1976 Legislative Session: 1st Session, 31st 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)

MONDAY, APRIL 26, 1976

Afternoon Sitting

[ Page

1079 ]

CONTENTS

Routine proceedings

Oral questions

Lease to Halfmoon Bay Estates. Mr. Lockstead — 1079

Circumvention of strata conversion regulations. Mr. Gibson — 1079

Summer employment by Highways department. Mr. Wallace — 1079

By-election in Vancouver East. Mr. Macdonald — 1080

Ferries dining room service. Mr. Wallace — 1080

Human rights branch inquiries. Mr. King — 1080

Victoria recycling depot. Mr. Barber — 1081

Ore shipments from Denison Mines. Mr. Gibson — 1081

Sale of Can-Cel shares. Mr. Wallace — 1081

Transition house funding. Ms. Brown — 1081

Thompson River study. Hon. Mr. Nielsen answers — 1082

Motion

Adjournment of House on matter of urgent public importance. Mr. King —

Hon. Mr. Wolfe — 1082

Mr. Speaker rules — 1082

Hon. Mr. Bennett — 1082

Mr. Speaker — 1083

Mr. King — 1083

Mr. Lauk — 1083

Mr. Speaker — 1083

Statement

Agricultural aid to developing countries. Hon. Mr. Phillips — 1084

Ms. Brown — 1084

Mr. Speaker — 1085

Routine proceedings

British Columbia Railway Company Construction Loan Amendment Act, 1976

(Bill 5)

Second reading.

Hon. Mr. Wolfe — 1086

Mr. Lauk — 1086

Mr. Nicolson — 1096

Mr. Gibson — 1102

Mr. Wallace — 1105

Mr. King — 1108

Mr. D'Arcy — 1110

Hon. Mr. Wolfe — 1111

Division on second reading — 1112

Errata — 1113

MONDAY, APRIL 26, 1976

The House met at 2 p.m.

Prayers.

HON. G.M. McCARTHY (Vancouver–Little Mountain): Mr. Speaker,

in the House this afternoon we have members of the Social Credit Party

Women's Auxiliary. I would like to ask all members of the House to

welcome this very dedicated group of women who were successful in

bringing the Social Credit Party administration to British Columbia

last December.

MR. W.S. KING (Leader of the Opposition): Mr. Speaker, in the

gallery today we have a former member of this House. I would ask the

House to join me in welcoming a gentleman who served for some 27 years

in the Legislature of British Columbia. As Minister of Mines in the

former government and as the member for Kootenay for many, many years

he made a great contribution to the public life of this province. I

would ask the House to welcome Leo Nimsick.

MS. K.E. SANFORD (Comox): Mr. Speaker, seated in the gallery

today is a group of students from the Campbell River Senior Secondary

School who are accompanied by their teachers and sponsors, Chris Round,

John Ison, Larry Short. I would ask the House to join me in making them

welcome.

Presenting reports.

Hon. Mr. Phillips files the annual financial statement of the B.C. Railway.

Oral questions.

LEASE TO HALFMOON BAY ESTATES

MR. D.F. LOCKSTEAD (Mackenzie): Mr. Speaker, to the hon.

Minister of Environment. With respect to a foreshore lease granted to

the Halfmoon Bay Estates on lot 303 or 304 at Porpoise Bay, Sechelt,

B.C., is that the same application, Mr. Minister, that was rejected

last year upon the advice of the departmental officials and the

recommendation of the village of Sechelt?

HON. J.A. NIELSEN (Minister of Environment): I wonder if I

may request from the member some specific reference as to which

application he is now speaking of, and I will gather that information.

Are you saying that an application is now before the department or has

been approved?

MR. LOCKSTEAD: It's the same application that I wrote to the minister about some time ago. The lease was granted on March 25 of this year.

If the minister is going to look into this, I wonder if he would be

good enough to look into the fact that the principal officer of

Halfmoon Bay Estates was active in the general election on behalf of

the Social Credit candidate in Coquitlam and may now be active in

Vancouver East, and that his wife is president of the Social Credit

constituency

MR. SPEAKER: Order, please.

MR. LOCKSTEAD: Well, I am interested in whether there is a conflict of interest, Mr. Speaker.

MR. SPEAKER: If that is your question, then ask that question.

MR. LOCKSTEAD: Well, yes, I do ask the question. I am asking

the minister if he'd like to look into the possibility of a conflict of

interest in this matter, Mr. Speaker.

HON. MR. NIELSEN: I can assure the member that if the applicant was the Premier he wouldn't get any more consideration than anyone else.

CIRCUMVENTION OF STRATA

CONVERSION REGULATIONS

MR. G. F. GIBSON (North Vancouver–Capilano): Mr. Speaker, a

question for the Attorney-General in his capacity of...the Landlord and

Tenant Act. Is the Attorney-General aware of current attempts to

circumvent the strata conversion regulations whereby the conversions

have to obtain municipal approval by the sale of so-called cooperative

units, and will he take measures to plug this legal loophole?

HON. G.B. GARDOM (Attorney-General): I'd very much like to

thank the member for the question and also for notice of the question

earlier today. I'm unaware of the matter which you've mentioned. I'll

look into it and I'll have to take it as notice this afternoon.

SUMMER EMPLOYMENT BY

DEPARTMENT OF HIGHWAYS

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

question to the Minister of Labour with regard to the summer employment

of students and the fact that in this area over the weekend certain

students who had been given employment by the Department of Highways

were notified at very short notice that, in fact, the job was not

available. I'm wondering if the minister could tell the House

[ Page

1080 ]

whether these difficulties are related to the

conflict between the policy of the government of paying students

two-thirds of union wages, whether that conflict between the government

and the employee's union has anything to do with this change of

decision by the Department of Highways.

HON. L.A. WILLIAMS (Minister of Labour): Mr. Speaker, I would

be pleased if I could have the opportunity of having specifics from the

hon. member. I'm not aware of any such decision being made by the

Department of Highways, and I'm completely unaware that there's been

any dispute as to the student employment rate that is being paid for

the jobs under the summer student employment programme. If he has

specifics, I'd be pleased to look into it.

BY-ELECTION IN VANCOUVER EAST

MR. A.B. MACDONALD (Vancouver East): Mr. Speaker, I'd like to

ask the Premier, enumeration having been long completed — and I can't

ask whether they're playing politics with the Constitution Act because

that would be out of order — but I do ask when will you set the date

for the Vancouver East by-election.

HON. W.R. BENNETT (Premier): The same answer that I've given

this member before: when the report is given to me from Mr. Morton,

through the Provincial Secretary's office, I'm sure they'll call the

by-election.

MR. MACDONALD: Mr. Speaker, is the Premier saying that enumeration hasn't been completed?

HON. MR. BENNETT: I'm just saying that I'm waiting for the report.

MR. G.R. LEA (Prince Rupert): On a supplemental to the

Premier, Mr. Speaker. Has the Premier asked for the report from Mr.

Morton? I mean, are you trying to get this underway as quickly as

possible?

HON. MR. BENNETT: No, but I have asked the Provincial Secretary, to whom Mr. Morton would report.

FERRIES DINING ROOM SERVICE

MR. WALLACE: Mr. Speaker, I'd like to ask the Minister of

Transport and Communications a question regarding the far-reaching

decisions that have been made on the ferry service, and particularly in

relation to the closing of the dining rooms on the ferries. Could I ask

the minister if consideration was given to the awarding of a franchise

to any private enterprise catering company to provide dining room

service on the ferries?

HON. J. DAVIS (Minister of Transport and Communications): Mr.

Speaker, consideration will be given to that possibility. However,

negotiations are currently underway with the union and it would be

inappropriate to raise that subject with any certainty at the moment.

MR. WALLACE: I would like then to get clarification from the minister. Is the decision to close the dining rooms not a final one?

HON. MR. DAVIS: The decision to close some of the dining

rooms is definitely final. The large new ferries do not contain any

facilities on them for dining rooms. This was a decision made, several

years ago. Other dining rooms will be closed in the coming months.

MR. WALLACE: On a supplementary, Mr. Speaker. In the planning

of these changes, what was the projected saving in dollars? By how much

will expenditures be decreased if the dining rooms are closed on the

ferry system?

I HON. MR. DAVIS: Mr. Speaker, I'll take that question as notice.

The figure would be an estimate. I'm sure I could get it shortly. It will

run into several millions of dollars a year.

HUMAN RIGHTS BRANCH INQUIRIES

MR. KING: Mr. Speaker, a question to the Minister of Labour.

With respect to two human rights board of inquiry requests which the

minister has received, I understand, from the director of human rights,

specifically the case of Dr. Johanna Bruhn-Mou and the College of

Dental. Surgeons, and the case of Dr. W.G. McLure and the College of

Physicians and Surgeons and the B.C. Human Rights Code, did the

minister receive either personal or written representation from any of

the parties to these disputes since the request was received from the

human rights branch?

HON. MR. WILLIAMS: With respect to the request for the board

of inquiry involving the College of Physicians and Surgeons, I

discussed the matter with the Human Rights Commission, which is one of

the parties, but I had no representations from the College of

Physicians and Surgeons or Dr. McLure, whom I believe is named as a

party.

As the member is aware, Mr. Speaker, that board of inquiry is in place and I believe its hearings commence on May 30.

[ Page 1081 ]

With respect to the complaint of Dr. Bruhn-Mou, I believe it is, and

the dental college, the only representations I have received — and I

don't really categorize them as that — is a letter from Dr. Bruhn-Mou

inquiring as to when it would be possible for the board to be

established, and expressing some concern about the time when

examinations can be taken in this province. But that was only an

inquiry; I have had no representations made to me by the dental college.

MR. KING: I wonder if the Minister could tell me why he has

found it advisable to change the administrative procedure with respect

to the appointment of boards of inquiry, and exercise political control

over the election and appointment of these committees rather than have

that process....

MR. SPEAKER: Order please. Hon. Leader of the Opposition, if

you're going to ask a question, it must be couched in terms that does

not in any way reflect upon something that the minister may or may not

have done or said. If you have proof of the fact that this is a proper

question, fine — otherwise, I would have to rule it out of order.

MR. KING: Mr. Speaker, the minister did make a statement to

the house, for which he was granted leave, indicating that he had

changed the administrative procedure. I am asking why he chose to do

this rather than have these boards selected by an impartial chairman.

HON. MR. WILLIAMS: Mr. Speaker, I wish the house to know that

appointments of boards of inquiry by me are made strictly in accordance

with the legislation. I have not delegated that authority, as was the

case under the former minister.

VICTORIA RECYCLING DEPOT

MR. C. BARBER (Victoria): My question, Mr. Speaker, is to the

Minister of the Environment. As he and this House are well aware, the

greater Victoria recycling depot is the largest and most successful

operation of its kind in Canada. I have been waiting for weeks to hear

what the minister is going to do. My question today is: can the

Minister of the Environment inform this House what action he has taken,

if any, to prevent the dissolution of the greater Victoria recycling

depot?

HON. MR. NIELSEN: In response to the member I might add that

that recycling depot has not requested any assistance since you first

asked your question. There is an outstanding request on behalf of the

recycling depot for a grant from the provincial government and which

has been, and is, under consideration.

The first question you asked did not come to pass in that they did

not close down the recycling depot; they cut back somewhat on their

budget. My understanding now is that they are seeking funds or seeking

relief from certain costs. Since they decided to cut back on their

budget, and have sought relief, I am not aware that they have sought

direct relief from the Department of Environment. However, I hope to

have very, very quickly for you, some time during this week, I trust,

some very definite action in response to that.

ORE SHIPMENTS FROM DENISON MINES

MR. GIBSON: Mr. Speaker, a question for the Minister of

Transport and Communications. In view of the announcement of Denison

Mines last week of their plans to bring into production a

five-million-ton coal property just south of Chetwynd, I wonder if the

minister could tell us the government's policy as to whether this ore

is to be shipped out through Prince Rupert or down the BCR line through

Squamish.

HON. MR. DAVIS: Mr. Speaker, this matter is still under very active discussion in cabinet.

SALE OF CAN-CEL SHARES

MR. WALLACE (Oak Bay): Mr. Speaker, I would like to ask the

Premier a question with regard to the statement on Thursday, April 22,

by Mr. Ronald Gross, president of Canadian Cellulose Ltd., that the

board of directors of Canadian Cellulose had proposed to the government

that it reduce its holdings in the company. Has the government sold any

shares in Can-Cel since assuming office in December, 1975?

HON. MR. BENNETT: No.

MR. WALLACE: Supplementary, Mr. Speaker: in the light of the

board's proposal and the chairman's statement, has any member or

members of the cabinet met with the board of directors of Can-Cel to

discuss the matter of the government's ownership of 81 per cent of the

company?

HON. MR. BENNETT: Mr. Speaker, through you to the member for

Oak Bay: I haven't, and I'll take your question as notice and inquire

from the cabinet. I'm not aware of any formal meetings.

TRANSITION HOUSE FUNDING

MS. R. BROWN (Vancouver-Burrard): Mr. Speaker, my question is to the Minister of Human Resources. Mr. Minister, have you yet worked out

[ Page 1082 ]

your terms of reference for funding for transition houses?

HON. W.N. VANDER ZALM (Minister of Human Resources): Mr. Speaker, I think this was made fairly clear at the time: they will be paid on a per diem basis for services provided.

MS. BROWN: Supplemental. Would the minister explain how new

transition houses will come into being? There are presently three in

existence. How will new ones come into being?

HON. MR. VANDER ZALM: Mr. Speaker, if someone deems there to

be a need for a further transition house they can make application and

certainly we will consider assisting wherever and in whatever way we

can.

THOMPSON RIVER STUDY

HON. MR. NIELSEN: Mr. Speaker, the member for Prince Rupert

(Mr. Lea) requested on April 15 a list of persons who were in

attendance at a meeting relative to the Thompson River study in West

Vancouver. I ask the member if he would prefer to receive the list or

have me read it. It's quite lengthy.

MR. LEA: Table it.

HON. MR. NIELSEN: Fine.

Presenting reports.

Hon. Mr. Gardom presents the annual report for 1975 of the Racing Commission.

Hon. Mr. Gardom presents the annual reports of the Privacy Act, for

the period ending December 31, 1974, and for the period ending December

31, 1975.

Hon. Mr. Curtis presents the 1975 report for Dunhill Development Corp.

MR. KING: Mr. Speaker, I rise on a matter of urgent public importance.

MR. SPEAKER: Do you have a copy of the motion or the information which you wish to put before me?

MR. KING: Yes, Mr. Speaker. I ask leave to move the

adjournment of the House for the purpose of discussing a definite

matter of urgent public importance, namely the shocking increase of 2.4

per cent in the cost of living index for British Columbia, reported on

April 21 by Statistics Canada.

This represents an actual increase of approximately 25 per cent in

the cost of food alone for our B.C. residents, subsequent to the

lifting of the B.C. price freeze by the provincial government.

Uncontrolled increases in auto insurance, electricity and gas rates,

home heating oil, food, drugs, beverages, plus increases in the sales

tax and income tax have driven the increase in the cost of living in

B.C. this year to the highest rates in the whole of Canada.

The figures from Statistics Canada were only released on April 21;

consequently this is the first opportunity, Mr. Speaker, I have had to

raise them, and I submit they warrant immediate debate as being urgent

matters affecting the citizens of this province.

MR. SPEAKER: Would you please give me a copy of the statement which you have just read, if you don't mind?

HON. E.M. WOLFE (Minister of Finance): Mr. Speaker, on a

point of order, this very matter is dealt with in a bill before the

House at this time — the Anti-Inflation Measures Act.

MR. SPEAKER: Thank you, Hon. Member.

Replying to the hon. Leader of the Opposition, in response to his

request to have an immediate debate under standing order 35 on the

matter of the increase in the cost-of-living index, as the hon. Leader

of the Opposition knows, in order to qualify under standing order 35

the matter must be one of definite urgent public importance. While it

is true that the hon. Leader of the Opposition has not had an

opportunity prior to today's sitting to raise the reported increase

before this House, it is also true that a matter of cost-of-living

index increases is one of continuing concern, I believe, for all of us.

It is not really a matter that has suddenly thrust itself upon us out

of the blue.

Interjection.

MR. SPEAKER: Order, please. It is something that, while it is

of concern — and I do not dispute the concern that people feel about it

— it is not a matter of urgent public importance to be debated

precisely at this particular time in this House.

It would also appear clear in reading from Sir Erskine May that your

request to debate this matter cannot really get around the rule of

anticipation as discussed on page 368 of Sir Erskine May's Parliamentary Practice .

For that reason, and those reasons, I must say to the hon. Leader of

the Opposition that the request for an emergency debate is out of order

according to the rules of our House. I so rule.

HON. MR. BENNETT: A point of order, Mr.

[ Page 1083 ]

Speaker.

Interjections.

MR. SPEAKER: One moment, please. We have the hon. Premier on a point of order.

HON. MR. BENNETT: Mr. Speaker, without being the first one to

break the new Whips' agreement, because I understand they'd agreed on a

certain course of procedure in this Legislature.... However, if it is

of concern to the opposition, we could deviate from the proposed

legislation and debate Bill 16 today, which would cover this very

subject.

MR. SPEAKER: That is a matter that the Chair has no knowledge

of. If it is a matter that the Leader of the Opposition and the hon.

Premier of the province wish to see that bill advanced ahead of others,

then that is up to the House Leader (Hon. Mrs. McCarthy) to put it to

the House.

Interjections.

HON. MR. BENNETT: Full debate under that bill.

MR. SPEAKER: Order, please. But the matter which I have had

to deal with is a matter of a request by the Leader of the Opposition

for a debate on a matter of public importance. There will be no debate

once I have reached a decision, which I have done. I have ruled that

the matter is not one that qualifies under standing order 35 and,

therefore, is not debatable.

MR. KING: A point of order, Mr. Speaker. I appreciate the

ruling that you have made, but I would point out that by leave of the

House it certainly would be permissible to debate this motion that I

have offered. I suggest, Mr. Speaker, that with leave of the House.

under the circumstances that we have, despite a bill which the

government has introduced and which, again, would be anticipation in

terms of whether or not it comes before the House for debate...

MR. SPEAKER: Order, please.

MR. KING: ...we have a revelation, developed extraneous from this province through Statistics Canada.

MR. SPEAKER: Order, please! Now we are getting into a debate

on the matters which you wish to raise before the House. It is simply a

matter on which I have given you the opinion of the Speaker. I have

ruled that it is out of order. However, I am a servant of the House and

at your disposal. Shall leave be granted?

Leave not granted.

MR. G.V. LAUK (Vancouver Centre): On a point of order, Mr.

Speaker, according to standing order 35 of our rules, leave to make a

motion for the adjournment of the House must be asked after the

ordinary daily routine of business has been concluded, which has been

done. The member desiring to make such a motion does so. If objection

is taken, which Mr. Speaker has found, Mr. Speaker requests those

members who support the motion to rise in their places and, if not less

than nine members rise accordingly, Mr. Speaker calls upon the member

who has asked for leave.

AN HON. MEMBER: He doesn't understand the rules. (Laughter.)

Interjections.

MR. SPEAKER: Hon. member, I have already followed the

provisions of rule 35, sections 1 and 2. In dealing with the matter I

have ruled that it is out of order, and that ends the matter at this

particular time.

Interjections.

MR. SPEAKER: I have also followed upon the recommendations

and the suggestion of the hon. Leader of the Opposition. I have asked

for leave, which was denied.

MR. LAUK: Mr. Speaker, on another point of order. This

concerns the request that was made by the Leader of the Opposition that

you have just ruled on. It is customary, I say with respect to the

Chair, to hear the arguments on the point of order upon which Your

Honour is ruling.

MR. SPEAKER: Essentially I'm afraid you're wrong. The matter is closed.

MR. LAUK: Mr. Speaker, it's....

MR. SPEAKER: Order, please.

MR. LAUK: It's showing disrespect for this....

SOME HON. MEMBERS: Order!

[Mr. Speaker rises.]

MR. SPEAKER: Order! Would the member please take his seat?

[ Page 1084 ]

Interjection.

MR. SPEAKER: Order! The matter was dealt with. I listened to

the request of the hon. Leader of the Opposition, I pointed out why it

was not in order, and that concludes the issue as it was before the

House. I also allowed the hon. Leader of the Opposition to make a

further point. I asked leave of the House — which was denied — to

debate the matter, and that concludes it, Hon. Member.

[Mr. Speaker resumes his seat.]

AGRICULTURAL AID

TO DEVELOPING COUNTRIES

HON. D.M. PHILLIPS (Minister of Agriculture): With leave of

the House I'd be prepared to make a statement which I promised to the

House some time ago regarding agricultural aid to developing countries.

If the House is still interested in the subject I'd be pleased to make

the report.

Leave granted.

HON. MR. PHILLIPS: I was going to do it last week but there was nobody here.

For the purpose of information and clarification, I wish to make the

following brief statement about the Agricultural Aid to Developing

Countries and World Disaster Areas Fund.

The fund has been operating since 1969 on the interest from a $5

million perpetual fund. This interest amounts to approximately $375,000

per year. In recent years, the applications for grants from

non-governmental relief and development agencies to carry out mainly

development projects in the Third World have far exceeded the interest

money available to support, in part, these worthwhile activities. As

all members know, a sum of $5 million was placed in the Department of

Agriculture estimates in the previous fiscal year to more adequately

meet the needs of the development and relief agencies. It is the clear

intention of this government to carry on with this important programme.

For further clarification, I would point out that the programme for

the 1976-77 fiscal year comprises two elements. First, the sum of

$350,000 will be included in the Department of Agriculture's estimates

to support development education work within the province as well as to

support administrative project evaluation and other expenses pertaining

to the fund. Secondly, the $5 million grant fund will also be included

in estimates to support eligible development projects and disaster

relief work as is needed in the Third World.

Now there were a lot of questions about the educational portion of the fund, and I shall proceed.

Development education programmes within the province are recognized

as an important activity necessary to create a greater awareness and

concern for the problems in the less fortunate areas of the world. In

1975, the advisory committee of the fund provided, for the first time,

grants to co-ordinate development education work. Major support was

granted to the new agency called IDERA — Industrial Development

Education Resource Association — for the purpose of development and

delivery of a co-ordinated programme on behalf of some two dozen relief

and development agencies sponsoring a programme in common. An annual

budget of $100,000 was approved by the fund's committee and made

available to IDERA on a quarterly basis depending on performance. IDERA

has received to date two quarterly payments of $25,000. The government

will continue its support of the IDERA programme for the next two

quarters on the same basis, and will at that time review both the

performance and the benefits resulting from the IDERA's efforts.

Additionally, the fund made several small grants to support similar

work conducted by other groups such as Interfaith, an agency supported

by three churches.

I want to emphasize at this time that development education work can

be expensive if not measured against productivity. The advisory

committee do not propose to support development education programmes

that are unlikely to be productive or are poorly co-ordinated with

other groups engaged in a like activity.

Finally, the advisory committee to the fund has, on the basis of

seven years of successful experience and interaction with major

development and relief agencies, developed criteria which are used in

evaluating all requests for support. Copies of the criteria and the

formal application form now in use are available from the Department of

Agriculture.

The advisory committee to the fund also publishes an annual report. The 1975 copy will be available shortly.

I hope that this relieves all of the areas of question that were in

the members' minds, and that they'll know that this great government is

going to carry on this great programme.

MR. SPEAKER: Order, please. I think that statement has now been concluded.

MS. BROWN: I appreciate the Minister of Agriculture answering in detail my questions.

MR. SPEAKER: Order, please. Are you on a point of order?

MS. BROWN: Yes, a point of order.

[ Page 1085 ]

MR. SPEAKER: What is your point of order, please?

MS. BROWN: I'm not permitted to respond?

MR. SPEAKER: No.

MS. BROWN: Okay, then, I'll make it a point of order.

MR. SPEAKER: I'm sorry, but there's quite a difference between responding and a point of order, Hon. Member.

MS. BROWN: If you work at it, Mr. Speaker, it can be one and the same.

On a point of order....

MR. SPEAKER: Hon. Member, would you take your seat, please?

There's a great deal of difference between responding to a statement

made in the House by leave and rising on a point of order. If the hon.

member wishes to pursue this matter further, would the hon. member

please do it in question period tomorrow? That is the rule that I

suggest to the House and that is a rule, I think, we will adhere to in

the House.

If the Minister is prepared to make the statement outside of the

question period, in order not to take away time from the question

period, if an hon. member wishes to pursue further that subject matter,

he will have ample opportunity to do it tomorrow.

Your point of order?

MS. BROWN: Mr. Speaker, I had no intention of being

disrespectful to this House. The precedent had been set. Other members

had been permitted to make responses and this is why I did it.

MR. SPEAKER: Order! No they hadn't, hon. member, with respect.

MS. BROWN: However, I certainly accept your ruling and I will

withhold my thanks and appreciation to the member for replying to my

question. (Laughter.)

MR. SPEAKER: Please do.

Orders of the day.

The House in Committee of Supply; Mr. Schroeder in the chair.

ESTIMATES: DEPARTMENT OF FINANCE

On vote 61: minister's office, $78,246.

The House resumed; Mr. Speaker in the chair.

The committee, having reported progress, was granted leave to sit again.

HON. G.M. McCARTHY (Provincial Secretary): I move we go to

public bills and orders, Mr. Speaker. I would ask the Leader of the

Opposition (Mr. King) at this time; we had an agreement between the

leaders earlier today that we would move to the second reading of Bill

5. But if the opposition would like, and the government would be

pleased to move to the second reading of Bill 16, which is the....

SOME HON. MEMBERS: Oh, oh!

Interjections.

HON. MRS. McCARTHY: Mr. Speaker, I would ask the Leader of the Opposition if he would grant that we move to Bill 16.

MR. W.S. KING (Leader of the Opposition): Well, Mr. Speaker, Bill 16 is completely irrelevant to the point raised earlier.

SOME HON. MEMBERS: Oh, oh!

Interjections.

MR. SPEAKER: Order, please!

MR. KING: Really that is the problem, and we have an agreement according to the government. I suggest that that agreement be followed.

AN HON. MEMBER: What a farce!

Interjections.

HON. MRS. McCARTHY: Mr. Speaker....

Interjections.

MR. SPEAKER: Order, please! The Provincial Secretary has the floor.

HON. MRS. McCARTHY: Mr. Speaker, as agreed with the

government, we had just hoped that we could have the agreement of the

opposition because of the subject matter of Bill 16 in regard to

inflation. However, as per our earlier agreement, I would suggest that

we move then to Bill 5, second reading.

Interjections.

MR. G.S. WALLACE (Oak Bay): Point of order.

[ Page 1086 ]

MR. SPEAKER: The hon. member for Oak Bay on a point of order.

MR. WALLACE: Mr. Speaker, since we questioned the Minister in

question period about providing the financial data and since he's

tabled the data just minutes ago, could we be assured that members of

the opposition will immediately receive copies of the annual financial

report of the BCR?

AN HON. MEMBER: Get it Xeroxed and pass it out.

MR. SPEAKER: First of all, Hon. Member, that's really not a

point of order. I think it is a question that you should direct to the

minister during the course of this afternoon — at no other time. It's

not a point of order to be taken on the floor of the House.

Second reading of Bill 5.

BRITISH COLUMBIA RAILWAY COMPANY

CONSTRUCTION LOAN AMENDMENT ACT, 1976

HON. E.M. WOLFE (Minister of Finance ): Thank you, Mr. Speaker. Bill 5 is the British Columbia Railway Company Construction Loan Amendment Act.

Mr. Speaker, the purpose of this bill is to increase the borrowing

power of the British Columbia Railway Company from $650 million to $900

million. This borrowing is necessary for the committed extension of the

railway into the resource-rich areas in the northern part of the

province and to cover the cost of operating the line.

While there are now losses in the operation of the railway, hon.

members are aware that the British Columbia Railway is a resource

railroad essential to the basic economy of large segments of our

province, and to the existence of the communities which it serves and

the livelihood of the citizens of those communities.

These facts, and the essentiality of its service, must be measured

against these losses in any realistic assessment of the railroad and

the financial support provided by this bill. Mr. Speaker, I move second

reading.

MR. G.V. LAUK (Vancouver Centre): Mr. Speaker, I can't help

but register the opposition's disappointment at the very short shrift

that has been given to a number of finance bills by the hon. minister.

I think that when expenditures and extensions of capacity to loan by

Crown corporations and so on in the amounts that have been put before

this Legislature this spring are being discussed, the minister has a

responsibility to go into some further detail and report as best he can

how the moneys are to be expended, for what purposes and over what

period of time — particularly in this bill, Mr. Speaker, when we have a

situation where the railway is operating at a loss and, although

unreported, has been operating at a loss for many, many years.

There are reasons, perhaps. But those reasons have not been

elaborated on by the Minister of Finance. He's in charge of this bill

and it's incumbent upon him to prepare the kind of information that is

necessary for us to deliberate and to vote intelligently on all sides

of the House on this important measure.

Mr. Speaker, the history of this railroad has been a good one in the

sense that it has brought economic development to inaccessible or

near-inaccessible regions of our province. The British Columbia

Railroad, although used as a political football, has from time to time

brought those benefits most clearly to Mr. Speaker's own riding as well

as many others.

But the decisions that surround the railroad, the problems that are

coming home to roost in the last three or four years, the difficulties

in management and in finance, in construction, have been brought about

by a legacy of political interference on the part of the previous

Social Credit administration. This legacy of playing with the railroad

as a political football has to be paid for by the people of British

Columbia today.

It's disappointing to me, Mr. Speaker, to see that that history, yet

again, has not been corrected by this new administration. The

accounting practices of that railway, Mr. Speaker, involved a

deliberate and wholesale cover-up...

HON. D.M. PHILLIPS (Minister of Economic Development): Order, Mr. Speaker.

MR. LAUK: ...of the finances and the losses of that railway

for so many years. It was disappointing, indeed, to have that

revelation laid before this House last spring.

Losses were varied, Mr. Speaker. The auditors for the railway, since

1916, were disgraced, resigned and were subsequently suspended by the

Institute of Chartered Accountants. What this railway needs is a new

and refreshing look. What happens? The new administration, breaking

another promise that they will have Crown corporations at arm's length

from the government, place another minister in charge of the BCR, the

Minister of Economic Development (Hon. Mr. Phillips) .

With great respect, Mr. Speaker, it's surprising indeed that so much

responsibility had been placed on the shoulders of this particular

minister. It's a surprise, and I will not reflect on his abilities one

way or the other. But any man could not possibly cope with all the

responsibilities that the minister has.

[ Page 1087 ]

In four or five months that minister has under his charge two major

departments — two major Crown corporations. He must have something to

do with the land commission and in all of this, Mr. Speaker, our fears

have proved correct. In four months no new directions have been taken,

no definitive decisions, and every public utterance of this hon. member

has revealed an abysmal lack of understanding of those Crown

corporations and departments over which he has charge. I see no new

creative responses.

AN HON. MEMBER: What for?

MR. LAUK: The other day the hon. minister outlined his

industrial strategy for the province and it was almost word for word

one of my old press releases from a year ago. I am complimented but at

the same time, Mr. Speaker, I would think that within four months,

coming into power as they have on the promise of great, new industrial

strategies, that there would be something new with this bill again.

The British Columbia Railway Company Construction Loan Amendment

Act, 1976: we would expect that accompanying this bill there would be a

full report through the Minister of Finance, that there would be

changes in financial structure, where the railroad is going in the

north, that there would be management decisions with respect to the

management itself, that there would be a detailed response on the

northwest rail agreement. None of these have been forthcoming in the

opening remarks of the Minister of Finance — a great disappointment

indeed.

Yes, Mr. Speaker, the railroad is a development railroad. It is the

most unique railroad in North America. It has two development lines:

one, the Dease Lake extension, and the other going to Fort Nelson —

important lines bringing the lifeblood of the economy to those remote

regions, if I could be so bold as to refer to your riding, Mr. Speaker,

as a remote region.

In any event, this needed economic development was carried over a

railway that was designed and engineered in a very sloppy fashion by

the previous Social Credit administration. It's been well documented,

Mr. Speaker, the neglect, the political interference and the cover-up

of financial losses that has gone on with this railway in the last 10

years or so of the previous Social Credit government.

The financing, Mr. Speaker, of this railroad must be radically

changed. The total railroad must be completely refinanced or it will

always operate from hand to mouth and depend on its political masters

for its financing and the needed corporate decisions that should be

made that are so essential for the healthy survival of this railway.

It's been used, as I say, historically as a political football by

W.A.C. Bennett. He called it his greatest jewel. It turned subsequently

into his greatest shame. The Dease Lake route was chosen more as a

result of whimsy rather than good planning — that's well documented —

and he, that previous Premier, ruled the railroad with an iron hand,

not for the good of British Columbia; the primary interest was not for

economic development and jobs or transportation decisions, but for

political jiggery-pokery during election time.

In only three years, the NDP administration struggled with the

decision to either proceed or not to proceed with the Dease Lake

extension. That Dease Lake extension was the result of political

decision-making on the part of W.A.C. Bennett, and it was followed by

the servants of the railway, day after day — and the Fort Nelson line

as well. We saw derailment after derailment because of the hidden

defects, the low standard of construction on the road, so that costs

could be represented to the public as much lower than they needed to

be. Penny wise and pound foolish, Mr. Speaker.

For years they kept the costs down — in the 1960s — and this added

exponentially to the greater cost of upgrading the line in the 1970s

under the NDP administration. The previous NDP administration paid the

legacy of political interference in the British Columbia Railway. Now

is the time for this government to act and bring about new management

and a new financial structure, but this government says one thing and

does another. It promised, as I say, that Crown corporations would be

at arm's length from cabinet. It has not happened. I wonder if it ever

will.

The British Columbia Railway needs new management at the top, a new

president and chief executive officer who knows how to make corporate,

not political, decisions, who will accurately report their accounts to

the House and be held responsible for their debts.

The NDP, coping with the financial morass, the hidden costs, the

cover-up and the lawsuits caused by political decision-making under the

previous Social Credit administration, delayed that process for three

years, Mr. Speaker. But now this administration has an opportunity that

it should not let slip through its fingers. Don't have an overtaxed

minister on the board of directors.

MR. G.F. GIBSON (North Vancouver–Capilano): We have an overtaxed public!

MR. LAUK: Don't have cabinet ministers on the board at all, Mr. Speaker.

HON. L.A. WILLIAMS (Minister of Labour): You were the executive vice-president. You were on there.

MR. LAUK: That's right.

[ Page 1088 ]

Interjections.

MR. LAUK: Don't get excited, Mr. Minister of Labour. Don't get excited. I'm going to deal with you in a moment.

The Minister of Labour, when he was a backbencher of the opposition Liberals many, many years ago....

AN HON. MEMBER: Four months ago.

MR. LAUK: Four months ago? That's right. I'm sorry. It seemed

many years ago because you act so at home over there. It's so easy to

shrug off 25 years of a political commitment to the Liberal Party and

now sit in the seat of power — the seats of the mighty, Mr. Speaker.

But that Minister of Labour, when he was an opposition Liberal,

spoke on this very subject, and we indicated to him, both the

then-Premier and myself, that the course of action that would be taken

would be to accept that principle: we would appoint executive officers

and a board of directors that would be clearly separate from political

interference on the part of the government.

Interjections.

MR. LAUK: Now maybe the Minister of Labour has not heard my

remarks in approaching this subject. He has not heard of the political

cover-ups, the financial cover-ups of that railroad under the previous

Social Credit administration. Maybe he missed a speech of the then

Premier, Premier Barrett, on Friday, June 6, 1975. Perhaps he wasn't in

the House, Mr. Speaker. Perhaps he didn't hear about the many reports

that had to be filed and prepared before any decision could be made

with this sad railway.

Well, that's on record. It's on a Hansard , brought to this House by the NDP administration. He should read it again — and I refer to Hansard ,

page 3165, Friday, June 6, 1975, the sordid history of financial

cover-up of this railway. The reports were filed in 1974 and 1973, the

Touche-Ross report, the Minty report, other reports, cataloguing

clearly the difficulties with this railway that had to be sorted out by

the previous administration.

HON. MR. WILLIAMS: You were on there. You could have done something. You accomplished nothing.

MR. LAUK: Oh, it's so easy. "You were on there; you could

have done something." I keep on mentioning the mess that this railway

was in, and we were moving towards putting, clearly, a new management

in charge of that railway.

What have they done? They've appointed the Minister of Economic Development

(Hon. Mr. Phillips) . Now you know, Mr. Speaker, we will expect that the Minister

of Labour will urge his colleagues to appoint an independent chief executive

officer and a board of directors — I hope he does — and is consistent with his

promise, because certainly that is supportable on this side of the House.

It is regrettable indeed that the NDP administration did not act

within its term of office to do that very thing. Regrettable, but I

don't think particularly blameworthy, in light of the fact of the

tremendous problems that we had to sort out in that relatively short

period of time. I think that it should be pointed out again, in

covering last year's loan amendment Act with respect to the BCR, that

there was reference made to the Minty report. It was clearly stated in

there, Mr. Speaker, by M.J. Minty — the effectiveness of the B.C.

Railway financial systems which had been prepared by the

comptroller-general, Mr. Minty. Mr. Minty noted, among other things,

that there appeared to be little or no internal or external audit check

on millions of dollars spent annually on construction of the B.C.

Railway engineering division. He recommended "the external auditors not

be unduly restricted in setting the terms of their audit engagements as

appeared to be the case in the past." Direct political interference

caused a financial cover-up of the BCR.

It took us almost two and a half years to sort that mess out. Mr.

Minty also recommended that an independent engineering consultant be

hired to review the methods of the engineering division. In a letter

attached to his report he commented as follows:

"With respect to the awarding of contracts for all rail-line

extensions, I confirm that the company's officials have seen fit to limit

spending on preliminary engineering studies, a practice which has contributed

directly to overruns in the order of $17 million on contracts completed to date."

That was April, 1973. At the fall session of 1973 two more reports were tabled

in this House, one on financial reporting by Price Waterhouse and another on

engineering by Swan-Wooster Engineering.

The Price Waterhouse report revealed that this great jewel in the

previous administration's crown had, in fact, "cumbersome, inefficient,

inadequate financial accounting and control practices." It was

recommended there that further study be done to sort that mess out.

As has been stated on previous occasions, on October 30, 1974, the

professional conduct committee of the Institute of Chartered

Accountants of British Columbia laid a complaint against Buttar and

Chiene, the auditors of the railway. The complaint related to the B.C.

Railway auditing. The panel found unanimously that the said member

[ Page 1089 ]

violated the rules of the code of ethics and rules

of professional conduct by reporting on and associating itself, for and

on behalf of the firm of Buttar and Chiene, with the financial

statements and auditor's report thereon for the British Columbia

Railway Company for the year ending 1972, when he had failed to obtain

sufficient information to warrant the expression of the unqualified

opinion expressed thereon. That firm was subsequently suspended.

The record shows that in

section 8 of the report that I referred to

by Mr. Minty, Einar Gunderson, an admitted campaign fund raiser for the

Social Credit government of that day, restricted the auditors in their

work, and, according to the comptroller, E.M. Gunderson restricted the

extent to which the external auditors could go into their auditing with

a consequent limitation of fees charged, and a consequent change, Mr.

Speaker, in the figures represented to the public of British Columbia.

This is all well documented. The new auditors, Peat, Marwick and Co.

provided last year for the first time in the railway's history an

accurate reflection of the accounts of the railway. The mess was slowly

beginning to sort itself out. After 20 years of financial cover-up and

finagling and deception, finally the NDP administration was able to

clarify, to sort out and to accurately reflect the true situation with

respect to the railroad.

Now I say this: the next step has to be the financial restructuring

of the railway. That entire railroad has to be totally refinanced. The

expenses of the Dease Lake extension, the upgrading of the Fort Nelson

line and the tremendous increase in costs generally require that this

railway be totally refinanced.

In so doing, this government has an opportunity to appoint an

independent officer who knows how to make corporate decisions and not

one who will respond to his political masters and again continue this

unsavoury practice of using the railroad as a political football. With

this new chief executive officer, Mr. Speaker, the BCR would have a

chance to become a jewel in the crown of all the people of British

Columbia. Political decisions would be eliminated, the accounts would

be accurately reported, and the corporation could be held responsible

for accurately reported debts.

We expect that the BCR someday will be profitable, but as a

development railroad, using track and developing lines into

inaccessible areas, it's a slow process indeed to develop the revenue

the railway needs to make a profit. But we can expect that in the

future. In the meantime, we should regard the development lines of the

BCR as highways. In the same way that we do not expect a profit from

the highways that we build in the province, we should not expect a

profit immediately from the development lines of the BCR.

With these new accounting directions that I'm proposing, we could

accurately reflect the profit picture of the railway. Its regular line

we would consider operational. Its development lines — the Dease Lake

extension and still the one to Fort Nelson — could be considered

developmental and separately accounted for. An attempt to do just that

has been made as a first step last year. I would hope that the next

step is taken.

With respect to management again, we need corporate managers. We

need someone who is not just familiar with railroading, but someone who

has a vast experience in administration and in corporate decisions, a

person who will be strong enough to resist undue political pressure

from their political masters, because the public in the long run own

the railway. It's to the public that the officers and the board of

directors of that railway must answer.

The Dease Lake extension, Mr. Speaker, was an unfortunate decision,

not in that the line is to be built, not in that it was a totally

disastrous decision, but in that the way the decision was made was so

characteristic of the political whimsy of the previous Social Credit

administration. We are told that the route was merely a line

imaginarily drawn by the finger of the previous Premier across the map,

and that the then president of the BCR said: "How high?" That's how you

make decisions, it seems.

I hope that does not continue, as that kind of practice is costly.

The pre-engineering studies were practically non-existent. The

estimates of costs were artificially under-represented, and therefore

overruns occurred constantly. Even with overruns and construction

delays, the line to Fort Nelson has caused great loss to revenue, to

the orderly economic development of the north and to the orderly

operation of the railroad. The lines that were built were hopelessly

inadequate. The previous Social Credit administration and the officers

of the railroad at that time knew it was hopelessly inadequate, but

they built the line for political purposes, without regard for the

safety, the property and the lives of the people of the north.

This was a shocking state of affairs, and that administration, of

course, stands condemned. I raise it now, Mr. Speaker, because this new

administration has a tremendous opportunity to correct that terrible

wrongdoing. They have an opportunity to restructure the railroad, to

refinance it, to bring in new management and to avoid making those

kinds of purely political decisions that sometimes may cause injury to

the person and his property.

As I say, day after day, derailment after derailment, we finally

made decisions under the NDP administration to upgrade the line to Fort

Nelson, a cost of which, had it been done properly when the line was

first built, could have been avoided — a tremendous cost that, as I

say, exponentially through

[ Page 1090 ]

inflation in the 1972-75 period was very great

indeed. This is why these borrowing powers are being requested today.

We are paying for the political deception and financial cover-ups of

the past. We are paying for the ineptitude of the management of the

railway in the past.

I will not mention any further the rumour that a former minister of

the Social Credit administration of the past will be called upon to

head up this railway, except to say this: that former minister was a

member of the board of directors when he approved the Buttar and Chiene

auditing and reporting of the accounts of the railway, which was a

deliberate cover-up to hide the costs and the losses of that railway.

Secondly, that person is a partisan — an old boy of the Social Credit Party.

MR. SPEAKER: Order, please, Hon. Member. In the last few

minutes in your address on second reading of this bill you accused a

previous administration of Liberal cover-up of the operations of the

B.C. Railway. I suggest to you that that is not a term in keeping with

the best parliamentary tradition and suggest that you use other words

or withdraw that term, please.

MR. LAUK: With respect, Mr. Speaker, I cannot. The evidence is before this House in Hansard

of last spring; the evidence is before this House in three different

reports. It was a deliberate deception; it was a deliberate cover-up of

the previous Social Credit administration. I will not withdraw those

remarks.

MR. SPEAKER: Order!

SOME HON. MEMBERS: Withdraw!

MR. SPEAKER: Hon. member, when you are referring in general

terms I have allowed you a fair amount of latitude. As I recall, and I

am sure that Hansard will show it, you referred to a previous minister of the Crown specifically...

MR. LAUK: That's correct.

MR. SPEAKER: ...and then concluded those remarks by

suggesting that he was involved in a deliberate cover-up, if I

interpret your remarks correctly.

MR. LAUK: Correct.

MR. SPEAKER: If that is what you meant, I suggest you

withdraw that remark, because it is an imputation against the character

of a previous hon. member of this House.

MR. LAUK: Which I am entitled to do, Mr. Speaker. It is only

unparliamentary, I say with respect, if I impugn an improper motive to

a present sitting member. It is not improper for me to impugn any kind

of motive to any previous member of this House. I therefore refuse to

withdraw the remark.

MR. SPEAKER: Hon. Member, it is the tradition of this House

to withdraw remarks whether they impugn the character of a sitting

member of the House or someone else who has at some other time on some

other day been a member of this House. I think it would only be proper

if you would withdraw that imputation.

MR. LAUK: Mr. Speaker, I cannot. That's the gravamen of my

charge. My charge is that a former minister of the Crown was a member

of the board of directors of the railway that deliberately interfered

with accounting practices of the railway to cover up costs and losses.

That has been documented; that has been proven. How can I say that the

sun won't rise in the morning?

MR. H.J. LLOYD (Fort George): That was never proven.

MR. LAUK: It certainly was.

MR. SPEAKER: Hon. Member, you are now referring to

conclusions that you may have reached in your opinion and in the

opinion of others at a time when the minister to whom you referred is

no longer a member of this House. Now I would ask you once more to

withdraw the imputation that you placed upon the character of a former

minister of the government of the province of that day.

MR. GIBSON: If I might rise on a point of order, Mr. Speaker,

I think it would be unfortunate if we started to adopt procedures in

debate which would be such as to unduly inhibit the expression of

opinion, particularly when the hon. member concerned alleges that they

are backed by tacts spoken in this House. I would draw to Your Honour's

attention that there has been no attempt by any member of this House to

restrain members opposite from impugning the motives of the former

Premier, for example, or the member whose seat has been vacated and

which the former Premier is now contesting. I hold no particular brief

for any of those parties, neither the former Social Credit minister nor

the former Premier. I simply wish to suggest, Your Honour, that it is

only equitable that equal latitude should be allowed on both parts.

MR. SPEAKER: Hon. Member, in speaking to your point of order, I have allowed more than a

[ Page 1091 ]

lenient attitude to the hon. member who is taking

his place in second reading of this debate in the remarks that he has

made, and in some of the imputations that have been involved in those

remarks. But when it came to a matter of instead of reflecting

generally upon the administration who previously sat in office, but to

specifically single out a single cabinet minister and by his imputation

suggest that this cabinet minister was less than, shall we say, doing

his job and duty, I think that that imputation of wrongdoing is

incorrect and should not take place on the floor of the House. That is

why I ask the hon. member to withdraw that remark.

I am not suggesting that he hasn't the opportunity available to him,

as all members of this House have, to express an opinion upon the

performance of a former administration, and I've allowed fairly strong

terms to be used in this debate this afternoon. But I would ask the

hon. first member for Vancouver Centre now, because he did enter into

an area of imputation on the character of an individual person, who was

not in the house at the time the report he referred to came down, to

withdraw that imputation.

MS. K.E. SANFORD (Comox): Mr. Speaker, on a point of order

with respect to your request to withdraw the remarks made by the hon.

first member for Vancouver Centre, I got out my copy of the budget

speech and would like to read to you just one sentence and make a

comment on that.

MR. SPEAKER: Has it anything to do with the matter which I am discussing with the hon. first member for Vancouver Centre?

MS. SANFORD: Yes, it reflects directly on this, Mr. Speaker.

It says: "How can the former Premier and Minister of Finance of this

province have the gall to ask people anywhere to vote for him after the

way he has blown their money on one of the fanciest spending sprees

this country has ever seen?"

Now it seems to me, Mr. Speaker, that you are reflecting there on

the character of the former Premier and the former Minister of Finance

(Hon. Mr. Barrett) .

MS. R. BROWN (Vancouver-Burrard): Good point!

MR. SPEAKER: Order, Hon. Members! At the moment the Speaker

has to deal with a matter that's before the house, not something that

was said in a budget speech. That is for the hon. minister who

presented the budget speech to be concerned with. My concern right now,

to the hon. first member for Vancouver Centre, is that I agree that the

remark you made relates to a man who is no longer a member of this

House. It was also a remark which related to a time when he was not a

member of this House. I am not going to force the hon. member to

withdraw it. I've requested that he do that in a spirit of good debate

because I do think that there's an imputation there that perhaps would

be best if it was not made at this particular time.

MR. G.R. LEA (Prince Rupert): On the same point of order —

it's more of a point of information from the Chair, Mr. Speaker — if a

member of the opposition or a member of the government back bench is to

rise in his place and speak about a former cabinet minister, where it

had been proved either by a court of law or by documentation that that

person has handled that portfolio in a way that is not beneficial to

the people of British Columbia, or has handled it just badly

administratively, it's a point of fact that you're talking about. Are

you suggesting that members of the opposition or other members of the

House can't bring that point of fact into the discussion in the House

if it's true? I don't see where it's maligning anyone if what a member

is speaking about is the truth which has been documented, or if a

cabinet minister was found guilty by a court of law. I'd like your

ruling on that or some information.

MR. SPEAKER: It's not a matter of a ruling; it's a matter

that I suggested to the hon. first member for Vancouver Centre that it

was bordering on the border of unparliamentary language in the manner

that it was used. That is what I suggested to the member.

Would the hon. member for, Vancouver Centre please proceed?

Interjection.

MR. SPEAKER: Are you on a point of order, Hon. Member?

MS. SANFORD: Yes, Mr. Speaker. I'm just trying to assist in

getting this clarified for the House, because it seems to me that when

the Minister of Finance, who was also an hon. member of this House,

uttered the words that are contained in the budget speech that I had

read previously, it seems to me that it reflects equally on the

character of a former member of the House.

MR. SPEAKER: Order! Hon. Member, will you please take your seat?

I didn't order a retraction. I suggested to the hon. first member

for Vancouver Centre that I considered the remark to be on the

borderline of unparliamentary. Now he has suggested that he will not

withdraw the remark and has no intention of doing it. I have asked the

hon. member to proceed and I expect that is what he will do if everyone

will

[ Page 1092 ]

give him the courtesy of having the floor.

MR. LAUK: Thank you, Mr. Speaker. What I was outlining to the

House is the fact that decisions were made — and I should repeat this

again, the reports that were made to this House last spring. In the

Minty report, for example, according to the comptroller: "E.M.

Gunderson restricted the extent to which the external auditors can go

into their auditing with a consequent limitation of fees charged." It

is also documented in the Touche-Ross and Minty report that the

accounting procedures adopted by the railway in those days were

approved by the board of directors.

They were approved by the board of directors, a member of whom was

Mr. Williston, the impugned former member. I would suggest that he is

culpable to that degree, the result of which was a financial cover-up

of the railway's loss and financial position.

In addition, the decisions that were made by the railway with

respect to the development lines to Fort Nelson and the Dease Lake

extension were political decisions. Their timing was political, the

nature of them was political and, as a result, the costs that were

burdened and placed upon the shoulders of the NDP administration were

horrendous. They were needless. They were needless. They were

pointless. They were purely out of political whimsy. Purely out of

political jiggery-pokery on the part of the previous Social Credit

administration.

Interjections.

MR. LAUK: And you know it, Mr. Member for Columbia River.

Interjections.

MR. LAUK: Well, at least I have aroused, or perhaps Mr.

Speaker has, by your interruptions, the attention of the opposite side.

But it seems to me that if this administration is acting responsibly,

they would have something to say now about what they are going to do to

change that bad, bad history of the BCR.

It seems to me, Mr. Speaker, that when the Hon. Provincial Secretary

(Hon. Mrs. McCarthy) introduced the women from the Social Credit

League, she should have mentioned that they were not entitled, even by

sounds, to participate in the debate on the floor.

AN HON. MEMBER: Ohhhhh!

MR. LAUK: You know, Mr. Speaker...

MR. J.J. KEMPF (Omineca): Against the women again! (Laughter.)

Interjections.

MR. LAUK: ...it seems to me that the opportunity that this

government now has is being missed as each day passes. That is a deep

regret to me. Cataloguing the problems with the railroad has been done.

Now what about the solutions? I think that if they chose Mr. Williston

to head the railway, not only would the public be disappointed, but

because of his political past, his independence from political

interference would be in question.

AN HON. MEMBER: You'll hear no more of B.C....

MR. LAUK: Oh, there's maybe no question about that, Mr.

Member. But that is not what I am arguing about — that in the instance

when he was on the board of directors there was a financial cover-up;

therefore his role with the railway was impugned, and, secondly, he was

a Social Credit cabinet minister.

How can you say you are going to keep the railway at arm's length if

you are calling in one of the old boys? You can't do it. He may be the

most honourable man. Mistakes have been made by honourable men in the

past. But how on earth do you appoint them to a board and expect the

public and the opposition to support it as being evidence of

controlling and governing the Crown corporation at arm's length from

the government? I say it's evidence in the opposite direction and I say

that they should avoid making that kind of decision at all costs.

The expenses of upgrading the Fort Nelson line caused by the neglect and cover-up of the past are underway and in completion.

AN HON. MEMBER: Catch 22.

MR. H.J. LLOYD (Fort George): On a point of order, I don't

see any particular effort made by the member over there to withdraw the

statement the Chair asked him to withdraw. I think the accusation he is

making is completely out of order. He suggests that the review

commissioned by the NDP said that there was improper accounting. There

was never any impartial trial of that; there was never any royal

commission to suggest there was any improper accounting.

AN HON. MEMBER: Hear, hear!

MR. SPEAKER: Order, please. Would you state your point of order?

MR. LLOYD: I think he should withdraw these statements that

there's a cover-up. He's impugning a member who has served this

Legislature and served

[ Page 1093 ]

this province in one of the heaviest portfolios,

and served it, I would say, very well. He's not here to defend himself,

and he hasn't got any documented proof that there was any alleged

cover-up. I feel that's one of the most honourable members who ever sat

in this House, and I believe he should be asked to withdraw those

remarks.

MR. SPEAKER: Hon. members, speaking to the point of order

raised by the hon. member for Fort George: first of all, the first

member for Vancouver Centre (Mr. Lauk) is not impugning the character

or the record of anyone who is presently a member of this House.

I've suggested to the first member for Vancouver Centre that his

remarks were perhaps a little intemperate, and he must take

responsibility for those. I do not intend to ask him, or order him, to

withdraw the remarks that he has made so far, although they have, at

times, to the ear of the Speaker, been in the category which I think

would be close to being unparliamentary. Perhaps as long as the hon.

member doesn't invade the field of unparliamentary language any further

than I have heard him do this afternoon, he would resume his place in

the debate.

MR. LAUK: Perhaps the hon. member who took the point of order

has not been briefed about what has occurred in the past two years in

this Legislature with respect to the railway, so I will repeat what has

happened. Perhaps he will do the courtesy of at least now representing

the people of Fort George by listening, if not referring back to what's

happened in this House and in this province in terms of public affairs

in the past two years.

MR. SPEAKER: Hon. member, may I suggest to you...?

MR. LAUK: Is Mr. Speaker going to enter into the debate or is he going to rule the House?

Interjections.

MR. SPEAKER: Hon. Member, may I suggest to you that the

matters which you have entered into, and the debate that has taken

place, will be amply reported in Hansard

and available to the hon. member for Fort George if he desires to read

them at his own leisure. So rather than continually repeat the debate

that you have already offered to the House, would you like to proceed

on the basis of some new subject matter?

MR. LAUK: Mr. Speaker, I have just taken my place in this

debate. I do not intend to be hampered or directed in terms of debate,

as proper as it is, from the Chair or anyone else. I was elected to

represent the people of Vancouver Centre and the people of this

province. I will not be curtailed! I know it's uncomfortable for Social

Credit members to hear how there was a financial cover-up. I know it's

uncomfortable, but they're going to hear it, Mr. Speaker, and they'll

hear it again if necessary because it was a sham and a disgrace. It

caused a needless expense on the part of the Crown corporation that is

paid for by the people of this province.

Several reports were filed in this House over the past three years.

The Minty report was only one. There was the Swan-Wooster report, which

sadly catalogued the neglect, the negligence of the building of the

line to Fort Nelson. The derailments, the injury to people, the loss of

revenue and property was catastrophic. It raised unnecessarily the

expectation of the people of that area, and it caused hardship. It was

as a result of this political deception for election and political

purposes.

MR. KERSTER: Can we get back to Bill 5 now?

MR. LAUK: You know, Mr. Speaker, it was not me; it was not

any member of this party who said that a former Social Credit bagman, a

director of the BCR then...it was not me who said that he restricted

the extent to which the external auditors could go into their auditing.

It was Minty, a distinguished public servant, the comptroller-general

of the province of British Columbia. It was not the previous Premier,

it was not me, it was not the former Minister of Labour, the member for

Revelstoke (Mr. King) ; it was Mr. Minty. Is he to withdraw his remarks?

What about the documentation that has been outlined? The member for

Fort George said that there has been no inquiry, no trial. I think the

Institute of Chartered Accountants would be interested in hearing about

that. The hearing procedures, as outlined in their circulars, are well

known. The Minister of Finance (Hon. Mr. Wolfe) knows them only too

well.

You know that their hearing procedures are impeccable, that they, as

a profession, keep close watch on the integrity and ethical behaviour

of their members. The trial, indeed, was held, and the verdict was

brought down. It was: guilty.

Interjection.

MR. LAUK: It was a hearing, Mr. Minister. I quoted it word

for word — and there has been no suggestion that the hearing of the

Institute of Chartered Accountants was improper, incorrectly held or

not according to fair rules of a hearing. There's been nothing like

that. There was no appeal by the auditors who were suspended. No, the

trial

[ Page 1094 ]

was held; the verdict was: guilty.

MR. SPEAKER: Order, Hon. Member. I think you realize that you

are on your feet debating the principle of Bill 5, which is to increase

the borrowing power of the British Columbia Railway Co. and that the

remarks and the debate that you follow must be relevant to the

principle of that bill. Therefore I'd ask you to relate your remarks to

the principle of that bill and stay within the rules of debate rather

than wander into some other areas that might be canvassed at some other

time in some other debate.

MR. LAUK: Thank you, Mr. Speaker. With respect to Bill 5, I'm

relating these remarks in this way: that the tremendous costs for which

we are now asked to provide extension of loaning power to the Crown

corporation, the costs that are forcing us to do that, were caused by

the years of negligence in the running of the railway. In order to

document that charge I have quoted from these reports.

MR. LAUK: It seems to me that the new administration has a

tremendous opportunity, but by the very objections and the points of

order that have been raised I fear that they are going to miss the

opportunity because they don't understand what happened. They don't

understand. I fear that the management of the railway will be

continually subjected to the political interference of the past and

that silly political decisions will be made, costing the people of

British Columbia great amounts of money to subsidize, in a needless

way, the operations and the extensions of the railway.

MR. LOEWEN: What's the recommendation?

MR. LAUK: My recommendation is that there be a total

refinancing of the railway, that there be an immediate restructuring of

its management and board of directors that will clearly and in fact —

not only apparently, but in fact — demonstrate to the public of British

Columbia that the railway will now stand on its own without political

interference, will accurately reflect its accounts and be accountable

for its performance. It's only in that way, Mr. Speaker, that we can

avoid that kind of political whimsy that caused ...

HON. K.R. MAIR (Minister of Consumer Services): That's six whimsies.

MR. LAUK: Seven.

...the tremendous losses that we now have to pay through this loan amendment Act.

You know, when these reports were tabled in the House, as to the

accounts of the railway over the past several years, the hon. member

for Cariboo (Hon. Mr. Fraser) — who's listening so attentively — in

response.... And I want you all to think about the Clarkson, Gordon

report when I read to you the member for Cariboo's response. You know

the Clarkson, Gordon report, that impeccable document that we're making

decisions about — what was a deficit and what wasn't, and what were the

true accounts of the province of British Columbia.

But in response to Bill 27 of last spring, the B.C. Railway Loan

Amendment Act, he said: "After reading all these reports, the Minty

report, the Touche-Ross and the Swan-Wooster..." and he had heard the

arguments.... He even heard about that conspiracy and fraud charge

against the former head of the railway that was still going to be heard

and still is to be heard in civil court. And far be it from me to

discuss something that may be sub judice on the floor of this House —

never, never do it. But fraud and conspiracy charges were raised

nevertheless. But we now know, as we knew last spring, that that former

chief officer of the railroad, charged with conspiracy and fraud,

acted, in all matters respecting the lawsuit, with the full knowledge,

consent and direction of the board of directors. And who was on the

board? W.A.C. Bennett, Mr. Williston and Mr. Gunderson. Is this matter

not a serious matter? Didn't you know about that, hon. members?

I hear no points of order. I'll continue to relate to you from Hansard

on page 3304, June 10, 1975, when the Minister of Highways (Hon. Mr.

Fraser), as he now is, said in response to the Premier (Mr. Barrett),

as he then was: "If you examine back the records...." I hope I get the

inflection right, Mr. Speaker:

If you examine back the records of this railroad, what

the former government did is what was done in accounting practices

right back to the start of the railroad. I would say that I think any

one of us could hire another accounting firm and come up with the

answers that we want if we were giving those kind of directions to them.

MR. LEA: Oh, oh!

AN HON. MEMBER: Who said that?

MR. LAUK ; Isn't that a shocker, Mr. Speaker, especially related

to the charges....

Interjections.

MR. LEA: Did you do that with the Clarkson, Gordon report?

AN HON. MEMBER: Ohhh!

[ Page 1095 ]

MR. LAUK ; It raises that question, doesn't it? It raises that question.

Butter and cheese all over.... Buttar and Chiene all over again. (Laughter.)

Well, let's look positively to the future. Let's talk about the

tremendous value of this railway — and it is a very valuable Crown

corporation. It is an integral part; it is the lifeblood of the

economic system of this province.

MR. LOEWEN: Would you fire all the directors of B.C. Rail? Would you fire them all?

MR. LAUK: You know, the member for Burnaby-Edmonds wasn't even in this province last year.

SOME HON. MEMBERS: Oh, oh!

MR. LOEWEN: Would you fire all the directors of BCR?

MR. LAUK: Do you know that what we have to have is a railway

that reflects accurately its accounts, that will make corporate railway

decisions? But it must also be — and I contend that it can be, even at

arm's length, and especially at arm's length from the government — a

railroad that can make those kinds of economic development decisions

that are so necessary to the lifeblood of the north. What are those?

Those are decisions that would incorporate and embrace the concepts and

the principles of the northwest rail agreement that was signed in July,

1973. That was, again, the agreement or memorandum of understanding

reached between the NDP administration and the federal government with

respect to the northwest rail agreement in November of last year that

would have put on the table $117 million. It would have brought to bear

the cooperation of the federal government and may avoid some of the

kinds of financial pressure, or at least some of its pressure, on the

BCR today. Again, a political decision has intervened.

The administration has decided that they came out against the

agreement when it was announced in November; before, they were claiming

credit for it — last spring — but they were angry....

Interjection.

MR. LAUK ; Are you going to buy another suit in Calgary, Mr. Member?

(Laughter.)

MR. SPEAKER: Hon. Member, could I just interrupt you for one

quick moment? I must ask you if you are in this debate as the

designated speaker. If so, continue.

MR. LAUK ; Yes, I am, Mr. Speaker.

MR. SPEAKER: Thank you, Hon. Member. Proceed.

Interjections.

MR. LAUK: I was anointed in front of a few thousand personal friends this morning.

HON. MRS. McCARTHY: If you have that many.

MR. D.G. COCKE (New Westminster): That's not you, Gracie; that's him.

MR. LAUK: I see the Provincial Secretary (Hon. Mrs. McCarthy) is always the mistress of the obvious.

Mr. Speaker, this opportunity that was missed is a deep regret to us

all. We know that last spring, some of you who were sitting in this

House at that time.... Some of you, I know, were residents of this

province at that time — not all, but some of you were. You had not yet

moved your car dealerships into Vancouver.

SOME HON. MEMBERS: Oh, oh!

MR. G. MUSSALLEM (Dewdney): I beg your pardon. Take it back!

MR. LAUK: Oh, I'm sorry. The member for Dewdney (Mr. Mussallem) has had a car dealership in this province of long standing. (Laughter.)

AN HON. MEMBER: Longer than you've been standing. (Laughter.)

MR. LAUK: We'll try and reform that situation. You know, last

spring they said: "Well, this railway agreement that was signed in 1973

between the NDP and the federal government, this railway agreement was

our idea." Do you remember that?

MR. LEA: Yes, I remember that.

MR. LAUK: Yes, they said: "It was our idea." They said: "Oh,

we had it all negotiated before you took office in 1972." Well, we

searched around the filing cabinets of the ministerial offices in those

days and didn't find any record of it.

HON. MR. MAIR: Nothing's changed. In fact, you even took the cabinets.

MR. LAUK: That's right. I couldn't find a cabinet in my office,

Interjections.

MR. LAUK: So we made inquiries. I think, Mr.

[ Page 1096 ]

Speaker, that they were a very effective outgoing

administration in '72, because even the federal government had no

record of any such negotiated agreement for the northwest railway.

Anyway, they took credit for it. They must have taken credit for it

because they saw a good thing. I was reflecting at that time on the

intelligence and good judgment of the opposition, as it then was, and

said to myself: "Well, at least they will support this rail agreement

because it is a good thing." It seems to me they changed horses in

mid-stream, the stream being the provincial election last fall.

We went pressing on with negotiations to implement that agreement.

When we had and announced them, the Premier, as he now is — the Leader

of the Opposition as he then was — said: "I am against it. I am against

it." He took the stolen document that was in his possession and

condemned it to the public of British Columbia.

I have a copy of that stolen document. I retrieved it; I can't relate how, but I retrieved it.

MR. C.S. ROGERS (Vancouver South): Who's your fence?

MR. LAUK ; Yes, I got it from a fence. Thank you, Mr. Member.

AN HON. MEMBER: Brown manila envelope.

MR. LAUK ; In a brown manila envelope with some family-planning material.

Interjections.

MR. LAUK ; You know, Mr. Speaker...

Interjections.

MR. LAUK: ...we looked over the agreement in principle and we

looked over the implementation agreement of November last. There were

no appreciable or substantive changes. Once again, when the new

administration takes office on December 22 last year, they did not pick

up that $170 million on the table to help defray the cost of this very

expensive but needed railway. They leave it on the table. Why? Pure

political...

AN HON. MEMBER: Whimsy!

MR. LAUK: ...whimsy. Whimsy. In other words, the Premier of

the day has to save face as the Premier of past days, drawing his

finger on an imaginary line on a map, showing Mr. Broadbent and the

railway officials where he wants the line to go. That's no way to run a

railway, Mr. Speaker. It costs money that way; it costs the people

money; it costs the people money in a very insidious way.

You know, I suggest that the arguments that were made in favour of

the agreement far outweigh the arguments against it. The originating

traffic for the BCR will bring greater revenues. The economic

development that will be brought about by the Dease Lake extension in

the line, if it goes farther, will bring that kind of social and

economic benefit to that region that they've never had before. They're

not thinking, Mr. Speaker; they're just hiding behind a political

face-saving device. Who suffers? The BCR suffers and the people suffer.

Well, that agreement is still on the table. I think that they

refused to pick up the money that was made available by the agreement

because they want to expand the deficit position of the 1975-76 fiscal

year. They didn't want to in any way bring in any unneeded revenue to

not reflect a black picture. I find that a very reprehensible,

irresponsible thing for a government to do. Certainly we can understand

statements and commitments made during a campaign if they are heated,

if they are childish, if they are petulant. They will be forgotten when

people take office.

But unfortunately, what particularly characterizes this

administration is that not only do they not forget; that is their

entire — if I can call it — philosophical thrust: petulance,

back-biting, name-calling and refusing to act responsibly as government.

I do hope that when they are ready to sign the agreement with the

federal government that the federal government is still in the mood to

agree, or it will be a tremendous loss to this province. Federal money

— that money we contributed to, hard-earned taxpayers' dollars from

British Columbia — we're getting some of it back. At a time when the

federal government is withdrawing from health programmes and other

shared-cost programmes between the provinces and the federal

government, this administration turns away from $117 million. "What's

another $117 million?" they say. It's money that is needed to complete

the Dease Lake extension and to bring needed jobs and economic

development to the north.

The Stikine copper resource — the corporations and companies

involved that will develop that resource are poised and ready to

proceed as soon as that railway can be completed, and in fast order.

The fastest way to get it completed is to sign this agreement to

restructure that railway, refinance that railway and stop using it as a

political football.

MR. L. NICOLSON (Nelson-Creston): Mr. Speaker, once again we

are debating a bill which seems to come up annually. Once again, I

think it is a bill about which there is a great necessity for some

debate to take place.

[ Page 1097 ]

It is obvious that not only are the people of the province of

British Columbia somewhat in the dark about the operations of the

British Columbia Railway, but it appears that barrel loads of the

government caucus also seem to be in that same situation.

MR. GIBSON: Flat-car loads.

MR. NICOLSON: Yes, flat-car loads, that's right, Mr. Member.

It is a fact that in the letter of transmittal from Mr. Minty, the

comptroller-general, on August 5, 1973, in tabling his report — the

letter of transmittal to the Premier of the day said:

"With respect to the awarding of contracts for the

rail-line extensions, I confirm that the company's officials have seen

fit to limit spending on preliminary engineering studies, a practice

which has directly contributed to overruns in the order of $17 million

on contracts completed to date."

This is one of the most important aspects to this railway — the way

in which it was handled in the past and the necessity for increased

borrowings today, because we're still living, Mr. Speaker, with the

type of management that B.C. Rail had prior to September of 1972.

It was very difficult for the immediate past government to handle

problems of the British Columbia Railway, and it will be a challenge to

this new government to turn the British Columbia Railway around so that

it can be a jewel in the province for the people of British Columbia.

The first member for Vancouver Centre (Mr. Lauk) I think made an

excellent suggestion. He made about four direct concrete, constructive

proposals — one of which would have been to separate those extensions,

the Dease extension and the Fort Nelson extension which Mr. Minty

commented upon in his letter of transmittal on April 5.

Of course, he made many recommendations, one about head office and

distribution of payroll cheques and so on. But I think more important,

he pointed to some of the deficiencies. He recommended that immediate

steps should be taken to carry out a properly supervised physical

stock-taking of all classes of operating materials. He commented on the

electronic data processing system which was being under-utilized and

suggested ways in which it could be improved. So as the

comptroller-general made suggestions and as the directors of B.C. Rail

in 1973 and '74 and '75 tried to comply with those recommendations, it

has led to some improvements, and I think the suggestions made by this

past director, the first Member for Vancouver Centre, I think that if

they were to be acted upon, particularly in terms of creating a clear,

visible picture about the operation of the railway, particularly as it

pertains to the two sorriest parts of the operation of the

railway...the manner in which the Dease and Fort Nelson extensions were

embarked upon....

Mr. Minty said it would be advisable to call upon an "independent

engineering consultant to review the methods of the engineering

division and firstly establishing tender specifications and secondly

calculating and measuring work performed by contractors." Those are

pretty serious areas to be deficient in and they were very serious and

they led to significant dollar overruns as was later brought in in the

Touche-Ross report.

Then, of course, he made the statement which some of the members

seem to be rather incredulous about "that the external auditors should

not be unduly restricted in settling the terms of their audit

engagements, as appeared to be the case in the past. This would include

the incorporation of essential explanatory notes and references in the

audited financial statements in order to comply with the statutory

requirements."

I noticed in the report which the Minister had the courtesy to table

today in the House that it's rather refreshing to see that, to be

rather positive about some of the things, Peat, Marwick, Mitchell have

been retained as the auditors, a firm of chartered accountants. They

have a world-wide reputation and they have been very well respected in

British Columbia. Their local branch, I think, is quite an exemplary

group.

In the report it shows that the opening deficit, which at the

beginning of the previous fiscal year was $66 million and rose to $98

million, rose in this past fiscal year from $98 million to $144

million, and, of course, there were increased interest and debt

expenses and they will be increased even more by this act of borrowing.

But one of the very interesting things in the report I can only

speculate about because we are not taking the suggestion made by the

former director, my colleague from Vancouver Centre (Mr. Lauk) . I look

at the item for road maintenance in terms of income and deficit

expenditures under operating expenses and I see a figure for the last

fiscal year of $12 million and this year almost $20 million, and it

approximately equals the operating deficit. Also, of course, equipment

maintenance of $10 million is up from almost $9 million the previous

fiscal year.

I wonder how much of the road maintenance is due to the inadequately

engineered and improperly constructed extensions, how much of the

equipment maintenance might be due to derailments, or is it just

routine maintenance. I guess if I expect to get answers the best time

to ask this would be in third reading but, in general, I look at this

and I wonder and can't help but agree with the suggestions made that if

the Dease Lake extension and the Fort Nelson

[ Page 1098 ]

extension were taken and shown separately, or at

least separately in an appendix, we might have some glimmering of what

is going on here.

I do know that costs of construction are capitalized from the date

that the line is certified operational, and I am not certain what parts

of those lines are certified as operational. I can't see that from the

report. It's fairly brief. I do see that some explanatory notes are

given, as suggested by Mr. Minty. That's a great help to us in trying

to come to grips with this. Mr. Minty pointed out also in point 9 that

no amounts for depreciation had been charged in the accounts prior to

1956, and in the years subsequent to that date, depreciation rates have

been calculated nominally at approximately 2 per cent per annum,

presumably to conform with rates used by Canadian Pacific Railway Co.

The resultant accumulated depreciation allowances appear to be

grossly inadequate, and to remedy this it is recommended that a

thorough review of the policy be undertaken with a view to adjust book

values against deficit account, and, of course, that was done. It was

done and it was introduced in the House and was debated in the House.

Yet I don't think that the story has really reached all the people of

British Columbia in terms of what became apparent when the independent

reports were made.

AN HON. MEMBER: Oh, yes.

MR. NICOLSON: Also, of course, in the note

section of his

report, Mr. Minty pointed out that the basis of inventory valuation is

not disclosed, and he said: "Accepted disclosure demands that the basis

of valuation of inventories should be clearly stated in the financial

statements." This was not done previously.

He gives details of certain problems. He talks about internal audit

and many of the operations of the railway. So it came to pass that a

full report on.... As a result of this and other reports, the firm of

chartered accountants who were responsible for the bookkeeping

procedures was suspended. Mr. Minty also mentioned other things in

terms of what he found out, in terms of engineering construction. He

said: "Formal board approval does not appear to have been consistently

obtained. Board of directors' minutes reviewed for the past two years

include only a few such formal approvals." He says: "For example, West

Vancouver tunnel. Many other major revisions, additions, although

available to the board by the monthly management reports, do not appear

to have received formal approval." Major overrun categories — In the

Keen Industries contracts on the Fort Nelson line — were due to

muskeg-fill requirements.

He talks about capital and construction costs. The company does a

large part of the construction work on lines, extensions representing

millions of dollars annually. These dollars are not included in formal

annual budgets and there's little or no external check on these

activities of the engineering division. External and internal auditors

have thus far avoided this particular area — some concern must be

expressed about the expenditures of dollars here.

So we see that a great deal of the problems on the railway might

stem to the pioneer philosophy that seemed to be used. In fact, it was

almost a sandbox mentality with which, I'm sure, through what must have

been a great deal of political interference we can almost imagine

extensions being planned in a non-professional way and without the

engineering background. We could almost see the Premier, who served the

province from 1952 to 1972, drawing little lines in the sand, or maybe

taking out a stick and saying: "Well, we can push this through from

here to here." Is that the way it was, Scott? Am I striking a chord?

MR. WALLACE: It makes me shudder to think that that might be right.

MR. NICOLSON: I think it is right. I think it's quite obvious from what has come to light.

So we have the Minty report. Then, as a result of that, we had

tabled in the House two more reports, one on financial reporting and

control practices, authorized by Price Waterhouse and company, and one

on engineering. This was in response to Mr. Minty's remarks and his

expressions of alarm and caution. So there was that one offered by

Price Waterhouse and company, and one on engineering and contract

methods by Swan-Wooster Engineering.

The Price Waterhouse report revealed that this jewel had become

cumbersome, inefficient and inadequate in financial accounting and

control practices. In one instance they noted that the cost of 1,000

freight cars, bought in 1971 for $16.3 million, was written off as a

charge to equipment rental over 15 years. They said that, in their

view, it was not in keeping with generally accepted accounting

practices.

That's pretty strong language, Mr. Speaker. You know, in this House

I guess we use much stronger language when we want to make a point. But

they are very subtle in the professional world, and when they say "In

our view, this is not in keeping with generally accepted accounting

practices," that is a rather serious charge. Of course, some rather

serious steps were taken as a result of that when Buttar and Chiene

were suspended. Of course, the Leader of the Opposition at that time —

in the years 1972-75 the opposition, and now the government party —

seemed to be obsessed with two things. They talked about the alleged

profit of the railway. They said that the railway had made $992,000

profit, as reported in the last year of Social Credit, 1972.

[ Page 1099 ]

MR. WALLACE: Did they pay the shareholders?

MR. NICOLSON: Well, I don't know. There might be a cheque lying somewhere NSF, Mr. Member.

Of course, he said that Buttar and Chiene were fired because they

wouldn't take direction from the government. That's what the now

Premier had to say at that time.

MR. KING: Is he going to hire them back?

MR. NICOLSON: Well, for this year we have Peat, Marwick and Mitchell, and that's an encouraging sign. I'm an optimist.

So Buttar and Chiene had been those auditors all through the Social

Credit years, and the present Premier said that they resigned because

they weren't prepared to change the auditing procedures because of the

mounting losses that the railway wished to hide this year. That's what

the present Premier had to say.

He said that they weren't prepared to change the auditing

procedures. That's a rather serious thing to say. You know, we get in

quite a flap in here, Mr. Speaker, about what members can and cannot

say. But, you know, that turned out to be incorrect.

MR. WALLACE: Term it an illogical inexactitude.

MR. NICOLSON: That's right.

What really happened to them? Did they resign because they were

asked by the government to change their auditing procedures? Was there

any connection between them and the supposed profit that the present

government boasted about when they were in opposition?

Buttar and Chiene resigned apparently for personal reasons, and on

October 30, 1974, the professional conduct committee of the Institute

of Chartered Accountants laid a complaint against Douglas McKenzie

Walker, the sole principal of Buttar and Chiene. The complaint related

to the B.C. Railway auditing.

On November 27, the institute's professional conduct inquiry board

panel held a hearing on the complaint. After hearing the evidence, the

findings were as follows:

"And the panel, having found unanimously that the said member,

Douglas McKenzie Walker, violated rule 21 of the code of ethics and rules of

professional conduct, as alleged in paragraphs 1 and 2 of the statement of complaint,

by reporting on and associating himself for and on behalf of the firm of Buttar

and Chiene with the financial statements and auditors' reports thereon for

the British Columbia Railway Co. for the year ended December 31, 1972, when he

had failed to obtain sufficient information to warrant expression of the unqualified

opinion expressed thereon and therein, and the said member has been incompetent

in professional matters within the meaning of the bylaw 6783, in force at all

material times, and also bylaw 6883, in force at the present time, as alleged

in paragraph 3 of the statement of complaint."

So we have the person who is now the Premier making a careless

charge — a wild charge — that we were getting rid of Buttar and Chiene

because they wouldn't take political direction. It's really ironic that

they were suspended, because they had taken political direction through

Mr. Gunderson, and had taken direction when the former Premier, W.A.C.

Bennett, was a director of the railway and when Mr. Ray Williston, who

was then the Minister of Lands, Forests and Water Resources, was a

director of the railway. The Institute of Chartered Accountants found

the practices that were going on under that directorship to be so

serious as to result in very, very stiff professional sanction.

Mr. Speaker, as a government we were charged to try to bring as much

of the facts to light as possible about what had happened, and also to

try to change the direction in order that these things would not happen

again, and to have a good, open and honest look at what were the

problems being faced by the railway and how we might take some remedial

action, recognizing the sorry state of affairs and how it had resulted.

As a result of some of the recommendations, we did take action.

I notice that Peat, Marwick and Mitchell, in the present report and

in last year's financial report, said they tried to keep to the

accounting regulations of the Canadian Transport Commission. They point

out, of course, that in some respects it's impossible to do. They say

that the Canadian Transport Commission prescribes the accounting

regulations for Canadian railways subject to their jurisdiction. B.C.

Railway is not subject to their jurisdiction, but the management

considered that the accounting regulations are the most appropriate

basis of accounting railways in Canada, and accordingly they adopted

them. It's unfortunate that the commission cannot review the policies

and rates of an organization such as B.C. Railway. So they cannot put

their stamp of approval on this report, but it has been done in line

with those regulations.

Of course, when we found out what the state of affairs was: that the

annual report submitted to the House.... It was concluded that the

financial statement, as of December 1, 1973, on an overall basis did

not fairly represent the cumulative operating results of the railway to

that date, and certain of the past policies did not conform to the

accounting regulations of the Canadian Transport Commission. As a

result of that, we thought it would be best to

[ Page 1100 ]

have a review which would go back, and to make a restatement of the prior years.

Retroactive effect was given to the 1974 accounting policies and

rates from January 1, 1957, the date which is accepted as that when the

Squamish–Prince George

section of the railway became operational. The

decision to reflect those changes retroactively was considered

necessary because the financial statement of December 31, 1973, was not

prepared in accordance with proper accounting principles. Because

certain past policies did not conform with accounting regulations, to

establish a basis of preparation and comparison of the 1974 report and

statements, and because of significant effect of such changes and

previous recorded amounts, adjustments arising from such a retroactive

statement gave rise to an increase of $62 million in the reported

deficit of the railway as of December 31, 1973.

So in those years from 1957 to 1963 there was a $62 million deficit

in the railway, of which $9.7 million applied to the year 1973. They

said a profit of $900,000. In fact, when it was properly audited, it

turned out to be a deficit of $9.7 million. Of course, they had

committed B.C. Rail to extensions that were done without proper

engineering, and, of course, that's pointed out in another report.

HON. A.J. FRASER (Minister of Highways): You don't even know where the railroad runs.

MR. NICOLSON: The annual auditor's report has said that for

many years now the annual financial reports of the B.C. Railway have

not been done according to the Canadian Transport Commission

regulations...

HON. MR. FRASER: They don't have to.

MR. NICOLSON: ...and they don't have to be, but they should be. They should be done that way.

SOME HON. MEMBERS: Oh, oh!

MR. NICOLSON: They are done that way, Mr. Minister of

Highways, if you read this report. They were done this way this year.

They were done that way last year.

Interjections.

MR. NICOLSON: I know that the Minister of Highways has

contempt for the accounting profession. He doesn't believe in auditors'

reports. He believes that if you pay the piper, you know, they'll play

the tune you want them to play. But I would just say, through you, Mr.

Speaker, to whomever is listening on the government benches: don't

appoint that minister to any Crown corporation. Please don't. Do

yourself a favour, and do the opposition a favour, and do the people of

British Columbia a favour, because we can't have that kind of an

attitude — that brazen political attitude — in terms of interfering

with Crown corporations and auditors and so on. That would be most

embarrassing to the government. It would be embarrassing to British

Columbia.

So it isn't the first time that we're asked to pass one of these

bills increasing the borrowing power. Between 1966 and 1972 bills were

passed by this Legislature subsidizing the B.C. Railway in the total

amount of $120 million, but it was from consolidated revenue. It wasn't

borrowing like we're doing today. This is another good step. This is

borrowing. We're not going to purchase more shares in the British

Columbia Railway, and that's a good step. We're continuing to be above

board there, and I commend the minister on that.

If we look at what happened in the past, prior to 1972, from 1957 to

1972, we had subsidies of $120 million and we had bookkeeping,

accounting practices of $57 million. That is $177 million, Mr. Speaker.

We could certainly say $57 million of that is a cover-up and $120

million may be whimsical legislation. You say it's strong language to

suggest that it was whimsy, but I'll say that it was whimsical

legislation. I'm very sensitive to the Chair....

MR. G.H. KERSTER (Coquitlam): You're also boring us to death.

MR. NICOLSON: You might find this boring, but you know the

people of British Columbia don't find the misappropriation of $177

million boring, Mr. Member.

Interjection.

MR. NICOLSON: Now, Mr. Speaker, this $177 million, this was

just sort of bookkeeping, and money passing back and forth. But then we

have to look into the future and the Swan-Wooster report that dealt

with the engineering was tabled in the House in the fall session of

Swan-Wooster detailed the Fort St. James and Dease Lake extension.

They noted only limited records were available and they were very

critical of the limited degree of pre-construction engineering

performed.

The question was raised in the spring of 1973 by one of the members for Point Grey.

AN HON. MEMBER: Oh, oh!

MR. NICOLSON: They found that this limited pre-construction

engineering directly contributed to the unrealistic estimates of

quantities and costs at the

[ Page 1101 ]

time contracts were awarded. This, of course, led

directly to the overruns being experienced on the Dease Lake extension.

On this extension they said there was a marked lack of pre-engineering.

Again, Mr. Speaker, very strong language. It would be like a member

in this house getting up and calling another member a buffoon, or

perhaps calling him a two-bit minister. Well, it might even be as

strong as if a member of this House got up and called another member a

liar. It's very strong language in the parlance of engineers to say

that there was a marked lack of pre-engineering, because engineers

aren't noted for their verbosity. They come to the point.

MR. GIBSON: It means the bridge would fall down.

MR. NICOLSON: Yes, it means the bridge would fall down, or they could get a hundred-and-some-odd derailments a year — that type of thing.

Mr. Speaker, one of the causes of having to extend the borrowing

power of B.C. Rail is certainly the Dease Lake extension. Of course, as

a result of this, we asked, when we were government, Touche-Ross and

Co. for a course of action. They found that the capital-cost estimate

of the project used by the previous administration was $69 million.

They estimated it needed to be increased by up to $102 million as of

December, 1972. Now that's a $102 million overrun, Mr. Speaker.

When I heard some of those members over there talking about $100

million overruns, I just thought they were rounding this thing off.

HON. MR. FRASER: Yours were clerical errors.

MR. NICOLSON: This was a planned clerical error. It was a

pre-election error, Mr. Minister of Highways, and I don't know if you

knew about it. You were in the back bench then and you were kept in the

dark about things, so I'm not going to blame you even though you live

on that railway line. But you should have been — and righteously been —

indignant about the way in which the railway was treated as it goes

through. Williams Lake is such a major point on the railway. It runs

through your riding.

They also found that two major traffic generators used to justify

the original projections, the Stikine-Dease pulp mill and the Groundhog

coal fields, were not likely to be developed. They concluded that the

wood supply at either Dease Lake or Stikine Crossing would provide

one-quarter to one-third of the production required for an economically

efficient and viable pulp mill. That's what Touche-Ross came up with. I

believe the government has been using Touche-Ross as consultants since

they've been government, so I don't think anyone is going to attack

their integrity or their ability. I found them very competent when I

was a minister and used their services, and I think the present

government agrees.

Notwithstanding the reservations, Touche-Ross concluded that the

Dease Lake extension still appeared to be financially feasible after

taking into account a federal capital-cost grant, which is, of course,

one of the keystones to the development of the northern rail links.

They recommended that the construction continue, at least as far as the

vicinity of the junction of the Skeena and Sustut Rivers, to negotiate

a firm commitment from the federal government for a grant and, if it

was received, to continue to Dease Lake.

This government has decided that that is not what they should do. In

fact, they played politics with this before the '72 election, then

during the '75 election, and now, as part of generating the so-called

$541 million overrun, of course, they refused to sign the agreement

with the federal government and refused to bring in about $30 million

which was one of the generators that they used in creating that deficit.

Following the Touche-Ross report, capital costs with their resulting

overruns continued to mount. Because of this, we ordered a further

evaluation by Swan-Wooster.

Swan-Wooster was asked to advise whether a decision by the railway

to proceed with the winter-works programme on two particular contracts

on the Dease Lake extension between miles 222 and 216 would produce

certain savings in costs. Swan-Wooster reported that it would be

feasible and preferable to carry out the operation in winter, and that

possible completion dates for the extension would be in the latter part

of 1976 with winter grading in mid-1978 without....

So we, as government, used outside consulting firms and engineers to

advise on courses of action. We didn't take a little stick and drag it

through a sandbox and say: "Well, this looks good. We'll take this

point here and we'll run it up this valley" — not looking at

environmental concerns, not looking at native Indian land claims and

various other things before committing B.C. Rail to horrendous expenses.

The first report was dated February 27, 1975. It's a factual history

of the Fort Nelson and Dease Lake extensions, prepared by George

Hanrahan, general counsel of British Columbia Railway. Mr. Hanrahan

carefully outlined the history of the contracts that were left for

clearing and grading, and the overrun on each contract. He reported

that the total amount of these contracts was $16,400,000. The total

cost of the extension to date is approximately $72 million — that was

as of last year, the middle of 1975.

MR. SPEAKER: Hon. member, may I draw to your attention the fact that you have less than two

[ Page 1102 ]

minutes?

MR. NICOLSON: Yes. So we see that the lack of planning, the

sandbox engineering which was practised not by competent directors or

professionals, the overriding of whatever competence there was in terms

of engineering capability and planning capability in B.C. Rail, the

overriding of any of this expertise by Mr. Gunderson — the

often-defeated Social Credit candidate and then, of course, identified

as the bagman of Social Credit through all those 20 years — the

overriding by Mr. Ray Williston and the overriding by the former

Premier, W.A.C. Bennett.... A standard practice is what has put the

British Columbia Railway in this position, and so we are once again

forced to borrow to pay for the neglect of a former Social Credit

government.

MR. G.F. GIBSON (North Vancouver–Capilano): Mr. Speaker, this bill,

or more properly the introduction of this bill by the minister concerned, has

all of what have become to be thought of as the hallmarks of this government,

which is to say, arrogant and bush league.

If the minister was going to the normal markets to collect $250

million the way he has come to this House to collect it, he couldn't

raise a cent with this bill. It is ordinary for lenders to require some

kind of detailed explanation, generally in the form of a prospectus. I

suggest the voters of the province of British Columbia deserve at least

as much — not a two- or three-minute introduction by a minister giving

only very vague thoughts on the use of $250 million of the taxpayers'

money.

That lack of prospectus, Mr. Speaker, may relate somewhat to the

usefulness of prospectuses that we are used to getting out of that

group. Do you remember the Social Credit prospectus last fall that said

that there would be no tax increase? It was the same prospectus that

said there were going to be more runs on the B.C. ferries instead of

people being laid off. Maybe that's why the minister is afraid to look

into the future a little bit; but he has to do so. The people of the

province deserve as much.

The BCR is not a small company, Mr. Speaker. If you look at the

balance sheet, which the Minister of Economic Development (Hon. Mr.

Phillips) had the timely courtesy to table in the House only an hour

before this debate commenced, you will see that it is a company with

assets of $650 million. It has employment, as you know, that ranges to

over 3,500 people, not counting construction workers. It is a

tremendously important part of our economy. Yet what are we given by

this minister to justify this loan of $250 million?

I've got here a prospectus from a very small company for a very small offering

— $250,000, not $250 million. It runs, to a sheaf of pages, over 20 pages thick,

giving some detail about what that company is proposing to do.

I have here another prospectus — B.C. Telephone Company prospectus,

over which the Minister of Finance manages a large number of shares

held in right of the province. B.C. Telephone, for a recent loan in the

amount of $46 million, put out a document about 30 pages in thickness,

with a tremendous amount of information on the financial position of

that company and how they propose to use it. Why can't we get this kind

of information out of that minister before we're asked for that

authorization, Mr. Speaker? I say that is simply not good enough.

Listen to what a usual prospectus should contain that this

minister's remarks did not. First of all, a general review of overall

operations, not just in that balance sheet that was tabled today, but

some detail as to how the company is going and what are its prospects.

"Regulation and Rates" — that's another title in the B.C. Telephone

prospectus. What is BCR doing about rates? Is the new government

legislation for the regulation of public agencies going to include the

BCR? These are material factors affecting this proposed loan of $250

million.

"Shareholders and Management" — you know, we haven't even got

an indication of who is going to be the chief executive officer of this company

during the time that this loan is going to be drawn down. I'll have more

to say about that later.

"Use of Proceeds" is another title in the B.C. Telephone prospectus

index. What are we told about that use of proceeds? Financing the extensions,

coverage of losses, those two quick phrases: that's all we are told. How

many losses? How, much is the extension supposed to cost?

Here is another heading: "Interest Coverage." Well, I can tell you

the heading on that one. Interest isn't covered at all. There is hardly

enough total revenue to cover the interest more than two and a half

times, let alone enough net profit to cover the interest. It is simply

not there.

"Asset Coverage, Consolidated Capitalization." We're entitled

to all of these things, Mr. Speaker, and we don't have it out of this minister.

It is just shocking as a Legislature to be asked for authorization for this

kind of money without the back-up, especially, Mr. Speaker, given the history

of accounting on this railway and given the history of accounting under a government

of a party that is now again back in charge of this province and this railway.

We simply do not have the guarantees.

What was the record? Hon. members who spoke before have gone through

the record with such clarity that I will do no more than recap it. The

fact of the matter is that the deficit on the BCR up until the end of

1973 was understated by an amount in excess of $63 million because of

absolutely improper and

[ Page 1103 ]

incompetent and misleading auditing practices that

started out with depreciation and went right to interest charged up to

capitalization, and track-laying labour and maintenance put into

capital instead of charged off — right down the piece. It was an

extended misleading of the people of British Columbia and it was done

by the party opposite that is now asking us for another $250 million

with no assurance from the minister concerned that controls have been

improved.

What's this money to be used for, Mr. Speaker? The minister said "an

extension of the railway." An extension was budgeted, as of last June,

in a report received in this House at something like $150 million —

$127 million more for the Dease Lake, if I am right there, and another

$25 million for the other extension. Is this figure still accurate, Mr.

Speaker, or have costs escalated a good deal in the last year? I

suspect that they have escalated a good deal, but doesn't this House

deserve that information?

The losses last year were $45 million; they were $32 million the

year before. What are they going to be next year — this coming year?

Doesn't this House deserve a forecast of how much the losses are going

to be before we are asked to authorize a loan? We haven't even got that

net figure, let alone a forecast of revenues, a forecast of rates, a

forecast of expenses. We are being asked to buy a pig in a poke.

The debt as of January 2, 1976, according to this balance sheet, was

$466 million in long-term debt and $25 million in parity bonds, which

totals about $491 million. By order-in-council there was a further $50

million incurrence of debt authorized in mid-January. This, by my

arithmetic, totals something less than $550 million. The current

authorization of the railway's borrowing power is $650 million. There

is $100 million slack right in there. So really, if this bill passes,

there will be $350 million left, and if it doesn't pass, there is still

$100 million left for right now. It is not exactly what you'd call an

urgent cash situation, especially considering the relatively

comfortable working capital position of the railway as of January 2,

with a working capital of about $10 million and cash in the bank of $29

million. Given that, Mr. Speaker, why couldn't the government take the

time to give us the full and complete picture of BCR before asking for

this kind of borrowing authorization?

What's the current labour situation? The members of this House know

that it's difficult. They know that negotiations are going on, but when

are we to have some words from either the minister responsible for the

railway or the Minister of Finance, who introduced this bill, about

some long-term improvements in the labour relations climate in the

British Columbia Railway? Does this government have any plans in that

direction? I tell you, Mr. Speaker, that if they do not, then this

essential service in this province is going to continue to be disrupted

year after year. The labour relations history of the party opposite is

not one that gives this House any reason for complacency in that regard.

There is a clear and present need for the parties to get together on

both sides and have a single spokesman on both sides — for the unions

to get together, in other words, and have a bargaining council to deal

with the railway. That should be encouraged.

What is the state of the northwest transportation agreement with the

federal government which, on the originally contemplated basis, would

have brought $117 million into the coffers of the BCR for assistance in

certain building programmes and in exchange for certain running rights

for the CNR? All we have, Mr. Speaker, is the statement