government at the time of the budget when I said that the

Premier was proposing to spend at a rate of a 9 per cent

increase when he expected a revenue increase of 12 per cent. Of

course, this kind of surplus should perhaps be held in reserve

when we think of the tremendous dangers of a run on parity

bonds.

I think it should be repeated today, as was stated by both

the Premier and the former Premier last night, that the

province is in good financial shape and there is no sign of any

sudden cashing-in of parity bonds. Even if this did happen, the

Premier made it plain last night that the funds and the surplus

cash are available to meet such a run if it happens.

Because of the feeling of apprehension by people generally

about financing in North America and Europe, I think that it's

very important that this House make that plain and not run the

risk of engendering panic by the present holders of parity

bonds. Last night when the Premier quickly responded to the

Leader of the Loyal Opposition, I sensed that this was very

much in his mind — to reassure the people of British

Columbia and particularly the holders of parity bonds that we

were talking philosophically and perhaps looking at possible

dangers in the future, but that at the present time this is not

a fear which the people of British Columbia holding parity

bonds should have. If I've read that debate last night

correctly it might be well for the Minister to mention that

when he speaks further in this debate.

I feel that the amendment which will presently be put before

the House by the Liberal Party represents…

Interjection by an Hon. Member.

[Mr. Dent in the chair.]

MR. WALLACE: Yes, Mr. Member. We have a spirit of

cooperation in the opposition.

The amendment represents to me a compromise between the

rather unlimited freedom given to the government in the clause

that we're proposing to delete and yet it does loosen a little

bit the rigidity which the government is keen to loosen.

Therefore, while I support this amendment — namely, the

deletion of 3(d) — I feel that we can bring in a better

amendment which I hope the government will consider later this

morning.

[ Page 2702 ]

MR. CHAIRMAN: I recognize the Hon. Member for

Boundary-Similkameen.

MR. F.X. RICHTER (Boundary-Similkameen): Mr. Chairman, I was

rather amazed at the statement of the Hon. Minister of Health

Services and Hospital Insurance (Hon. Mr. Cocke) in using a

private employer and the government as a comparable situation

in relation to the investment of pension funds.

Should a private employer who invests pension funds make an

error and lose on that investment, he puts his own personal

assets at stake. In relation to the government, none of the

Executive Council's members' personal assets would be at stake.

Only the taxpayers' funds would be at stake.

Interjection by an Hon. Member.

MR. RICHTER: We want to trust the government.

Interjection by an Hon. Member,

MR. RICHTER: If you're investing them, somebody has to make up the loss,

government or private. In the event of the private, his own personal assets

are at stake. But the government elected…

Interjection by an Hon. Member.

MR. RICHTER: Sure they are. Then he's going to break down

his pension plan within his own organization. A government

won't, so it's the taxpayer who will have to make it up in the

end.

MR. CHAIRMAN: I recognize the Hon. Member for North Peace

River.

MR. D.E. SMITH (North Peace River): Thank you, Mr. Chairman.

Just a few comments concerning this proposed amendment. I

certainly support it.

First I took a great deal of interest in the discussion last

night between the Hon. Premier and the former Premier of this

province. Having spent a good part of my active business life

in the field of investments and insurance, listening to the

discussion last night I came to the conclusion that the two

speakers involved made very well and in a very serious manner

the points for both the government and opposition positions.

Really, what we ended up with was quite a philosophical

difference between the opposition on this side of the House and

the attitude of a socialist government.

The thing which concerns me more than anything else, Mr.

Chairman, was the apparent attitude of the Premier — and

I presume this reflects the attitude of the Executive Council.

While he indicated that he would exercise some caution in the

investment of funds, he was quite willing to consider

broadening the field of investments into areas where there may

be a profit or there may be a disastrous loss. He was quite

prepared to take that risk.

It's not good enough to say that the government guarantees

the pension plan. That's not good enough, Mr. Chairman. These

funds are trusteed funds. As a matter of fact, a good part of

the money in the pension plans comes as a result of direct

contributions by every civil servant of this province. The

other part of the fund comes as a contribution on behalf of all

the taxpayers in this province to fund the employers' share of

the pension plan.

The pension plan and the commitment of the pension plan

should be fully funded at all times. This is what has happened

in the past. It has been fully funded. Any commitments of the

plan have been fully funded and backed by reserves and

cash.

When we start wandering away from the principle of sound

investments and get into the matter of investments in common

shares, stocks and so on, every company that has any experience

in self-trusteed pension plans will tell you that they've had

good experience and bad experience. I'd like to bring to the

attention of the House one of the larger self-trusteed pension

plans in the province to give you an indication of the fact

that even in good times these plans are not necessarily the

best vehicles for funding a pension plan.

That plan is operated by none other than the Canadian

Medical Association on behalf of all the doctors. It's a

self-trusteed plan. They've stepped out into many fields of

investment, including common shares and flyers on the stock

market and so on. Do you know something, Mr. Chairman? One of

the poorest track records in the field of investment is the

return that the doctors have realized through investing their

funds into a self-trusteed pension plan under the jurisdiction

and management of the Canadian Medical Association. And that's

a fact.

MR. WALLACE: You spoiled my whole day. (Laughter).

MR. SMITH: I'm sure the doctor from Oak Bay knows what I'm

talking about.

They are supposed to have some of the best investment brains

that they could hire as trustees for the operation of that

plan. Yet they have one of the poorest track records in the

field of investment return of any plan in British Columbia.

They would have been far better off to have taken the

tremendous funds available to them and put them into corporate

bonds or into parity bonds in the province. They would have got

a much better return. Their net has been anything but good.

[ Page 2703 ]

The government is acting as the trustee for the people who

are employed in the civil service. There is no guarantee, then,

even with expert investment counsel they will always make wise

decisions. As a matter of fact, I'm prepared to say that they

will make as many unwise decisions as wise decisions in these

investments.

Under the terms that they would like to see, they could

invest in any common shares of any company or corporation in

the province. That is why we support this amendment — to

delete that section. At least the government should be

responsible to the extent that they would not want for

themselves a provision that is not available to insurance

corporations and trust funds of that nature. As was pointed out

by the former Liberal speaker (Mr. Gardom), for hundreds of

years they have been subject to checks and balances within that

area of investments.

Mr. Chairman, in an attempt — and probably an honest

attempt — by the government to provide greater returns

not only to the people who are presently retired but also to

those who will retire in the future, by pressures from within

and from without they will be forced to take a flyer once in a

while with those pension funds in order to provide what they

feel will be a greater return.

We're already in a position right now to see some of this

philosophy in the bills that are before us. The pension

benefits have been increased. One way you increase pension

benefits without any more direct impost on the taxpayers than

we presently have is to try to get a greater return on the

investment funds so that whatever return is there will pay off

in terms of increased benefits, without any further cash

contributions than we presently have going into the plan.

So there is going to be a great deal of pressure upon the

Premier and the Treasury Board of this province to increase

benefits. There has always been that. There's going to be an

equally great or greater pressure upon the Members of the

cabinet to move into fields where the chance of loss is far,

far greater than under the present circumstances and

investments of the pension funds.

It's a bit of a tongue-in-cheek expression, I guess, because

I don't have actual facts and figures to back it up; but in the

insurance business there's a saying that, with respect to

investments, some of the most highly-skilled and highly-trained

people in the country are the poorest investors. One of the

expressions that is often used is that if you want to

collectively look at groups that have a track record of very

poor returns on their investments, look at lawyers, doctors and

teachers, and not necessarily in that order. As a group

collectively employed, they have the poorest record for

continuous and good investments of any group in the country.

Maybe that's because their experience is in fields away from

the investment field.

Nevertheless, if we do not retain the checks and balances

that are required by every large insurance or trust company

within the provisions of our superannuation Acts for this

province, then I'm concerned that we are going down a very dark

and narrow path that, not necessarily immediately, but within a

few years will result in one of two things: either a reduction

in pension benefits to the people who are already retired or

about to retire, or a continually greater requirement by the

Crown to pump funds into the plans to meet the commitments of

those plans.

MR. CHAIRMAN: I recognize the Hon. Provincial Secretary.

HON. E. HALL (Provincial Secretary): Mr. Chairman, when the

debate started yesterday evening, I said that this amendment

was not acceptable to the government Since then we've had what

has been termed a "philosophical discussion." All four parties

have engaged in that discussion. I think I should sum up and

then perhaps we should come a little closer to the rules of the

House than we've been recently.

I think it's fair to say that there has been some

constructive criticism. There's been little heat and acrimony

in the debate so far. I certainly don't want to start up that

particular path — tempted though I am from time to time

when I hear words like "funny-farm…speculation…gambling

… take a flyer…mucking up investments," and things

like that, I'll ignore those for the moment.

The government considers this to be an important part of the

financial policy of this government for many years to come.

We're talking about $750 million, We're talking about a series

of checks and balances that are well defined in our Acts and

statutes, no matter how much you say they're not here. We're

talking, for instance, about

section 13 of this Act currently

being amended as far as paragraph 3 of that Act is concerned,

in which all contributions in the hands of the Minister of

Finance under this Act shall be placed in a fund in the

Treasury to be known as the Civil Service Superannuation Fund

and shall be accounted for as part of the consolidated revenue

fund.

We have indicated that we will table at each session a list

of the holdings in the capital stocks of any companies we

choose to get into. There is the Treasury Board under the Audit

Act . There is a professional man who has looked after the

affairs of this province as far as pension funds are concerned

for many, many years. I think the province has been served

well by Mr. Sam Ackland, the actuary and the

[ Page 2704 ]

accountant for the

funds

In the other three funds — if I may because I think

that perhaps this debate could do for all the Sections in the

next three bills we'll be discussing — there are

trustees. This is the only fund where there's not a trustee.

The Treasury Board and cabinet, following passage of these

bills unamended, will have to devise some methods in which we

can instruct the trustees as to methodology, not in terms of

instructions that will supersede their trustee function.

As I say, there is the annual statement of affairs. There

are also the members of the pension plans themselves — a

very significant group of people to whom we'll be giving

collective bargaining before very much more time has passed

this year.

All in all, I think it's fair to say that we require, we

request and we are going to insist on having this investment

power, this flexibility, for a government which is determined

to take this province into a more meaningful role as we enter

the Seventies and Eighties. As I said in second reading, it's

been part of our policy. We have stomped the country for 30

years on this subamendment alone. I think that sums up the

position of the government without any heat. It's a difference

of philosophy.

For the first time this session I agree entirely with the

Member for North Peace (Mr. Smith), who said quietly…and I

now reduce the tone of my voice and say that we will not accept

the amendment. The Liberal leader has graciously and

courteously given me a copy of a further amendment to come. We

won't accept that one either. Thank you very much.

MR. CHAIRMAN: I recognize the Hon. First Member for

Victoria.

MR. N.R. MORRISON (Victoria): Mr. Chairman, in speaking to

this amendment, I very briefly would like to say that we really

are concerned on this major and fundamental change in the

financial directions of this province.

I was pleased last night to listen to the plain talk across

the floor of this House. Today I was pleased to hear the plain

position of the definite direction that this government intends

to take. All we ask is that you be careful and that you be

cautious. I want to assure you that no one on this side of the

House has any intention of trying to make your life difficult.

We think you make it difficult enough by yourself, frankly.

I don't want any of us to say "we told you so" at some

future date. But I would like to remind you that you heard it

here first.

Amendment negatived on the following division:

YEAS — 15

Richter

Bennett

Chabot

Phillips

McClelland

Morrison

Jordan

Smith

Fraser

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Wallace

Curtis

NAYS — 30

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Calder

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

PAIRED

Nimsick

Brousson

Stupich

McGeer

MR. CHAIRMAN: I recognize the Hon. Second Member for

Victoria.

MR. D.A. ANDERSON (Victoria): Mr. Chairman, now that that

amendment, which would wipe out government investment of the

pension funds in any capital stock of any corporation, has been

defeated and we're back with the Minister of Finance having

full discretionary powers to invest in any capital stock of any

corporation, I feel that we should see what restrictions we

could put forward which would protect the pensioners involved

who are, in this instance, civil servants. I imagine the Hon.

First Member for Victoria (Mr. Morrison) and myself represent

more of these people than any other Members of the House might

do.

We would like to see in this

section some restriction which would end this

unfettered and unrestricted power which would grant many millions and millions

of dollars of the pensioners now working into the hands of the Minister of Finance.

In doing this I would like to indicate, as I stated last night, that it is not

a question of us believing that the Minister of Finance intends to use these

funds in any nefarious or underhanded way. It is not a question of us mistrusting

him in terms of him misusing these funds. But there is a problem here in terms

of mistakes of judgment. Mistakes of judgment in investment decisions are numerous

and have occurred by other government corporations in other provinces as well

as in this province. There have been many examples of this and I have listed

them on previous occasions when debating legislation similar to this particular

subsection we are considering now.

[ Page

2705 ]

We are dealing here with trust funds, not with the public's

money in the general sense. We are dealing with the trust funds

that have been put aside for the civil servants' pensions. The

argument that because they are guaranteed by the government and

therefore by the taxpayers, while certainly true, does not

avoid the responsibility for dealing just as carefully as we

can with these trust funds.

The key word is really "trust." We are not asking that the

Minister of Finance be completely restricted. That amendment

was defeated. But we do feel that the other extreme of

unfettered, unrestricted discretion should also be defeated.

The extreme on that side is perhaps even worse than the extreme

on the other.

We are not saying that abuse will occur — we are

simply saying that the legislation, if passed the way it is,

will give the opportunity for abuse. It will give the

opportunity for mistakes as well as deliberate abuse. We are

not arguing that this government will do this. We are not

arguing that the following government will do it. We are simply

saying that when a Legislature responsible to the people and

for trust funds acts in a manner which we think is

irresponsible, there should be very, very careful decisions

beforehand.

To hand out these powers by legislation to the executive is

not the true function of a Legislature. If there is any check

upon the executive in our system of government it is by the

Legislature. Perhaps backbenchers don't necessarily realize at

the moment that there really can be none other in a British

parliamentary system. This is perhaps one of the greatest

weaknesses in the British parliamentary system when you are

dealing with an executive that is strong and a Legislature that

is weak in terms of the number of opposition Members and in

terms of the docility of the government backbench.

Last night the argument was put forward that this had to be

done to help the pensioner. Really it was the only way of

getting him out of the bind of inflation and the problem of his

declining purchasing power. Well, no one in this room of any

party — Social Credit, Liberal, Conservative or NDP

— wishes to do anything less than the maximum for the

pensioner. This argument that somehow this is necessary to do

the best job for the pensioner simply won't hold up.

HON. MR. COCKE: That argument was never put.

MR. D.A. ANDERSON: Well, Mr. Minister of Health, you were

unaware of the last amendment we were on. When I put this

amendment I will send you a special copy. The argument

yesterday, when you were unaware of what amendment we were on,

did deal with the question of trying to get the best deal for

the pensioner. It was said that the only way of getting it was

through this type of legislation.

We say that there has to be in situations such as this some

sort of legislative provision which would restrict this

unfettered power. No one here of any party wants to do anything

less than the best for the pensioner, but it is not necessarily

doing the best for the pensioner to hand out total control over

his funds to a single person, namely the Minister of Finance,

who can act entirely on his own discretion for other

objectives, perhaps, than those of the pensioners' well-being

when investing those funds.

Statements have been made in terms of bringing the province

up 30 years. Statements were made by the Provincial Secretary a

few minutes ago which do indicate that the interests of the

pensioners are not the only interests that the government has

in mind when bringing in such legislation.

I propose, Mr. Speaker, an amendment to this

section 15,

line 13, by striking out the words "(

d) in the capital stock of

a corporation; and" — and substituting an

amendment which you have, I believe, Mr. Chairman. I have

circulated it to other Members — there are a few extra

copies, if any of you want them. This amendment then would

restrict the power of the Minister of Finance in the following

way.

First, with respect to preferred shares, it would insist

that the corporation in which he wishes to invest be one that

has paid a dividend in each of the five years previously. And

in those five years, the amount that has been paid as a

dividend will have to equal the specified annual rate upon its

preferred shares.

A fairly reasonable provision. In other words, the record of

the company as far as preferred shares goes, has to be that

they have paid out what they should pay out according to the

rate of the preferred shares. And I think that is not an

unreasonable restriction.

The second area where we would permit, with this amendment,

investment would be in common shares — and again it's

unlimited within these particular parameters. We say that in a

corporation in which the Minister of Finance wishes to invest

money, common shares, we think that in the five years

previously the corporation should either have paid a dividend

every year on its common shares, or had earnings adequate in

those years to pay a dividend. And the amount of money which we

think they would have to have either paid out or earned and

kept, which they could have paid out, should be equal to 5 per

cent of the average value of the shares.

These two provisions are not onerous. They exist elsewhere.

The actual wording of my amendment is taken from and adapted

from the insurance companies Act. It's a restriction which we

feel would protect, on the one hand the pensioner and the civil

servant expecting to go on pension in the future, and on the

other, give an adequate amount of scope to the Minister of

Finance to invest in any corporation provided it's got a decent

record for the preceding five years.

[ Page 2706 ]

Now, this we don't think is something which restricts the

Minister of Finance from investing in the resource industry of

British Columbia, for example. There are many corporations in

B.C. in the resource industry which have had a record over the

last five years which would permit pension funds to be invested

in them, even though this amendment passes.

The restrictions are such that there is still great scope

for the social objectives to be achieved, that the Hon.

Provincial Secretary (Hon. Mr. Hall) and, indeed, the Premier

talked about last night. There is great opportunity within

these limitations for investment for social purposes in

corporations in British Columbia in the resource

industries.

But if this amendment is accepted, it will prevent any

future abuse that might take place when someone acts

irresponsibly or when someone decides that they have a

particular enthusiasm for a new company which may sound great,

but which may in fact later on turn out not to be so good.

It's a little bit of caution, insisting on a five-year rule

of an adequate record before the government can go in and

invest the pension's trust money.

The statement that the thing is guaranteed anyway by the

public, so it really doesn't matter how much power is handed

out, is obviously fallacious.

First of all, if the pension funds do not generate an

adequate return, if there are losses which sop up or absorb any

profits that might be made, obviously the pension fund is going

to be less and the pensioner is going to be less well off,

regardless of the fact that the actual capital base will be

replenished from the public treasury.

On the other hand, the argument that we should accept this

type of legislation because it really doesn't matter — in

the end the public has to pay if there are any losses,

therefore there can be no losses, is an argument with respect

to the public purse and with respect to taxation of the people

of British Columbia which we feel really is unacceptable as

well.

The public also need protection. And this type of amendment

gives them some protection against irresponsible

investment.

Mr. Chairman, the proposal we put forward exists in other

legislation. In actual fact, I made it a lot easier and I made

it a lot more generous with respect to the government than the

insurance companies Act. It's quite a generous bit of

legislation and a generous amendment from the point of view of

the government which wants to make investments.

It's the type of amendment which permits this Legislature to

put some control upon the executive without making that control

or those restrictions onerous or difficult from the point of

view of the objectives which the executive have stated it

wishes to achieve.

We feel that if the pensioners themselves, if these trust

funds of the pensioners are to be properly protected, there

must be some limitation on the unfettered power and the

unfettered investment discretion which

section 15 of the

present bill would permit.

The amendment, in a fairly modest way, goes to providing

that type of check and that type of protection. On behalf of my

Hon. friend, the First Member for Victoria (Mr. Morrison), and

myself, both of whom, as I said, represent more pensioners and

more potential pensioners who might lose or might gain under

this Act than perhaps any other Member of the House, we think

that this amendment deserves the support of the House.

MR. CHAIRMAN: I recognize the Hon. Provincial Secretary.

HON. MR. HALL: Well, first of all, Mr. Chairman, may I say,

because I detected a note of complaint in the leader's voice,

that you told me personally about this amendment about 9:40

a.m. I got a copy of it shortly thereafter, and it's been

discussed with the Minister of Finance and with a number of

other people. It has been given full consideration.

I would also point out that frankly, believe it or not, many

of the arguments that you are using have been used in the

debate on this side of the House already in terms of

determining our position on it.

I say that because I think that you should know that we have

already had this debate in terms of the preparation and the

production and the erection of this bill.

MR. GARDOM: We're not allowed in your caucus anymore.

HON. MR. HALL: No. But I thought you should know that.

HON. MR. BARRETT: You're welcome.

HON. MR. HALL: I thought you might assume it, but now I'm

telling you. We have considered it. In light of the debate

yesterday, and in light of the position I outlined for you a

short while ago, we are not prepared to accept this

amendment.

We've listened. Later on, I'm going to assure another Member

on the other side of the House that there will be an amendment

coming in at the next session on something that he suggests.

But, on this particular occasion on this particular amendment,

the answer is no.

MR. CHAIRMAN: I recognize the Hon. Member for West

Vancouver–Howe Sound.

[ Page 2707 ]

MR. L.A. WILLIAMS (West Vancouver–Howe Sound): Well,

everyone on this side of the House, Mr. Chairman, fully

recognizes the implication of what the Hon. Provincial

Secretary has said by refusing this amendment. But we are in

committee of the whole House, and I think that the Members

should recognize that they do have an opportunity to speak on

the floor of this House regardless of the opportunity that they

may have had to speak and voice their opinion in any caucus,

because we surely haven't come to the day yet…

HON. MR. HALL : I think you misunderstand what was said.

MR. WILLIAMS: I hope I do, because after all it is this

assembly and the committee of this assembly, not the Executive

Council, who make these decisions, and may we never ever lose

that opportunity.

Mr. Chairman, may I draw to the committee's attention the

extent of the entire

section of which this amendment is part,

and say to the members of the committee, accepting what the

Provincial Secretary has said — that there is a Treasury

Board, and there are trustees, there are responsible members in

the public service who advise them with regard to investments,

and that no one would suggest that they are going to be

incautious in their approach — then why do we have any of

the restrictions on this Minister of Finance set out in this

particular subsection?

If the Provincial Secretary is saying that the right to

invest in the capital stock of a corporation…

HON. MR. HALL: "A" means any.

MR. WILLIAMS: It says "a corporation"; "a" means

any, well that's fine. If we are to extend this power and the

Minister is to be trusted in this regard, why don't we just

simply say with regard to these moneys not required for

immediate use in this pension fund, that the Minister of

Finance may invest them at his discretion, period? Put no

limitations on him at all.

Quite obviously, Mr. Chairman, the answer is that previous

administrations, previous Legislatures, have deemed it

essential to place some limitation upon the Minister of Finance

to provide some guidelines which indicate how cautious he

should be. It is only for this reason that we offer this

amendment, because of this government; because no Minister of

Finance should have unfettered discretion in the investment of

moneys.

I'm not going to go into the matters raised in debate last

night as to the dangers in equity investments. No one can fail

to recognize that, in the past, serious consequences have

arisen for organizations who with the best of intentions and

with apparently the best of advice have nonetheless suffered

serious — often tragic — financial loss because of

investment policies.

It's no secret. The Minister knows that the amendment

proposed by the Hon. Second Member for Victoria (Mr. D.A.

Anderson) was borrowed from a federal statute. We make no

apology for that. It is

An Act Respecting Canadian and

British Insurance Companies . I think that it is significant

at this time to consider why the federal government many years

ago felt compelled to place limitations upon the investing

power of the Canadian and British insurance companies.

In the

preamble to that legislation, it says:

"Whereas it is contrary to the public interest that

insurance companies that are unable to discharge their

liabilities to policyholders in Canada as they become due, or

are otherwise insolvent, should be permitted to carry on the

business of insurance in Canada;

"And

whereas it is desirable to provide a system of returns

and inspection against such companies engaging in, or

continuing to carry on, business in Canada while unable to

discharge their liabilities to such policyholders as they

become due, or while otherwise insolvent; and to declare the

conditions upon which such companies shall be deemed to be

insolvent and be subject to being wound-up…” and I

close the quote there.

years ago recognized that insurance companies were in the

position, by reason of the nature of their business, to take

large sums of moneys from citizens in Canada for specific

purposes, namely to provide protection in the event of loss of

life — in the case of insurance companies; life insurance

to provide a fund to compensate widows, widowers and orphans in

the event of the death of one of the spouses, the breadwinners

incautious investment could deplete the funds available to the

insurance companies for the purposes of meeting these

obligations, they saw fit to limit in very specific ways

— but with a great deal of scope nonetheless — the

investment powers of these companies.

Now here we're dealing with a fund of money which the

Minister of Finance hopes — and we hope with him —

will expand so that greater benefits can be paid to the

pensioners who will benefit from this particular legislation.

There is no question as well that if anything occurs or goes

amiss with regard to the investment decisions made by the

Minister of Finance, the taxpayers will be obliged to step in

and ensure that the pensioners don't suffer.

It is because of the likelihood that additional burdens may

fall upon taxpayers as a consequence of errors in judgment or

of unforeseen circumstances over which the Minister of Finance

and his advisers

[ Page 2708 ]

have no possible control, we feel that some

guidelines should be drawn out by this committee and by the

Legislature as to how far the Minister can go.

I listened very carefully to what the Minister of Finance

had to say last night. I thought it was a good debate and that

he said some very significant things which might indicate that

this limitation in this amendment is perhaps too restrictive.

If I gathered what the Minister of Finance was saying, it was

that the beneficiaries of this pension fund should have a

better opportunity to benefit from the growth potential of this

province. It seems to me that what the Minister of Finance was

saying was that as the government moves more into ownership or

part ownership of some of our resource-extractive companies in

British Columbia, moneys from these pension funds should be

available for investment in that kind of development of our

province.

Interjection by an Hon. Member.

MR. WILLIAMS: No, but it's a possibility. I recognize this

possibility. It might therefore be that the restriction that we

offer in this amendment is too narrow to permit that to

happen.

For example, the government has a bill on the floor of the

House which deals with its involvement in a forest operation in

the northern part of the province. Maybe that will be a very

profitable operation. We all hope for the government's sake

that it will. And it may be that these pension moneys could be

used to acquire shares in that company and that therefore these

people would get a direct benefit from that industrial

enterprise.

HON. MR. BARRETT: We're going to look for performances.

MR. WILLIAMS: Fine. If the Minister is going to look for

performance, then the amendment that we are proposing here is

one which sets out a measure of performance that you must seek

before you invest your money.

AN HON. MEMBER: It's 9 per cent a year.

MR. WILLIAMS: If you're going to buy common shares all you

have to do is restrict yourself to investments in companies

which have paid dividends for five years of at least 5 per cent

of the average value upon which the shares were carried in the

capital stock account of that company. It's a very simple

investment. It's an investment limitation which the insurance

companies in Canada have found to be very satisfactory to them,

let me assure you. And let me assure you that many other

companies and many other trusteed funds have borrowed the very

words that are in this federal statute. It is common for

trustees to have the right extended to them to make investments

allowed to companies operating under the Canadian and

British Insurance Companies Act because it has been found

to be a fair, satisfactory and reasonably safe yardstick for

investment. And that's all we're saying to the Minister.

If you want to take some other investment, fine, make

another amendment. But don't leave yourself carte blanche and

say to us, "We'll be cautious."

What is "cautious"? What is "cautious" to you may not be

"cautious" to me; but what is "cautious" to me may be

"over-cautious" to other Members in this House.

You asked me a question in debate last night: "What does

'reasonable' mean?"

MR. D.A. ANDERSON: The courts can decide that.

MR. WILLIAMS: Somebody decides what "reasonable" is. But we

don't think that you should be given that right, Mr. Minister.

Why not take all of the other restrictions out and just say,

"The Minister shall invest these funds cautiously "?

HON. MR. BARRETT: Are you suggesting an amendment?

(Laughter).

MR. WILLIAMS: I'm not suggesting that amendment, Mr.

Minister of Finance.

Mr. Chairman, as I say, we know what the rules are. The

Minister has said they're not accepting the amendment. But it

is important that we place before this committee the

opportunity of providing a guideline, a yardstick against which

the Minister of Finance can measure his definition of

"caution."

MR. CHAIRMAN: I recognize the Hon. Member for Oak Bay.

MR. WALLACE: Thank you, Mr. Chairman. My comments will be

brief to avoid all this repetition. I spoke earlier this

morning and said that I felt that amendment would represent a

measure of compromise between the two boundaries with which we

seem to be debating today. In other words, the government wants

the right to put the money in any corporation. We feel that is

too extensive a power to be granted when you're dealing with

other people's money and taxpayers' money.

I think the point has been made and I am sorry the example

that was chosen hit so close to home when the Hon. Member for

North Peace River (Mr. Smith) tells me what kind of mess my

pension plan is in under the hands of the Canadian Medical

Association. I think this demonstrates the fact that no matter

how well intended or how proficient the financial experts are

said to be, this kind of example which the Member for North

Peace River quoted shows that with all the best of intentions,

financial investments can be misguided and the performance of

the investment might be very unsatisfactory.

[ Page 2709 ]

The amendment which the Minister of Finance has interjected

in the debate a few minutes ago that the government will look

at performance — with respect, Mr. Chairman, that is all

the amendment is saying. Before money is invested on behalf of

the civil servants towards their pension plan, the government

should have some basic formula or guidelines on which that

investment should be chosen — namely, the performance

over the last five years. Now this seems to me eminently

reasonable. We're only asking that it has produced at least 5

per cent return in these years.

We can argue about semantics and what is reasonable and what

one side or the other means by reasonable But this amendment,

in my view, offers a very appropriate compromise between the

government point of view and the more rigid attitude which the

Minister mentioned was typical of the former government. This

kind of amendment gives this loosening effect, it gives the

government some more freedom to invest, a wider scope of

investments, but at the same time satisfies the more cautious,

more conservative approach which this side of the House thinks

is absolutely necessary. I support the amendment.

MR. CHAIRMAN: I recognize the Hon. Premier.

HON. MR. BARRETT: If the whole session could be at this

level I'm sure we could all learn something. The debate last

night, which I enjoyed, had an obvious difference of opinion.

But really I agree with what the Member for Point Grey said:

last night was a rare experience in that some of us who've

been here quite some time have had a real exchange of what this

place is all about. It was quite good.

AN HON. MEMBER: We should have more of it.

HON. MR. BARRETT: We should have more of it, you bet. This

morning is a continuation of it.

The amendment is a good position for the group in the middle

and it's really where you are: the group in the middle. This is

absolutely limiting. It's limiting because…

Interjection by an Hon. Member.

HON. MR. BARRETT: No, the pensioners are on the receiving

end, not in the middle. They're on the receiving end.

What about a brand new enterprise?

Interjection by an Hon. Member.

HON. MR. BARRETT: O.K. Now that is the area where you're

wondering in terms of…You can't confine that to the

government being in an equity position in a brand new

enterprise, but that possibility might exist. But what about a

brand new enterprise that is totally private, that's related to

the resources of this province, that has, certainly in terms of

tracing paper…

MR. GARDOM: Kaiser…

HON. MR. BARRETT: Ah, but this relates to something else

that was discussed earlier in this House. What kind of research

was done on Kaiser?

Interjection by an Hon. Member.

HON. MR. BARRETT: Well, I'll tell you something. You'd be

amazed at the gap between the former Minister of Finance's

(Hon. Mr. Bennett) caution and then seizing on something as

accident would strike him that sounded like a good deal.

Interjection by an Hon. Member.

HON. MR. BARRETT: Ah, that is a possibility; that is a

distinct possibility. However, at this stage in my life —

and I hope for some time to come until I get out of politics,

which will be much earlier…I guarantee you that or promise

you that, whichever way you look at it.

MR. GARDOM: We'll guarantee that!

HON. MR. BARRETT: Oh, you'll guarantee that, O.K.

(Laughter). Thank you. Get in early, get out early.

We must govern. We must. And regardless if whether it's in

this area or any other area, the crunch comes in making

decisions. We will not make decisions, as I've said time and

time again, without gathering the best possible material in the

period of time that is allotted to us.

Now if you give us this limitation, all we're doing is just

opening it a bit and we don't agree with that. We want the

potential of getting involved in new ventures that have a

tracing paper connection with the possibility of bringing good

returns. Certainly this is going to be where 80 per cent of our

interest is, or even 90 per cent. In the first year, I'd say it

would be 100 per cent. But maybe not.

We've got to have some room in our opinion. That's why we're

rejecting the amendment. But the debate itself? Fantastic. And

it's given us a lot to think about, I have to admit, even from

one Social Crediter, because none of…

MR. WALLACE: He never talked like that before, that's for

sure.

[ Page 2710 ]

HON. MR. BARRETT: Well that's true, and none of it related

to the A plus B theorem, incidentally.

No, that's true. It's Conservative, Liberal, socialist

discussion. But it's all bucks and it's all the people's bucks;

that's really what's involved. When the people elect a

government they entrust them to spend their bucks. That's what

we're all concerned today about equally, but from different

philosophical bases.

I can't convince you of the validity, as I know it to be, of

my socialist base. But neither are you going to convince me of

the validity of your base. So there shouldn't be the

presumption that someone has the absolute in terms of what's

right or wrong. We have to make a judgment. We've listened,

we're making a judgment. We don't claim any kind of

absolute.

Interjection by an Hon. Member.

HON. MR. BARRETT: Then the people judge, and that's the

point.

MR. GARDOM: After the loss.

HON. MR. BARRETT: And after the gain, So that's what it's

all about.

Interjection by an Hon. Member.

HON. MR. BARRETT: Well, trustees have been known to lose

too. All right, then don't say that you've got an absolute over

there in terms of protecting potential loss. We've listened.

We're going in that direction; you guys are going up that way;

the Tories are going that way. The only thing is, we've got 38,

so that's the way it goes. So, Mr. Chairman, for the time being

we cannot accept the amendment proposed by the Liberals.

MR. CHAIRMAN: I recognize the Hon. Second Member for

Vancouver–Point Grey.

MR. GARDOM: Mr. Chairman, I'm going to be short. I obviously

completely anticipated what the Premier would make in his reply

when I opened this debate this morning because I talked about

trust, I talked about human frailty, I talked about the need to

have some kind of legislative parameters which were not here. I talked about the great check and balance of

the openness of debate.

I'm not going to repeat the remarks that I did make earlier.

I'd ask the Hon. Members to take that which I earlier said

today as delivered now and accepted — mutatis mutandis is

the dear old Latin phrase — in support of this…I beg

your pardon?

Interjection by an Hon. Member.

MR. GARDOM: …in support of this very fine, well-reasoned

and thoroughly practical amendment of the leader of the Liberal

Party (Mr. D.A. Anderson).

I would mention this as it was stressed by myself earlier,

and was also stressed by the leader when he proposed it and by

the Member for West Vancouver-Howe Sound (Mr. Williams). This

amendment is one that is based upon years and years of

financial, economic and trust experience. Indeed, it is one

that is based upon those who have experience in these fields

with literally millions of people and billions and billions of

dollars and pounds and francs and yen and all of those

things.

I certainly do support the amendment.

Amendment negatived on the following division:

YEAS — 5

Anderson, D.A.

Williams, L.A.

Gardom

Curtis

Wallace

NAYS — 39

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Calder

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

PAIRED

Hartley

Brousson

Stupich

McGeer

MR. D.A. ANDERSON: I would ask you, Mr. Chairman, to have

the division on this amendment to

section 15 reported to the

Speaker. I would request that you ask leave to have it recorded

in the Journals .

MR. CHAIRMAN: Shall

section 15 pass?

Section 15 approved on the following division:

YEAS — 29

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

[ Page

2711 ]

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Calder

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

NAYS — 15

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Wallace

Curtis

PAIRED

Hartley

Brousson

Stupich

McGeer

MR. J.R. CHABOT (Columbia River): Mr. Chairman, I would ask

if you could notify the House that a division took place on

Section 15 and we'd like a recording of the results.

Sections 16 to 46 inclusive approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and

report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports three

divisions on amendments to

section 15 and asks leave that they

be recorded in the Journals .

Leave granted.

Bill No. 159,

An Act to Amend the Civil Service

Superannuation Act, reported complete without amendment,

read a third time and passed.

HON. MR. BARRETT: Committee on Bill No. 160, Mr.

Speaker.

AN ACT TO AMEND THE

COLLEGE PENSION ACT

House in committee on Bill No. 160; Mr. Dent in the

chair.

Sections 1 to 13 inclusive approved.

section 14.

MR. CHAIRMAN: I recognize the Hon. Member for Langley.

MR. R.H. McCLELLAND (Langley): Mr. Chairman, I would move

the amendment standing in my name on the order paper.

I would just briefly like to say that the reasons are those

that have been enunciated very clearly by so many Members in

the House.

The comments that we've heard from the other side of the

House have not eased my fear about the investment knowledge or

prudence of the government at this point. The Premier has

indicated by his comments about brand new corporations that

there is a possibility that the government will take flyers on

corporations for which there is no real guarantee.

We agree on this side of the House that the government has

the responsibility to govern, as the Premier said this morning,

but I would just ask that the government doesn't let its

philosophy cloud its judgment when it comes to investing the

money of the people of British Columbia, because there is a

difference, Mr. Chairman, between a private corporation and a

government. The government does have a responsibility to a far

wider range of people. Those people are the taxpayers of this

province.

I really think, Mr. Chairman, that under the terms, without

that power to invest in a company, any company, there is scope

enough for good, sound investment, good protection to the

people who are involved in these pension funds.

MR. CHAIRMAN: Shall the amendment standing in the name of

the Hon. Member for Langley pass?

Amendment negatived on the following division:

YEAS — 14

Richter

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Curtis

Wallace

NAYS — 30

Hall

Barrett

Macdonald

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Calder

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

[ Page 2712 ]

Kelly

Webster

Liden

PAIRED

Brousson

Nimsick

Stupich

McGeer

MR. CHABOT: I move that the committee ask leave to have the

Journals record the division that took place on

section

14 of Bill No. 160,

An Act to Amend the College Pension

Act .

Leave granted.

MR. CHAIRMAN: I recognize the Hon. Member for Saanich and

the Islands.

MR. H.A. CURTIS (Saanich and the Islands): Mr. Chairman, I

move the amendment to

section 14 of this particular bill

standing in my name on the order paper.

I realize that a number of points which are covered in the

first portion of the amendment were made in the debate on the

earlier bill last evening and again this morning, but I would

like to point out that this provincial government and its

predecessor made much over the years with respect to a

provincial guarantee for parity bonds. This undoubtedly

instilled investor confidence in those parities and encouraged

purchase of them time and time again.

Surely if that kind of reassurance, that type of guarantee,

was felt essential for individual purchasers of parities, then

the same assurance or reassurance should be given to the

various civil servants or public employees, in particular those

who are covered by the College Pension Act , but

obviously the remarks apply to the other public employees dealt

with in the neighbouring bills.

It's an important matter of principle and I would urge the

government to give the most serious consideration to this

amendment, which is made in a constructive manner.

Secondly, Mr. Chairman, there is a strange inconsistency

— I would like to think it is simply an oversight, but if

it is an oversight, it is the kind of little slip which I think

has worried Members of the opposition in the debate last night

and again today. Is it a slip? Is it sloppy legislation? Or did

someone just forget to make the final check? Because we see

that Bill 160 makes no provision whatsoever for the investing

committee, for the Minister of Finance, for anyone associated

with the investing of these funds, to invest in the Municipal

Finance Authority of British Columbia.

This isn't some private company which may or may not have a

good couple of years. This is not some wild scheme which might

go down the tube as others have commented and expressed concern

about.

This is a charge against all property in the Province of

British Columbia. As I have attempted to point out, and as

indeed Members on both sides of the House have pointed out

previously, this is an extremely fine investment.

Picture if you will, Mr. Chairman, particularly the paradox

in British Columbia, in eastern Canada, or wherever the

debentures of the Municipal Finance Authority may be offered

for sale. The prospective investor is examining this, and he's

giving very serious consideration to MFA debentures going into

a particular portfolio to round out British Columbia or western

Canada investments.

But he sees suddenly that even these provincially managed

funds, raised through local and provincial taxes and

administered by people at the provincial level, these funds

cannot be invested in the Municipal Finance Authority of

British Columbia.

Mr. Chairman, I'll conclude my remarks. I know the debate

last night and today has been very lengthy. The Hon. Provincial

Secretary (Hon. Mr. Hall) alluded, I believe, to one

section of

this amendment. If he is prepared to give the strongest

possible assurance that this inconsistency will be corrected at

the earliest possible time, then I'll be most satisfied and I

will encourage the opposition not to call division on this

particular amendment.

HON. MR. HALL: You're quite correct in assuming that this

amendment is the one I was referring to. It's not an oversight.

The policy of the previous government was a good one insofar,

as I understand it, that they wanted to make sure that this

particular fund, this municipal financing authority did develop

its own market and should not be "greenhoused" or "hothoused"

along. That was their view three years ago.

Currently, the Municipal Finance Authority figures, series

1120, as you know, being its chairman for a while, yielding

8.18 per cent — that's about half a percentage point

better than Hydro — it's a good investment.

However, we've got Bill 120 on the order paper. We want to

make sure that this is right. We want to discuss it with the

consolidated committees that have been encouraged to form in

the last months; the committees that are meeting with my

commissioner of pensions all the time.

I have had a number of proposals by wire already that

perhaps we should do it now. I don't think that is correct. I

think we need to discuss it together with some of the exciting

plans that are going on via municipal affairs and also with the

present Bill 120 on the order paper.

I want to give you the assurance that you've asked for.

We'll be looking into it.

MR. CHAIRMAN: I recognize the Hon. Second Member for

Victoria.

[ Page 2713 ]

MR. D.A. ANDERSON: Briefly, Mr. Chairman, we also support

the amendment, particularly the second part of it. We feel that

it would be unwise for the government, through legislation such

as this, to indicate that the Municipal Finance Authority is

somehow excluded from government pension funds or in this case,

college pension funds. Therefore, we will be supporting the

amendment of the Member for Saanich and the Islands (Mr.

Curtis).

Amendment negatived on the following division:

YEAS — 5

Anderson, D.A.

Williams, L.A.

Gardom

Curtis

Wallace

NAYS — 39

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Calder

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

Richter

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

PAIRED

Hartley

Brousson

Stupich

McGeer

Bennett

Strachan

MR. CURTIS: Mr. Chairman, I ask that you report to the

Speaker that a division took place on Bill 160 in committee and

that this be reported in the Journals .

MR. CHAIRMAN: I recognize the Hon. Second Member for

Victoria.

MR. D.A. ANDERSON: Mr. Chairman, this

section quite

obviously has the same problem as the one we discussed earlier

today. We in actual fact were planning to put forward the same

amendment. I am not going to do it at this time because quite

clearly from what the Premier said and what the Hon. Provincial

Secretary (Hon. Mr. Hall) has said, there is no way the

government will accept it.

But we would like to at least go on record as saying that

exactly the same arguments apply. We don't want to let this go

by without having our views recorded to that effect. However,

in light of the manpower that stood up against us earlier, it's

pretty clear that we have no chance of having our point

accepted. Therefore, to cut down on the procedural time that

this would take, we would simply like our views on this

recorded and not put the amendment forward.

MR. CHAIRMAN: I recognize the Hon. Premier.

HON. MR. BARRETT: Mr. Chairman, if the Member would read the

bill, he'd find that the same arguments do not apply; that

there are trustees, and they do not apply.

Let's get the record straight. Since we are reading

statements into the record: the same arguments do not apply.

There are trustees.

MR. CHAIRMAN: I recognize the Hon. Second Member for

Victoria.

MR. D.A. ANDERSON: Mr. Chairman, I can certainly put the

amendment forward if the House would like us to debate the very

point. In actual fact on

section 14(b)(2) the words are there:

"in the capital stock of any corporation." Now we're trying

hard to be as reasonable as we can in this whole debate to cut

down on…

HON. MR. BARRETT: The arguments are different.

MR. D.A. ANDERSON: …any waste of time by us or the

government. But in actual fact where it states "in the capital

stock of any corporation," I believe the difference was

the last time it was a corporation; this one's any corporation,

which is not a major difference.

We feel that under those circumstances, an amendment to the

effect which would restrict this to a company which has had at

least a five-year track record of earning 5 per cent per year,

which is hardly an outstanding track record, would not be too

much.

The Premier's remarks, I find, are just not applicable to

this particular point. They're right off it. We would just like

again to point out to him that in bills such as this and for

the reasons given by him and the Provincial Secretary, it's

quite obvious they're not going to accept amendments. But in

our view amendments would be desirable along the nature of the

one we proposed earlier.

MR. CHAIRMAN: Shall

section 14 pass?

Section 14 approved on the following division:

[ Page 2714 ]

YEAS — 29

Levi

Lorimer

Cocke

Calder

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

NAYS — 14

Richter

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Curtis

Wallace

PAIRED

Nimsick

Brousson

Stupich

McGeer

Strachan

Bennett

MR. CHABOT: Mr. Chairman, I would ask you to notify the

House that a division took place on

section 14, and that this

be recorded in the Journals .

Section 15 approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and

report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill No. 160,

An Act to Amend the College Pension

Act , reported complete without amendment, read a third time

and passed.

HON. MR. BARRETT: Committee on Bill No. 161, Mr.

Speaker.

AN ACT TO AMEND THE TEACHERS'

PENSIONS ACT, 1961

House in committee on Bill No. 161; Mr. Dent in the

chair.

Sections 1 to 16 inclusive approved.

section 17.

MR. CHAIRMAN: I recognize the Hon. Member for Langley.

MR. McCLELLAND: Mr. Chairman, I move the amendment standing

in my name on the order paper. I would just like to say since

we are putting things on the record: the official opposition

does not agree with government investment in any private

corporation whether it be these pension funds or whether it be

funds from the insurance corporation or whether it be included

in the Revenue Act . We just want to make that very, very

clear. From that point of view the arguments for all of these

are exactly the same.

MR. CHAIRMAN: Shall the amendment pass?

Amendment negatived on the following division:

YEAS — 14

Richter

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Curtis

Wallace

NAYS — 29

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Anderson, G.H.

Barnes

Steves

Rolston

Kelly

Webster

Liden

PAIRED

Nimsick

Brousson,

Stupich

McGeer

Strachan

Bennett

MR. CHABOT: Mr. Chairman, I request the vote be reported and

recorded in the Journals .

MR. CHAIRMAN: I recognize the Hon. Second Member for

Victoria.

MR. D.A. ANDERSON: Mr. Speaker, in this bill in

section 17

the words come up, the fatal words in 17(b)(2), "in the capital

stock in any corporation."

[ Page 2715 ]

When I rose in my place the last time, I spoke on an earlier

bill and I pointed out that it was virtually the same as the

previous bill, and we had gone on record at that time as

opposing the unrestricted power of investing in any corporation

and putting that power to invest into the hands of one man to

act entirely at his discretion.

At that stage the point was disputed by the Hon. Minister of

Finance. Therefore, Mr. Speaker, as apparently our point was

not understood, I would like to move an amendment at this time

which I have in my hand here.

The purpose of this amendment, Mr. Speaker, and again I'll

be as brief as I can, is to restrict the unfettered power of

the Minister of Finance so that he can invest in any private

corporation, provided that that corporation has had five years

of reasonably profitable performance and that is judged as to

whether or not it has paid or is capable of paying or would

have been capable of paying 5 per cent per year in the

five-year period preceding the investment.

The provision is very similar. It is a restriction first in

terms of the preferred shares, insisting that the company

either pay them or pay an average equivalent to its annual

rate. In common shares we are dealing with the company either

paying a minimum of 5 per cent or having earned enough during

that period and added to its capital stock account enough to

pay out a 5 per cent provision.

The provision, Mr. Speaker, occurs in every major

jurisdiction in the world, protecting the funds of those people

who are in the position of beneficiaries of insurance policies

or situations such as this where we are dealing with pension

funds. It is a protection against over-enthusiastic investment

in new ventures which might lead to loss.

It is a protection which has been shown to be extremely

valuable over the years. Therefore I move putting this

amendment in, which once again is parallel to the federal

insurance Act when dealing with the moneys the people pay in by

way of premiums so that they can be protected in the future in

case of any loss.

Again, the arguments are the same. The principle is the

same. There is no difference in wording between this and the

first bill I put in, except the change from the words "a

corporation" to "any corporation" which I don't believe is of

major significance.

I only raise this and put in the amendment once more,

because apparently the Minister of Finance misunderstood the

arguments made in the first bill where we presented a similar

amendment. As he apparently misunderstood it, I trust he's had

time to reconsider it, and perhaps this time we can have a vote

in favour of such an amendment.

MR. CHAIRMAN: I recognize the Hon. Minister of Health

Services and Hospital Insurance.

HON. MR. COCKE: Mr. Chairman, I just wanted to draw the

attention of the House — I won't go very much further

than that — but I would like to draw the attention of the

House to the fact that this

section talks about the trustees

investing, not the Minister of Finance as that Member indicated

— the trustees. The trustees will be governed by the

federal Act. That's what I've been trying to talk about all

day. The federal Act legislating pension funds which permits

that kind of diversity for any other group. Why shouldn't

we?

Thank you, Mr. Chairman.

MR. CHAIRMAN: Shall the amendment standing in the name of

the Second Member for Victoria pass?

Amendment negatived.

MR. CHAIRMAN: I recognize the Hon. Member for Saanich and the

Islands.

MR. CURTIS: Mr. Chairman, I move the amendment to

section

17, Bill 161, standing in my name on the order paper.

The answer given earlier by the Hon. Provincial Secretary

(Hon. Mr. Hall) concerns me greatly because frankly I wonder if

he really understands the importance of the second part of the

amendment.

The Municipal Finance Authority provision in this amendment

would not make it mandatory that the funds from this particular

fund from this particular plan be invested in MFA, but rather

that they be permitted to invest as and when they wish.

The amendment is permissive. It isn't mandatory. Those

administering the fund would not be compelled to pick up

something of every single MFA issue. Without the amendment they

cannot. The Provincial Secretary has told the House that MFA

issues are doing very well. They are.

If that is the case, then why should these funds, Mr.

Chairman, not be permitted to take advantage of that good

performance on behalf of the people whose retirement money is

going into them?

MR. CHAIRMAN: Shall the amendment standing in the name of

the Hon, Member for Saanich pass?

Amendment negatived on the following division:

YEAS — 5

Anderson, D.A.

Williams, L.A.

Gardom

Wallace

Curtis

NAYS — 139

[ Page 2716 ]

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

PAIRED

Nimsick

Brousson

Stupich

McGeer

Section 17 approved on the following division:

YEAS — 29

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

NAYS — 15

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson,D.A.

Gardom

Wallace

Curtis

Williams, L.A.

PAIRED

Nimsick

Brousson

Stupich

McGeer

Sections 18 to 20 inclusive approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and

report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports two

divisions on the amendments to

section 17 and one on

section

17 and asks leave that they be recorded in the

Journals .

Leave granted.

Bill No. 161,

An Act to Amend the Teachers' Pensions Act,

1961 , reported complete without amendment, read a third

time and passed.

HON. MR. BARRETT: Committee on Bill No. 162, Mr.

Speaker.

AN ACT TO AMEND THE

MUNICIPAL SUPERANNUATION ACT

House in committee on Bill No. 162; Mr. Dent in the

chair.

Sections 1 to 26 inclusive approved.

section 27.

MR. CHAIRMAN: I recognize the Hon. Member for Langley.

MR. McCLELLAND: Mr. Chairman, I move the amendment standing

in my name on the order paper.

Amendment negatived on the following division:

YEAS — 15

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Curtis

Wallace

NAYS — 29

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Levi

Lorimer

Cocke

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

PAIRED

Nimsick

Brousson

Stupich

McGeer

MR. CHAIRMAN: I recognize the Hon. Second

[ Page 2717 ]

Member for Victoria.

MR. D.A. ANDERSON: Mr. Chairman, in this

section those

words, "in the capital stock of any corporation," occur

again.

"(

b) the trustees shall not make any investment except (

i) in the debentures or other securities of, or guaranteed by

Canada, or any province of Canada;"

Nothing could be more sure than that; nothing could be more

safe than that. Then: "(ii) in the capital stock of any

corporation." Nothing could be more unsafe and unsure

than that — "any corporation."

Interjection by an Hon. Member.

MR. D.A. ANDERSON: "Or in any of them." Right. So this

particular

section meets with our strong disapproval once more.

We once more are dealing with a pension fund — a

superannuation fund. We are once more dealing with the future

security of people. Whether they are guaranteed by the

government or not is really not relevant because if it's

mismanaged they will get less regardless of the guarantee.

Mr. Chairman, the arguments and the principles that I have

put forward before in the three times I have spoken on this

type of

section are true here. They are perhaps all the more

important to be put forward because of the misunderstanding

displayed by the Minister of Health (Hon. Mr. Cocke). Funnily

enough, I thought it was the Hon. Provincial Secretary (Hon.

Mr. Hall) handling this bill but apparently it's the Minister

of Finance and the Minister of Health.

The fact of the matter is that in this

section it says

flatly that investments can take place by the trustees in any

corporation. Now if that doesn't mean what it says, the Hon.

Provincial Secretary (Hon. Mr. Hall) had better suggest to his

colleague that it be amended, because he's tried to tell us

that the Hon. Provincial Secretary, in putting forward this

bill somehow or another has concealed the true meaning of this

bill through some other system of revelation or something.

Now it's just not a fact, Mr. Speaker, that the trustees in

this

section are governed in the same way as under the Dominion

of Canada Act . It states here flatly that it's in the capital

stock of any corporation. I repeat this and repeat this and

repeat this because every time I've said it apparently another

Minister gets up and shows his lack of appreciation of what

we've been talking about.

I thought when I first heard the Premier's words on the

first bill that there had been some understanding and there had

been a rejection of our views on the basis of a different point

of view. I now find they've been rejected because of a

misunderstanding as to what the

section states and as to what

our point was. I apologize if we didn't explain it fully enough

the first time around. Sometimes we, in this party, make the

mistake of assuming that you just have to say things once or

you have to say them quickly and they'll be understood.

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

more accurate in trying to force home his view hour after hour

and perhaps that's what we should adopt. Because quite clearly

the Minister misunderstood the points we made earlier as to the

need for restriction. That's the very simple remark. This is

the Minister who didn't even know what amendment he was on a

short time ago, or what bill he was on.

Interjection by an Hon. Member.

MR. D.A. ANDERSON: Now, perhaps, he is waking up after a

late night last night and he at least knows what bill we're on.

I'm not sure that he's still aware as to what amendment he's

on.

So, Mr. Speaker, in this particular bill, we want to put in

an amendment and here it is, an amendment to the Municipal

Superannuation Act . I'll read it out if people think it's

unusual…

Interjection by an Hon. Member.

MR. D.A. ANDERSON: I wish to put it in the record because

the fact of the matter is that all we're asking is that instead

of having investment in any corporation, the trustees be

restricted to corporations which have made a 5 per cent profit

over five years, which is in no way an unreasonable

restriction.

I trust that this would not rule out any more than a small

percentage of the companies in British Columbia which are in

the resource field. Those that they do rule out I'm quite sure

should be ruled out because of the risk involved.

The thing that we're putting forward is this: First, in

dealing with preferred shares the company must have paid in the

preceding five years the equivalent of the preferred share

rate. Secondly, if they go into and invest in common shares of

a corporation then the company should have paid at an annual

rate of 5 per cent per year or else the company should have

kept retained earnings so they could, in other words, have paid

that 5 per cent had they wished.

It's far from an onerous restriction. It's a very simple and

straightforward protection against the enthusiasm of a new

Minister, unaware of. the portfolios perhaps that he has

because of his other responsibilities as House Leader, as

Premier, as president of the B.C. Rail, that might lead him

into a new venture which would be risky. Once again we can

repeat the same example: Kaiser.

[ Page 2718 ]

Interjection by an Hon. Member.

MR. D.A. ANDERSON: We're dealing here with trustees —

the Minister has corrected me on this ground. Nevertheless, we

are trying to have the same type of protection so that there

cannot be irresponsible decisions made on new companies.

Now, Mr. Speaker, we've divided on this once. The purpose of

that was to record the points that we were trying to make, that

this was a necessary and useful restriction to be placed on

either trustees or on the Minister of Finance. We have no wish,

unlike the other parties on our left and right — the

Conservatives and the Social Credit — to delay the House

by extra votes or…

Interjection by an Hon. Member.

MR. D.A. ANDERSON: Would you like us to have this recorded

and take the time, Mr. Minister of Health…?

HON. MR. BARRETT: Do whatever you care to do.

AN HON. MEMBER: Just keep on reading.

MR. D.A. ANDERSON: Well, I'm telling you what I care to do,

if you'll listen. The fact is that we have recorded it once,

the principle is the same and therefore we will not be calling

for a recorded vote in this instance. But we do feel that in

this whole series of bills it becomes more and more important,

as the government shows less and less understanding of the

points we are trying to make, that this type of thing be

accepted.

MR. CHAIRMAN: I recognize the Hon. Member for Columbia

River.

MR. CHABOT: Mr. Chairman, I wouldn't call for a recorded

vote on this kind of amendment either, because this is the type

of amendment, in my opinion, that shows very clearly what the

Liberals are attempting to do relative to the

section which

they are amending, and that is to walk the centre line, to be

on neither side…

We are opposed to the investment of these funds in the

capital stock of any corporation, but the Liberals say that it

should be tolerated providing the company has had a five-year

experience of paying dividends. It is a most dangerous point of

view, and it's one which, in my opinion, amounts to the same

position, basically, as the NDP has taken on this, because you

can invest in basically any capital stock of any

corporation.

MR. CHAIRMAN: Order. Would the Hon. Member address the

chair.

Interjection by an Hon. Member.

MR. CHABOT: You're just attempting to be on both sides of

the issue which we are discussing right now. I can give you

example after example of companies that have risen from being

small companies. Their stock has come out at a $10 price and

I've watched it go to $20-odd. I'm not going to mention the one

I have in mind at the moment. It is a British Columbia company,

and it's moved on to about $25. They paid dividends for many

years. Then all of a sudden, because of over-extending

themselves, they ran into bad times because of credit

situations and the unavailability of ready cash.

I watched that stock move down from $25 to $2.50. This is

the type — and I didn't have any of that stock.

(Laughter).

Interjections by some Hon. Members.

MR. CHABOT: I watched the stock go down to $2.50. This is

the type of investment which the Liberals are suggesting that

these funds should be invested in.

AN HON. MEMBER: Oh, come off it!

MR. CHABOT: They say municipal superannuation funds should

be invested because of a five-year performance. I say that a

five-year performance means absolutely nothing, absolutely

nothing — and that the stock can go down just as quickly

as the stock that has no performance. This isn't the type of

double-sided amendment that we can support.

MR. CHAIRMAN: I recognize the Hon. Second Member for

Vancouver–Point Grey.

MR. GARDOM: Mr. Chairman, let's first of all appreciate one

fact.

First, the Hon. Member who last spoke is not aware of the

consistence of this amendment. Since this amendment does not

appear in any printed form in the Journals I intend to

read the amendment to make sure that it is properly recorded in

the Hansard that we have for this purpose in the

House.

The amendment strikes out the words "in the capital stock of

any corporation" under

section 27(b)(ii) and substitutes for

those words the following…if the Member for Columbia River

doesn't want to listen, would he at least be quiet so that

maybe the other Members can hear what the amendment is? We

substitute these words:

"in the preferred shares of a corporation, if the

corporation has paid a dividend in each of the five years

immediately preceding the date of investment at least equal to

the specified annual rate upon all of its preferred shares, or"

— b(iii) — "in the common shares of a corporation

if, during a period of five years that ended one year before

the date of investment, the corporation has either paid a

dividend in each such year upon its common shares, or had

earnings in each such year available for the payment of the

dividend upon its common shares of at least 5 per cent of the

average value at which the shares were carried in the capital

stock account of the corporation during the year in which the

dividend was paid or in which the corporation had earnings

available for the payment of dividends as the case may be."

[ Page 2719 ]

That is the amendment. Now, trustees we have here — I

appreciate that as do the Members in our party; we all

appreciate that — but trustees are governed by the powers

that are given to them. We find under the government

section

here that you give them a very restricted power to deal with

gilt-edged securities under (a), to deal with investments and

debentures or other securities of or guaranteed by Canada or

any province of Canada and then you go 100 per cent the other

way and fully open the door and give them totally unrestricted

powers — totally unrestricted powers — to invest in

the capital stock of any corporation.

My golly, there'd be just as good an investment in an

unincorporated organization as in the capital stock of any

corporation, or an investment in the shares of any individual

as opposed to necessarily there.

It's a carte blanche, "open, Sesame" power. It's a blank

cheque kind of a power and this is why we're criticizing it.

This amendment has not come out of the thin air. There has been

the most serious thought given to this amendment. (Laughter).

There has and I'll tell you why…this is amusing to the

ignorant. I'll tell you why. It is because the amendment comes

from the Canada and British insurance companies Acts dealing

with the powers of investment, and this concerns itself with

corporate stock. This is universal across Canada. It's in

Britain; it's in the United States; it's the type of thing that

is utilized in every financial sector in the world. And the

people can't understand these kinds of things. Under (

a) we

find a gilt-edged opportunity for investment, one that has

records, has performance.

Under existing (2)(

i) of the government's

section here,

"investing in the capital stock of any corporation,"

this could be a corporation without record; it could be one

that had just been incorporated; it could be one without

performance under the top part of it, "guarantees by Canada or

any province."

Under (b) "any corporation," the "Philippines

Fallaparts Corporation," or "Uncle Albert's Armchair

Corporation" — it can be any kind of corporation and we

say that's not good enough.

We say you should insist upon a record of performance and

that's the purpose of the amendment. The purpose of the

amendment is something that has been considered most seriously

by the financial sector; otherwise this thing would not have

been in existence the years and years that it has, and it would

not have dealt with the billions and billions and billions of

dollars that it has and with the millions and millions of

people that it has.

MR. CHAIRMAN: I recognize the Hon. Member for West

Vancouver–Howe Sound.

MR. WILLIAMS: Thank you, Mr. Chairman. It would appear from

some of the comments made by way of interjection in the course

of this debate that Members of this committee — some of

them at least — seem to believe that because you

categorize a group of individuals as trustees somehow or other

there is some magic in that word. The fact of the matter is

that a trustee has an obligation, but the obligations of that

trustee are spelled out in the document which creates that

capacity. In this case we are talking about a trustee created

by legislation.

The entire limits of the obligations and responsibilities of

the trustee must be spelled out in this statute. Trustees are

created in other ways, by documents in the course of wills and

so on and it is interesting to note — and I point out to

the Hon. Member for Columbia River (Mr. Chabot), who saw fit to

suggest that we were taking a middle course being neither one

way or the other — that we have other statutes in this

province which deal with the investment limitations imposed

upon trustees who are created under a will or some other

document. Two pages of limitations upon their investment

authority. Included in those limitations is precisely the

limitation which is proposed in this amendment.

I trust the Hon. Member for Columbia River is not suggesting

that if he had the opportunity he would do away with these

limitations and with these opportunities that are in existence

under the Trustee Act of the Province of British

Columbia. If the Member would just see fit to read the

provisions of

section 15 of the Trustee Act he would

recognize that these same words — the same limitations

that are proposed here — are the law of this province

with regard to trustees' investments in those

circumstances.

The Member obviously doesn't know what he is talking about

when he suggests that this limitation is not an acceptable one,

is not one which has been proven by long performance, and is

not one which the Legislature of this province has deemed fit

to impose upon trustees in other cases. All we are asking is

that the trustees under this legislation have the same

conditions imposed upon them.

MR. CHAIRMAN: Shall the amendment pass?

[ Page 2720 ]

Amendment negatived.

MR. CHAIRMAN: I recognize the Hon. Member for Saanich and

the Islands.

MR. CURTIS: Mr. Chairman, in this particular bill more than

any other,

An Act to Amend the Municipal Superannuation

Act , the amendment standing in my name on the order paper,

I suggest, has more relevance than ever. I move the amendment

standing in my name in

section 27.

The Municipal Superannuation Act, as I understand it,

has some $250 million invested in its various funds at the

present time receiving about $20 million annually. I simply

cannot understand, if this Act has been given or if the

amendment to this Act was given any kind of careful considered

thought at all by the Members of the cabinet of this

government, why they would inadvertently or by other means

overlook the opportunity to invest municipal and regional

district dollars in funds that are so designated under this

particular Act.

It makes no sense whatsoever and again I find the remarks

earlier by the Hon. Provincial Secretary (Hon. Mr. Hall)

totally unacceptable and unsatisfactory in this respect.

MR. CHAIRMAN: Shall the amendment pass?

Amendment negatived on the following division:

YEAS — 5

Anderson, D.A.

Williams, L.A.

Gardom

Wallace

Curtis

NAYS — 39

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Lorimer

Cocke

Calder

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston

Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

PAIRED

Stupich

McGeer

Nimsick

Brousson

AN HON. MEMBER: I request the division be recorded.

MR. CHAIRMAN: Shall

section 27 pass?

Section 27 approved on the following division:

YEAS — 29

Hall

Macdonald

Barrett

Dailly

Nunweiler

Nicolson

Brown

Radford

Sanford

D'Arcy

Cummings

Lorimer

Cocke

Calder

Hartley

Skelly

Gabelmann

Lauk

Lea

Young

Lockstead

Gorst

Rolston Anderson, G.H.

Barnes

Steves

Kelly

Webster

Liden

NAYS — 15

Richter

Bennett

Chabot

Jordan

Smith

Fraser

Phillips

McClelland

Morrison

Schroeder

Anderson, D.A.

Williams, L.A.

Gardom

Wallace

Curtis

PAIRED

Stupich

McGeer

Nimsick

Brousson

Sections 28 to 30 inclusive approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and

report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports a division

on an amendment to

section 27 and asks leave that it be

recorded in the Journals .

Leave granted.

Bill No. 162,

An Act to Amend the Municipal

Superannuation Act , reported complete without amendment,

read a third time and passed.

HON. MR. BARRETT: Mr. Speaker, the order of business will be

finance, health, education, labour, municipal affairs…

MR. CHABOT: In that order?

[ Page 2721 ]

HON. MR. BARRETT: Yes.

Interjections by some Hon. Members.

HON. MR. BARRETT: Tonight.

In that order so far, Mr. Member. And industry — we

may bring in the industrial bill before health.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 1:30 p.m.

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