December 14, 1981 ALBERTA HANSARD 2297 LEGISLATIVE ASSEMBLY OF ALBERTA Title: Monday, December 14, 1981 2:30 p.m. [The House met at 2:30 p.m.] PRAYERS [Mr. Speaker in the Chair] head: NOTICES OF MOTIONS MR. CRAWFORD: Mr. Speaker, I would like to give oral notice that tomorrow I will move the following resolution:

Be it resolved that when the Assembly adjourns, it shall stand adjourned until such time and date prior to the commencement of the 1982 session as is determined by Mr. Speaker after consultation with the Lieutenant Governor in Council. head: TABLING RETURNS AND REPORTS MR. KOZIAK: Mr. Speaker, during the course of the estimates, my colleague the Minister of Energy and Na­ tural Resources indicated that if he was unable to com­ plete reading the agreement between AOSTRA, Shell Canada Resources Limited, and Shell Explorer Ltd., he would file that at the end of his estimates. I do so now. MR. HORSMAN: Mr.

Speaker, I wish to table answers to Written Question 122 on the Order Paper. MR. MILLER: Mr. Speaker, I would like to file four reports of the Land Agent Advisory Committee on the qualifications and standards of conduct for land agents. MR. NOTLEY: (Inaudible) with the Legislature Library three copies of background memos I submitted to you, sir, and which were distributed to members of the Legis­ lature, with respect to the question of privilege raised on November 24. head: ORAL QUESTION PERIOD Computer Technology in Schools MR. R. SPEAKER: Mr.

Speaker, my question to the Minister of Education is with regard to the computers that are going to be made available to school boards across the province. It's my indication that the Alberta School Trustees' Association has asked the department that local boards be able to defer decisions on purchases of computer technology until the Alberta School Trus­ tees' Association task force has reported. I wonder if the minister has had that request made to him. What action will be taken? MR. KING: I have not had that request made to me, Mr. Speaker. MR. R. SPEAKER: Mr. Speaker, a supplementary ques­ tion.

Could the minister indicate how many local school boards have purchased the computer equipment at this time? MR. KING: No, I'm sorry I can't, Mr. Speaker. MR. R. SPEAKER: Mr. Speaker, a supplementary ques­ tion to the minister. My understanding is that the task force will take about 11 months to do their work. Could the minister indicate whether consideration would be given to deferring the purchase or this agreement with regard to the computers? MR. KING: Since I have no knowledge of the Alberta School Trustees' Association task force, referred to by the hon.

Leader of the Opposition, I'm afraid I can't com­ ment on his question. Housing Standards MR. R. SPEAKER: Mr. Speaker, I'd like to ask a question of the Minister of Housing and Public Works, with regard to the occupancy-rate situation in Alberta. A lot of substandard housing is being occupied by Alber- tans at the present time. I wonder if the minister has looked at any type of assistance program to help persons upgrade some of these homes and bring the living condi­ tions up to standard. MR. CHAMBERS: Mr.

Speaker, we've discussed on previous occasions the program we have which allows for the conversion of suites — whether they be basement, upstairs, or attic suites, or individual, light housekeeping rooms. As I indicated before, to this point in time that program has not gone as well as I hoped it would, primarily because of municipal zoning restrictions and so forth. I'm optimistic that during the next year and in the years ahead, the municipalities will take a more realistic view of this, and that program will come into its own and generate a lot more of such units. MR. R. SPEAKER: Mr.

Speaker, a supplementary ques­ tion to the Minister of Consumer and Corporate Affairs. I wonder if the minister could indicate the number of complaints received by the department, if any, with re­ gard to persons renting condemned or substandard premises. MR. KOZIAK: Mr. Speaker, I was asked that question some time ago, in the last two to three weeks. At that time, I checked with department officials to determine the nature and number of complaints in this area and was informed that there had not been any.

The Leader of the Opposition is well aware of the provisions of The Landlord and Tenant Act, 1979, which impose a responsibility on the landlord to assure that the premises are habitable at the commencement of tenancy. We have not received complaints in this respect. We assume that prospective tenants would be in the best position to relay those concerns to us, because they would be the ones who view the premises before determining whether or not they should occupy them. Water Management — TV Production MR. NOTLEY: Mr. Speaker, I'd like to direct this ques­ tion to the hon. Minister of Agriculture.

It's further to my

2298 ALBERTA HANSARD December 14, 1981 questions last week with respect to the television program On The Waterfront. So there's no misunderstanding, in terms of XTV making their decision to delay or at least not show the film as originally scheduled, is the minister in a position to advise the Assembly whether there was any representation by any official of the government of Alberta to the management of XTV before that decision was made? MR. SCHMIDT: Mr.

Speaker, it's my understanding that the contact was made on behalf of the CBC studio to the department, suggesting that the time schedule, which had been laid out and printed in many media pamphlets, be delayed for a period of time. The indication was that it came from the television studio to the department. MR. NOTLEY: Mr. Speaker, a supplementary question.

Then the minister is saying that the initiative on the question of the delay came exclusively from the station, and that no one in the government of Alberta — either the minister's department or any other department — contacted the CBC, either formally or informally, to recommend the delay? MR. SCHMIDT: Mr. Speaker, in reply to a question last week, I believe, I stated that over the years information that is available goes out through the television and radio media.

And over the last 12 years with the CBC, an arrangement has existed that if by their choice the media wish not to show any of the available material, that option is in the basic understanding and agreement we have with them. It's my understanding that the call sug­ gesting that the time frame be changed was made under that agreement. MR. NOTLEY: Mr. Speaker, a supplementary question.

Then the minister is advising the House that no informal representation was made by anyone from either the min­ ister's department or any other department of govern­ ment, with respect to the delay in this particular showing, and that it was exclusively the initiative of XTV. MR. SCHMIDT: Mr. Speaker, it's my understanding that the initial submission was made in this case by CBC to the department. It was on that joint submission that the decision was made to delay. There was no communi­ cation from my department or my office.

It's my under­ standing that no other exchange was carried on in this particular case, other than the normal procedure through CBC and the department. MR. NOTLEY: Mr. Speaker, a supplementary question. The minister said "joint" representation. Is the minister able to advise the Assembly what is meant by that? Was there a meeting of the minds, as a result of a discussion of this matter? What was meant by "joint" representation? MR. SCHMIDT: Mr. Speaker, to my knowledge CBC suggested that the time frame be changed. The depart­ ment received that suggestion and agreed.

That was the joint decision made on behalf of both. MR. NOTLEY: Mr. Speaker, a further supplementary question. On page 2,181 of Hansard, December 8, the minister indicates that On The Water Front is only one of four programs the department is showing this year. Is the minister in a position to advise the Assembly whether the other three programs are completed, and what the subject matter will be? MR. SCHMIDT: Mr.

Speaker, from memory, I believe two deal with marketing — one deals with the overseas marketing of Alberta products, and one is consumer oriented and deals with the use of Alberta products by the consumer in our province — one was On The Water Front, and the other topic fails me at the moment. Four films are available through the Department of Agricul­ ture this particular year. MR. NOTLEY: Mr. Speaker, one final supplementary question. The minister indicated that the cost of this film was $25,000. Are any other financial obligations still to be met with respect to the production costs of this film? MR.

SCHMIDT: Mr. Speaker, to my knowledge, the $25,000 is the total cost of the production itself. Any other costs incurred would be for services rendered for showing the various films through the various outlets that exist. Reservoir Development MR. MANDEVILLE: Mr. Speaker, my question is to the hon. Minister of Environment. Could the minister indicate what response his department has given to the Eastern Irrigation District request for funds to develop the Crawling Valley reservoir within its boundaries? MR. COOKSON: Mr. Speaker, I'd have to have more information from the member.

The Department of Envi­ ronment administers $234 million from the Heritage Sav­ ings Trust Fund for development of on-stream and off- stream water supply plus channelization. If the question is related to the trust fund administration, I'd have to check to see if that specific was included in the '82-83 year. I don't think it is. However, if it has to do with expenditures by Agriculture, it might be better to refer the question to the Minister of Agriculture. MR. MANDEVILLE: A supplementary question to ei­ ther the hon. Minister of Environment or the Minister of Agriculture, with regard to the same project.

Is it the policy of the department to let irrigation districts transfer money from one project to another? The Eastern Irriga­ tion District wants to transfer some money approved for one project to the Crawling Valley project. MR. SCHMIDT: Mr. Speaker, further to the comments of my hon. colleague the Minister of Environment, for the ag. portion irrigation districts have a basic upgrading program for a five-year period. That plan is followed very closely and, of course, is approved by the irrigation council.

If, through either engineering or time-frame changes, a change has to be made in their basic long-term upgrading plan, a submission to the irrigation council has the flexibility to give irrigation districts an opportunity to change, within reason and, of course, within the purview of the engineering design. MR. SPEAKER: The hon. Member for Pincher Creek- Crowsnest wishes to supplement some information given in a previous question period.

December 14, 1981 ALBERTA HANSARD 2299 Syncrude Operations MR. BRADLEY: Mr. Speaker, last Friday the hon. Member for Spirit River-Fairview asked some questions with regard to a filing by the Minister of Energy and Natural Resources and its relationship to the Crown agreement, and

Schedule A in particular. I'd like to respond as follows. The information tabled on October 15 by the Minister of Energy and Natural Resources was in response to Motion for a Return 136 of June 2, 1981, by hon. Member for Spirit River-Fairview, requesting a return showing all audited annual reports of Syncrude Canada Ltd. provided to the government, in accordance with its role as an equity participant in the Syncrude project, for the years 1976, '77, '78, '79, and '80.

The audited annual financial statements of Syncrude Canada Ltd. relate to the business arrangement between the Syncrude partici­ pants and, as such, accurately reflect the financial trans­ actions of the private company, Syncrude Canada Ltd.

Schedule A of the Alberta Crown agreement relates to the Alberta joint venture between the Syncrude partici­ pants and Alberta royalty. For this reason they are not, nor should they be, consistent with

Schedule A of the Alberta Crown agreement. Further, Mr. Speaker, the hon. member requested in­ formation as to when the accounting manual for Sched­ ule A to the Alberta Crown agreement would be tabled in the Legislature. As a matter of fact, that has been tabled.

Schedule A to the Alberta Crown agreement is the accounting manual and, as such, was filed in this Legisla­ ture on May 4, 1976. ORDERS OF THE DAY head: GOVERNMENT BILLS AND ORDERS (Second Reading) Bill 83 Appropriation (Alberta Heritage Savings Trust Fund, Capital Projects Division) Act, 1981 MR. HYNDMAN: Mr. Speaker, I move second reading of Bill No. 83, the Appropriation (Alberta Heritage Sav­ ings Trust Fund, Capital Projects Division) Act, 1981. [Motion carried; Bill 83 read a second time] Bill 84 Appropriation (Alberta Heritage Savings Trust Fund, Capital Projects Division) Supplementary Act, 1981 MR.

HYNDMAN: Mr. Speaker, I move second reading of Bill No. 84, the Appropriation (Alberta Heritage Sav­ ings Trust Fund, Capital Projects Division) Supplemen­ tary Act, 1981. [Motion carried; Bill 84 read a second time] [On motion, the Assembly resolved itself into Committee of the Whole] head: GOVERNMENT BILLS AND ORDERS (Committee of the Whole) [Mr. Appleby in the Chair] MR. CHAIRMAN: Will the committee please come to order. Bill 83 Appropriation (Alberta Heritage Savings Trust Fund, Capital Projects Division) Act, 1981 MR.

CHAIRMAN: Are there any questions or com­ ments regarding the sections of this Act? [Title and

preamble agreed to] MR. HYNDMAN: Mr. Chairman, I move that Bill No. 83 be reported. [Motion carried] Bill 84 Appropriation (Alberta Heritage Savings Trust Fund, Capital Projects Division) Supplementary Act, 1981 MR. CHAIRMAN: Are there any questions or com­ ments regarding the sections of this Act? [Title and

preamble agreed to] MR. HYNDMAN: Mr. Chairman, I move that Bill No. 84 be reported. [Motion carried] Bill 69 Alberta Heritage Savings Trust Fund Special Appropriation Act, 1982-83 MR. CHAIRMAN: Are there any questions or com­ ments regarding any sections of this Act? MR. R. SPEAKER: Mr. Chairman, I'd like to make some opening remarks with regard to Bill 69, first of all as to where we are and what is happening.

As we all know, Bill 69 allots 30 per cent of the natural resource revenue of this province to the Provincial Treasurer, to be used for the functions of the Heritage Savings Trust Fund, in terms of the Canada division, the Alberta divi­ sion, the capital division, and other investments. At this point in time, I think it is very important for us to review not only what has happened but, as well, to be assured in this Legislature that we know where the funds are going in the future and where they are going to be invested, hopefully for the good of Albertans.

We must focus, though, on the problem we've raised in this Legislature, because it is an example of what can happen and describes the character of the management of the Heritage Savings Trust Fund. As have many people in Alberta, we have noted that there is a realized loss of some $60 million over the last years, in terms of bonds invested in this purchase and sold in this province. I'm sure that sounds like a record in this Legislature, or words that are not necessary to say anymore. But, Mr. Chairman, that is the focus of concern.

2300 ALBERTA HANSARD December 14, 1981 Over the last seven or eight weeks, we have raised our concern about accountability and how that loss occurred. We've asked for specific information to back up those losses, to trace the pattern of the losses. Time and time again, the Provincial Treasurer refused to give this Legis­ lature that information. I don't know what his position is as of today. But that's important information, Mr. Chairman. We must know what the traders did with over $1 billion of our money, in investing it in bonds.

We must know how responsible they are; who they are; who the firms are — maybe not only in Alberta but in Toronto or Ontario or wherever they are — that are investing the heritage savings trust funds. Who are those people? What are they doing with it? How are they affecting the market? We're talking about the traders and the invest­ ment firms. What about the department, Mr. Chairman? Who is responsible in that department? Who is qualified to make good investments? We don't know. We are not sure who those people are. We don't know whether they have adequate qualifications.

We look at the very limited in­ formation before us — and in questions today, I hope to dig into that further. But in looking over the list of people who invest over $1 billion on our behalf, I cannot be assured: one, that they can trace and follow the invest­ ment in the bond market and other markets; and second­ ly, whether good management procedures are in place and have been put in place by the Provincial Treasurer. We don't even know what those management procedures are.

We don't know the communication between a trader and investment personnel of the Treasury Department, between that person and the Deputy Provincial Treasurer and the Provincial Treasurer. Mr. Chairman, we don't know any of those kinds of things. We don't know the daily or hourly checks, which are necessary when you're investing in the bond market, to assure yourself that the trader is not collaborating with somebody — maybe in the Treasury Department — and that there isn't any collusion, any fraud. We're not as­ sured of that kind of thing happening. So we're con­ cerned.

We've raised that matter in this Legislature for seven or eight weeks, but to no avail. This is only one example, Mr. Chairman, one example of many, many others that occur across government. When we look at long-term investments, we ask ourselves what the accountability is. When we look in the 1980-81 report, page 5, some $461 million of the Alberta Heritage Savings Trust Fund is in long-term investments. Who is watching those investments? I don't know of anybody. If I don't, the people of Alberta don't. The government has not told us who they are.

They have not told us what procedures are in place to assure us of accountability. They have shown us no records, not one record which documents accountability. The only thing we have had in this Assembly is the empty words: everything's okay, don't ask us for the documented information. That's the only thing we have got, Mr. Chairman. Beyond that, nothing. Those are the long-term investments. But then we look at short-term investments, $897 million under

Section 9 of The [Alberta] Heritage Savings Trust Fund Act: cash and deposits, $43 million; money market securities, $855 million, which includes the bonds we have been talking about, the bonds that had a realized loss. Mr. Chairman, between the long term and the short term, our report shows that $1,334 billion is in deposits and marketable securities. Many things can happen with that amount of money if someone is not right on top of the job. Certainly fraud and collusion can happen. Not only I say that, but the Auditor General says that.

Then we must be concerned — $1.3 billion in this one division of the Heritage Savings Trust Fund. We have no back-up material to say that things are proper and properly accounted for in this Legislature. What other conclusions come from that, Mr. Chair­ man? I think this is the only conclusion the public of Alberta can come to: after this seven or eight weeks of questioning, the public is saying that they know there is a $60 million realized loss, a loss to them as Albertans.

The second thing they're saying in the coffee shops, on the street, and in the meetings across this province, is that the government is covering something up. When they don't give you the information, they're covering something up; there is a cover-up. Mr. Chairman, from there, there is only one other conclusion. Maybe the government is not coming clean and telling us what's really going on. Maybe there is some fraud and collusion behind the scenes. [in­ terjections] Who knows? When the government cannot present the documents, what other conclusion can you come to?

I don't know of any others the people of Alberta can come to. Mr. Chairman, where does the responsibility for this kind of attitude rest? Certainly it rests with all members of the Conservative Party in this Legislature, each and every one who didn't take the opportunity of speaking out in this Legislature during this session, this Legislature which is now going to be closed up. The barn door is going to be closed and whatever is happening and has happened is going to be kept behind the barn door so Albertans will not know. At least that's what the Conser­ vative Party thinks.

The whole party, every one of you is a witness and part of the crime that has been committed. [interjections] Every one of you. MR. CHAIRMAN: Order please. I would judge the remark just made by the hon. Leader of the Opposition as not appropriate for discussion within the committee here today. MR. R. SPEAKER: Mr. Chairman, let's define what a crime is. A crime is often when a person doesn't speak out and stand up for his responsibilities when he's in this Legislature. [interjections] That's what's happened here. MR. CHAIRMAN: Order please.

I wouldn't think the Leader of the Opposition would want to set himself up as judge and jury in deciding that what he is talking about is absolutely correct. I think it would be appropriate not to make that kind of remark in the committee. It was not necessary, and it could be withdrawn. MR. R. SPEAKER: Mr. Chairman, in terms of the remark being withdrawn, I was using the definition of the word. The word was "crime". That's a given. The second part of that is the definition of the word "crime".

Crime is when people do not speak out on behalf of their constitu­ ents, bring out information, and reveal whether some­ thing happened or it didn't. That's the definition . . . MR. CHAIRMAN: Order please. We're still into a mat­ ter of judgment on the part of the Leader of the Opposi­ tion deciding what a certain issue is. I do not think that type of language is necessary in this committee. MR. R. SPEAKER: Mr. Chairman, I'll withdraw the word "crime" and replace it with the word "irresponsi­

December 14, 1981 ALBERTA HANSARD 2301 ble". Maybe that's a little stronger and a little more direct. The point I want to make is that there is one minister in this Legislature who is responsible for the situation we are in today, the Provincial Treasurer. If the Provincial Treasurer isn't willing to take his responsibility, it is the Premier. In terms of accountability, the buck stops, one, with the Provincial Treasurer and, two, with the Premier.

Even though other members in this Legislature do not stand up and take their responsibility, they can walk home and feel free that they don't have to take the responsibility, the direct ramifications or implications of the act that has occurred. The responsibility lies with the Provincial Treasurer. Today the Provincial Treasurer and this government have limited the time to show accountability. If the Provincial Treasurer has not presented us with any in­ formation, any documents, even to support this one example of mismanagement, by 10 o'clock tonight, the people of Alberta will have to deal with that problem.

Hopefully the people of Alberta will be voting against that kind of irresponsible action and lack of accountabili­ ty. Mr. Chairman, that's what is out at the grass roots in Alberta today. People are concerned about the accounta­ bility for the Heritage Savings Trust Fund. They know in their minds and feel that the government is covering something up, covering up some kind of action that they do not want to reveal to the public of Alberta.

If we don't clear up that lack of accountability today in this Legisla­ ture and it is left to drag out and go into the streets of Alberta, then the Conservative party in this province must live with the implications of that, live with the image of a lack of accountability. The Provincial Treasurer, who has aspirations to be the leader of this Conservative party in the province of Alber­ ta, will leave that as a mark on his leadership. That will be a mark on his leadership. In no way can the hon.

Provincial Treasurer go into a leadership convention and say, I believe in public business being done in the public or in open government like my predecessor, Mr. Lougheed, stood for. He can no longer say that, Mr. Chairman, because it is clear in this fall Legislature that one, the Provincial Treasurer will not present any docu­ ments to substantiate his actions and, two, there has been no open government through the example set by the hon. Provincial Treasurer. That is the case the Provincial Treasurer must live with in this Legislature.

Through our questions today, the Provincial Treasurer has one last chance to come clean and show Albertans that there isn't anything wrong, that there is no cover-up. That's what we expect through our questions today, Mr. Chairman. We expect that kind of responsible action. If we don't get it, we're going to do everything we can do to ferret out information. If we're stonewalled and closed out at 10 o'clock with no information, then we speak to the people of Alberta. We're going to travel this province from one end to the other and talk about free speech. We're going to talk about accountability.

We're going to talk about $60 million being lost. Mr. Chairman, I'll tell you that the people of Alberta are ready to hear that information like they have never wanted to hear it before. They don't believe, and didn't believe to this point in time, that the Conservative party was really this closed, this arrogant, this unwilling to give the people of Alberta information about their manage­ ment. The people in Alberta didn't believe that until the last five or six weeks, when we raised an example and placed it on the kitchen table of every Albertan.

They now realize that this government isn't as great as they thought it would be. The government's going to have to live with that. This government will have to work harder than ever to disprove that doubt in the minds of Alber­ tans today. Over the last 10 years, I've been very gentle with this government, very, very gentle in my approach to this government. This government has had its way to do what it wants. But that period of time has stopped, because Albertans are demanding accountability like they've never demanded it before. They want accountability.

As I go into offices of Conservative supporters, they're saying, ask for accountability, don't stop the actions you've taken to this point in time. Mr. Chairman, we don't intend to stop. We'll start that job today, and continue it as we have over the last six or seven weeks. Mr. Chairman, we are going to ask as many questions as we can in the time between now and 10 o'clock. If the Provincial Treasurer has good answers to those ques­ tions, maybe he can relieve some doubts. But the per­ formance to this point in time would not leave you with that hope in mind. DR. PAPROSKI: Mr.

Chairman, rising to speak on Bill 69 raises the issue of the 1975 and 1979 campaigns when, over two years prior to 1975, the citizens of Alberta had an opportunity to debate this on every street corner and in every household, farm yard, and farm home. We know what happened in 1975. We know what happened in 1979, when the issue was raised again by the opposition members' trying to create a cloud over this very impor­ tant Heritage Savings Trust Fund, where 30 per cent is allocated for and invested in for special items for not only generations now but future generations.

When I hear the kind of talk coming from the hon. opposition member's mouth, I get distressed, not for myself but for the citizens out there: every man, woman, and child, the young and the senior citizens. The need for such a fund for future generations was as well known then as it's known now. They recognized the management of that fund, and it was clearly articulated across this province. It was submitted in 1975, again in 1979, and since that time. The citizens recognized that it was a good and proper way to manage this fund. The need and the direction was there.

They recognized that this was an investment fund and that it should be carried on that way. Mr. Chairman, no one wanted to spend all the non­ renewable resource [revenues]. I think the opposition members are missing the point. They forget that 70 cents of every non-renewable resource revenue dollar goes on the day to day management for our citizens, and only 30 per cent goes for investment for a rainy day, for future generations. They don't mention that. They forget be­ cause they want to forget or don't want to mention it.

They zero in on one item, which has been clearly ex­ plained over and over again in this Assembly. Every bit of information that had to be provided under the rules of the House, has been provided. As a matter of fact, we know that additional information will be provided through the Auditor General, as requested by the Premier and the Lieutenant Governor in Council.

The level of services from non-renewable resources — 70 cents of every dollar flows on a day to day basis to give us the lowest corporate tax, the lowest provincial tax, the lowest personal tax, lowest natural gas prices in all Canada, no sales tax, no gasoline tax, et cetera, et cetera. In other words, Mr. Chairman, we must recall

2302 ALBERTA HANSARD December 14, 1981 that 70 per cent of the dollar is being spent on a day to day basis to the extent — and this is a rough figure, but I challenge any one of the opposition members on this figure — that every husband and wife with two children earning $25,000 to $30,000, is $5,000 a year better off living in Alberta than in any other province. That's because of the money spent on a day to day basis.

What we're talking about and zeroing in on here is that under this Bill, 30 cents of every dollar — 30 per cent, if you wish — goes into a special fund to be invested on a day to day basis and, I submit, is being managed very well. AN HON. MEMBER: Saving for the future. DR. PAPROSKI: Saving for the future, as the hon. member indicates. Turning to accountability, who brought in the inde­ pendent Auditor General, Mr. Chairman? This govern­ ment, not the previous government. And what has this independent Auditor General stated regarding the fund?

Of course, we were talking about the capital division for these 21-plus days. The hon. opposition leader says six or seven weeks. Indeed, questions have been up over and over again for the past six or seven weeks. [The Auditor General] says that every dollar has been accounted for. There was no evidence of fraud or collusion — no evidence of fraud or collusion. Every dollar and cent has been accounted for. The citizens out there know about that, Ray Speaker. You must be speaking to your hon. opposition members when you say they are concerned about it.

They know that the $60 million — and we're not going to go over that again — was a realized loss, because the bonds had a lower interest rate. They were sold. Every citizen would do that and transcribe that into a higher yield. As a matter of fact, the yield proves it. Because over that same period of time, the yield was a $60 million loss and over a $1.5 billion gain. Well, the citizens will not be duped by this kind of commentary over and over again. I'd be prepared to go on every street corner or every table across this province and challenge the hon. opposition leader any time on that basis.

Let's talk about accountability, Mr. Chairman. They don't want to talk about the accountability regarding this fund. They don't speak of the annual report. They don't speak of the quarterly report. Every citizen has an oppor­ tunity to see it. They don't speak of this debate that goes on every year to raise the issues, and properly so. I'm not criticizing the debate, Mr. Chairman; I'm criticizing the items they're bringing to the debate, as if to make citizens believe that something terrible has happened. In fact, they have no evidence whatsoever that something has hap­ pened.

As a matter of fact, the independent Auditor General, who reports under the rules of the House, did not say that anything happened. There was no evidence of fraud or collusion. A special report is even coming in to show that. Mr. Chairman, I would be the first in this House to indicate that if the independent Auditor's spe­ cial report, requested by the Premier, indicates that some­ thing unusual has happened, I'm sure that will be correct­ ed forthwith. But I'd be amazed, in view of the commen­ taries made already by the independent Auditor General.

Then we have a special select committee that sits and reviews the 30 per cent allocation, and is able to call the Premier and the ministers responsible for the various sec­ tions of the fund. They debate that over the summer, prior to coming here in the fall session. The opposition members sit on that committee. They ask all the ques­ tions they want, then they come to this House and repeat the whole situation over again. We have the debate on estimates, as we're having today.

So I have great diffi­ culty with the verbalizing, the repetitive questions, and the circular way they're talking in trying to create an illusion that something has happened when, in fact, they have no evidence that anything has happened. They say that the non-cabinet government members are not free to speak. Well, I challenge him on that right now. I'm sure that if we wanted to stay for another four or five weeks, there is not one member who wouldn't get up and speak for half an hour, 45 minutes, or an hour.

But it has been stated very clearly by other members, and we don't like to repeat ourselves in a repetitive, circular manner to convince ourselves and create an illusion. We know the facts. Mr. Chairman, they talk about limitation of time. Again, that is going to be raised over and over again. Yet, the rules of the House are followed. There is a limitation of time on the question period, but we have a question period. We've backed off many times to allow the opposi­ tion members to question the government on the specific items we're talking about. What have they done?

They've either walked out of the House or become mute. There are remarkable supplementaries on this specific item over and over again. So, Mr. Chairman, I'm saying that at least I know now where the opposition members stand: the Social Credit, the socialist party, and the independent. They're all in bed together. They want to create an illusion of a problem by saying there's no freedom of speech, when they've had all the opportunity in the world to make their point. They're delaying, they're repeating and, frankly, they're politick­ ing, pure and simple, just politicking. Mr.

Chairman, I want to get onto a more specific item and say that we've spent 21 days on the capital division. Although the hon. Leader of the Opposition says six or seven weeks, I'll give him the benefit of the doubt. There were questions on that item in question periods too. Six or seven weeks on a portion of the fund that represents only 3 cents of the whole non-renewable resource dollar. We're now talking about the rest of it, Mr.

Chairman: 27 cents of every dollar of the $9 billion fund for all our citizens and future generations; that is, the Alberta in­ vestment division, the Canada investment division, the marketable securities, and the energy investment division. I'd like to spend a few minutes on that, especially in reference to the Alberta division, which represents some $4.9 billion of the $9 billion.

It represents such items as the Agricultural Development Corporation; the Alberta Home Mortgage Corporation; the Alberta Housing Cor­ poration; the Alberta Municipal Financing Corporation, which gives low interest loans to all cities, towns, and municipalities; the Alberta Opportunity Company; the Alberta Energy Company; and so forth. I'm sure other members will pick one or two of those and cover them in detail. I hope we have an opportunity to do that, Mr. Chairman, because I think the citizens are entitled to know what's happening through this fund.

They should know in detail, but it's difficult to assimilate because of the vast number of programs carried on for all citizens of all ages. Before I go to the Alberta Housing portion of the Alberta division, I want to say clearly, once and for all — because I don't think I will have an opportunity to speak again in this sitting — that no one has said there is fraud; no one has said there is collusion; no one has said there is mismanagement. Every cent of the fund is accounted for,

December 14, 1981 ALBERTA HANSARD 2303 according to an independent Auditor who, by the rules of the House, provides all the information he must provide. He couldn't provide any more if he wanted to, because we as a government, as a Legislative Assembly, brought in that Act. If the hon. opposition member or any of the opposition members want to bring in an amendment and try to change that Act, that's a different story.

So let's talk about the Alberta Housing Corporation, where a good portion of the fund — as a matter of fact, a significant portion — goes to helping citizens with a very important item: affordable housing for every man, woman, and child. We have the Alberta family home purchase program. Incidentally, that fund is over $1 bil­ lion — $1.5 billion, as I understand it. I haven't the exact figures, but it's over $1.5 billion. AN HON. MEMBER: A lot of money. DR. PAPROSKI: It's a lot of money indeed. The hon. member is prompting me, and he's just like an echo.

I wish the hon. member would restrain himself for a few minutes. But it's true, Mr. Chairman. There are so many of these programs that I won't be able to cover this one program in the minutes allotted to me. I hope hon. members will spend just a few moments on any one of the programs, because we're not talking about the capital division now; we're talking about the other division. What about the Alberta family home purchase pro­ gram? Every man and woman with a dependent child can qualify for this. The income could be up to $38,000. The subsidy could be up to $500 a month.

Now, the hon. socialist leader has difficulty swallowing that. Up to $500 per month: that's called performance, and that's called a program. The mortgage could be up to 90 per cent. So there we are. [interjection] He's trying to echo, Mr. Chairman, but he's having difficulty. We have co-operative housing, Mr. Chairman, again for families or single parents with one or more depend­ ants. They can act as general contractors and construct their own homes. We have the shell housing program. "Shell housing" means that the home is 75 per cent completed, then the couple can complete it as they see fit.

Again, the funding occurs under the Alberta family home purchase program. We have rental housing, where the target group is households whose adjusted income is up to only $15,000. Low rental: loans of up to 95 per cent of cost for builders. We've stimulated that rental market tremendously. In spite of these programs, because of an influx of people into this province from other provinces, to the extent of 2,500 to 3,000 per month in Edmonton alone and about 75,000 per year, we have a problem. When you get that kind of influx of people into this province, you have to ask why.

I know the opposition members have difficulty with that one. Why? Because here there are jobs, pro­ grams, opportunities, and an investment climate that is second to none in Canada. And incidentally — again repeating it — because of the variety of programs, a couple earning between $25,000 and $30,000 a year and living in Alberta is $5,000 better off, in round figures, than in any other province. What about the modest apartment program for small centres in Alberta — small rental housing. Again, loans up to 90 per cent. We have the municipal non-profit program for rental housing, Mr. Chairman.

We have the community housing program, again a rental housing pro­ gram. We have the self-contained housing program for senior citizens not only aged 65 but, where they have serious housing problems, aged 60 to 65. What do tenants pay? Twenty to 25 per cent of income. It was 30. But I'm happy to say that I, with other members, fought to lower it to 25 per cent, and we got it down to 25 per cent of income. And they're very happy with that. Mr. Chair­ man, the other rental program is the one-third capital grant program.

Just to read the titles takes 15 to 20 minutes: rental housing programs; the senior citizens' lodge program, again for senior citizens; the nursing home financing program, to provide loans to voluntary non-profit or­ ganizations for the construction of nursing homes. In addition to providing this kind of 95 per cent financing for nursing homes, our subsidy for the nursing home patients is double that in Saskatchewan, a socialist prov­ ince. Mr. Chairman, the hon. Member for Spirit River- Fairview can check. If it's not double, it's very close. That's a government subsidy, Mr. Chairman.

In other words, a nursing home patient in Saskatchewan has to pay twice as much to stay in a nursing home, and they have fewer nursing home beds. We have the rural mobile-home program. The Alberta pioneer repair program for senior citizens: they get $2,000 by way of a grant to repair their homes, whether it's the roof, the chimney, floor coverings, a fence, or whatever. We have the Alberta home conversion program, a new program of up to $5,000 for converting homes so as to have an extra suite or a light housekeeping room.

It not only helps the owners, who are usually senior citizens, because they can rent that portion of their premises, but it also increases the rental units, which are in such high demand in our province because of our good programs and the influx of people. We have housing assistance for those in wheel chairs, Mr. Chairman, $1,000 for each housing unit that has a wheel-chair occupant. To get it, that person doesn't have to own the house; he merely has to occupy it. We have the residential land program. I could go on and on, Mr. Chairman.

But in conclud­ ing, I'm not only proud but exhilarated by what's happen­ ing here, and I hope we can transfer 30 per cent more . . . As a matter of fact, I'm amazed that the opposition members haven't come up with the idea of increasing that amount. But in either case, the dollars provided to date have done a very important job for investment for all citizens, especially for our future generations, our young people. I hope the Legislative Assembly will indeed pass this Bill, and I hope the opposition members will bring up something positive instead of getting on a negative, repe­ titive kick.

They've created an illusion. They've already convinced themselves that something is wrong, when nothing is wrong at all. MR. NOTLEY: Mr. Chairman, in the dying hours of this debate, as we complete committee study of this important Bill with closure staring us square in the face at 10 o'clock tonight, might I say that it is interesting to all of a sudden see this remarkable interest on the part of government backbenchers, such an amazing number of people who have suddenly found their voices.

I must say that I appreciate that, although I think it would have been more useful had we had somewhat more contributions over the last few weeks. But isn't it interesting that we now have a government filibuster, if you like. [interjections] in a debate that has about four and a half hours to run before closure is brought down, not at the behest of the opposi­ tion but rammed through by this government. Mr. Chairman, in dealing with Bill 69, our primary

2304 ALBERTA HANSARD December 14, 1981 responsibility is to hold this government accountable. We've talked about the loss of $60 million and, at this stage of the game, we still haven't had any kind of reasonable answer in the Legislature from the Provincial Treasurer, a clear response to the observation in the leaked memo from the Auditor General. I think it's worth repeating that again. If the hon. Member for Edmonton Kingsway says that's repetition, too bad.

These points have to be made and, until we get an answer, those questions have to be raised: It would appear that traders should be in a position to explain the rationale for purchases and sales transactions long after the event and should be able to provide information on the results of their activi­ ties to senior investment management. There is con­ siderable scope for collusion between an investment trader employed by the Treasury Department and someone in one of the brokerage houses, which could result in fraud. Mr.

Chairman, the Auditor General has now been given the special assignment to look into this matter. It is extremely unfortunate that this committee does not have an opportunity to review our position on Bill 69 after we get the special report of the Auditor General. But no, we're facing closure; we're going to be booted out of this Assembly before we have an opportunity to review the observations made by the Auditor General.

The fact that the Member for Edmonton Kingsway is convinced that everything is fine, that there are no problems, that there's nothing but sweetness and light and sunshine and roses, is very intriguing. But until we get the special report from the Auditor General, the people of Alberta are not going to be prepared to accept that, nor should they. It is outrageous that this committee, as Committee of Supply, is not in a position to decide whether or not we allocate 30 per cent after getting the report from the Auditor General, not before. Mr.

Chairman, when one looks at the investment of additional funds in the Heritage Savings Trust Fund, it's not just a question of insisting that this government measure up to accountability on the $60 million. That's fundamentally important, because we still have no an­ swers. This government is always prepared to trumpet the gains, but never to explain the losses. Well, Mr. Chair­ man, we have a responsibility to find out why the losses occurred. Let's look at some other areas as well.

During the discussion of the estimates, where for the most part the opposition members raised the questions, we indeed found some interesting information that relates very spe­ cifically to the management, by this government, of the heritage trust fund. Let's begin with the Walter C. MacKenzie construction at the University of Alberta hospital. A great announcement was made in 1976, an announcement that the cost of construction of Walter C. MacKenzie would be $86 million. The chairman of the investment committee himself, the Premier of the prov­ ince, made the announcement of $86 million.

Now, five years later, we have the Minister of Hospitals and Medi­ cal Care admitting in this House that by the time the project is complete, it will cost $500 million, more than five times the original estimate. There is really very little that members with any kind of credibility at all can do other than probe, question, and challenge that kind of management, when a project goes from $86 million in 1976 to over $500 million by the time construction is complete. We had the Minister of Hospitals and Medical Care and, to his credit, he was frank with the committee.

But he pointed out that we had a whole desk drawer full of change orders, which apparently had been going on for months, almost a year, without anybody knowing about it, even though there was an implementation committee that included the Deputy Minister of Hospitals and Medical Care. With that kind of management, we now have this government saying that they want another 30 per cent. And they want us to trust them — after that kind of management. Mr.

Chairman, when citizens in our two major cities or small communities in the province see a municipal project escalate in cost, they properly jump on their local council­ lors. How aghast they must be at a project that goes from $86 million in 1976 to over half a billion dollars by the time construction is completed. Or we have the Kananas- kis project; again, an announcement by the Premier on November 2, 1977, four years ago. And what was the announcement? Was it that we'd be spending more than $200 million, almost a quarter of a billion dollars? No it wasn't. The announcement was a $40 million program.

But as a result of changes, additions, and expansion, we find that it is now well over $200 million. Somebody has to hold that kind of government accountable. In the city of Edmonton now, all kinds of issues are being raised about the convention centre because of the overruns and the increase in the cost of that project, and rightly so. In the city of Calgary, people are raising questions about the coliseum and possible overruns in that city, and rightly so. But in Kananaskis and Walter C. MacKenzie, we have two capital works projects where there have been phenomenal overruns.

We have all the government members saying, oh, everything is fine; don't worry about us; don't ask any questions; trust us. Well, Mr. Chairman, the people of Alberta are saying very clearly that they aren't prepared to trust this kind of government. They want some concrete answers. Frankly, to this point in time, we haven't got them.

The other day, on a small item, the university library program — it's not major, but it's important — we had the Minister of Advanced Education and Manpower tell us that the money we were voting for the heritage library program was for expansion, additional books, and addi­ tional periodicals for university libraries. Well.

I have a memo from the General Faculties Council library com­ mittee, November 17, 1981, which clearly points out that for the last three years, the University of Alberta has not been using their money to supplement because they've been so squeezed in other areas of their university budget that they've had to use their heritage money to maintain their existing library program. So, Mr.

Chairman, where has the minister, who is accountable, been all this time that at this stage of the game, on November 17, 1981, we find that the heritage library program has actually been used to maintain existing services because this govern­ ment hasn't provided adequate funding to the universities through the normal operating budget of the province. Members can say no all they like. The fact of the matter is that we have to hold this government account­ able in the House for the estimates set out.

When those estimates come in five times over budget; when we have the Premier himself saying $86 million for Walter C. MacKenzie, and now it's over half a billion; when we have the Premier saying $40 million for Kananaskis, and now it's almost a quarter of a billion: when we have these kinds of wild overruns, surely it is a bit much to get a bit uppity when opposition members stand in their places and say, we want an accounting. We want to know what's

December 14, 1981 ALBERTA HANSARD 2305 going on with our money. We have a right to know what's going on with our money. The people have a right to know what's going on with their money. They want a little better accountability and management than they've received from this government for the last period of time. Mr. Chairman, several months ago, just shortly after the House reconvened, we had the minister announcing with great fanfare that we'd finally converted the Syn­ crude debentures — as well we should have.

When one looks over the arithmetic of the Syncrude debentures, we should have converted them at least a year ago. But we lost money because we didn't convert at the earliest appropriate time. Whose responsibility is that? The re­ sponsibility for that fiasco clearly has to rest with this government, Hon. government members can get as upset as they like.

The fact of the matter is that we have a number of major items where this government has failed to explain and document in a convincing manner why heritage trust fund money either hasn't been used the way it should have been, or an awful lot more money than we were told about in the first place has had to be used to complete the objective. Either we have estimates which are ludicrously, ridiculously low, or we have a lack of control.

Whether it's a lack of control in the administration, monitoring, and execution of those funds; whether it's $60 million lost in the bond market, and for what reason — I think we have to be able to satisfy ourselves what the reasons were for this kind of loss; whether it's overruns in major projects, or even in a relatively small project, which seem to have been used for a different purpose than we were told in this Assembly by the minister when he was asking for supply, when he was requesting money to be voted by the Legislative Assembly for heritage projects: whatever the reason, it seems to me, at this stage of the game at least, that we have precious little in the way of concrete answers.

The Member for Edmonton Kingsway is so convinced that everything is fine with respect to this $60 million. I really have to say to that hon. member — and I respect him — that when you see the information in the memo of February 20, 1981, which very clearly draws to the atten­ tion of the Provincial Treasurer and now, as a result of publication of this memo, to the attention of the people of Alberta, that a very serious problem was documented, surely no member in this committee this afternoon, no member on either side of the House, would stand up and justify what had been going on.

Surely no member could be satisfied that for the period from 1975 until 1981, from the very election the hon. Member for Edmonton Kings- way documents — you know, the great election where the people of Alberta applauded the idea of the heritage trust fund. Yes, they did. But they weren't jumping up and down at the thought of having management which was so sloppy that there was considerable scope for collusion between the investment traders employed by the depart­ ment and someone in the brokerage houses. They weren't asked for a mandate on that, Mr. Chairman.

What we find now is information which has been tabled in this House and which has been brought forward not as a result of the government voluntarily coming forward with it. If the government had come forward and said, we have a major problem, we want to lay the information on the table, and we want to do this before you vote another 30 per cent, many of us would have been much more willing to say, all right, we will trust them, because it would have been a forthright approach by the government. But we didn't get that.

We got the brown-envelope routine, the very kind of thing the Con­ servatives in Ottawa quite rightly jump on the Liberals for: secretive government. When people like Joe Clark raise this issue in the House of Commons, they're right. When Mr. Baldwin, the former distinguished Member for Peace River, raised this kind of issue in the House of Commons, he was right. But what is sauce for the Liberal goose in Ottawa is clearly sauce for the Tory gander in Alberta. What we have now is a memo which shows there was a serious lack of management control.

For hon. members on the government side to say that everything is fine, don't worry, just trust the Provincial Treasurer, he has it all worked out; for hon. members to say that the Auditor General looked at the information . . . To be fair to the Auditor General, on the basis of 78 per cent of the transactions, not 100 per cent, he found no evidence of collusion or fraud. That should be said, and it should be said fairly — on the basis of 78 per cent of the transac­ tions. But that does not justify the failure to have a system in place which protects public dollars. Mr.

Chairman, once again all we have now from the Provincial Treasurer or from hon. government members is a plaintive appeal: trust us, we've worked it out. We didn't work it out between 1971 and 1981. Until February 20, 1981, almost 10 years into our term in office, we didn't bother doing anything. But all of a sudden we had this instantaneous recognition that we should do some­ thing. Well, Mr. Chairman, frankly that is a little hard to believe unless we have some evidence supplied by the Provincial Treasurer.

It's the Provincial Treasurer who tells us he's accountable for this fund; it's the Provincial Treasurer who must clearly be answerable, along with the Premier, for the management of the heritage trust fund. So today, as far as I'm concerned, we have to look at this $60 million and have a pretty forthcoming response from the government as to what happened to it. I also think the Provincial Treasurer and the Premier have to be held accountable for the $86 million at Walter C.

MacKenzie going to $500 million; for $40 million at Kananaskis going to almost a quarter of a billion dollars; for some of the other overruns and problems which have developed in the management of this Heritage Savings Trust Fund. As the Leader of the Opposition has pointed out, the buck must ultimately rest on the desk of the chairman of the investment committee.

Those who would applaud the good things about the heritage trust fund — and there are many good things about it; there's no doubt about that — at the same time have to be clearly answerable, not only to this House but to the people of Alberta, for the shortcomings, deficiencies, and problems in the management of this fund. MR. PAHL: Mr. Chairman, I felt I should rise to the challenges of both the hon. Leader of the Opposition and the Member for Spirit River-Fairview, and their collec­ tive suppositions that some hon. members did not rise on the proper occasions.

I must admit that both hon. gen­ tlemen are quite right: I did not rise on the occasion because in the Standing Committee on The Alberta Her­ itage Savings Trust Fund Act, we asked our questions sitting down; at least, most of us did. I refer to the minutes of a meeting on October 27, 1981: Mr. Pahl asked Mr. Rogers [the Auditor General] if he could assure the Committee that no unaccount­ able losses, frauds, or thefts had occurred from the Heritage Fund monies. Mr. Rogers indicated there is no evidence whatsoever of any wrong doing. If it had

2306 ALBERTA HANSARD December 14, 1981 been a significant loss, it would immediately be submitted as a report under

Section 20 of the Act. Mr. Chairman, the fact is that the question was asked; the response was given by the independent servant of the Legislature who was responsible. Additionally, when the Minister of Hospitals and Med­ ical Care appeared before the Standing Committee on The Alberta Heritage Savings Trust Fund Act, questions were asked about the expenditure overruns on the Walter C. MacKenzie program. At that time, the minister clearly acknowledged the problems and where the responsibility was, with respect to both the Department of Hospitals and Medical Care and the owner of the structure. So, Mr.

Chairman, I just cannot sit in my place and hear hon. members who were at that committee and had full oppor­ tunity to ask all their questions, suggest that the other members of the committee were not doing their jobs and that they did not have full opportunity at that time. [Mr. Purdy in the Chair] Mr. Chairman, in speaking at committee stage in support of Bill 69, the Alberta Heritage Savings Trust Fund Special Appropriation Act, 1982-83, I can't help but respond to the repeated references in this session by the hon.

Leader of the Opposition to the "man on the street" who wants to know what the Alberta Heritage Savings Trust Fund has done for him today. First, the man on the street whom I meet is just not that selfish. Quite frankly, I think the hon. Leader of the Opposition knows that too. The man on the street has sort of been left in the background here in the last few weeks.

I suppose that's a recognition that, as I feel, the man on the street fully appreciates the value of putting 30 cents of every non-renewable resource dollar towards the future, while the remaining 70 cents go to everyday expenditures for the citizens of Alberta: schools, roads, hospitals, sa­ laries for nurses and teachers, and the like. The impact of non-renewable resource revenue is such that normal taxa­ tion provides less than 50 per cent of the regular govern­ ment funding requirements and still means there is no sales tax or gasoline tax in Alberta.

If I met the hon. leader's "What's the world done for me today lately?" man on the street — and I must admit that I haven't met him yet — I'd like to say, the Heritage Savings Trust Fund hasn't done one darned thing for you today, and don't hold your breath. That's what I'd like to say to the hon. leader's me-minded man on the street, whom I've never met. But I can't. I would be wrong if I said that, because investments for the future made by the Heritage Savings Trust Fund provide immediate direct and indirect spinoff benefits today.

There are many examples of direct benefits in the various Heritage Sav­ ings Trust Fund divisions. The hon. Member for Edmon­ ton Kingsway did an excellent job of outlining those, particularly in the area of housing. In supporting Bill 69, I should like to refer to the Alberta Heritage Savings Trust Fund expenditures on the Alberta Oil Sands Technology and Research Authority, that provide a couple of present and future direct and indirect or spinoff benefits of the Heritage Savings Trust Fund.

AOSTRA is a provincial corporation funded from the capital projects division of the Heritage Savings Trust Fund, and dedicated to unlocking the secrets of Alberta's oil sands and heavy oil deposits and to getting more of the conventional oil, already found, out of the ground. Since 1976, AOSTRA has received $128.9 million from the Heritage Savings Trust Fund. Because of the nature of AOSTRA's generally fifty-fifty working arrangements with industry, a roughly similar expenditure has been provided by industry.

With the passage of Bill 69, a further $74 million will be invested in Project Energy Breakthrough, which was announced by our Premier in 1974. Mr. Chairman, $260 million is a lot of money, whether you say it fast or slowly. So what has been the prize or goal of this research effort? The oil sands and heavy oil deposits of Alberta contain more oil in place than in all the Middle East. The problem is that present technology is costly and can recover only about 5 per cent of the oil in place.

The average conventional light- or medium- gravity crude oil reservoir yields about 30 to 35 per cent of the oil in place to conventional extraction techniques, which include, for some reservoirs, replacing each barrel of oil produced with a barrel of fresh water. As an aside, I'm sure some of the Arab nations would call that a very bad trade.

The objective of the Alberta Oil Sands Tech­ nology and Research Authority is to raise the recovery of oil to about 50 per cent of the total oil in place through the application of economically feasible and environ­ mentally acceptable technologies: pretty straightforward goals, Mr. Chairman, and, I would think, pretty obvious future benefits if the secrets of the oil sands are success­ fully unlocked. But what about the man on the street who wants something today?

The objective, back in 1974, was to speed up development of new oil sands technology, and certainly that has been done to the extent that industry has spent about $130 million in matching expenditures in oil sands research that would not have been undertaken otherwise. I might add that another objective, Canadiani- zation of that effort, has occurred at least to 50 per cent and sometimes greater, depending on the nature of the projects. Mr. Chairman, I should add that not all oil sands research is jointly funded by AOSTRA.

Some oil compa­ nies have elected to conduct research on their own, to retain the competitive advantages of owning their techno­ logical discoveries. There's nothing wrong with that. The technological breakthroughs funded by AOSTRA are 100 per cent owned by AOSTRA and the provincial govern­ ment, and are made available to all potential users on equitable business terms in order to better develop the oil sands and heavy oil resources.

Ignoring for a moment the future potential of increased oil production, there is considerable benefit to the man on the street from the spinoff effects of multimillion dollar projects in research and development. There is a substantial spinoff effect to all R and D expenditures; that in the oil sands is no exception. As I mentioned, most of those expenditures are in Alberta. Whether it's a trucking business, a welding shop, a machine shop, or a catering firm, there is a potential for business through those expenditures. And, of course, the trucking business and the machine shop hire people as well. Mr.

Chairman, a more exciting present spinoff or bene­ fit of oil sands research, in my view, has been the opportunity for technically skilled Albertans to work on challenging, first-class research here in Alberta, on natur­ al resources of critical importance to our country. The universities, not only in Alberta but across Canada, are involved in a comprehensive and ongoing oil sands re­ search program initiated by AOSTRA. In addition to funding specific research projects, AOSTRA has estab­ lished professorships at Alberta universities for the pur­ poses of encouraging advanced fundamental research on

December 14, 1981 ALBERTA HANSARD 2307 oil sands problems. The Alberta Oil Sands Technology and Research Authority is also providing, with the alloca­ tion that I trust will be provided by passage of Bill 69, a number of fellowships and scholarships to assist in train­ ing new scientists. In building a centre of intellectual excellence in oil sands research, the here-and-now benefits of the Heritage Savings Trust Fund capital projects division investment have not only stopped the problem of shipping jobs down the pipeline; they have also developed a valuable export commodity for the international market place.

Oil sands deposits are found throughout the world. The world-class expertise being developed in Alberta under the leadership of AOSTRA is being sought by other nations. Thus the complexity of oil sands research and the potential for sharing and applying our expertise throughout the world will provide literally generations of challenging research opportunities for Albertans who are not yet out of grade school. Mr. Chairman, that is a legacy provided by the Alberta Heritage Savings Trust Fund that should be a source of pride for all Albertans. In conclusion, Mr.

Chairman, I hope the example of the Alberta Oil Sands Technology and Research Authori­ ty has shown that by investing for tomorrow, you can have benefits both today and in the future. MR. FJORDBOTTEN: Mr. Chairman, it's a privilege to enter the debate today. I'd just like to say about the opposition: if you're strong on facts and weak on logic, talk facts; if you're strong on logic and weak on facts, talk logic; if you're weak on both, pound the table. I think we've seen a lot of table-pounding.

I think about remarks made over the last number of weeks that we've been discussing the capital projects division of the Alber­ ta Heritage Savings Trust Fund; the comment was made that a lot of hon. members on the government side of the House didn't speak. But if the opposition had to eat their words over the last number of weeks, some of them would have gained about 100 pounds. When I sat back and listened, I thought that if they kept on talking, they'd think of something to say. It's an old saying: you can lead a horse to water, but you can't make him drink.

With the opposition, I suppose you can lead them to the fountain of knowledge, but all they really want to do is gargle. When we talk about the projects to be funded now, I'd like to concentrate more on the Alberta investment divi­ sion and some of the others, rather than the capital projects division. When we talk about the bonds, the hon. Member for Bow Valley, who I think understands the stock market as well or better than most, says that you want to be in the chips and stay out of the slivers. But everybody gets into the slivers periodically.

Not much has been said that the heritage fund made a $1.6 billion profit and a $60 million loss. I'd say that's a pretty insignificant sliver. When we talk about the Alberta investment division and the money going into different projects there, I'd like to talk a little bit about the Ag. Development Corpora­ tion. With the beginning farmer program, we can say that one of the finest and brightest futures we have is with our young farmers. The Ag. Development Corporation has assisted more than 1,000 beginning farmers. That ac­ counts for more than 80 per cent of all direct farm lending during the year.

Providing financial assistance to more than 20 per cent of Alberta's farmers is a pretty significant approach. The report also indicates that direct and guaranteed loans to Alberta farmers saved about $16 million in interest during 1980-81, when ADC's rates are compared with interest rates from conventional lenders. In addition to all of that, over $2 million was paid out in loan incentives to beginning and developing farmers. I know the number of beginning farmers in my constitu­ ency, and what it's done for agriculture in that area is a real benefit.

Last week I circulated to all members of the House, on both sides, what Farming for the Future was doing. That's just another approach funded by the heritage fund to try to increase the net incomes of Alberta producers. If hon. members haven't read that, I would certainly suggest they do. Farming for the Future has a great future in a number of things it is looking at and can do. I think we've barely begun to scratch the surface of what we're really trying to do. If you have an itch for something, you have to be prepared to scratch it. I hear a little bit of scratching from over there.

I don't know if they're quite sure where the itch is. I'd like to make a couple of remarks about the food processing centre funded from the heritage fund. The centre, near Leduc, will provide the food industry with an Alberta facility which can be used in the creation and testing of new products and processes, and in the prepa­ ration of small lots for market testing. I think we have a long way to go, in the beef industry in particular, to try to come up with new ways and processes of packaging dif­ ferent products for the world market. The processing centre won't be done and in operation until 1984.

But back in May 1981, the Minister of Agriculture said that, once constructed, it would be of sufficient size to accom­ modate the broad needs of meat, dairy, oil seed, veget­ able, and cereal-based food items. There are a lot of innovations in products in the world today. I think the approaches we can make in those areas are certainly important. I'd just like to mention a little bit about irrigation, because it relates to my constituency. The irrigation po­ tential there is very significant. We're assisting our 13 irrigation districts in rehabilitating irrigation systems to provide water for Alberta's farmers.

We know we can put a lot of that land under irrigation. I think the heritage fund should be moving more into the drainage potential in the northern part of our province in particular. I could say the number of things the heritage fund has provided for agriculture — it isn't out there now, with some of the remarks the opposition has made in the last few weeks. They think — I don't think the people in Alberta do — that everything is tied up in bonds and that we have a loss. But the heritage fund is working for today and tomorrow. Some remarks have been made about the sky-blue color of the hopper cars.

I'm glad we had the color chosen before last week. With what we have seen on the opposition side, I think the color might have been plaid. I appreciate the advances that have been made in all the agriculture programs funded by the heritage fund. I look for the passing of this particular Bill and the money going in, so that we can make the approaches in the future that are really necessary. I'm reminded that Churchill once said that the inherent vice of capitalism is the unequal sharing of blessings; the inherent vice of socialism is the unequal sharing of miseries.

We in this province certainly want to share blessings. We have the blessing of the heritage fund, so that we can make some of the moves we have to in the future. I encourage all hon. members to support the Bill. MRS. FYFE: Mr. Chairman, last year the Alberta Herit­ age Savings Trust Fund committee commissioned a re­

2308 ALBERTA HANSARD December 14, 1981 search project to identify and quantify the extent to which the funds of that trust fund are recycled and circu­ lated directly and indirectly. The report, done by Western Management Consultants, was tabled in this Assembly. On November 5 last year, the Leader of the Opposition tabled a document entitled, Thinking About the Alberta Heritage Savings Trust Fund. This document discusses many issues concerning the interrelationship among cur­ rent consumption, investment, and savings of the trust fund.

Many suggestions in this report were designed to assist members of this Assembly to review the policy options of the fund; policies that will continue to meet the objectives set out for that fund five years ago. This is the fifth anniversary of the establishment of the Heritage Savings Trust Fund. I believe it is a most appropriate time to review the basic objectives and poli­ cies established at that point in time. Both of these reports refer to the high calibre of management related to the trust fund. The handling of financial institutions, whether they be public or private funds, is left to skilled people.

We don't expect to go to a physician who is not trained, and we don't expect to have funds in a portfolio such as this left to persons who are not highly skilled and trained. For weeks, the members of the opposition have been shouting humbug, humbug. Yet even in their hearts, they know there was no real loss in the fund, but in fact a deemed loss, a result of the bond market deterioration. I would be happy if my own very small portfolio, an RRSP, were at the same level it was a few years ago.

But unfortunately, there are deemed losses in funds across our entire country, and our trust fund has also felt the effects of this loss. What happened when the market went down? Sales were made to ensure that we maximized the profits and minimized the losses when the market deteriorated. As John Crosbie said, if I can quote: a short-term pain for a long-term gain. I would just to like to make a couple of very short quotes, if I may, Mr. Chairman, from the transcripts of the Heritage Savings Trust Fund committee hearings this summer. Under questioning, the Auditor General for the province of Alberta, Mr.

Rogers, said to the committee: . . our recommendation was that with the growth of the fund, some thought should be given to a formal plan. He went on to say: . . . I'd like to stress that the transactions were documented to the extent necessary as accounting transactions. But . . . with the erratic operation of the market, we felt it could be improved. The recommendations in the management letter in both cases were for improvement. He further says: . . . the losses were not attributable to fraud through collusion or poor control. They resulted solely from investment decisions . . .

There was no evidence of collusion. Accounting and management controls were satisfactorily in place. Even before the recom­ mendations for their improvement and their docu­ mentation, those controls were not unsatisfactory. I think that says in very [certain] terms that we are talking about an accounting loss, a paper loss, and not a real loss. We're fortunate in Alberta to have funds to invest. There are many other provinces, many other countries across this world, that would like to have the problems Alberta faces — and where to best invest our money.

But one of the greatest problems in having a source of funds is where to invest it wisely. What happened in the Arab countries when they suddenly were faced with massive new revenues and no expertise to invest these funds? Billions of dollars have been wasted on frivolous things. As a result, there has been disarray and war. A lot of poor people in those countries were left impoverished. In most Arab countries, only a few have fallen heir to the wealth of their oil revenue. Everyone in Alberta has personal priorities for gov­ ernment spending. I'm sure the trust fund is a catchword in many homes.

If a shopping list were set out, most people would have priorities for how they would like to spend X dollars. In the report set forward by the official opposition, Dr. Daniels, a co-author, said to the Heritage Savings Trust Fund review committee that non-recurring revenue should finance non-recurring social and econom­ ic impact investment in economic development. He felt we should increase the percentage we set aside, not leave it at 30 per cent. Bill 69 continues the policy of 30 per cent of our non-renewable resource revenue.

This is a basic policy decision: not how much of the fund will be frittered away on continuing programs, but how much will be set aside for the next or subsequent generations. As has been said many times in this Assembly, we're now spending 70 per cent of our resource revenue on current expenditures. If, at 70 per cent, we don't have enough to satisfy the needs, aspirations, and desires of the people living in this prov­ ince, what will happen 20 to 30 years from now when that revenue is seriously eroded?

If we don't fiercely defend the principle of conservation of our non-renewable re­ source revenue, we will go down as an irresponsible and frivolous Legislature that was incapable of explaining the purpose of the fund and unwilling to show restraint in the demands for new programs requiring recurring expendi­ tures. The issue today is the percentage of the resource revenue that should be conserved for the future. Mr. Chairman, there is much food for thought in the reports tabled last year.

I'm extremely surprised that the Leader of the Opposition has not brought forward con­ siderations from the research commissioned from his of­ fice. For example, the report, Thinking About the Alber­ ta Heritage Savings Trust Fund, recommends that con­ sideration be given to a development division within the trust fund, to offer equity capital and perhaps to co- venture with a private venture capital firm or firms. Co-venture has been extremely successful in tar sands development, and perhaps it deserves serious considera­ tion here. The Leader of the Opposition talks about accountabili­ ty.

Well, the same research commissioned from his office, from his own party, recommends on page 97 that: In establishing a provincial investment board, the legislative assembly must realize that the independ­ ence from the government of such an agency is of great importance.

Further on in the report, and underlined for emphasis: It is absolutely essential that an investment board, if it is to be efficient in carrying out its public purposes, be free to hire the highest caliber profes­ sional staff at competitive world-wide market rates — free of the constraints of Civil Service and of either political or bureaucratic manipulation. The report goes on to say: In short, we suggest that investors for the province should be free to make whatever investments they deem prudent. The legislature should, in effect, build a high fence around an investment board but allow

December 14, 1981 ALBERTA HANSARD 2309 the investors to "roam free" within that fence. In my opinion, Mr. Chairman, members of the opposi­ tion have lost sight of their basic role to provide alterna­ tives. And there are considerable alternatives that are basic policy decisions that we should be examining and debating in this House. But in fact, we haven't been examining basic policy decisions. We've spent days talk­ ing about a small percentage of the fund. MR. R. SPEAKER: Read the rest, and you'll see what's [inaudible] . . . reporting to the Legislature. Read it all. MR.

DEPUTY CHAIRMAN: Can we have some order, please? MRS. FYFE: Members of the opposition are not elected to administer the Heritage Savings Trust Fund portfolio. We hire experts to do that. The Leader of the Opposition does no favor to Albertans in his lack of understanding of basic investment principles. Even Edmonton Journal wri­ ters understand basic investment principles far better than anything I've heard over the last seven weeks. I can hardly believe it. In this article, it says that the opposition has been spending time debating the crumbs of the trust fund instead of debating the basic issues of the fund.

After five years, I think it's essential that we review the basic principles of the fund. Any fund, any concept, is worth the challenge. I think we would be worth while spending the rest of the day looking at the basic policies of the Heritage Savings Trust Fund. Thank you. SOME HON. MEMBERS: Question. MR. DEPUTY CHAIRMAN: Are you ready for the question? MR. R. SPEAKER: Mr. Chairman, certainly we're ready for a number of questions that should be asked of the Provincial Treasurer. I think the number one question, the place we start in our discussion here today, is with regard to the $60 million loss.

I think it's incumbent upon the Provincial Treasurer to take us through that loss, as to what happened behind the scenes. The Provincial Treasurer has said a number of times that the documents will not be provided. Our preference is to have the documents in this Legislature. To this point in time, we have had speeches that have distracted us and have made attempts to distract us from the issue. The issue here is a realized loss of $60 million, which is an example of the method that the government manages the fund. If it is managed well, we have accountability. That's the focus and the issue of discussion.

We have had other members of this Legislature rise in their places and talk about the great things the fund is doing, the great programs. The Member for Macleod talked about the great things it was doing for the Agricul­ tural Development Corporation. Nobody's arguing that. We've had talk about AOSTRA, about housing, and various other programs. All that does is distract us from the real issue, and that's the attempt that's going on by this Conservative government to cloud the real issue of accountability in the fund. This is a real trust account we're talking about.

We've entrusted it to the provincial government and the Provin­ cial Treasurer. We know, and we've seen in practice in Alberta, that when anybody violates a trust account, there are certain ramifications and implications. We've had two very good examples in 1981, in which action was taken by the Law Society of Alberta. Well, here we have a trust account of $8.5 billion, and I think it's our responsibility in this House to assure accountability, that all documents are on the table.

We have no time in this Legislature to stand here while the province burns, or Rome burns, and the Member for Edmonton Kingsway fiddles away to try to distract us from the real purpose we have at hand. Members have talked about the fact that we put an emphasis on the loss that is before us — maybe we have put an emphasis on the loss — and why shouldn't we put more emphasis on the profit? Maybe that's an area of accountability we want to explore too, Mr. Chairman, and we are.

When you explore the system through which the bonds have travelled to realize a loss, you also explore the same system through which the bonds travel to realize a profit. That means accountability. So that's what we have to do in the Legislature at this point in time.

If the Provincial Treasurer can stand up at this point and say, here is what happened to the bonds on Monday, Tuesday, Wednesday, each day during that period of time, or during the overall number of days the bonds were on the market, and say that on a certain day we sold them for certain reasons, and give those reasons, then we've got the information. If we can't get that, we'll keep probing at the question. That's what's going to happen between now and 10 o'clock. So if the Provincial Treasurer would like to answer at this point in time, maybe we can get the argument over in a hurry. MR. HYNDMAN: Mr.

Chairman, I have provided in­ formation on this topic on, I think, at least a dozen occasions over the past six weeks. It has been done on two occasions before the Heritage Savings Trust Fund select committee. It has been done in the question period, I think, on at least a dozen or more occasions. There has been debate on a private member's public Bill. There has been debate on various Bills in the Assembly as well. I think there have been one or two motions for returns. There have been questions. And on at least a dozen occasions, there has been an indication of what the situa­ tion is.

As I've pointed out on many previous occasions, every intelligently and thoughtfully managed bond portfolio in Canada over the years we've been discussing has deliber­ ately incurred losses. That is intelligent management of a bond portfolio, especially with the volatile interest rates we've seen. I trust, understand, and hope the hon. member understands, that that is a basic, understood, and accepted rule of investment practice when it comes to dealing with bonds.

With respect to suggestions he has made with regard to losses, as I've indicated in the past, I can only quote the independent Auditor General of the province, who has found — and given testimony which can be found in Hansard in the record of the select standing committee — that not $1 has been unaccounted for, that there is no money mislaid, that there is no mismanagement of the fund, and that there is no evidence of collusion leading to fraud.

However, it does appear that even though that information has been provided and, in addition, very significant information was provided when we opened debate in this committee on this Bill on November 19, I think it was — at that time, I outlined again the present situation with respect to the plan for investment of Sec­ tion 9 funds and how that had derived and how it had been developed. I outlined the situation with respect to

2310 ALBERTA HANSARD December 14, 1981 the organization structure of the investment group that invested those moneys. I indicated the information flow for the senior management and how that occurred. I talked about the scope for collusion and the accountabili­ ty for all the various tasks done by staff members. I think it's very clear, though, that the hon. member has a difference of opinion with me. That is why, on December 3, the government requested someone inde­ pendent of either the hon. member or myself to give an opinion. He may have his opinion; we have our opinion.

Therefore, if there is any doubt, any concern whatever that the government has anything to hide, we've asked an independent officer of the Assembly, on wide terms of reference, to look into the whole issue raised in the investment of moneys for bonds. I'm confident the Audi­ tor General will do a thorough report. So when he reports, gives his conclusions, his judgment and perhaps his suggestions for further improvement — there's always room for further improvement — that is the time we can debate the matter further.

The proper way, the appropriate way to have an as­ sessment of the management of the fund is through an objective third party. I'm confident that the department and the government have carried forward the manage­ ment of the fund over the past years in a proper, respon­ sible, conscientious way and that they will continue to do so. MR. R. SPEAKER: Mr. Chairman, I'd like to refer to a document from the Provincial Treasurer to the select standing committee, September 11, 1981.

On page 3 of that document, two statements indicate to me that there is good, concrete evidence about what happened during that time with regard to this realized loss of $60 million. It seems to be there, if this statement is correct. The statement is that: Detailed records of all investment transactions undertaken by Alberta Treasury are maintained. To the Provincial Treasurer, in light of that statement: are all documents, all records in place with regard to the period of time during which the $60 million became a realized loss? If the records are there, why can't they be tabled in this Legislature?

That's the question. The second is that the vast majority — I emphasize that: the vast majority — of losses realized during 1980- 81 for the purpose of purchasing securities with a higher yield . . . The vast majority — that doesn't mean all of them, Mr. Chairman. What is the majority of them, what is the whole? What is this: 10 per cent, 51 per cent, 49 per cent, 40 per cent, 60 per cent? Nice general statement. If you read it quickly, it sounds okay. They were used for the purpose of purchasing securities with a higher yield. But we have no evidence of what really did happen.

So it leaves open the question: what kinds of manipulations could have gone on behind the scenes? That's the second question related to that. That's the kind of evidence that isn't before us in this Legislature. On a previous occasion, the minister said we can't have that documentation, because it would reveal the invest­ ment strategy of this government. Well, when you have a loss, who cares about the strategy? It was a bad one. That's the first point. The second point is that each time you invest your money, conditions of the market change, and factors are different. They changed from 1979 to 1980 to 1981.

They'll be different in 1982. You do different things at different times in buying and selling bonds in the market place. One action does not set a precedent for the next. So, Mr. Chairman, there is no argument that the details of one transaction are a precedent or reveal a strategy for the next. That's the detail we want, Mr. Chairman. The minister is answering the question up at the front end and saying, accept the fact that everything is okay; the Audi­ tor said it, the Provincial Treasurer says it, other minis­ ters, people in this House say it; it's fine.

But behind the door, where the evidence is, not one person in this Legis­ lature, except the Provincial Treasurer — and I don't know of any other minister — gets to peek into that desk drawer where all these change orders were hidden that change the bond on the traders' market. You know, we used the example of what happened over at the Walter C. MacKenzie health centre. All of a sudden we opened a drawer and there were a bunch of change orders. One of these days we're going to open the door of the Treasury and find a bunch of change orders that may reveal a lot of things to us. Mr.

Chairman, one of the things I suspect, with the way the government is handling it, is that there are no detailed records in that drawer. It's an empty drawer in the Treasury: '79, '80, 1981. Open the drawer, and nothing's in there: no traders' notes, no documentation. This government is afraid to present that in this Legislature. I can't come to any other conclusion. If I'm wrong, the Provincial Treasurer puts the notes on the table, puts them here on the table. But that's where the argument is, Mr. Chairman.

It's the backup, the evidence that shows there was accounta­ bility and that the government was on top of its job when those bonds took that drastic loss. Nobody is arguing about the loss or the gains. Those are arguments all in themselves. But it's accountability of the loss or the gain. Either way, I'd like to see the documents, because then I know I've done my job in this Legislature. As long as it's kept hidden in the drawer where I can't get at it . . . I just can't get at that Treasury drawer to pull it open. If I could, we could go home.

The government is going to send me home tonight at 10 o'clock anyway, but I'll try my best between now and 10 o'clock. Open the drawer. Mr. Provincial Treasurer. Let me look in there. If noth­ ing is in there, say there's nothing there. Then you'll have to account to the people. But if there's lots in there, good evidence, close the drawer, and we can all go home. MR. HYNDMAN: Mr. Chairman, as it has been for about seven or eight weeks, the debate's all about the adequacy of the way the management situation has been set up.

Obviously, the hon. gentleman opposite has made up his mind that there's not an adequate situation with regard to management. He has purported to file a letter which is now the subject of a special report of the Auditor General. I have indicated, as have others on many occasions, that there . . . MR. SINDLINGER: Mr. Chairman, on a point of order. The letter was not purportedly filed; it was, in fact, tabled in the Legislative Assembly. MR. HYNDMAN: Well, we can argue about it, Mr. Chairman.

I gather a tabling relates to a document which is either required by statute or is before the Assembly and the property of the Assembly by reason of a resolution which makes it so. Whether it's filed or tabled, I say it's allegedly filed; therefore, that will at least leave it open to all sorts of

interpretations for the purpose of the debate. But the issue is the adequacy of the management of the heritage fund with respect to these matters. Although I have indicated — and I feel strongly — that with respect

December 14, 1981 ALBERTA HANSARD 2311 to any identified problems that there may have been, changes have been made. Of course, the evidence of that is in the Auditor General's annual report. The Auditor General reports annually on matters which are material, matters which are significant, matters which have not been corrected. And there is nothing in the Auditor General's report up to the year ended March 31, 1980, with respect to the matters raised.

However, because there still seem to be some remaining doubts, the government has asked for a special report from the Auditor General, whereby he is to go into as great detail as he would wish. In addition to the specifics, he is able to report on any matter pertinent or relevant, and he will come up with a report as to whether steps have been taken to correct those matters that may have been problems and as to whether other steps should be taken. Therefore, I suggest that the opinions of the inde­ pendent Auditor General will be very pertinent to the exercise.

I'm quite sure I could go on filing documents or making statements for years, and the hon. Leader of the Opposition would still say he's not satisfied. Let's accept and see what the independent, objective opinion of a man of some considerable stature in the auditing community is, about the Heritage Savings Trust Fund. If he makes useful and different recommendations for procedures, we'll certainly look at them. Because in his evidence, of course, he indicated very clearly that the suggestions he made for change were acted upon and viewed with very great conscientiousness by the department and the government. MR.

R. SPEAKER: Mr. Chairman, to the Provincial Treasurer. We must realize that by 10 o'clock tonight, we're finished. MR. NOTLEY: We're out. Bye bye. MR. R. SPEAKER: The accountability of the Heritage Savings Trust Fund is left at the whim of the Provincial Treasurer and whoever assists him. That's number one. Number two, the Provincial Treasurer can table or bring any documents he wishes into this Legislature.

As the Heritage Savings Trust Fund Act indicates, through Sec­ tion 9, the Provincial Treasurer is fully responsible for the investment of the money; does it through the investment committee, on which I believe there are three personnel. I could be corrected on that; I'll just check my notes with regard to that matter. The Provincial Treasurer puts in place management procedures; also puts in place the request for any type of documentation, forms, or what­ ever is handled by the trader; and also makes the decision as to which traders and investment houses are used.

I don't recall that kind of evidence, even that minimal evidence — which investment houses are being used, how we divide the fund from one to the other. That's very minimal information, but not even that is presented to us in this Legislature. We can only say that it is a behind-the-doors kind of operation. With all good intent made by the Provincial Treasurer to run a good operation, it may be off track. Even the Auditor General realized that, after a three-year period. It was allowed to go and not get into one of our reports.

It wouldn't have been in our present report, or maybe the next report, and we wouldn't even have had it in this Legislature if some responsible citizen hadn't given us a document. We wouldn't even have known about it. We saw the loss, but that was all. We didn't know there was poor management in the background. Let's really make a judgment on that. That's all the responsibility of the Provincial Treasurer. I think it's incumbent on the Provincial Treasurer to document, give everything he can, to open up his heart and pour it out on the floor of this Legislature so we know there is accountability. MR.

NOTLEY: Open up his mind. MR. R. SPEAKER: That kind of action isn't being taken. It's a government that thinks it has been in power for 35 years, and it becomes callous and immune to the general public and really doesn't have to listen. I remem­ ber a government like that: backbenchers got up and gave great speeches on how fine the government was, but missed the focus of the point of discussion with the general public; they didn't listen; the minister stood up and said, we've been doing a great job. In this case: we lost money three years ago, and we're going to lose it again today; we're doing a good job.

Those kinds of things have been said in this Legisla­ ture. Do you know what it leads to? All of a sudden, the public are saying they have doubt. I try to transmit that message into this Legislature, that they have doubt and that I have doubt. We're here today to try to clear that whole accountability matter. But the Provincial Treasurer is not doing it. I think he should redefine his terms of reference about documents in this Legislature before it's too late, before the people see what is really happening, even more than they do today.

After a 35-year period of time, which is compressed into 10, the action occurs very quickly. Mr. Chairman, again to the Provincial Treasurer: give us something in this House and show us that you're accountable. It isn't going to hurt a bit. It isn't going to hurt any future investments of the Heritage Savings Trust Fund either. MR. HYNDMAN: Mr. Chairman, I don't know how long we can keep going on this. I'm quite happy to do it for hours. Surely what it boils down to is that the question of accountability has to be measured by some­ body.

Obviously, the hon. gentleman has a different opin­ ion than the government and I have. Therefore, the independent Auditor General of the province of Alberta is going to make a judgment about accountability. If, in his report, he finds that some moneys are unaccounted for, then I quite concede I am responsible. If he finds that some moneys have been mislaid, that moneys have actual­ ly been lost from the Heritage Savings Trust Fund, that will be a matter of very great seriousness. If he finds there is some serious mismanagement, then let us await his report.

In effect, that is what the accountability is going to disclose. If he finds some evidence of collusion or fraud — he has indicated that is not there today. These are the items upon which the government would act if there were recommendations by the Auditor General. That's where the independent accountability is measured. We're quite prepared to and, as I indicated, have asked the Auditor General of this province to make that study. That will be the accountability report on that aspect of the heritage fund. MR. ZAOZIRNY: Mr. Chairman . . . MR. DEPUTY CHAIRMAN: The hon. Member for Calgary Buffalo.

2312 ALBERTA HANSARD December 14, 1981 MR. SINDLINGER: Go ahead. Mr. Chairman, I always enjoy listening to the Member for Calgary Forest Lawn, and I'm looking forward to hearing what he has to say. I have only a very short question to ask at this time, and that's in regard to the basic questions we've been asking throughout the debate on the estimates. The first question has always been in regard to what has been done with the money. We delved into that quite thoroughly over the last eight weeks, and certainly we've been discussing it this afternoon.

The other question we've always asked is in regard to what is going to be done with the money. Today, we have before us Bill 69, which will see the transfer of 30 per cent of natural resource revenue to the heritage fund. The obvious question has to be, what will be done with it? Could the minister perhaps address that question, and indicate what the allocations of that transfer will be to the various sections of the heritage fund, and perhaps relate that to the long-term plan in terms of economic develop­ ment for the province? MR. HYNDMAN: I wouldn't be able to give any speci­ fics, Mr.

Chairman, because under review at this moment are a number of aspects of the heritage fund as to where the revenues might go. I might indicate, though, what the approximate value of that 30 per cent transfer is expected to be. Hon. members will recall that the actual amount transferred for the fiscal year ended March 31, 1981, was $1,445 billion. The estimate in the budget of this spring for March 31, 1982, was $1,395 billion. A very general estimate, by way of a range, of what that 30 per cent will involve for the fiscal year ending March 31, 1983, is somewhere between $1.8 billion and $1.9 billion.

It's not possible to predict with any exactitude what that would be. For example, we don't know what the activities of OPEC will be, what the world oil price will turn out to be, the various volumes of production, the impact of energy conservation in the country, how cold the winter will be, and the impact of the federal budget on the economy of Canada. But that is the range. With respect to the activities, members will recall that this year the Canada investment division was reduced from $600 million to $400 million.

I think the principle of having a division of that kind, which lends to other provinces, is sound. But at this stage, we're not able to indicate how many dollars will be involved next year with respect to that aspect of the fund. This year, of course, the capital projects division saw no new capital projects, rather a continuation of existing ones. Again, it depends on what the trade-offs will be. Next year, as this year, I expect there is every likelihood that the number of customers or clients interested in securing moneys from the heritage fund will far exceed the actual dollars available.

That's particularly pertinent when we look at the Al­ berta investment division. Members know the rocketing increase in demands for housing and the moneys which have flowed from the heritage fund to the Home Mort­ gage Corporation. We know that doubled, from some $250 million to $500 million, in '79 from '77, that it has doubled again, and that we're now in a range of about $3 billion worth of moneys invested in housing. I don't see any downturn in the demand by the housing corporation for further dollars. So that is another goal of the heritage fund: to invest in the Housing Corporation.

As well, as members know, the Alberta Municipal Financing Corporation is being called on by the growing municipalities of the province to provide more and more moneys for roads, bridges, and other municipal projects. I hope that will level off, but a decision has to be made as to how much money will be made available. The Alberta Opportunity Company is a regular cus­ tomer and is provided moneys from the fund — the Agricultural Development Corporation and Alberta Gov­ ernment Telephones.

So there again, very significant opportunities for investment and calls upon the fund will be present next year, as they were last year. As well, on the horizon are other possible investments for the heritage fund but which at the moment are not definitive. For example, one could be the Alsands project. But at the moment, we don't know what that situation will be. I think what it boils down to, and the question is pertinent, is that we will continue with those divisions and, in addition, with the commercial investment divi­ sion, where the first investments will be made during this fiscal year.

Those will be made in Canadian equities for the sole purpose, as the Legislature has directed, of earn­ ing the best possible return under the guidelines, which have been tabled. Those are the various activities which will be carried on next year. Obviously there will have to be trade-offs and choices; moneys are not available to do everything. Some activities may have to be cut back to allow others to proceed. But essentially, that is the outline for next year. MR. SINDLINGER: A supplementary please, Mr. Chairman. I take it from the response, then, that a defini­ tive allocation hasn't been set out for each

section of the heritage trust fund as yet. [Mr. Appleby in the Chair] But in his reply, the minister made another comment that dealt with investment in equities. It seemed to me the minister placed special emphasis on the Canadian aspect of equity investments. My initial supplementary question is whether any specific investment areas have been identi­ fied. I'm not asking for a specific equity that has been identified for investment, because that would certainly enhance my personal opportunities for profit-taking. I wouldn't want to do that. On the other hand, in the '80-81 annual report, there is a footnote on page 34, dealing with the notes to the financial statements. Footnote (

d) reads: Marketable securities and payables in respect of for­ ward exchange contracts, denominated in foreign currency, are translated at the current rate of ex­ change at the balance sheet date. I found that footnote rather puzzling. In the spring, in response to a question from me regarding investments in foreign equities, or foreign investments at all, the minister responded, if I recall correctly, that there had been none. Yet this footnote indicates that something is denominated in foreign currency. I wonder if the minister might elabo­ rate on that a little, please.

It may simply be that some issues originate in Canada but are denominated in a foreign currency, probably American. But it's hard to tell from this. Perhaps that could be expanded upon. MR. HYNDMAN: I'm sure that subsection relates to fixed-income securities, a very small percentage of which relates to occasional purchases; for example, U.S. Treas­ ury bills in the United States. Those would have to be purchased in American dollars, so there would have to be a transfer with respect to that foreign currency. Those that do not relate: there's been no transaction under the

December 14, 1981 ALBERTA HANSARD 2313 commercial investment division with respect to any pur­ chase of foreign stock. The objective in the first question was: what would be the areas of investment? Again, the criteria there are to ensure the highest possible return for the heritage fund. So the range of Canadian stocks which have a good earning record and which would provide that would be looked at. I don't think that would exclude any particular stock, although any company not following the laws of a particular country would not be up for consideration.

Therefore, that would range in all the various aspects of Canadian stocks on the stock market — say, in Toronto, we know a very large aspect of that is resources — then others would be looked at. The objective is a balanced portfolio that, because it is passive, will over time yield the largest possible return to the fund without other considerations. MR. SINDLINGER: Just a final supplementary please, Mr. Chairman, again in regard to the same question. I would consider a purchase of American Treasury bills to be an investment in a foreign country or a foreign investment.

I thought the response last spring was that there had not yet been any investments in another coun­ try. So am I to presume that this acquisition of an American Treasury bill occurred after this spring when the minister reported in the Legislative Assembly? Following that, the subsequent question simply is: would the minister give us an undertaking to determine just how much investment has been made outside the country to date in all forms, including acquisitions of foreign governments' treasury bills? MR.

HYNDMAN: I can certainly give that undertaking on the latter point, with respect to fixed-income securities purchased outside the country. I think the misunderstand­ ing probably occurred when I mentioned that no invest­ ments were purchased outside the country. I meant to say that no equities pursuant to the commercial investment division were purchased outside Canada. In other words, members will recall that the statute doesn't restrict the government with respect to purchases of, say, stocks ei­ ther inside or outside Canada.

But we indicated as a matter of policy that we would initially be purchasing within Canada stocks of Canadian corporations. That's our initial attempt. However, in the past there have been purchases of fixed-income securities outside Canada. That has gone on since 1975, since the early days of the Act, because it's permitted under the statute. However, it's certainly a minimal amount, and I will provide the information on the topic. MR. SINDLINGER: A final supplementary please, Mr. Chairman.

If the minister has undertaken to do that, I ask him if he would do it for all the years of the heritage fund and for all sections of the Heritage Savings Trust Fund Act as well, so we'll have an indication of the total volume that has gone outside the country. MR. HYNDMAN: I'll do that. MR. R. SPEAKER: Mr. Chairman, to the minister on the same point. The minister covered the Canada, capital, commercial, and Alberta divisions with regard to poten­ tial distribution of the funds. The other is the energy investment division. Maybe I missed it, but I don't think the minister referred to it.

The only investment we have there now is Luscar, at $25 million. In the coming year, is there potential allocation of some of the funds to that area as well, or an additional amount to Luscar? MR. HYNDMAN: As I indicated, the one possibility there which could be significant, depending on circum­ stances, is an investment through the energy division with respect to one or more oil sands plants. MR. NOTLEY: Mr. Chairman, I want to deal with several items.

Getting back to this business of the special report of the Auditor General, I simply say to the minis­ ter that the arguments presented here this afternoon would have been a great deal more plausible had you and your colleagues decided to simply recess the House so that discussion of Bill 69 could take place sometime in February or perhaps March, after the report of the Auditor General. I understand that report is going to be available in February. I see no real reason that we could not follow the very procedure we used last year.

Last year, the House did not prorogue; it adjourned, recessed until the end of March. That would have allowed the Assembly as a group, particularly the Committee of Supply, to deal with Bill 69 in the context of the report of the Auditor General. It seems to me that we could argue the matter over and over, and will no doubt as the evening proceeds. But that would have been the fairest way of dealing with it.

Then we could have satisfied ourselves that the 30 per cent allocation was undertaken in light of as much informa­ tion as possible from the independent Auditor General being tabled in the Assembly and available to all mem­ bers of the committee before we proceeded with the allocation. Mr. Chairman, no doubt we'll get into this business about the transactions later on with the minister, and when the Premier is present.

I think it's worth noting that the Auditor General made the observation: . . . it was not possible to obtain from the investment manager a precise reason for these sales because of the time lapse between the transaction date and the examination and because of the high volume of business. Also, it was not feasible to review the substance of the transaction through analysis be­ cause of the inability to determine which investments were acquired with the proceeds of the sale.

Getting back to peeking into the drawer, which the Leader of the Opposition observed, it strikes me that right there the Auditor General has told us that there really isn't adequate information in the drawer for '78 and '79. Whether or not the adequacy has been improved, the minister tells us that the system has been corrected. Beyond just asking the committee to trust him, he really hasn't told us anything more. We do know that between 1971 and 1981 there was not an adequate system in place. The Auditor General couldn't make it any clearer.

I suspect that when the Auditor General begins under­ taking this special inquiry, in terms of getting informa­ tion, he will find, as I suspect we will all find, that the drawer will perhaps be empty. That doesn't prove there was any collusion or fraud. Quite frankly, Mr. Chairman, I suspect there wasn't. We only know 70 per cent, not 100 per cent of the information, but the fact of the matter is that the possibility existed because the control system wasn't in place. Who's responsibility is that?

Clearly that has to be the responsibility of the government, and to the extent that the present Treasurer has been in office since 1979, the responsibility of the Treasurer along with his

2314 ALBERTA HANSARD December 14, 1981 colleague the chairman of the investment committee. Mr. Chairman, I'd like to deal with two issues looking into the future. The minister indicated one area of poten­ tial investment might be the oil sands plants. At this stage, are we in fact likely to see a draw on the fund during the current year that we have under study? I understand there have been initial negotiations. Have they reached the point where there could be a significant draw of hundreds of millions of dollars on the fund during the year in which this 30 per cent will be allocated to the fund?

It's one thing to talk about Luscar, a $25 million project, but we're looking at what may be an investment of several billion dollars. That could, perhaps, be the largest investment in a private consortium in the history of the province. Is there a real possibility of that occur­ ring during this year, or are the negotiations such that we would be more likely looking at it in the year we will be studying in the fall of 1982? The minister also made reference to the adequacy of figures and the best available information. He also noted the OPEC situation.

With the uncertainty now in the international oil markets, are the figures that were supp­ lied in this House as a result of the energy agreement, 30 per cent of which would work out to approximately $19 billion, still accurate and reasonable, in the government's mind? Is there any reason to doubt that there will be $64 billion coming to the province of Alberta over the next five years, 30 per cent of which will work out to about $19 billion? MR. HYNDMAN: On the last point first, Mr. Chairman.

Yes, we think that they're still valid and accurate to the extent, of course, that one can predict what will happen in one, three, or five years, as I indicated. The one reality of energy in this world is uncertainty with respect to what might happen in price. That is, of course, also with regard to the various elements of petroleum: natural gas, oil, and synthetic crude oil. The other uncertainties with regard to markets, production, and conservation mean that, cer­ tainly to the extent we're able, we still feel that's a valid price. No one will know until that period of time has passed.

On the second question, with regard to Alsands, I regret that it's not possible to provide the committee with the precision of information it would like. Because nego­ tiations are in a preliminary stage, it's simply not possible to say whether, or if so to what extent, there might be a draw on the heritage fund in the next year. MR. ZAOZIRNY: I'd like to address a couple of comments to the committee with respect to Bill 69, and a question to the hon. Provincial Treasurer. At the outset, having listened to the earlier remarks of the hon. Member for Spirit River-Fairview and the hon.

Leader of the Opposition admonishing the government members of the Assembly for participating in this particular debate and taking issue with the amount of participation in the earli­ er debate with respect to the capital projects division, I feel I must briefly respond. Mr. Chairman, you really can't win with the members of the opposition. There's a great deal of distress express­ ed by them about their number. In recognition of that complaint, when the government tries to give them every opportunity to participate in the deliberations of this House, they're upset with us.

They feel we should be on our feet more and, supposedly, they less. I find that somewhat incongruous. To the extent that they feel there's some obligation on government members to sus­ tain their filibuster, I must simply say, too bad, to borrow the oft-used words of the hon. Member for Spirit River-Fairview. I would also like to comment briefly on the statements made by some members of the opposition, with respect to the views of the people of Alberta on the Heritage Savings Trust Fund. With respect, Mr.

Chairman, I think that some of those hon. members have been reading their press clippings just a little too much and, as a result of that, coming to the conclusion that the people of Alberta are somehow troubled with the Alberta Heritage Savings Trust Fund and its administration. I've had some oppor­ tunity, limited admittedly as a result of the duration of the sitting, to speak with constituents of mine in Calgary Forest Lawn. I must say that the question most often asked of me is: what's the matter with those guys?

I suppose as much as anything, I get an occasional friendly jibe about the late nights I've been putting in. I respond by simply saying, that's politics. The opposition members obviously feel that if a statement is made often enough, someone's going to start believing it. I guess that's some sort of belief of some public relations agents. To the extent that the opposition parties want to determine their policy and direction on the basis of that kind of advice, that's certainly their prerogative. Mr.

Chairman, I'm perfectly prepared to do as the hon. member suggested: listen and go to the voters of this province with respect to the Alberta Heritage Savings Trust Fund. I would welcome that opportunity, because I'm convinced the people of this province believe very fervently in the concept of that fund and its handling by this government. It is that point, Mr. Chairman, that brings me to my question. I've taken the opportunity to look again at the pre­ amble to The Alber