1981 Legislative Session: 3rd Session, 32nd Parliament

HANSARD

The following electronic version is for informational purposes only.

The printed version remains the official version.

Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY

(Hansard)

TUESDAY, JUNE 30, 1981

Morning Sitting

[ Page

6495 ]

CONTENTS

Routine Proceedings

Tabling Documents

B.C. Ferry Corporation annual report for the year ending March 31, 1981

Hon. Mr. Fraser –– 6495

Statement respecting Crown Proceeding Act

Hon. Mr. Curtis –– 6495

Financial Administration Act (Bill 27). Second reading.

Hon. Mr. Curtis –– 6495

Mr. Hall –– 6496

Miscellaneous Statutes Amendment Act (No –– 2), 1981 (Bill 31). Committee stage.

section 4 –– 6496

Mr. Levi

Hon. Mr. Wolfe

Mr. Cocke

Mr. Hall

Division

section 5 –– 6500

Mr. Leggatt

Hon. Mr. Curtis

section 6 –– 6500

Mr. Leggatt

Hon. Mr. Phillips

Hon. Mr. McGeer

Mr. Barrett

Mr. Cocke

Mr. Lea

Mr. Nicolson

The House met at 10 a.m.

Hon. Mr. Fraser tabled the annual report of the B.C. Ferry Corporation for the year ending March 31, 1981.

Hon.

Mr. Curtis tabled a statement for the fiscal year ending March 31,

1981, recording each certificate served under sections 13 and 14 of the

Crown Proceeding Act and the money paid out in respect of those

certificates.

Orders of the Day

HON. MR. GARDOM: I ask leave to proceed to public bills and orders, Mr. Speaker.

Leave granted.

HON. MR. GARDOM: I call second reading of Bill 27, Mr. Speaker.

FINANCIAL ADMINISTRATION ACT

HON. MR. CURTIS:

Mr. Speaker, under other circumstances I would speak at length with

regard to the Financial Administration Act. I assure the House that I

will make my remarks as brief as possible. It's been one of my

principal objectives to bring forward on behalf of the government

modern and comprehensive legislation which would provide for

strengthened financial control and accountability in the conduct of the

province's financial affairs, and so we have the Financial

Administration Act, which I believe will give British Columbia the most

modern financial legislation in Canada. As our Auditor-General, Mrs.

Morrison, has pointed out, existing legislation governing the financial

affairs of this province is archaic by any standard and, frankly, is

completely inadequate to meet the requirements of sound fiscal

management in the 1980s and beyond.

The two major pieces of

existing financial legislation are the Revenue Act, which was enacted

in 1879, and the Financial Control Act, formerly the Audit Act, which

was passed by this assembly in 1913. While these acts have been

modified in minor ways over many years, the fact remains that the

financial administration legislation of the province remains much as it

was 60 years ago, and to a large extent as it was 100 years.

1879, when the Revenue Act was passed by this assembly, the

expenditures and revenues of the government were less than $500,000.

Today, as the House will know, the province gathers and expends

revenues of more than $6.5 billion each year.

The province's

financial legislation has not kept pace with changing times, and the

need for new and modern legislation has become more critical with each

passing year. Again, the Auditor-General has highlighted the urgency

for new financial legislation in each of her reports to this assembly.

Last year her report contained the following recommendation with

respect to the need for modern law in this respect: "Legislation to

meet current and anticipated requirements in this critical area is

urgently needed, and I recommend that action be taken to provide it

without delay."

Mr. Speaker, members will be aware that the act which is now before the House

represents the results of a very extensive process of consultation both inside

and outside government. Work on this new legislation began almost 18 months

ago in the Ministry of Finance with considerable in-Ministry research, including

a detailed examination of the shortcomings of existing statutes and an analysis

of corresponding legislation in other jurisdictions. In particular special attention

was given to recently enacted legislation in province such as Alberta, which

introduced totally new legislation approximately three years ago.

Based

on that research carried out in the ministry, a discussion paper was

prepared and released for public discussion in August of last year. The

work of the task force, I think, is well known; submissions were

received from well over 200 organizations and individuals. They

reflected the very strong interest generated by the discussion paper,

particularly among those organizations in receipt of public funds.

After that. we reviewed the recommendations and submissions of the task

force. From the public discussion with the ' auditor-general and with

the Institute of Chartered Accountants, the task force prepared a

report which was submitted to me in February of this year. I released

the task force report in March, along with a statement confirming

acceptance of the major recommendations in that report.

Mr.

Speaker, in designing new financial legislation for the province the

government has considered very carefully the fundamental objectives

which the Financial Administration Act should address, not only for the

control of public resources but also for the management of these public

resources in an economic and efficient manner. As the members will

know, there are a very significant number of consequential amendments

contained in the bill which flow from the bill. First of all I should

note that three major acts will be repealed with passage of this one.

The Revenue Act, the Financial Control Act and the Ministry of Finance

Act will all be repealed with passage of this new one, when that

occurs. In addition, over one hundred consequential amendments are

required to bring other statutes into harmony with the new legislation.

Mr.

Speaker, we've had the cooperation of all ministries and.all sectors of

government in reviewing the consequential amendments to ensure that

none have been omitted and further that none are intruding where they

should not or where we do not want them to. I think the six points

which best describe the objectives of the government with respect to

this legislation are as follows: the consolidation of financial

legislation into one comprehensive act, the deletion of archaic

provisions, the modernization of revenue, expenditure and investment

provisions, the clarification of organizational responsibilities, the

reduction of red tape, and the strengthening of control and

accountability.

In conclusion I would simply reiterate that

the Revenue Act and the Financial Control Act in British Columbia are

decades out of date. I'm in favour of heritage but not in financial

legislation. They are long overdue for reform, as the Auditor-General

has noted and as members of this House, in turn, have noted from time

to time. As such, this bill represents a very strong statement to the

Legislative Assembly and to the people of British Columbia of this

government's continuing commitment to increasing control over the

public purse, but more importantly, I think, to improving the effective

management of the resources which are held in trust by the government

of the day on behalf of the people of this province.

I move second reading of the Financial Administration Act.

[ Page 6496 ]

MR. HALL:

In rising to support this act and to assure the government of the

official opposition's support, I want to say to the minister that the

opposition welcomes any improvement at all that's been outlined by the

Minister of Finance. As he points out, the chief purpose of the bill is

consolidation and modernization of financial control legislation. This

bill is well laid out and, in general terms, achieves its goal. We

notice that it differs somewhat from the draft sent out originally; I

think that in almost all particulars it is an improvement on the draft

sent out originally way back whenever it was. I can't read my note here.

HON. MR. CURTIS: Last summer.

MR. HALL:

Yes, last summer. That indeed speaks a great deal for the process. The

only regret I have about the whole process — and I want to speak a

little bit about that — is that the Members of the Legislative Assembly

were not involved in an organized way in that process. I don't want to

thrash that unmercifully at all with the minister. I feel there is a

weakness on the part of the government in not using its standing

committees, in not taking the advice and not using the talents of 57

people who are available to this House. It's a grave mistake the

government makes. It's got nothing to do with politics; it's got to do

with talent. That talent is overlooked. It has been my experience that

whenever you get into committee, partisan, political posturing very

rapidly leaves the committee room. I think you yourself, Mr. Speaker,

will remember that, when you were a chairman of a standing committee

that did excellent work.

In continuing on this bill, it is

my opinion that this has shown to almost everybody who is of a mind to

stop and pause for a second that the method of erecting legislation can

be copied and can be a model. This minister can now safely recommend to

his colleagues that this should be used again, and embellished upon.

Therefore without taking much more time of the House I am going to say

that in general terms the act is worthy of support, as is the

minister's procedure for bringing it about. The publication of a

discussion paper, followed by comments and public hearings is an

excellent method of presenting such important legislation.

The

input from the Auditor-General, the financial institutions and other

financially concerned bodies in the country was, I think, valuable and

important.

An act has emerged, and it is as well drafted as any that

think it's reasonably laudable. It has moved us a long way towards the

target that has been shown to us by our own Auditor-General, and I'm

hoping that when I go to the conference next week of legislative

accountability people — auditors-general, public accounts people and my

colleague from North Vancouver — we will be able to show this piece of

legislation and perhaps show that B.C. is in the vanguard of this kind

of thing.

MR. NICOLSON: I rise on a point of order,

Mr. Speaker, and draw your attention to page 434 of Sir Erskine May,

nineteenth edition: "Reading of Books, Etc." Members are not to read

books, newspapers or letters in their places...." Or to attempt to

solve cubic puzzles. I note that the Minister of Universities, Science

and Communications (Hon. Mr. McGeer) is so engrossed.

HON. MR. CURTIS: I greatly appreciate the constructive remarks made by the hon. second member for Surrey

(Mr. Hall) with respect to this particular bill, not only as a member

of this House, but also as Chairman of the Select Standing Committee on

Public Accounts and Economic Affairs. I hear what he said with respect

to review by a committee of the House, and I can't argue strenuously

with that suggestion, which I think could be employed on some other

occasion. With that, I again express appreciation to all who've been

concerned with the development of this bill, particularly the

Auditor-General, who has appropriately and continually prodded with

respect to this legislation. That is her job, and we have responded to

that task. Mr. Speaker, I move second reading.

Motion approved.

Bill

27, Financial Administration Act, read a second time and referred to a

Committee of the Whole House for consideration at the next sitting of

the House after today.

HON. MR. GARDOM: Committee on Bill 31, Mr. Speaker.

MISCELLANEOUS STATUTES

AMENDMENT ACT (No. 2), 1981

The House in committee on Bill 31; Mr. Davidson in the chair.

Sections 1 to 3 inclusive approved.

section 4.

MR. LEVI:

Is the minister around? There he is. Have you got anything to say on

this, Mr. Minister? He obviously hasn't. Do you want to open the debate

or...? No, he doesn't. I'm going to ask you something. As I can see,

you're well prepared.

I want to refer the committee to the

1980-81 annual report of the B.C. Buildings Corporation. On page 14 in

the report it says the following: "Commitments. The corporation

estimates that the cost to complete projects under construction will be

$44 million, of which $25 million has been committed." I'd like the

minister to tell us exactly why he wants to increase the potential debt

load of the corporation from $300 million to some $700 million. I can

recall that during his estimates we asked the minister what plans B.C.

Buildings Corporation had in respect to broadening its services. He

made mention of some government buildings that were to be constructed

over the next few years, mainly in Victoria. To go from $300

million.... We find in the annual report that the direct long-term debt

of the corporation as of March 31, 1981, was some $155 million. There

are some notes payable to the province of some $166 million, which are

payable sometime in 1992.

If this debt load goes to $700

million, which is about a 140 percent increase over what it is now,

what is it going for? What specifically has the corporation got in mind

in order to incur this amount of debt? I can only suggest to you, Mr.

Chairman, that the purpose of this increase in the debt structure is

directly related to that northeast coal project up there. The

government is on record as saying that they will develop the Tumbler

Ridge area and provide infrastructure. I'd like the minister to confirm

for us exactly what the long-range or short-range plans are in respect

to the B.C. Buildings Corpo-

[ Page

6497 ]

ration that they would require this amount of leeway to accumulate debt. At

the moment they're still below the amount that has been legislated. Here

we are going up to $700 million. I'd like the minister to tell us very specifically.

can only get the impression from the legislation coming down in the

past session that the government are behaving like a bunch of Swiss

gnomes. They're taking pockets of money, putting it in envelopes and

running around under the Douglas Buildings putting it somewhere. What

are you using the money for? This is a dramatic increase in the debt

structure. I'd like the minister to explain to us particularly whether

this debt structure is related to the development of the northeast coal

area, particularly the Tumbler Ridge area, and the provision of

infrastructure. Is that what we're talking about here? I'd like the

minister to give us an answer.

HON. MR. WOLFE: No,

the requested increase in the borrowing authority of the Buildings

Corporation has to do just with the requirement and future plans, some

of which are in the feasibility stage, for provincial government

buildings, primarily institutional, but also the potential of office

buildings, particularly so in the case of the Victoria precinct here.

You have heard of some of those. During my estimates, you requested

further information, which we will be tabling in due course, having to

do with broader plans for the precinct. I think the Minister of Finance

(Hon. Mr. Curtis) has already announced the addition to the Douglas

Building and so on. That increase is simply related to plans for

buildings. It does not relate to the northeast coal project.

MR. LEVI:

Is the minister saying that none of the future debt of that corporation

is going to involve any expenditure of money in the northeast coal

area? I would remind him that the government is on record as saying

that they were participating in the construction of the Tumbler Ridge

and the infrastructure. That requires buildings and personnel. He just

said that this money is going for a building project. That's over about

five or six years or even more. Some of it involves renovating —

particularly the Douglas Building. We're not talking about rebuilding

there.

We asked him during his estimates if he would provide

us with his blueprint that they put together, which he hasn't done. I

wrote him a letter and asked him to provide the Coopers Lybrand report,

which would give us some idea about the operation of the B.C. Buildings

Corporation, and he hasn't even replied to it. I'm not sure that he

knows anything more about this operation than he did about the Systems

Corporation.

I want it very much on the record. Is the minister saying that none of this money will be billed on the Tumbler Ridge project?

HON. MR. WOLFE: Mr. Chairman, I'd like to be clear and not

mislead the committee in terms of that question. It's not intended with

this, but I presume that there may be provincial government facilities

which would eventually be destined for that community. We have no

specifics on that at this stage, but naturally it is a possibility. So

I don't want to indicate that that's impossible, but for standard

services required by the province, as in any community, from

correctional institutions to you name it — but certainly not at this

stage.... If the community arrives at the size that is envisioned,

there will certainly be provincial government facilities required. This

would be the vehicle that, perhaps, would be required to establish

those.

MR. LEVI:

I'd just refer the minister again to the last annual report, which was

recently tabled. This is the report that goes to March 31, 1981. I

appreciate that it really covers that previous year's operations, but

there is a very specific

section in there talking about commitments,

and it doesn't talk about any of the things that the minister has

talked about. In terms of future development of buildings, it says very

specifically: "The corporation estimates the cost to complete projects

under construction will be $44 million."

HON. MR. WOLFE: What page are you on?

MR. LEVI:

I'm on page 14 of the annual report, "Notes to the Financial

Statements," note 14. If you are going to produce an annual report and

have a

section which deals with commitments, presumably one could

extend that definition and say: "Well, what will we be looking at in

the future?" You're getting advice from the Minister of Industry and

Small Business Development. My God, now you're in trouble, son. Leave

him alone. He's doing bad enough as it is.

Interjections.

MR. CHAIRMAN: Order, please. Let's continue on

section 4.

MR. LEVI:

The minister has the

section in front of him: "Commitments." Here is a

board of directors that is pointing the direction for the corporation.

There's nothing in there that you've said. Frankly, one gets the

impression that what is happening to this corporation is really what is

happening to the BCR — that the government is really running the thing

and it is no longer at arm's length. We have no indication in this

report that they have in mind any of the things that you are talking

about, or for that matter what your involvement might be in northeast

coal. What about the commitment section? There's nothing in there: your

board has just recently met to approve this.

HON. MR. WOLFE:

Mr. Chairman, there are specific commitments referred to in the report

that members have referred to, and there are other commitments which

are being made from one month to the next as the corporation meets and

considers projects in various communities. Those are specific

commitments, as of the year-end of this report, which are specified as

a note to the financial statement, and there are many more which are

developing at the feasibility stage. In an effort to consolidate

various branch staffs of ministries and to make them more efficient,

there is a very worthwhile effort going on to consolidate facilities.

You have staff here in Victoria distributed in a very uneconomic

fashion throughout different buildings. So there are many more

commitments coming onstream than those that are referred to in the

report. There are also feasibilities being considered in E lot of other

ones. It is a case of providing services in the best manner to the

people of B.C. That's the main thrust of the Buildings Corporation and

the request to the ministries before it. So we have to respond to that

in an economic manner.

MR. LEVI: I just have one

other point, Mr. Chairman, The minister finished up his statement by

saying "in a most economic manner." You are the government that has

pay-as you; go or debt-as-you-go. Which is it? You are going to incur

some $700 million in debt: that's what you've done with the

[ Page 6498 ]

B.C.

Buildings Corporation. You are going to do all sorts of things through

this corporation and have a debt that will go up to $700 million, and

you may very well be back in this House asking for an extension of that

ceiling in order to spend more money. Frankly, Mr. Minister, you have

not been candid about what you are doing with the other $400 million.

You can't tell us that you're going to be building buildings and

integrating staff, and all that's going to take a little.... We're

going to spend $400 million on that? You already get $180 million in

rents. By next year we might be paying $250 million in rents.

One

of the questions I want to ask you is when we are going to be able to

get this corporation accountable in front of a committee. Have you

given consideration, particularly in view of this increase in the

debtload, to putting this Crown corporation on the

schedule for the

Crown corporations reporting committee? You are the minister

responsible, and you can make the recommendation. We can't get anything

out of the Minister of Finance (Hon. Mr. Curtis), but I'm asking you if

you are prepared to put this on that

schedule so that members of this

House can examine the operations of that corporation. It is starting to

get out of hand. If you are asking us to go up to $700 million, then

we're going to have a lot of trouble. We want to be able to understand

what's going on. Are you prepared to do that? And don't tell us it's a

matter of policy.

Interjections.

MR. CHAIRMAN: Order, please, hon. members. The member is again suggesting a legislative change.

MR. LEVI:

It's not a legislative change, Mr. Chairman. Where is the legislative

change? It's an order-in-council, one of those famous

orders-in-council. Ah, you see, you think that orders-in-council are

legislative changes — they do — but no, they're not legislative changes.

he prepared to recommend that? Has he decided to recommend that? That's

not a legislative change; it's simply an order-in-council adding to the

schedule. We want to be able to examine this in a lot closer fashion

than we're able to do in this committee.

HON. MR. WOLFE:

Mr. Chairman, I think the matter the member just raised was discussed

during my estimates, and it would require a legislative alteration to

consider whether such a corporation should be considered by the Crown

corporations reporting committee. It has, in my view, adequate

accountability now through the minister being represented on the board

and through the tabling of their annual report. I must say that this

corporation has done a responsible job in effecting economies in their

own operations in the last two years. Responding to the wishes of

Treasury Board and the Minister of Finance (Hon. Mr. Curtis), they have

accomplished substantial reductions in staff levels and in the cost of

operation, as well as substantial energy efficiency through a very

effective program in all government buildings.

So I only

want to say that we can, I presume, have confidence in this request by

virtue of the fact that all requests for additional borrowings have to

go before the executive council. It isn't as if the company has carte

blanche to make all of these borrowings; but it has to make forward

plans and it has to have enough latitude in its borrowing authority to

handle both what are known commitments at the exact moment and also

those which are coming on stream.

MR. LEVI: Well, I'm going to try once more, and then I'll leave

it. The minister said that representations were made to the cabinet in respect

to this $400 million increase. They came to the cabinet and said — I hope they

did, because that's what I presume happens; they draw up the plans and then

they come to the minister — "We need approval for $400 million." Let

me ask the minister one question: apart from new buildings, which are long-term,

what significant amount of money is there in those plans which require an increase

of $400 million in the debt ceiling? What is the most significant amount there?

You say that they laid these plans before you. What significant amount of money

is there that you suddenly need $400 million?

HON. MR. WOLFE:

Mr. Chairman, this has received cabinet consideration. What I said

earlier — just to be clear with the member — was that any individual

requests for borrowings within this borrowing authority have to come by

way of an individual proposal and presentation to cabinet, as is the

case with all of the Crown corporations where their borrowings are

guaranteed by the government and so on. I'm just saying that there is

astute and careful examination made of the request for each individual

borrowing within this borrowing authority request. This is just an

overall borrowing authority required under the act.

You

asked about individual proposals within that. There is a significant

number, all the way from courthouses to correctional institutions

throughout the province, some of which would be difficult to elaborate

on at this specific stage.

MR. COCKE: Mr. Chairman,

what effrontery! We hear that our safeguard is that the executive

council will examine all borrowings. We hear that there is safeguard

after safeguard after safeguard; but the government's own precious

safeguard, the Crown corporations reporting committee, which,

incidentally, hasn't met for months anyway — that window-dressing piece

of legislation — just isn't working. But anyway, I concur totally with

my colleague from Maillardville-Coquitlam (Mr. Levi) that this should

be included among the Crown corporations that report to the committee.

Beyond

that, we're looking here at an authority for an increase in borrowing

from $300 million to $700 million. Mr. Chairman, that minister was once

Minister of Finance, and we all recall him getting up and making a

splendid assertion — a political statement about debt created by a

former government — and going around the province with this particular

situation. Here we're talking now about public works, which used to be

a part of government and government expenditure. This government moved

public works out of the purview of the Legislature. They took it out of

the estimates, created an immense debt and said we were debt-free. That

is the part that we find the hardest to take. This increased borrowing,

along with the increased borrowing for practically every Crown

corporation, shows us to be the most debt-ridden province one could

ever imagine. So that it's not a direct debt, this government moved it

out into the purview of a Crown corporation. The Buildings Corporation

was a way that the government could create debt without being

criticized for going into a deficit-budgeting situation. Clearly that's

precisely where we are. We're in a deficit budgeting situation, to the

tune of whatever the debt is there now, up to a maximum of $700 million

— pure and simple. I would hope that the minister could give us some

kind of explanation of that.

[ Page 6499 ]

HON. MR. WOLFE:

I would like to comment with regard to that. The member again raises

the question of the fact that space costs were formerly recorded in

Public Works and that the concept of the Buildings Corporation was

developed. I think there is ample reason to support the fact that that

has provided a great deal more accountability in the ministries and the

real cost of building occupancy. The opportunity for this committee to

question anything with regard to the Buildings Corporation occurs

through the ministerial votes having to do with space occupancy. I note

that the federal government has been very closely watching the progress

of the Buildings Corporation concept in British Columbia, and in the

past 12 months they have adopted a space occupancy accountability

formula in government in using the same approach as the Buildings

Corporation in British Columbia.

[Mr. Strachan in the chair.]

MR. HALL:

The facts of the matter are that this

section asks the committee to

approve an increase in borrowing powers of more than double the current

$300 million. At the moment, as reported in the budget speech,

borrowing to December 31, 1980, is $172 million. That's what has been

borrowed up to now. According to the budget speech, the expected

borrowing is $76 million. This government has admitted that those are

the plans. Those are the plans that you have — $76 million this year.

That's what you said in print; that's what we heard from the member for

Saanich. If I add the $172 million that you've already borrowed to the

expected borrowing of $76 million, it comes to $248 million. There's

already enough borrowing power to cover that expectation. You've got

more than enough borrowing power to see you through the fiscal year

we're dealing with.

Now the minister says he's got a lot of

other ideas and a lot of feasibility studies. He wants to look after a

lot of people. We're saying okay, we're reasonable. Tell us what they

are. Just give us a hint. Give me a name. Tell me of one building. Give

me one address. Give me one project. Just give me one piece of a

building proposition that I can hang a $400 million hat on. I'm

suggesting to you, Mr. Minister, that you can't. You've already got

$300 million. You can only tell me, through the speeches of your

Minister of Finance, that you want $248 million. Recorded to date, the

excess borrowing authority over your requirements is $452 million. For

what? What do you want the $452 million for? You're going to get it

anyway, because you've got that huge majority over there. You're going

to steamroller this

section 4 through anyway. On top of that, we've

heard the explanation from the minister that the Buildings Corporation

has become so efficient that they've done this and they've done that.

I'll tell you what they've done. They've raised the rents on every

single governmental department from 40 to 70 percent. That's how darned

efficient they've got. They're out borrowing money to put the rents up.

Now we know what's really happening. It's a mess, Mr. Minister, and

we're not going to vote yes on this

section until you give us some idea

why you want this $452 million to play with.

MR. LEVI:

I'm really quite amazed at the minister. In order to illustrate the

success of the corporation, he is telling us that his friends in Ottawa

are looking at it. They're fascinated with it. Do you know what they're

fascinated with? They want to find some new mechanisms for wasting

money so they can increase the national debt. Who do they come to? The

king of the waste-makers. What are they looking at? You come in here

and tell us that because the company has saved $0.5 million on the

energy costs.... That's very good, but you don't hang that out as an

excuse to come in and say: "They're so good we can give them $400

million to play with." What will they do?

My colleague from

Surrey is right. Hang your hat on one project beyond what you talked

about and gave us during your estimates. You haven't been able to do

that. Don't tell us about accountability in here. We have great

difficulty in getting answers from the minister. He is not equipped

with the kind of information that could in any way substantiate even

$100 million. That's why I said in the beginning that the basic

objective of this increase is for something entirely different. The

only thing I can hang my hat on is the northeast coal. It's for costs

for all sorts of infrastructure up there that your government is going

to find a way of putting through. If you can counter that by saying:

"Here are the long-range plans...." You've given us nothing in terms of

any long-range plans — nothing beyond what you gave us when we had your

estimates and when we had the budget speech. All of a sudden you come

in and you need another $400 million or $450 million, as my colleague

said. Well, hang your hat on it. 'Let's have that kind of discussion.

Tell us why. If you want to be accountable, be accountable right here.

You've said you're prepared to answer questions. So far you haven't

answered any, other than what you answered in the last estimate. We

were looking at a $76 million increase, not a $400 million increase.

Answer the questions. You said you were prepared to do that. This is

the accountability process, so let's get some accountability.

MR. COCKE:

The minister is sulking now. He's having difficulty answering

forthright questions put in this committee. Now we know beyond a shadow

of a doubt that his whole effort to talk to us about accountability was

a farce. He is not even accountable in this House. Obviously the only

place that minister is accountable is in the cabinet or with the

executive committee. That's just not good enough for us. We're here to

do the people's business, and we should hear what the people's business

is from that minister. He's created a phenomenal amount of debt and

will create a lot more. He will not stand up in this House and tell us

what it's for. That's not good enough.

Section 4 approved on the following division:

YEAS — 28

Waterland

Hyndman

Chabot

McClelland

Rogers

Smith

Heinrich

Hewitt

Jordan

Vander Zalm

Ritchie

Richmond

Ree

Davidson

Wolfe

McCarthy

Williams

Gardom

Curtis

Phillips

McGeer

Fraser

Nielsen

Kempf

Davis

Segarty

Brummet

Mussallem

NAYS — 18

Macdonald

Barrett

Lea

Lauk

Cocke

Nicolson

Hall

Lorimer

Leggatt

Levi

Sanford

Skelly

Lockstead

Brown

Barber

Wallace

Hanson

Passarell

[ Page 6500 ]

An hon. member requested that leave be asked to record the division in the Journals of the House.

MR. REE: On a point of order, Mr. Chairman, I believe Mr. Mitchell's name was called.

MR. CHAIRMAN: The correction is noted.

section 5.

MR. LEGGATT:

I'd like to ask the minister for some clarification of this particular

section. This

section specifies that the company — we're talking about

B.C. Rail now — is for all its purposes an agent of Her Majesty, and

the right of the province and its powers may be exercised only as an

agent of Her Majesty. At the present time my understanding is that the

government of British Columbia owns all of the capital stock of B.C.

Rail. Perhaps the Minister of Finance, who I understand is quite

familiar with this because I discussed it off the record with him the

other day.... The specific question is: given the fact that the

government now holds all the capital stock in B.C. Rail, why is it

necessary for this declaration to be there given that it's a Crown

corporation? As I understand it, a Crown corporation is always deemed

to be an agent of Her Majesty the Queen.

HON. MR. CURTIS:

The Minister of Industry and Small Business Development (Hon. Mr.

Phillips) may want to respond to this

section or other sections.

Inasmuch as the hon. member opposite directed this question to me, the

present legislation does not classify the British Columbia Railway

Company as an agent of the Crown, even though the railway is entirely

owned by the province of British Columbia. The amendment therefore

clearly establishes the relationship of the railway to the province.

Secondly,

there has been a requirement on the part of the federal government to

further clarify another point with respect to the investment of Canada

Pension Plan funds. As the committee will know, federal legislation

requires that CPP money may only be loaned to a province or a

provincial Crown corporation. Over the years a significant amount of

money has been loaned from CPP to the BCR and its predecessor railway.

It's only recently that the federal government has questioned the

legality of that due to the absence of the point I mentioned a moment

ago.

Section 5 approved.

section 6.

MR. LEGGATT:

I have some questions surrounding

section 6. This

section provides an

increase in the capital stock of the BCR to be $1 billion divided into

ten million shares of $100 each. The existing legislation provides the

capital stock under

section 18 of being $25 million divided into

250,000 shares at $100 each. Firstly, what is the existing authorized

capital stock of B.C. Rail as of today before this legislation is

passed? What's the existing structure? Is the existing capital stock as

we read under

section 18 of the old act or, as I understand it, was it

increased substantially by a previous order-in-council? Perhaps the

minister could explain what the present situation is with regard to the

capital stock of that company.

HON. MR. PHILLIPS: The

authorized capital stock of the company made by the directors'

resolution from time to time is $210,572,900, of which $185,572,900 has

actually been issued.

MR. LEGGATT: Would the minister

explain how the company was able to get to $210 million when the

legislation provides only that there be $25 million, divided into

250,000 shares at $100 each? What was the authority for moving up?

HON. MR. PHILLIPS:

The authority to move up was really through the British Columbia

Railway Finance Act, even though the old British Columbia Railway Act

did not allow it. We're really cleaning up the legislation.

MR. LEGGATT:

I just want to clarify this, Mr. Chairman. What the minister is telling

the House is that B.C. Rail, without authorization, without legal

justification, decided to increase its capital stock. Otherwise why are

we having to amend this legislation today?

HON. MR. PHILLIPS:

Mr. Chairman, as you know, the railway has a difficult time increasing

its capital stock until they have the money. They get all their money

from this Legislature. Any moneys received to increase their capital

stock has been voted on through this Legislature. So it has been done

through the British Columbia Railway Finance Act, and we are now

changing the British Columbia Railway Act to correspond with the

finance act.

MR. LEGGATT:

There is no authorization that I can find, unless the minister can

point it out. Under the British Columbia Railway Finance Act, which

this Legislature has amended to provide the watering of the stock in

the BCR. What we have at the present time is legislation within which

the BCR must act. That legislation clearly provides under

section 18

that the capital stock shall be $25 million divided into 250,000 shares

of $100 each. There has never been any amendment to the law that came

forward, I am still at a loss to understand how it is that BCR, no

matter who did it.... I don't know whether it was the NDP or the Social

Credit government. I suspect that the stock was increased subsequently,

but there is no legislative authority. The reason I want to make this

point is that too often we think we can take an order-in-council and

change a law without coming before the Legislature. That's been a habit

of this government over and over again. It's not good parliamentary

practice. As far as I can see, what we are presumably going to do now,

if this

section passes, is to clean up something which was done but

which did not have legislative authorization. The minister may say that

he can show it in estimates or that he can show somewhere else that the

Legislature had a cursory look. But that's not what legislation is

about. Legislation is taking a law and amending it in the House, not by

order-in-council. It's bringing it forward to this House, giving us an

opportunity to debate, as we're doing today,

section by section. It's

just not a satisfactory way to legislate, as far as I'm concerned.

I'd

like to ask the minister some other questions surrounding

section 6.

The proposal would increase the capital stock to a billion dollars from

what had been legislated previously at $25 million. That gives the

company $975 million, presumably in stock that it can market or sell.

Just so that we're not thoroughly confused by this — and I admit I

don't entirely understand what's going on.... If you take

[ Page 6501 ]

this

additional allocation of capital stock, first of all, who is the

purchaser going to be? It's presumably the government. I take it that

there are no plans afoot to have the private marketplace purchase any

of the capital stock of BCR. So, first of all, would the minister

advise us who is the prospective purchaser for the additional stock

authorized under this particular section?

HON. MR. PHILLIPS:

Mr. Chairman, there will be no shares purchased by anybody but the

government. We are the sole shareholder and intend to remain so.

MR. BARBER: Socialist! Commie! Pinko!

MR. CHAIRMAN: Order, please.

HON. MR. PHILLIPS: We're not really going from $25 million to $1 billion. As I said, we are going from $185 million to $1 billion.

MR. LEGGATT:

Presumably, since there is no other purchaser in mind, I take it that

the government can expect to become a purchaser of the increased stock

allocation. In the course of time we can anticipate that the government

will be taking these shares into its own name. Is that correct?

HON. MR. PHILLIPS: Yes.

MR. LEGGATT:

Could the minister explain to the House how this process is going to

take place'? As the shares move into the government's name.... How will

the price of the stock be determined? Is this the method by which the

minister is seeking to assist the BCR in the construction of the Anzac

line?

HON. MR. PHILLIPS: We will be buying the stock

at the authorized value set out by the board of directors, naturally. A

dollar injected will be a capital investment in the railway.

Historically, the government and the people of British Columbia have

put very little money into the British Columbia Railway, and that's why

it has such a tremendous debt today.

MR. LEGGATT: Try it again.

Interjections.

HON. MR. PHILLIPS: There's a lot of cackling over there, Mr. Chairman, from the members opposite.

MR. SKELLY: That's because you're telling jokes.

HON. MR. PHILLIPS: I don't know what they are cackling about.

we proceed with the construction of new railway lines.... Instead of

historically going and borrowing the money and debt-funding all the

capital construction, this will allow the government to purchase shares

and capitalize immediately the additional construction. We seem to

forget in this Legislature that the British Columbia Railway has really

been one of the best economic tools this province has ever had. It has

been treated very poorly by all governments because they have been

allowed to progress and borrow money to the point that if it were a

private corporation it wouldn't be allowed to exist.

[Mr. Davidson in the chair.]

the not too distant past the federal government had an identical

situation with the Canadian National Railway. The St. Lawrence Seaway,

which had built up debts of billions of dollars and would never make a

profit.... It certainly contributed to the well-being of our country by

way of the economy and a transportation system, and the federal

government picked up the debt. Now the seaway can function on a normal

basis and be competitive and make a profit. We had the same situation,

Mr. Chairman, with Air Canada. The taxpayers of Canada picked up the

debt and now Air Canada functions as a normal corporation in the normal

fashion because they haven't the responsibility or the burden of

servicing this horrendous debt which they had.

MR. LEGGATT:

Mr. Chairman, I am still a bit unsure on this one. Since the government

now holds all the shares in B.C. Rail. why is it of any value to them

to have more shares in B.C. Rail? In other words, your assets aren't

going to grow because you're getting more stock. You already own the

entire corporation. Right? You own everything in it — you've got all

the stock. What's this ruse of taking more stock in a company that you

already own all the stock in? That's the kind of financial arrangement

I can't quite understand.

HON. MR. PHILLIPS: Well,

Mr. Chairman, let me explain it to the member this way. You start a

business and you either put money into the business — and you usually

have to put some in because the bank makes you put some in — and then

you go out and borrow. Right? What we're saying here is that instead of

having.... The money has to come from somewhere.

MR. LEGGATT: Right.

HON. MR. PHILLIPS:

As we put the money into the railroad, we will take it out in shares.

You're a lawyer; you understand that. Normal procedure. That's all

we're doing. We have to have something in return. Legally we own the

company, we'll be buying more stock and injecting more capital into the

railway. I don't see as that's so complicated.

MR. LEGGATT: Mr. Chairman, I understand it to this extent....

MR. BARBER: A bunch of worthless paper!

MR. LEGGATT:

In my sort of naive, lawyerish. non-business way I understand that if I

wanted to lend money to the BCR, I'd want to get some interest on the

money. If I wanted to give money to the BCR, I'd buy worthless stock

and it wouldn't give me any return. Now isn't that correct, Mr.

Minister? What you're really doing is taking the public's money,

pumping it into the BCR, and you're not even getting them to sign a

note. Instead, you're going to take back shares which will pay the

government nothing and give the taxpayers of British Columbia nothing.

What you're really doing is pumping tax money into he BCR without even

taking a promissory note, a guarantee or any interest back for that

particular fund. Admit it! Why don't you say: "Sure, we're going to

pump some money.... We're in favour of northeast coal." This little

financial device is.... It takes a little time to keep looking at it

and looking at it, but we're

[ Page 6502 ]

getting worthless pieces of paper for the taxpayers' money. That's what it is.

HON. MR. McGEER:

I think this is an illuminating exercise on the part of our socialist

opposition as to their penetrating insights into how enterprise is

developed in Canada. Listening to the arguments of the opposition, it

becomes pretty obvious that had Canada depended upon the imagination

and enterprise of the members opposite, or people who thought like they

did, we would be a Third World country today. There is no possibility

at all of making use of the abundant resources of this bounteously

endowed land unless one is prepared to invest — may I use that term

once more — invest in the future of the country by putting in the

infrastructure that allows those resources to be utilized.

The

problem with underdeveloped countries is that too often they have been

guided by the kind of thinking that we heard from the member for

Coquitlam-Moody. Investment has made Canada great, and our future will

be built upon investment. Investment depends upon supplying capital

from savings in order that it can be utilized — not to bring immediate

returns, but to bring dividends in the future as the land is developed

and the enterprise succeeds. If we were to depend on that man from Port

Coquitlam–Moody — I'm sorry if I can't get the exact definition of his

riding — we would never have roads, railroads or any other facilities

to the resources of this country. What this

section of the act does is

indicate the faith of this government in the development of the

resources of our province in such a way that they will bring dividends

to the public in terms of jobs, careers, opportunities and, last but

not least, money. Jobs, money and opportunity — that's what an

infrastructure is all about.

If we had to depend on the NDP

to build the facilities and infrastructure, with their misunderstanding

of what's brought the development of Canada to the stage it's at today,

it would never happen; we'd never have any resource development in

Canada; we'd never have any industry, jobs or opportunities. That's why

the members opposite are opposite. That's why they've been defeated in

election after election. The people understand the relationship between

investment and success. The public, the unions, business people and

investors understand that. The only people who don't understand it are

the socialists. They don't understand it in Canada, in Europe or in

other parts of the world, and wherever their ideas dominate you can

depend upon failure. It's the same story everywhere. It's the

philosophy of failure, the creed of envy — I think it was Churchill who

said that, but it's so true. Here we see it coming up again this

morning as the opposition attempts to stall a development in British

Columbia. It's against our resources, it's against providing an

infrastructure. They don't understand the relationship between

investment, faith in the future, risk of capital and all those things

that have brought good to Canada and British Columbia and which we want

to remain in this country. We want it to remain, and I and the members

on this side will be supporting the Minister of Industry and Small

Business Development (Hon. Mr. Phillips) to see British Columbia go

ahead.

MR. BARRETT: Could I first of all ask leave of the House that the following remarks not be put in Hansard because I do not wish to embarrass the minister who spoke previously. May I have leave that they be struck from Hansard ?

AN HON. MEMBER: No.

MR. BARRETT:

Somebody said no. The silliness of the argument I've just given is in

direct agreement with the silliness of the speech we've just heard.

When that member was a Liberal and had principles that were Liberal, he

voted against the BCR and fought against the BCR and the Columbia River

Treaty. At that time he was a university professor who was leader of

the Liberal Party, and he gave a brilliant analysis of how dumb Social

Credit was.

What have we found today? We've had a debate on

power versus principle, and power won out. That minister lost his

principles as he walked across the floor, and now has embraced the

orthodoxy of borrowing money to give to corporations so that they can

make money. Who used to give the greatest speeches...?

Interjection.

MR. BARRETT:

Yes, sir, the

section of the act. Who used to give the greatest

speeches against the Columbia River Treaty? I used to think that I did,

Mr. Chairman, but I didn't. There was one who spoke greater than I did

about the folly of the Columbia River Treaty and the debt, and it was

that member. There was one even more eloquent than I on the debt of the

BCR. I am embarrassed to admit that I'm only number two and trying

harder, but the number one critic of the BCR debt was the former

Liberal leader, who now sits as a quiet lapdog to the Social Credit

Party, who stroke him and pat him when he gets up and makes that

fatuous speech abandoning any kind of principle.

HON. MR. HEWITT: He saw the light.

MR. ' BARRETT:

Mr. Chairman, he didn't see the light; he went right down the tube. He

walked away from his Liberal colleagues, that once great leader of the

Liberal Party who changes principles as one would change one's coat.

AN HON. MEMBER: The bill.

MR. BARRETT:

This bill is to put British Columbia into debt for years and years and

years, and that member is the one who is agreeing with putting it into

debt. Mr. Chairman, I can say about the minister of small industry and

small things or whatever he is — small things are those he understands

— forgive him, for he knows not what he does. After all, if you spend

your life kicking used-car tires, what do you know about putting the

province into debt? Just roll back the odometer and everything will

work out all right, as far as his mind is concerned. But that genius

sitting next to him, that brilliant scientific analyst, who was a

Liberal spokesperson and used to sit on this side of the House and rail

against B.C. Rail, stands up this morning in British Columbia and

announces: "The conversion has struck. I'll do anything for power. Just

put me in the cabinet, please, old Bill, and let me call you Bill; let

me be one of the few who are allowed to call the Premier Bill, and I'll

get up and I'll defend any policy."

I read the interview.

He's one of the favoured cabinet ministers. He's allowed to say:

"Hello, Bill." Do you know what he's done for that privilege? The rest

of you guys all have to genuflect and say: "Dear Mr. Premier, sir, can

I come into your office?" He doesn't have to do it. He has actually

seen him and talked to him for 15 minutes this year. He's had

[ Page 6503 ]

minutes this year with Bill alone in his office. He said: "Bill, for

this 15 minutes I will get up and forsake every speech I ever made

against B.C. Rail; I will get up and do the last thing possible to show

that my conversion has taken place; I will embrace the policies of Don

Phillips." Can you see that taking place in Bill's office?

Interjections.

MR. BARRETT: "Yes, I will embrace Don Phillips." Now that's going too far; he didn't say he'd embrace Don Phillips; he just embraces ideas.

AN HON. MEMBER: That's going over the deep end.

MR. BARRETT:

No, he goes over the deep end when he's on television. They went to

Hollywood to tell him how to handle himself. I'm going to see if that

14 grand we spent on Disneyland...

MR. CHAIRMAN: Order, please.

MR. BARRETT: ...has

any effect on the minister. I'm going to watch him. I'm not talking

about you right now, Mr. Chairman, I'm talking about this

section of

the bill.

MR. CHAIRMAN:

section 6.

MR. BARRETT: That's right —

section 6. I'm glad we're on

section 6.

That

brain surgeon over there.... You'll notice they only let him work on

ones that are already in formaldehyde; that's the only ones they let

him work on, because his mind is always in the past. They let him rip

apart these old formaldehyded brains. Sometimes he doesn't wear the

gauze over his nose and the formaldehyde goes right up through there,

and he gets the formaldehyde fumes. What happened with the formaldehyde

fumes? He floated on those fumes across from the Liberal Party right

into Social Credit; and the fumes are so bad, he's actually spouting

Don Phillips' programs and philosophies. Thank God, the children are no

longer in school this year. We would have been burdened with hundreds

of young children in the galleries watching politics as it is in

British Columbia; young children would be asking their mommies and

daddies: "Was Dr. Pat not once a Liberal? " "Oh, children, don't ask

that question." "Did he not have principles as a Liberal?" "Oh

children, don't ask that question." "How could that man speak that way,

Mommy and Daddy, when he spoke against B.C. Rail when he was a

Liberal?" "Oh, children, that's politics Pat McGeer style."

Interjections.

MR. CHAIRMAN: Order, please.

MR. BARRETT: Mr. Chairman, I'm glad you called order; there are interruptions. I don't like those interruptions.

MR. CHAIRMAN:

Actually, hon. member, the reason we called order is because the Chair

has allowed — and I believe the hon. member will agree — considerable

latitude under

section 6. Also, hon. member, could we refer to members

in the House by their proper titles.

MR. BARRETT: Mr.

Chairman, I certainly intend to stay in order. I don't enjoy this

speech. If anybody thinks I'm having a good time rubbing the minister's

nose in his memories, they're wrong. Not me. My heart is full of

compassion. I'm attempting to understand how one takes off his

principles just like he takes off his jacket, floats across the floor

on formaldehyde fumes, ends up as a cabinet minister in Social Credit

and then gets up in this House and defends massive debt for B.C. Rail.

It's

shocking that this was allowed to take place under this section.

There's nothing in this

section that allows a minister to shed his

principles on a

section of an omnibus bill. That's what we saw today.

My colleague the member for Nelson-Creston (Mr. Nicolson) has come to

me and is considering a motion of privilege and censure on that member

for changing his principles right here on the floor of the House. At

least it could have been done in the corridor or in a back room, or at

least a smoke-filled room. But the embarrassment of seeing that

minister abandon his principles right here on the floor of this House

in front of innocent, naive legislators is too much for some of us to

understand. He was the Leader of the Liberal party. He used to sit back

there. He attacked Social Credit's policy of borrowing on B.C. Rail,

and today he stood up and said: "They should do more borrowing, because

I believe in Social Credit." Aberhart, where are you? Conversion has

taken place. I expect that minister to bring in a bill on funny money

so we can pay off the New York bankers and the European interests with

scrip from UBC. He can write it in the empty hospital beds. "On the a +

b theorem, how do we get patients in this hospital that I built as a

memory for me?"

Mr. Chairman, if I continued that I would be

out of order. So I want to say in conclusion, for those children who

are not here today, that their whole life has been saved. They'll still

believe there's purity in politics. But for those wizened taxpayers who

grace this chamber today, I want you to understand that you've not seen

anything new in British Columbia, just a repeat of our history. Every

time there's a whiff of power the Liberals cross the floor and go for

it. Where are they today? There's the first member for Surrey (Hon. Mr.

Vander Zalm) who wanted to be the leader of the Liberal Party. There's

the second member for Vancouver–Point Grey (Hon. Mr. McGeer), who was

the former leader of the Liberal Party. There's the former

Attorney-General, now the minister.... There are so many Liberals over

there that Prime Minister Trudeau was jealous. He doesn't have as many

Liberals in the west as there are in the cabinet over there. That's a

fact.

I ask all those citizens who have seen that minister

shed his principles today not to tell their children, not to tell their

friends or neighbours, but just to understand that as long as the price

is right, Liberals are available. As a matter of fact, Mr. Chairman,

that's where that program "The Price is Right" started: Dr. Pat McGeer

as the host, principles abandoned. Shame on you! Your uncle, Gerry

McGeer, was better than that. I never thought I'd live to see the day.

I'm ready to go to heaven and my reward after today's speech. I'm

ready. I know that even if I can't make a claim to purity, on a scale

of sticking to principles, I'm further ahead than that minister.

dealing with this section, Mr. Chairman, after I'm through with the

preamble, you ask us to put this province into debt and to put our

financial fate in the hands of people who would abandon principle to

play power politics. Forget it! Go back to sniffing formaldehyde. We

don't want any part of putting the people of British Columbia deeper

into debt for formaldehyde dreams.

[ Page 6504 ]

MR. CHAIRMAN:

Hon. members, prior to recognizing the minister, I think it would be a

good time to take a look at the

section we are debating, which says:

"The capital stock of the company shall be $1 billion divided into ten

million shares of $100 each." As hon. members must understand, we are

limited in committee to discussing specifically the amendment to the

section that is before us.

The member for New Westminster on a point of order.

MR. COCKE:

Mr. Chairman, we have a bill that has no principle, by virtue of the

fact that it has a number of dissimilar bills within it. So really,

what we are discussing here is both the principle and the

section-by-section debate. That is why latitude is widened in debate

with respect to an omnibus bill. I rather appreciate the fact that you

have given that kind of latitude, and hopefully it is going to continue.

MR. CHAIRMAN:

The member for New Westminster makes a good point. Nonetheless, hon.

members, even under second reading of a bill there are parameters

established.

MR. BARRETT: On a point of order, Mr. Chairman, because of your ruling, I withdraw all the remarks I made.

HON. MR. PHILLIPS:

Mr. Chairman, I was just going to say that member who just spoke must

have had that speech preserved in formaldehyde, because he drags it

out. It's well preserved, well used, but I've heard it so many times.

But here, while we're debating the great British Columbia Railway, the

railway that that man, when he was president of it, just about ran onto

the rocks and ruined....

I want to tell you what we're doing

here in the Legislature today. We're investing in the future; a dollar

put in today will be worth $14 down the road. I want to tell you that's

what we're doing. This government has got the courage and the

intestinal fortitude to go ahead and finally take that poor country

cousin, that great railroad which has done more for the economy of this

province than any other single-vehicle.... I want to tell you we're

putting some money into it. Yes, and it's an investment in the future.

When the city slicker member over there calls it a lemon, I'll tell you

I'll go up and down that railway line, and I'll tell those people along

that line what the socialists think of the great British Columbia

Railway. The man who just spoke was going to spend $2 billion to build

a railway to Alaska to haul nothing; it started nowhere and ended

nowhere. And he talks about us putting money into this great economic

development to open the province up for the future citizens, for the

young people. He condemns it.

I want to tell you those are

the socialists over there. When you ran the railway it was in debt.

When we first took it over it lost $22 million the first year. Now it's

making money because we have an independent board and we're running it

like a railway should be run. I want to tell you that railway is the

best economic development tool this province has ever seen. You talk

about subsidies, my friend. Look at the money we're putting into your

ferry system. Look at the money we're putting into urban transit. Every

dollar you put into the railway brings back hundreds of dollars in

investment.

Don't you condemn that great little railway.

It's never been better run. It's making a profit, and it's going to

make more. It's the best investment this province will ever make, and

we've got the fortitude and the money to do it.

MR. LEGGATT: Mr. Chairman, we weren't condemning the railway. We were condemning the minister, not the railroad. That was the difference.

AN HON. MEMBER: You're in favour of it?

MR. LEGGATT:

If we could just get back for a minute, I think we've got some answers

now out of the exchanges that have taken place. One of the answers

seems to be that the funding that will be used to buy this worthless

stock in the BCR is going to be from the consolidated revenue. That

consolidated revenue and that surplus is being built up by the increase

in the sales tax in the province of British Columbia. The plan is in,

and it's clear. There's not much doubt what's happening. They're being

overtaxed to build the Anzac line. That's the answer we wanted out of

this, because it's fine that we finally got some truth.

You're

not lending money to the BCR; you're giving them money. You're building

the line, not the BCR. The idea that somehow the BCR is going to do

this.... It's pretty clear that under this

section you're going to take

the worthless stock. You're not going to charge a dime in interest for

the public's investment, and therefore it's a giveaway. That's why we

say that it should have been a co-adventure. We should invest the

taxpayers' money in that project. If it's so good for the private

companies, why the hell isn't it good for the taxpayers of British

Columbia? This should have been a joint-venture project where we got

some returns. Instead we had a minister who dashed in prematurely and

made a lousy deal with the Japanese. The result is right in this tiny

little section. There's the giveaway. He's taken those worthless pieces

of paper and exchanged it for the sales tax of the people of British

Columbia who have been overtaxed.

HON. MR. PHILLIPS:

Mr. Chairman, let it be known to all the people of British Columbia

that the socialist party feels that any money invested in the British

Columbia Railway is — and he said it — worthless stock. It's an

investment in a tool which will keep the economy of this province

going. I want to tell you, Mr. Chairman, that group over there, led by

Broadbent.... We wouldn't need to invest any money in the British

Columbia Railway, because they'd have given all the resources to

Ottawa. I want to tell you further that if they had been government we

wouldn't be asked to put money into the British Columbia Railway,

because there would be no economy. The railway wouldn't have anything

to haul anyway.

It's time the people of this great province

knew and thoroughly understood what the socialists are all about.

They're in bed with Broadbent. The past leader wanted to give all the

resources to Ottawa, so they'd take it out of the taxpayers and it

would all go back to eastern Canada — to Ontario and Quebec. You stand

up here and tell me, when we're investing in one of the best

transportation modes this province has ever had, that we're buying

worthless stock. I've never heard such stupidity in my life. That's

exactly what you socialists stand for.

Sure, we're going to

put some money into British Columbia Railway. Then he has the audacity

to stand up here and say, "Oh, the deal is no good. You shouldn't even

build the railway. But why don't you buy stock in it?" That's a typical

socialist deal. They say the coal deal is no good, yet they want us to

put the British Columbia taxpayers' money into it. I can't understand

them. They condemn the deal, say it's no

[ Page

6505 ]

good, and in the next breath say: "Well, you should put money in it."

I'm

telling you, Mr. Chairman, the true old socialists have come out here

today. I thought you, young fella, when you came here from Ottawa, had

a little bit of hope. But when you stand here on the floor of this

Legislature and make a speech like that, you've been brainwashed by the

guy who just sat down, who keeps his speeches in formaldehyde. I'm

telling you, I really feel sad for you, but you're in bed with all the

old group over there — the real socialists, and some of them verging on

something a little more that I'm not allowed to say in this House. I

really thought that I had a little faith in you.

MR. LEA:

Mr. Chairman, I'd like to review briefly what the minister has had to

say. He insists on calling a subsidy an investment. We have not said

that the coal deal is a bad deal for the coal companies; we've never

said that. We're saying that we think it's a good deal for the coal

companies; that's why when we put money in we'd rather have it as an

investment than as a subsidy. The minister, who has been in business

all his life, should understand that nobody can put money in and call

it an investment if there is no hope of any return. How can you have an

investment if there is no return? You can, but it's called a bad deal.

It's a bad business deal for the people who are investing the money.

the people of the province of British Columbia are being asked to

invest in northeast coal, then why can't we share in some of the

profits from the selling of the coal? If we're putting up half the

money, give us half the profit. Doesn't that make sense? But no, that's

not the way this very businesslike government operates. This very

businesslike government operates on subsidies as opposed to investment.

You can't call it an investment, Mr. Minister. You can call it exactly

what it is: a subsidy to the coal companies.

Nobody is

knocking the BCR. Nobody is knocking the sale of coal. What we're

saying is that you, on behalf of the taxpayers, have made a lousy deal.

HON. MR. PHILLIPS:

Mr. Chairman, that last speaker always amazes me with his illogical

remarks in this Legislature. Let me tell you that an investment in a

transportation system to move goods and services to port is not a

subsidy. I think it's a good deal when the original contracts paid for

by the Japanese steel industry and the export of coal will go a long

way toward paying all the original investment. If we need that coal in

the future for British Columbia steel mills or for an energy source,

the infrastructure will be there paid for by the first export contract.

That is good business, and if that man over there from Prince Rupert

(Mr. Lea), who doesn't really want to kick the deal.... His leader says

it should be stopped at all costs. They're all over the mat on

northeast coal and the British Columbia Railway. It's hard to tell,

depending on the speakers, what the point of view is. This is a good

solid investment for all the taxpayers of British Columbia. Investments

in railways have traditionally opened up this country, and if they had

been in government there would be no railway and the country would

still be overrun by buffalo.

MR. NICOLSON: What the minister is saying is that a good deal for the

people of this province would be if we were to take the natural resource we

have.... Let's look at another natural resource. Let's look at the

logs that are rotting in the ground for lack of development of proper pulpmills

and so on. He's saying that the British Columbia government would

create a trucking company and make an offer to some outside company like Louisiana-Pacific

of the United States and say: "You come in here, and we'll make this

great deal for British Columbia. You go into the woods, cut down the trees and

load them onto our trucks. We'll carry them down there and subsidize you.

We'll hide costs for you, and we'll make a great deal for you. We'll

haul them down to your mill. Don't worry about the impossible terrain or

anything like that; we'll punch a new highway through and pay for that as

well. We'll punch it through a mountain if we have to, and we'll haul

them out to your mill. We'll possibly even help you build a townsite for

that new mill, put in schools, hospitals etc., and then once you've created

the pulp we'll haul it down to tidewater for you. We'll get more trucks

and make sure it gets where it has to go, and we'll absorb those costs,

or a good part of them, and just charge a nominal little bit."

What

we are saying here is that if British Columbia is going to be part of

this action, we want to be part of the action where the profit is; we

don't want to be part of the action where the hidden subsidies are. We

as taxpayers have a right to see investment all over this province, not

simply to serve the needs of one particular area. There are areas of

this province that are being neglected — they're being neglected by the

inaction of this government and by what the government did in forming

BCRIC. We have an area in which we are rich in the natural resources of

logs and trees, which are rotting on the ground and making our lumber

industry uncompetitive.

We're saying that if we are going to

invest in this province, we don't do it by this kind of a flimflam —

trading an inflated share value or authorized share value for a company

which does not trade on the stock market. You couldn't go out and sell

these shares for 10 cents; you couldn't go out and sell these $100

shares on the market. Maybe you could get 10 cents for wallpaper

souvenirs or maybe you could get $1 down here during the height of the

tourist season — to sell somebody so many hundred shares in the BCR. We

are saying that we want to see equity where we are investing. We just

don't want to write a blank cheque for subsidies that go on and on and

on.

HON. MR. PHILLIPS: Mr. Chairman, I don't know. I

was going to say I'm glad that member is here and not back in the

classroom, but I must say that I'm sure glad he's on that side of the

House and not on this side of the House, because when it comes to logic

I have real difficulty in understanding what the last member said,

except that he doesn't know what the devil he's talking about.

I'll

tell you again, as I've said before, that we're investing in the future

of this province through a transportation system. Railroads usually

have been built into an area where there are known resources. We don't

have contracts; we don't put an impost on the industry we're going to

serve. If we had, there would have been no lumber industry in the

northern part of this province, because the economics of the lumber

industry in the northern part of this province are a far cry from what

they are in the south. But here we have a project — contracts,

something to haul — we're investing in, and you on the other side of

the House are saying that the first two contracts should pay for the

entire line. I want to tell you that we're giving a surcharge.

Historically, the normal freight rates in this country have been set on

what the market will bear — that's what Canadian National Railways have

used historically; that's why we have the Crow rate.

[ Page 6506 ]

The

movement of goods and services in the province of British Columbia is

subsidizing the movement of grain from western Canada. If you want to

follow that to the nth degree, the commodities moving in British

Columbia, such as potash, coal and lumber, are really subsidizing the

feeding of the countries that we sell our wheat to. Normally and

historically freight rates have been set at what the market will bear.

We are getting full recovery costs for moving the coal, plus a

surcharge on every tonne of coal to help pay for the new

infrastructure, which will be there for centuries and will haul

additional millions and millions of tonnes of coal. And you tell me

that isn't a good deal? There has never been such a good deal put

together in the history of this country.

I want to tell you

that if we had had to have all these guarantees, the railway would

never have been extended from Quesnel into the Peace River country;

there would never have been a railway to Pine Point; there would never

have been a railway across this country. I want to tell you fellows

that you'd better smarten up and realize what a good deal we've got

before you go around the country knocking it.

MR. COCKE: Mr. Chairman, we've heard a lot of loud dissertation in this House. I want to ask a question: when is a subsidy not a subsidy?

I see this capitalization, an increase.... You know, this isn't a

modest increase in capitalization to satisfy the northeast coal

situation. We are seeing a tripling of capitalization. We are seeing a

capitalization being taken from $250 million to $1 billion. What does

that say about the past? Was there something wrong with the

capitalization in the past? Modest increases in capitalization could be

supported. But we're seeing a tripling, Mr. Chairman, from $250 million

to $1 billion; the end result is a quadrupling. The Minister of Forests

(Hon. Mr. Waterland) is laughing over his spilt milk.

The

fact is, Mr. Chairman, that what we have here is a subsidy for one of

the richest economies in the world: the economy of Japan. We further

see that it is a subsidy of two major mining corporations. I ask you

what they do in Australia. The mining corporations in Australia are

asked to share directly the costs of transportation before the fact,

not after — not in the hope that something is going to develop to make

everybody happy. Today we are sitting in a committee that has seen a

major increase in taxation in this province. We keep asking the

question: why this major increase? Well, we see this kind of infusion

without any suggestion of infusion coming from the economy that we are

going to affect — Japan. There's no infusion coming from the mining

corporation, which can sit back and wait until we've punched through

the tunnels and created this railroad and enhanced the CNR. That's what

we're really talking about. We're just saying: since the people have to

invest this huge amount, why couldn't they have a share in what comes

back, other than what the minister optimistically talks about as future

benefits? If there's any place where we're going to get future

benefits, it's in the place where we now have all the infrastructure —

that's in southeast coal. They have the capacity to serve at least

double or triple of what they are doing now. We're dealing here with

the people's money. For any minister to stand up on any grounds and

criticize our politics as a means of getting around some very logical

questions.... It's pure and simple. This

section of the bill is

unsupportable, as far as I'm concerned.

HON. MR. PHILLIPS:

I just want to straighten out the member for New Westminster, who just

sat down, on a couple of things. We have not got the capacity in the

southeast rail system today to handle the contracts being signed. I

said that before in the House. The Canadian Pacific Railway has to

spend an additional $500 million to upgrade the tunnel through the

Rogers Pass in order to handle the capacity. At the present time we

can't sell any more coal out of the southeast because we can't handle

the capacity. You would far sooner give the jobs to Australia than open

up the northern part of the province. That's exactly what you're

saying. I know what they do in Australia. You also ought to realize

that our coal happens to be three times farther from tidewater than it

is in Australia. I know what they do. I sat down with the boys in

Australia. Sure, they do the same thing we do when it's necessary; they

put in the infrastructure.

AN HON. MEMBER: No, they don't.

HON. MR. PHILLIPS:

Oh, yes, they do, and they have in the past, my friend. I sat there and

I argued with them for four hours. I know exactly what they do. When

all the chips are down, they do the same thing that we do. You're a

great expert. If infrastructure is needed to develop the great country

of Australia, they put it up front. Make no mistake about that.

With

the way the province is going, we have to invest money in our

transportation system. As I said a little earlier — you weren't in the

House, Mr. Member for New Westminster (Mr. Cocke) — the province has

historically not put any money into the British Columbia Railway.

That's why it has that huge debt load out there. What we're saying now

is that instead of allowing the railway to continue to accumulate this

huge debt, we're going to inject some capital into it. That's the

difference. We are going to invest in the future of this province. We

spent $310 million building the Anzac line. By 1990 it will be worth $2

billion. I say that is good business and an investment in the future.

That's the kind of business we stand for.

MR. LEA:

I can't let the Australian bit pass, because the minister knows that

that isn't the way it happened in Australia. The Japanese steel

interests offered to put up front money for Australia. They offered to

put in the infrastructure money. Australia turned it down. Do you know

why they turned it down, Mr. Chairman? They said: "Here we are as a

supplier of coal to a limited market." What Japan wants to do — and it

makes sense from where they sit — is to go into the coal suppliers and

split it off. They'll never sign that they'll take the tonnage. They

never take the tonnage that they contract for. What they've been doing

systematically around the world is going to the suppliers of coal and

trying to split up each country that supplies that coal to get an

advantage for Japan. Australia sent them packing with their money. The

Conservative government in Australia said: "Do you think we're stupid?

We're not going for that." What the Japanese wanted to do in Australia

was to get two suppliers in Japan so that they could play one off

against the other. Australia said: "We would have to be absolutely

nuts. Take your money and leave." They turned down the money from

Australia, and the government knows it. They do have some advantages

over us, you're right. Their coal is a lot closer to tidewater. The

transportation distances and transportation problems are not the same

as we have. What the minister can't seem to under-

[ Page 6507 ]

stand

is that we're not against the coal deal. We're saying that we want not

only a coal deal, but a good deal. The minister is right too. There

would have to be money put into southeast transportation systems to

increase the capacity. So we aren't in quite the same position as

Australia.

Australia does not have to do that, so they could

send the Japanese packing. We're not in quite the same position; we can

open up northeast coal without harming ourself in the province in terms

of a supplier of coal. But to do it on a political whim instead of a

good, sound economic footing is folly. The government knows it, but

that's been our history in this province. It's been our history that

every time we go for an export deal we look at the quick-term results

in terms of jobs and economy, but it's always based on political need

of the governing party. That's the way it goes every time and we're

doing it again. Do you know something? It wouldn't have mattered what

the figures on northeast coal were. This government would approve it.

They need that sort of economic activity at any cost because in their

six years in office they haven't done anything economically worthwhile.

Nothing! Name one thing that you've done.

Interjections.

HON. MR. HEWITT: We defeated you twice.

MR. LEA:

Oh, you've defeated us twice. That's right. That's what it's all about,

Mr. Chairman. They don't give a damn about the economy of this

province; all they care about is whether they're sitting on that side

of the House in government and the province be damned.

MR. COCKE: Mr. Chairman, I move the committee rise, report progress and ask leave to sit again.

Motion approved.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

Divisions ordered to be recorded in the Journals of the House.

Hon. Mr. Gardom moved adjournment of the House.

Motion approved.

The House adjourned at 12:01 p.m.

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