[ Page 2697 ]

CONTENTS

Morning sitting Statement Unexploded bombs in Vernon area. Hon. Mr. Hall — 2697

Mrs. Jordan — 2697

Mr. D.A. Anderson — 2697

Mr. Wallace — 2697

Routine proceedings

An Act to Amend the Civil Service Superannuation Act. (Bill No. 159). Committee stage.

Mr. Gardom — 2698

Hon. Mr. Cocke — 2700

Mr. Wallace — 2700

Mr. Richter — 2702

Mr. Smith — 2702

Hon. Mr. Hall — 2703

Mr. Morrison — 2704

Division on amendment — 2704

Mr. D.A. Anderson — 2704

Hon. Mr. Hall — 2706

Mr. Williams — 2707

Mr. Wallace — 2708

Hon. Mr. Barrett — 2709

Mr. Gardom — 2710

Division on amendment — 2710

Division on section 15 — 2710

Report and third reading — 2710

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

Mr. McClelland — 2711

Division on amendment — 2711

Mr. Curtis — 2712

Hon. Mr. Hall — 2712

Mr. D.A. Anderson — 2713

Division on amendment — 2713

Mr. D.A. Anderson — 2713

Hon. Mr. Barrett — 2713

Mr. D.A. Anderson — 2713

Division on section 14 — 2714

Report and third reading — 2714

An Act to Amend the Teachers' Pensions Act, 1961. (Bill No. 161). Committee stage.

Mr. McClelland — 2714

Division on amendment — 2714

Mr. D.A. Anderson — 2714

Hon. Mr. Cocke — 2715

Mr. Curtis — 2715

Division on amendment — 2715

Division on section 17 — 2716

Report and third reading — 2716

An Act to Amend the Municipal Superannuation Act. (Bill No. 162). Committee stage.

Mr. McClelland — 2716

Division on amendment — 2716

Mr. D.A. Anderson — 2717

Mr. Chabot — 2718

Mr. Gardom — 2718

Mr. Williams — 2719

Mr. Curtis — 2720

Division on amendment — 2720

Division on section 27 — 2720

Report and third reading — 2720

FRIDAY, APRIL 13, 1973

The House met at 10 a.m.

Prayers.

Introduction of bills.

HON. E. HALL (Provincial Secretary): Mr. Speaker, I ask leave of the House to make a statement regarding the tragic affairs in Vernon.

Leave granted.

HON. MR. HALL: Mr. Speaker, I and the department staff contacted Col. David Carr, the commanding officer of the Canadian Forces base in Chilliwack, with respect to the Vernon situation as reported in the newspapers, particularly the statements of Col. Carr. He stated that the tragic accidents were isolated incidents and the explosive device was brought down from the hills. He said that he sent three recommendations to the Minister of National Defence.

Those recommendations are:

(1) Put up more warning signs to warn the public to keep away from the area;

(2) Have an educational programme through the schools in the community with respect to the area and the need of not trespassing;

(3) A sweep of the area would not do any good, as the area consists of 31/2 square miles and it would take 40 men two months to complete it.

He further stated that it is now up to the Minister of National Defence to make his decision.

We told Col. Carr that the government is most perturbed with respect to this matter and urges that everything be done to make the area safe. We are not satisfied — I repeat, we are not satisfied — with those statements. To that end, further communications have gone to the Minister of Defence in Ottawa as follows:

"The Government of the Province of British Columbia urges you to have a complete sweep made of the Vernon military area where the tragic accident occurred last Sunday, and to take all of the steps to assure the complete safety of the area." Signed by the Provincial Secretary.

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

MRS. P.J. JORDAN (North Okanagan): On a point of privilege, Mr. Speaker. With your permission I would like to publicly compliment the Provincial Secretary (Hon. Mr. Hall) on the assistance that he has offered on behalf of the government to the people of the Vernon area, to the family and to myself as MLA.

I hope the House will support the Provincial Secretary and the government in their efforts to insist that this request is complied with by the federal government to ensure that as much as possible such a tragedy will not happen again.

While I recognize through the Premier's statements that the government cannot take active participation in my claims to the federal government on behalf of the families that have been bereaved not only in this incident but before, for financial compensation, I would hope the Provincial Secretary would use as much support in whatever avenues he can in the government without involving him illegally in any way in the support of this claim on behalf of these people. Again, I would like to thank the Provincial Secretary.

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

MR. D.A. ANDERSON (Victoria): Yes, Mr. Speaker. This party fully supports the statement of the Provincial Secretary. We endorse the idea of a further sweep although, of course, it is never possible to be 100 per cent sure that every device of this type is recovered, no matter how much sweeping is done.

At this time we should mention that it is not isolated. It may in this instance be military material but we do have an extensive mining industry in the province — at least at the moment — and there are devices and caps being used there that are extremely hazardous to children. I trust that this object lesson, tragic though it is, will lead to a tightening-up in all the areas such as the mining industry as well as this military so that in other aspects as well we can make the province a safer place for our children.

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

MR. G.S. WALLACE (Oak Bay): Thank you, Mr. Speaker. This party would also certainly pay compliment to the Provincial Secretary for his firm attitude in insisting that every attempt be made to make the area safe. When we hear so much about unemployment it is very distressing to find an indifferent attitude by the army towards the time and effort which would be required in a sweep. I'm very pleased and this party strongly supports the government taking the firm attitude that nothing less than a determined effort to sweep the area will be acceptable to this House.

Orders of the day.

HON. D. BARRETT (Premier): Mr. Speaker, I move the House proceed to committee on bills.

[ Page 2698 ]

Motion approved.

HON. MR. BARRETT: Adjourned debate in committee on Bill No. 159, Mr. Speaker.

AN ACT TO AMEND THE

CIVIL SERVICE SUPERANNUATION ACT

(continued)

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

On section 15.

MR. CHAIRMAN: I recognize the Hon. Second Member for Vancouver–Point Grey.

MR. G.B. GARDOM (Vancouver–Point Grey): Speaking to the motion that is now before the House that we were dealing with at length yesterday evening, I would like to reflect on the too infrequent but most pleasant interludes that we've had this session. That was the interchange of ideas and the economic attitudes that were expressed last night. One spirit prevailed in the House last night and that was the desire that this system and this place both work.

You know, Mr. Chairman, the Members left whistling — some for the very first time. They felt functional and productive and even happy. We found last night that reason conquered emotion, intelligence vanquished invective and there was a passion for performance in this Legislature. It was a really nice spring feeling, Mr. Chairman, a really nice spring feeling.

Yesterday evening the former Premier had, I think, his finest hour since I've been in the House and I would like to congratulate him. He was advocating economic caution. The new Premier — he too was advocating economic caution. But over and above that he urged the need to hedge for growth. He talked about flexibility and sort of inferred that he didn't want to be fenced in. The old Premier was wary of equity in today's market; the new Premier was wary of it but not to the same extent.

[Ms. Young in the chair.]

But I'd like to make this point: all levels of government today are hammering at equity via taxation and via controls. Until such time as the new values are sorted out, I think caution in equity should certainly not be disclaimed.

We talked a little bit about parity bonds and we trod very frankly, but gingerly. I think it's a flirtation experiment. There're not any problems but I don't think that they should be a long-time lifestyle for B.C.

In any event, Madam Chairman, last night the consensus was caution. The amendment that has been proposed by the official opposition provides a vehicle for caution. An amendment that will be proposed a little bit later on this morning by the Second Member for Victoria (Mr. D.A. Anderson) will, in my view, provide a better vehicle for flexibility but still emphasize caution.

Investment cautions and the laws of investment caution are not new. They're historic and they're well-reasoned. They come from long-practice rules which you find in the law of trustee investments. Those are investments in which trustees — say, the holders of assets and funds for others, guardians for infants, executors of estates, comity for patients, managers of portfolios for people's investment, public trustees, insurers' moneys and investment plans — all of those things you find are covered by the law of trustee investments.

Under the law of trustee investments there is no carte blanche authority to invest. These laws of trustee investments came about via our common law and our statutes. There's about 200 years precedent. Rules must be there. This has been the consensus over about a 200-year period. If a power is not going to be exercised, the power should not be granted.

Madam Chairman, legislative powers do not rely upon the continued existence of any well-meaning individual. When granted, they're there to be used by…

Interjection by an Hon. Member.

MR. GARDOM: …by anybody, as the Member says — whoever is authorized to use the power. That person can use the power only within the confines of it. So if you give a carte blanche power you are giving a carte blanche authority to somebody to exercise carte blanche power.

Here, within your bill and within the section that we're complaining about now, you have eliminated any confines. There are not any checks. There are not any balances. There are no parameters, viable or otherwise.

You've heard of the right-of-way rule in driving. It's on the statute books. Some people might say, "Well, I want to take it off because I'm not going to go ahead and violate it. I'm going to be cautious." That's fine and dandy, Madam Chairman. But we've got to remember that there are other drivers and they may not be as cautious as you. Or indeed, you as a driver may have a change of personality and you may not be as cautious as you have planned to be at the outset.

All of these points have been considered very carefully over the past 200 years. In the law of trustee investments powers were given that set definite guidelines and definite parameters. They

[ Page 2699 ]

eliminated the opportunity or possibility of an opportunity for any kind of funny-farm actions or funny-farm investments.

What we're talking about here are trust funds. They're trust funds just the same as the illustrations that I have been giving. I say that we need built-in safeguards against judgment errors. That's what it is: built-in safeguards against judgment errors. There's nothing wrong with a person mucking up their own investment portfolio if they choose. But they don't really have the right to do that with somebody else's. We've got to go ahead and legislate against the possibility, as best we can, of judgment errors. As I've said, there is a 200-year precedent on this point.

As I mentioned a few seconds ago, even apart from the question of judgment errors there can indeed be personality changes. The power can be exercised, albeit genuinely but still improperly, and poorly exercised. Our present Minister of Finance could perhaps slip on one of his dad's old banana peels. He could get a nasty burnp on the temple and end up with a very different attitude than he has today. But if the power is unfettered to start with it remains unfettered, to be dealt with as the person controlling it deems fit.

Sure, errors will eventually come to light, but after the fact and after the loss. That's why we have this historic precedent. That's why we have specific laws that have been reasoned and have been thought out and have been practised for about 200 years concerning trustee investments.

There's another point and this is the last point that I wish to make. That's the safeguard of open debate Your measure precludes that. The amendment provides the openness of debate for desired programmes. Let me illustrate. I'd much appreciate the attention which I know I have of the Hon. Minister of Finance. I'd like to give two illustrations here, with no acrimony and no condemnation at all, but just illustrations of human nature at work.

It takes a Grand Vizier to fool a Grand Vizier. The new Premier said last night that there would not be any win or grin for him. That's fine and dandy. I think win or grin would be the last thing that one would have ever expected from the former Premier, even he himself. But that's life and these things can happen. But the power of public debate saved the loss there. The power of public debate was available because a measure such as yours was not on the statute books. The only route at that time was the public route. It was not possible for an executive decision to be made and happen. The only route was the public route.

The second illustration I want to give on this point is the Commonwealth Trust situation. The denial and the statutory unavailability of report initially precluded public debate. That created loss, which we all well know in the House. But also, the power of public debate prevented future loss.

You will recall that it was found that the company was conducting its business in a manner that was contrary to the public interest. But the fact could not be brought to the attention of the general public by virtue of the legislation that was in this House. But the power of public debate prevented the second loss to the taxpayer because it became necessary to utilize a legislative vehicle — which is not here — to find funds for the proposed loan of $3 million, I think it was, to that company. Fortunately, that loan was never given. If it had been given, there would have been another $3 million bath.

But the power of public debate was there and, I'm sure, the power of public debate prevented those funds being advanced.

Interjection by an Hon. Member.

MR. GARDOM: Well, there's no way that the $3 million would have saved anything. Another $3 million would have gone down the drain, as has proved to be the case.

With respect to the illustration I've given here, in a bill such as yours we don't find these built-in checks and balances and the public route may not be available, by virtue of what I've discussed this morning. In concluding, Madam Chairman, I would say that trust funds are trust funds and trustees are trustees. We have a trust fund here and we have a trustee. Trustee investments require built-in legislative protections. They've been too long and too effectively practised. They have had built-in checks and balances. Those built-in checks and balances should not be eroded with an open-end, carte blanche, blank cheque route.

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

Interjection by an Hon. Member.

MR. GARDOM: Does that disturb you? Why? It doesn't disturb me in the slightest. I'm not saying there's going to be an abuse of power but the opportunity for the abuse is here.

Mr. Minister of Health, you've had experience in the life insurance field and you know that premiums constitute trust funds. I could assure you, Mr. Minister, that had you been sitting on this side of the House and had there been a different government and had this particular measure been proposed, you would have been one of the first advocates to make the points that I've made this morning, as would the Premier and the Provincial Secretary. I know these fellows too well. I've almost lived with them for six years. There's no question of a doubt that they would be doing that.

[ Page 2700 ]

I'm very much in favour of the amendment that is now being proposed. I'm more in favour of the amendment that is to be proposed later on this morning by the Second Member for Victoria.

MS. CHAIRMAN: The Hon. Minister of Health.

HON. D.G. COCKE (Minister of Health Services and Hospital Insurance): Madam Chairman, what the opposition are asking this morning is that we place the government in a more restrictive position than what you would place a trustee or an employer where an employer has a salaried service pension plan.

My interpretation of the federal Act, Mr. Member, who is also a lawyer, is that this plan is subordinate to the federal Act and therefore must invest in the kind and at the percentages allowed by the federal Act.

So therefore if you would allow a normal employer to invest in common shares, why would you not have the same kind of trust in the government? Now the employer, if there are — that is the employer or trustees — must make up losses, if in fact they enjoy losses…

Interjections by some Hon. Members.

HON. MR. COCKE: Madam Chairman, the fact of the matter is why should not government be a normal kind of employer? If we give that kind of latitude to employers why wouldn't we give that kind of latitude to the government? As far as I'm concerned, there will be no losses. The likelihood of losses in a plan of this magnitude is so absolutely infinitesimal — and the people across the way know it…we know something about this area. We've watched the mutual funds over the last number of years. We've seen how the bottom has fallen out of a great number of them. We know the hazards of the market.

What we are talking about here is some investment for the Province of British Columbia which is long overdue, long overdue. The power has been in the east. Now, do you want to keep it in the east? If you want to be that restrictive, then we are going to enjoy the same kind of unemployment, lack of progress and growth that we've enjoyed in the last number of years.

Ms. Chairman, this is a well-thought-out amendment to the Pension Act and I support it fully, and had I been on the other side I would have kept my mouth shut.

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

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

AN HON. MEMBER: This is an amendment to the Pension Act and there's no amendment being discussed right now.

Interjections by some Hon. Members.

MS. CHAIRMAN: Order. Order. Order! I have asked for order. The amendment that we are dealing with reads — it was submitted by the Hon. Member for Langley to section 15 to amend as follows: "section 15 by deleting subsection (3)(d) and relettering." That is the amendment we are dealing with.

I recognize the Hon. Member for Oak Bay.

MR. G.S. WALLACE (Oak Bay): Thank you, Madam Chairman. I appreciate you informing me which amendment I am speaking about. Certainly when one sits around the chamber it can become a puzzle to know exactly what we are talking about sometimes.

But as a member of the Conservative Party, I suppose it would be most seemly that I should talk about caution in investing other people's money; and certainly as a Scotsman I was always brought up to count the pennies.

I also enjoyed the debate we had last night in which the former Premier and our present Premier exchanged their basic views on the investment of money, particularly civil servants' money.

I haven't been here many years, but the few years I have been here I've never heard the former Premier talk with such frankness about his attitude to the financing of the affairs of this province.

Time after time on the very crucial financial matters of this province, the former Premier used to sit in that chair across the way and smile, and smile, and smile, but he never ever got up and spoke in the open, frank manner and in depth as he did last night.

As Premier of this province he used to avoid discussion on such sensitive areas of financing as his parity bonds. He always repetitively told us that they were as good as cash in hand, and I agree with that. But last night people like myself who know very little about the intricacies of financing found it very stimulating and all around me I heard comments that this was perhaps the best debate we had had this season.

The frankness of the former Premier was matched by the frankness of our present Premier. I think that if this is what you mean by open government, then we are certainly looking forward to more exciting days. I think the people of British Columbia can feel more confident that they will become better informed about not only the philosophy of this government, but its practical financial decisions and the ways in which it intends to use, in this particular instance, the money which civil servants pay toward their pension plan.

Again, as a Conservative, I feel that this government should exercise a very definite measure of caution for the simple reason, as was pointed out by

[ Page 2701 ]

the former Premier, that the whole monetary system around the world seems to be in the shakiest of positions. Again I make it quite plain that I don't profess to understand all the ramifications of the world monetary system. As one who reads the world journals in the kind of language for the layman which is described in Time magazine, it's very clear that those who know most about financing and world economics are living very much in an uncertain world. People generally, citizens in every industrialized country in the world, have a real feeling of fear and uncertainty.

God forbid that we should have any depression, but the word is mentioned all too often these days by the experts as being a possibility.

Tremendous emergencies seem to erupt and all these financial experts suddenly, as the former Premier said, have to get going in the middle of the night to emergency meetings in different European countries, or in New York. It leaves the ordinary citizen like myself very uncertain and apprehensive about how well the financial stability of the world is at the present time.

I think if that kind of world situation doesn't engender a feeling of caution, goodness only knows whatever will. We are all living in a smaller world and the interdependence of countries in the form of trading blocs has become so obvious to most of us that we all know very well that isolationism is gone forever, and probably never was a sound policy for the United States or anybody else.

We are living in such a smaller world, where countries are so interrelated and so interdependent that we know very well, and the present Premier mentioned this last night, that we can't hide from the fact that we are very dependent on what happens financially elsewhere.

He pointed out that this small corner of North America can do very little to influence these very powerful world monetary forces.

So against that general background I would have to say that there is a rigidity that the present Premier is trying to loosen a little bit. While I respect his well-intentioned motives for trying to be less rigid, against the general background of financing that I mentioned I would have to ask the question as to whether this is the appropriate time to start being a little more adventurous in investing pension plan money in common stock.

My decision is that this is not the time, and from the kinds of opinions that we have from the experts and from the feeling that perhaps we are reaching a point where the stock market may begin to decline again, this is not the opportune moment for taking more risks.

The whole question of inflation was mentioned by our present Premier. While I agree in part with what he said, that government has to try and provide some hedge against inflation for the pensioner, it is also a fact that the people who are the working members of society in a time of inflation continually contribute as inflation increases.

It's automatic that they continually contribute larger amounts of revenue to both the provincial and federal coffers. While this doesn't prevent the erosion of the dollars already in the pension plan, it does give the provincial government opportunity by other mechanisms to give the pensioner increases by one means or another, direct or indirect.

I think this has been shown by the actions already taken by this government. I would perhaps review my harsh criticism of the government at the time of the budget when I said that the Premier was proposing to spend at a rate of a 9 per cent increase when he expected a revenue increase of 12 per cent. Of course, this kind of surplus should perhaps be held in reserve when we think of the tremendous dangers of a run on parity bonds.

I think it should be repeated today, as was stated by both the Premier and the former Premier last night, that the province is in good financial shape and there is no sign of any sudden cashing-in of parity bonds. Even if this did happen, the Premier made it plain last night that the funds and the surplus cash are available to meet such a run if it happens.

Because of the feeling of apprehension by people generally about financing in North America and Europe, I think that it's very important that this House make that plain and not run the risk of engendering panic by the present holders of parity bonds. Last night when the Premier quickly responded to the Leader of the Loyal Opposition, I sensed that this was very much in his mind — to reassure the people of British Columbia and particularly the holders of parity bonds that we were talking philosophically and perhaps looking at possible dangers in the future, but that at the present time this is not a fear which the people of British Columbia holding parity bonds should have. If I've read that debate last night correctly it might be well for the Minister to mention that when he speaks further in this debate.

I feel that the amendment which will presently be put before the House by the Liberal Party represents…

Interjection by an Hon. Member.

[Mr. Dent in the chair.]

MR. WALLACE: Yes, Mr. Member. We have a spirit of cooperation in the opposition.

The amendment represents to me a compromise between the rather unlimited freedom given to the government in the clause that we're proposing to delete and yet it does loosen a little bit the rigidity which the government is keen to loosen. Therefore, while I support this amendment — namely, the deletion of 3(d) — I feel that we can bring in a better amendment which I hope the government will consider later this morning.

[ Page 2702 ]

MR. CHAIRMAN: I recognize the Hon. Member for Boundary-Similkameen.

MR. F.X. RICHTER (Boundary-Similkameen): Mr. Chairman, I was rather amazed at the statement of the Hon. Minister of Health Services and Hospital Insurance (Hon. Mr. Cocke) in using a private employer and the government as a comparable situation in relation to the investment of pension funds.

Should a private employer who invests pension funds make an error and lose on that investment, he puts his own personal assets at stake. In relation to the government, none of the Executive Council's members' personal assets would be at stake. Only the taxpayers' funds would be at stake.

Interjection by an Hon. Member.

MR. RICHTER: We want to trust the government.

Interjection by an Hon. Member,

MR. RICHTER: If you're investing them, somebody has to make up the loss, government or private. In the event of the private, his own personal assets are at stake. But the government elected…

Interjection by an Hon. Member.

MR. RICHTER: Sure they are. Then he's going to break down his pension plan within his own organization. A government won't, so it's the taxpayer who will have to make it up in the end.

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

MR. D.E. SMITH (North Peace River): Thank you, Mr. Chairman. Just a few comments concerning this proposed amendment. I certainly support it.

First I took a great deal of interest in the discussion last night between the Hon. Premier and the former Premier of this province. Having spent a good part of my active business life in the field of investments and insurance, listening to the discussion last night I came to the conclusion that the two speakers involved made very well and in a very serious manner the points for both the government and opposition positions. Really, what we ended up with was quite a philosophical difference between the opposition on this side of the House and the attitude of a socialist government.

The thing which concerns me more than anything else, Mr. Chairman, was the apparent attitude of the Premier — and I presume this reflects the attitude of the Executive Council. While he indicated that he would exercise some caution in the investment of funds, he was quite willing to consider broadening the field of investments into areas where there may be a profit or there may be a disastrous loss. He was quite prepared to take that risk.

It's not good enough to say that the government guarantees the pension plan. That's not good enough, Mr. Chairman. These funds are trusteed funds. As a matter of fact, a good part of the money in the pension plans comes as a result of direct contributions by every civil servant of this province. The other part of the fund comes as a contribution on behalf of all the taxpayers in this province to fund the employers' share of the pension plan.

The pension plan and the commitment of the pension plan should be fully funded at all times. This is what has happened in the past. It has been fully funded. Any commitments of the plan have been fully funded and backed by reserves and cash.

When we start wandering away from the principle of sound investments and get into the matter of investments in common shares, stocks and so on, every company that has any experience in self-trusteed pension plans will tell you that they've had good experience and bad experience. I'd like to bring to the attention of the House one of the larger self-trusteed pension plans in the province to give you an indication of the fact that even in good times these plans are not necessarily the best vehicles for funding a pension plan.

That plan is operated by none other than the Canadian Medical Association on behalf of all the doctors. It's a self-trusteed plan. They've stepped out into many fields of investment, including common shares and flyers on the stock market and so on. Do you know something, Mr. Chairman? One of the poorest track records in the field of investment is the return that the doctors have realized through investing their funds into a self-trusteed pension plan under the jurisdiction and management of the Canadian Medical Association. And that's a fact.

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

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

They are supposed to have some of the best investment brains that they could hire as trustees for the operation of that plan. Yet they have one of the poorest track records in the field of investment return of any plan in British Columbia. They would have been far better off to have taken the tremendous funds available to them and put them into corporate bonds or into parity bonds in the province. They would have got a much better return. Their net has been anything but good.

[ Page 2703 ]

The government is acting as the trustee for the people who are employed in the civil service. There is no guarantee, then, even with expert investment counsel they will always make wise decisions. As a matter of fact, I'm prepared to say that they will make as many unwise decisions as wise decisions in these investments.

Under the terms that they would like to see, they could invest in any common shares of any company or corporation in the province. That is why we support this amendment — to delete that section. At least the government should be responsible to the extent that they would not want for themselves a provision that is not available to insurance corporations and trust funds of that nature. As was pointed out by the former Liberal speaker (Mr. Gardom), for hundreds of years they have been subject to checks and balances within that area of investments.

Mr. Chairman, in an attempt — and probably an honest attempt — by the government to provide greater returns not only to the people who are presently retired but also to those who will retire in the future, by pressures from within and from without they will be forced to take a flyer once in a while with those pension funds in order to provide what they feel will be a greater return.

We're already in a position right now to see some of this philosophy in the bills that are before us. The pension benefits have been increased. One way you increase pension benefits without any more direct impost on the taxpayers than we presently have is to try to get a greater return on the investment funds so that whatever return is there will pay off in terms of increased benefits, without any further cash contributions than we presently have going into the plan.

So there is going to be a great deal of pressure upon the Premier and the Treasury Board of this province to increase benefits. There has always been that. There's going to be an equally great or greater pressure upon the Members of the cabinet to move into fields where the chance of loss is far, far greater than under the present circumstances and investments of the pension funds.

It's a bit of a tongue-in-cheek expression, I guess, because I don't have actual facts and figures to back it up; but in the insurance business there's a saying that, with respect to investments, some of the most highly-skilled and highly-trained people in the country are the poorest investors. One of the expressions that is often used is that if you want to collectively look at groups that have a track record of very poor returns on their investments, look at lawyers, doctors and teachers, and not necessarily in that order. As a group collectively employed, they have the poorest record for continuous and good investments of any group in the country. Maybe that's because their experience is in fields away from the investment field.

Nevertheless, if we do not retain the checks and balances that are required by every large insurance or trust company within the provisions of our superannuation Acts for this province, then I'm concerned that we are going down a very dark and narrow path that, not necessarily immediately, but within a few years will result in one of two things: either a reduction in pension benefits to the people who are already retired or about to retire, or a continually greater requirement by the Crown to pump funds into the plans to meet the commitments of those plans.

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

HON. E. HALL (Provincial Secretary): Mr. Chairman, when the debate started yesterday evening, I said that this amendment was not acceptable to the government Since then we've had what has been termed a "philosophical discussion." All four parties have engaged in that discussion. I think I should sum up and then perhaps we should come a little closer to the rules of the House than we've been recently.

I think it's fair to say that there has been some constructive criticism. There's been little heat and acrimony in the debate so far. I certainly don't want to start up that particular path — tempted though I am from time to time when I hear words like "funny-farm…speculation…gambling … take a flyer…mucking up investments," and things like that, I'll ignore those for the moment.

The government considers this to be an important part of the financial policy of this government for many years to come. We're talking about $750 million, We're talking about a series of checks and balances that are well defined in our Acts and statutes, no matter how much you say they're not here. We're talking, for instance, about section 13 of this Act currently being amended as far as paragraph 3 of that Act is concerned, in which all contributions in the hands of the Minister of Finance under this Act shall be placed in a fund in the Treasury to be known as the Civil Service Superannuation Fund and shall be accounted for as part of the consolidated revenue fund.

We have indicated that we will table at each session a list of the holdings in the capital stocks of any companies we choose to get into. There is the Treasury Board under the Audit Act. There is a professional man who has looked after the affairs of this province as far as pension funds are concerned for many, many years. I think the province has been served well by Mr. Sam Ackland, the actuary and the

[ Page 2704 ]

accountant for the funds

In the other three funds — if I may because I think that perhaps this debate could do for all the Sections in the next three bills we'll be discussing — there are trustees. This is the only fund where there's not a trustee. The Treasury Board and cabinet, following passage of these bills unamended, will have to devise some methods in which we can instruct the trustees as to methodology, not in terms of instructions that will supersede their trustee function.

As I say, there is the annual statement of affairs. There are also the members of the pension plans themselves — a very significant group of people to whom we'll be giving collective bargaining before very much more time has passed this year.

All in all, I think it's fair to say that we require, we request and we are going to insist on having this investment power, this flexibility, for a government which is determined to take this province into a more meaningful role as we enter the Seventies and Eighties. As I said in second reading, it's been part of our policy. We have stomped the country for 30 years on this subamendment alone. I think that sums up the position of the government without any heat. It's a difference of philosophy.

For the first time this session I agree entirely with the Member for North Peace (Mr. Smith), who said quietly…and I now reduce the tone of my voice and say that we will not accept the amendment. The Liberal leader has graciously and courteously given me a copy of a further amendment to come. We won't accept that one either. Thank you very much.

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

MR. N.R. MORRISON (Victoria): Mr. Chairman, in speaking to this amendment, I very briefly would like to say that we really are concerned on this major and fundamental change in the financial directions of this province.

I was pleased last night to listen to the plain talk across the floor of this House. Today I was pleased to hear the plain position of the definite direction that this government intends to take. All we ask is that you be careful and that you be cautious. I want to assure you that no one on this side of the House has any intention of trying to make your life difficult. We think you make it difficult enough by yourself, frankly.

I don't want any of us to say "we told you so" at some future date. But I would like to remind you that you heard it here first.

Amendment negatived on the following division:

YEAS — 15

NAYS — 30

PAIRED

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

MR. D.A. ANDERSON (Victoria): Mr. Chairman, now that that amendment, which would wipe out government investment of the pension funds in any capital stock of any corporation, has been defeated and we're back with the Minister of Finance having full discretionary powers to invest in any capital stock of any corporation, I feel that we should see what restrictions we could put forward which would protect the pensioners involved who are, in this instance, civil servants. I imagine the Hon. First Member for Victoria (Mr. Morrison) and myself represent more of these people than any other Members of the House might do.

We would like to see in this section some restriction which would end this unfettered and unrestricted power which would grant many millions and millions of dollars of the pensioners now working into the hands of the Minister of Finance. In doing this I would like to indicate, as I stated last night, that it is not a question of us believing that the Minister of Finance intends to use these funds in any nefarious or underhanded way. It is not a question of us mistrusting him in terms of him misusing these funds. But there is a problem here in terms of mistakes of judgment. Mistakes of judgment in investment decisions are numerous and have occurred by other government corporations in other provinces as well as in this province. There have been many examples of this and I have listed them on previous occasions when debating legislation similar to this particular subsection we are considering now.

[ Page 2705 ]

We are dealing here with trust funds, not with the public's money in the general sense. We are dealing with the trust funds that have been put aside for the civil servants' pensions. The argument that because they are guaranteed by the government and therefore by the taxpayers, while certainly true, does not avoid the responsibility for dealing just as carefully as we can with these trust funds.

The key word is really "trust." We are not asking that the Minister of Finance be completely restricted. That amendment was defeated. But we do feel that the other extreme of unfettered, unrestricted discretion should also be defeated. The extreme on that side is perhaps even worse than the extreme on the other.

We are not saying that abuse will occur — we are simply saying that the legislation, if passed the way it is, will give the opportunity for abuse. It will give the opportunity for mistakes as well as deliberate abuse. We are not arguing that this government will do this. We are not arguing that the following government will do it. We are simply saying that when a Legislature responsible to the people and for trust funds acts in a manner which we think is irresponsible, there should be very, very careful decisions beforehand.

To hand out these powers by legislation to the executive is not the true function of a Legislature. If there is any check upon the executive in our system of government it is by the Legislature. Perhaps backbenchers don't necessarily realize at the moment that there really can be none other in a British parliamentary system. This is perhaps one of the greatest weaknesses in the British parliamentary system when you are dealing with an executive that is strong and a Legislature that is weak in terms of the number of opposition Members and in terms of the docility of the government backbench.

Last night the argument was put forward that this had to be done to help the pensioner. Really it was the only way of getting him out of the bind of inflation and the problem of his declining purchasing power. Well, no one in this room of any party — Social Credit, Liberal, Conservative or NDP — wishes to do anything less than the maximum for the pensioner. This argument that somehow this is necessary to do the best job for the pensioner simply won't hold up.

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

MR. D.A. ANDERSON: Well, Mr. Minister of Health, you were unaware of the last amendment we were on. When I put this amendment I will send you a special copy. The argument yesterday, when you were unaware of what amendment we were on, did deal with the question of trying to get the best deal for the pensioner. It was said that the only way of getting it was through this type of legislation.

We say that there has to be in situations such as this some sort of legislative provision which would restrict this unfettered power. No one here of any party wants to do anything less than the best for the pensioner, but it is not necessarily doing the best for the pensioner to hand out total control over his funds to a single person, namely the Minister of Finance, who can act entirely on his own discretion for other objectives, perhaps, than those of the pensioners' well-being when investing those funds.

Statements have been made in terms of bringing the province up 30 years. Statements were made by the Provincial Secretary a few minutes ago which do indicate that the interests of the pensioners are not the only interests that the government has in mind when bringing in such legislation.

I propose, Mr. Speaker, an amendment to this section 15, line 13, by striking out the words "(d) in the capital stock of a corporation; and" — and substituting an amendment which you have, I believe, Mr. Chairman. I have circulated it to other Members — there are a few extra copies, if any of you want them. This amendment then would restrict the power of the Minister of Finance in the following way.

First, with respect to preferred shares, it would insist that the corporation in which he wishes to invest be one that has paid a dividend in each of the five years previously. And in those five years, the amount that has been paid as a dividend will have to equal the specified annual rate upon its preferred shares.

A fairly reasonable provision. In other words, the record of the company as far as preferred shares goes, has to be that they have paid out what they should pay out according to the rate of the preferred shares. And I think that is not an unreasonable restriction.

The second area where we would permit, with this amendment, investment would be in common shares — and again it's unlimited within these particular parameters. We say that in a corporation in which the Minister of Finance wishes to invest money, common shares, we think that in the five years previously the corporation should either have paid a dividend every year on its common shares, or had earnings adequate in those years to pay a dividend. And the amount of money which we think they would have to have either paid out or earned and kept, which they could have paid out, should be equal to 5 per cent of the average value of the shares.

These two provisions are not onerous. They exist elsewhere. The actual wording of my amendment is taken from and adapted from the insurance companies Act. It's a restriction which we feel would protect, on the one hand the pensioner and the civil servant expecting to go on pension in the future, and on the other, give an adequate amount of scope to the Minister of Finance to invest in any corporation provided it's got a decent record for the preceding five years.

[ Page 2706 ]

Now, this we don't think is something which restricts the Minister of Finance from investing in the resource industry of British Columbia, for example. There are many corporations in B.C. in the resource industry which have had a record over the last five years which would permit pension funds to be invested in them, even though this amendment passes.

The restrictions are such that there is still great scope for the social objectives to be achieved, that the Hon. Provincial Secretary (Hon. Mr. Hall) and, indeed, the Premier talked about last night. There is great opportunity within these limitations for investment for social purposes in corporations in British Columbia in the resource industries.

But if this amendment is accepted, it will prevent any future abuse that might take place when someone acts irresponsibly or when someone decides that they have a particular enthusiasm for a new company which may sound great, but which may in fact later on turn out not to be so good.

It's a little bit of caution, insisting on a five-year rule of an adequate record before the government can go in and invest the pension's trust money.

The statement that the thing is guaranteed anyway by the public, so it really doesn't matter how much power is handed out, is obviously fallacious.

First of all, if the pension funds do not generate an adequate return, if there are losses which sop up or absorb any profits that might be made, obviously the pension fund is going to be less and the pensioner is going to be less well off, regardless of the fact that the actual capital base will be replenished from the public treasury.

On the other hand, the argument that we should accept this type of legislation because it really doesn't matter — in the end the public has to pay if there are any losses, therefore there can be no losses, is an argument with respect to the public purse and with respect to taxation of the people of British Columbia which we feel really is unacceptable as well.

The public also need protection. And this type of amendment gives them some protection against irresponsible investment.

Mr. Chairman, the proposal we put forward exists in other legislation. In actual fact, I made it a lot easier and I made it a lot more generous with respect to the government than the insurance companies Act. It's quite a generous bit of legislation and a generous amendment from the point of view of the government which wants to make investments.

It's the type of amendment which permits this Legislature to put some control upon the executive without making that control or those restrictions onerous or difficult from the point of view of the objectives which the executive have stated it wishes to achieve.

We feel that if the pensioners themselves, if these trust funds of the pensioners are to be properly protected, there must be some limitation on the unfettered power and the unfettered investment discretion which section 15 of the present bill would permit.

The amendment, in a fairly modest way, goes to providing that type of check and that type of protection. On behalf of my Hon. friend, the First Member for Victoria (Mr. Morrison), and myself, both of whom, as I said, represent more pensioners and more potential pensioners who might lose or might gain under this Act than perhaps any other Member of the House, we think that this amendment deserves the support of the House.

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

HON. MR. HALL: Well, first of all, Mr. Chairman, may I say, because I detected a note of complaint in the leader's voice, that you told me personally about this amendment about 9:40 a.m. I got a copy of it shortly thereafter, and it's been discussed with the Minister of Finance and with a number of other people. It has been given full consideration.

I would also point out that frankly, believe it or not, many of the arguments that you are using have been used in the debate on this side of the House already in terms of determining our position on it.

I say that because I think that you should know that we have already had this debate in terms of the preparation and the production and the erection of this bill.

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

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

HON. MR. BARRETT: You're welcome.

HON. MR. HALL: I thought you might assume it, but now I'm telling you. We have considered it. In light of the debate yesterday, and in light of the position I outlined for you a short while ago, we are not prepared to accept this amendment.

We've listened. Later on, I'm going to assure another Member on the other side of the House that there will be an amendment coming in at the next session on something that he suggests. But, on this particular occasion on this particular amendment, the answer is no.

MR. CHAIRMAN: I recognize the Hon. Member for West Vancouver–Howe Sound.

[ Page 2707 ]

MR. L.A. WILLIAMS (West Vancouver–Howe Sound): Well, everyone on this side of the House, Mr. Chairman, fully recognizes the implication of what the Hon. Provincial Secretary has said by refusing this amendment. But we are in committee of the whole House, and I think that the Members should recognize that they do have an opportunity to speak on the floor of this House regardless of the opportunity that they may have had to speak and voice their opinion in any caucus, because we surely haven't come to the day yet…

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

MR. WILLIAMS: I hope I do, because after all it is this assembly and the committee of this assembly, not the Executive Council, who make these decisions, and may we never ever lose that opportunity.

Mr. Chairman, may I draw to the committee's attention the extent of the entire section of which this amendment is part, and say to the members of the committee, accepting what the Provincial Secretary has said — that there is a Treasury Board, and there are trustees, there are responsible members in the public service who advise them with regard to investments, and that no one would suggest that they are going to be incautious in their approach — then why do we have any of the restrictions on this Minister of Finance set out in this particular subsection?

If the Provincial Secretary is saying that the right to invest in the capital stock of a corporation…

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

MR. WILLIAMS: It says "a corporation"; "a" means any, well that's fine. If we are to extend this power and the Minister is to be trusted in this regard, why don't we just simply say with regard to these moneys not required for immediate use in this pension fund, that the Minister of Finance may invest them at his discretion, period? Put no limitations on him at all.

Quite obviously, Mr. Chairman, the answer is that previous administrations, previous Legislatures, have deemed it essential to place some limitation upon the Minister of Finance to provide some guidelines which indicate how cautious he should be. It is only for this reason that we offer this amendment, because of this government; because no Minister of Finance should have unfettered discretion in the investment of moneys.

I'm not going to go into the matters raised in debate last night as to the dangers in equity investments. No one can fail to recognize that, in the past, serious consequences have arisen for organizations who with the best of intentions and with apparently the best of advice have nonetheless suffered serious — often tragic — financial loss because of investment policies.

It's no secret. The Minister knows that the amendment proposed by the Hon. Second Member for Victoria (Mr. D.A. Anderson) was borrowed from a federal statute. We make no apology for that. It is An Act Respecting Canadian and British Insurance Companies. I think that it is significant at this time to consider why the federal government many years ago felt compelled to place limitations upon the investing power of the Canadian and British insurance companies.

In the preamble to that legislation, it says:

"Whereas it is contrary to the public interest that insurance companies that are unable to discharge their liabilities to policyholders in Canada as they become due, or are otherwise insolvent, should be permitted to carry on the business of insurance in Canada;

"And whereas it is desirable to provide a system of returns and inspection against such companies engaging in, or continuing to carry on, business in Canada while unable to discharge their liabilities to such policyholders as they become due, or while otherwise insolvent; and to declare the conditions upon which such companies shall be deemed to be insolvent and be subject to being wound-up…” and I close the quote there.

It just simply means that the Government of Canada many years ago recognized that insurance companies were in the position, by reason of the nature of their business, to take large sums of moneys from citizens in Canada for specific purposes, namely to provide protection in the event of loss of life — in the case of insurance companies; life insurance to provide a fund to compensate widows, widowers and orphans in the event of the death of one of the spouses, the breadwinners of the family. Because the Government of Canada recognized that incautious investment could deplete the funds available to the insurance companies for the purposes of meeting these obligations, they saw fit to limit in very specific ways — but with a great deal of scope nonetheless — the investment powers of these companies.

Now here we're dealing with a fund of money which the Minister of Finance hopes — and we hope with him — will expand so that greater benefits can be paid to the pensioners who will benefit from this particular legislation. There is no question as well that if anything occurs or goes amiss with regard to the investment decisions made by the Minister of Finance, the taxpayers will be obliged to step in and ensure that the pensioners don't suffer.

It is because of the likelihood that additional burdens may fall upon taxpayers as a consequence of errors in judgment or of unforeseen circumstances over which the Minister of Finance and his advisers

[ Page 2708 ]

have no possible control, we feel that some guidelines should be drawn out by this committee and by the Legislature as to how far the Minister can go.

I listened very carefully to what the Minister of Finance had to say last night. I thought it was a good debate and that he said some very significant things which might indicate that this limitation in this amendment is perhaps too restrictive. If I gathered what the Minister of Finance was saying, it was that the beneficiaries of this pension fund should have a better opportunity to benefit from the growth potential of this province. It seems to me that what the Minister of Finance was saying was that as the government moves more into ownership or part ownership of some of our resource-extractive companies in British Columbia, moneys from these pension funds should be available for investment in that kind of development of our province.

Interjection by an Hon. Member.

MR. WILLIAMS: No, but it's a possibility. I recognize this possibility. It might therefore be that the restriction that we offer in this amendment is too narrow to permit that to happen.

For example, the government has a bill on the floor of the House which deals with its involvement in a forest operation in the northern part of the province. Maybe that will be a very profitable operation. We all hope for the government's sake that it will. And it may be that these pension moneys could be used to acquire shares in that company and that therefore these people would get a direct benefit from that industrial enterprise.

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

MR. WILLIAMS: Fine. If the Minister is going to look for performance, then the amendment that we are proposing here is one which sets out a measure of performance that you must seek before you invest your money.

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

MR. WILLIAMS: If you're going to buy common shares all you have to do is restrict yourself to investments in companies which have paid dividends for five years of at least 5 per cent of the average value upon which the shares were carried in the capital stock account of that company. It's a very simple investment. It's an investment limitation which the insurance companies in Canada have found to be very satisfactory to them, let me assure you. And let me assure you that many other companies and many other trusteed funds have borrowed the very words that are in this federal statute. It is common for trustees to have the right extended to them to make investments allowed to companies operating under the Canadian and British Insurance Companies Act because it has been found to be a fair, satisfactory and reasonably safe yardstick for investment. And that's all we're saying to the Minister.

If you want to take some other investment, fine, make another amendment. But don't leave yourself carte blanche and say to us, "We'll be cautious."

What is "cautious"? What is "cautious" to you may not be "cautious" to me; but what is "cautious" to me may be "over-cautious" to other Members in this House.

You asked me a question in debate last night: "What does 'reasonable' mean?"

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

MR. WILLIAMS: Somebody decides what "reasonable" is. But we don't think that you should be given that right, Mr. Minister. Why not take all of the other restrictions out and just say, "The Minister shall invest these funds cautiously "?

HON. MR. BARRETT: Are you suggesting an amendment? (Laughter).

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

Mr. Chairman, as I say, we know what the rules are. The Minister has said they're not accepting the amendment. But it is important that we place before this committee the opportunity of providing a guideline, a yardstick against which the Minister of Finance can measure his definition of "caution."

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

MR. WALLACE: Thank you, Mr. Chairman. My comments will be brief to avoid all this repetition. I spoke earlier this morning and said that I felt that amendment would represent a measure of compromise between the two boundaries with which we seem to be debating today. In other words, the government wants the right to put the money in any corporation. We feel that is too extensive a power to be granted when you're dealing with other people's money and taxpayers' money.

I think the point has been made and I am sorry the example that was chosen hit so close to home when the Hon. Member for North Peace River (Mr. Smith) tells me what kind of mess my pension plan is in under the hands of the Canadian Medical Association. I think this demonstrates the fact that no matter how well intended or how proficient the financial experts are said to be, this kind of example which the Member for North Peace River quoted shows that with all the best of intentions, financial investments can be misguided and the performance of the investment might be very unsatisfactory.

[ Page 2709 ]

The amendment which the Minister of Finance has interjected in the debate a few minutes ago that the government will look at performance — with respect, Mr. Chairman, that is all the amendment is saying. Before money is invested on behalf of the civil servants towards their pension plan, the government should have some basic formula or guidelines on which that investment should be chosen — namely, the performance over the last five years. Now this seems to me eminently reasonable. We're only asking that it has produced at least 5 per cent return in these years.

We can argue about semantics and what is reasonable and what one side or the other means by reasonable But this amendment, in my view, offers a very appropriate compromise between the government point of view and the more rigid attitude which the Minister mentioned was typical of the former government. This kind of amendment gives this loosening effect, it gives the government some more freedom to invest, a wider scope of investments, but at the same time satisfies the more cautious, more conservative approach which this side of the House thinks is absolutely necessary. I support the amendment.

MR. CHAIRMAN: I recognize the Hon. Premier.

HON. MR. BARRETT: If the whole session could be at this level I'm sure we could all learn something. The debate last night, which I enjoyed, had an obvious difference of opinion. But really I agree with what the Member for Point Grey said: last night was a rare experience in that some of us who've been here quite some time have had a real exchange of what this place is all about. It was quite good.

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

HON. MR. BARRETT: We should have more of it, you bet. This morning is a continuation of it.

The amendment is a good position for the group in the middle and it's really where you are: the group in the middle. This is absolutely limiting. It's limiting because…

Interjection by an Hon. Member.

HON. MR. BARRETT: No, the pensioners are on the receiving end, not in the middle. They're on the receiving end.

What about a brand new enterprise?

Interjection by an Hon. Member.

HON. MR. BARRETT: O.K. Now that is the area where you're wondering in terms of…You can't confine that to the government being in an equity position in a brand new enterprise, but that possibility might exist. But what about a brand new enterprise that is totally private, that's related to the resources of this province, that has, certainly in terms of tracing paper…

MR. GARDOM: Kaiser…

HON. MR. BARRETT: Ah, but this relates to something else that was discussed earlier in this House. What kind of research was done on Kaiser?

Interjection by an Hon. Member.

HON. MR. BARRETT: Well, I'll tell you something. You'd be amazed at the gap between the former Minister of Finance's (Hon. Mr. Bennett) caution and then seizing on something as accident would strike him that sounded like a good deal.

Interjection by an Hon. Member.

HON. MR. BARRETT: Ah, that is a possibility; that is a distinct possibility. However, at this stage in my life — and I hope for some time to come until I get out of politics, which will be much earlier…I guarantee you that or promise you that, whichever way you look at it.

MR. GARDOM: We'll guarantee that!

HON. MR. BARRETT: Oh, you'll guarantee that, O.K. (Laughter). Thank you. Get in early, get out early.

We must govern. We must. And regardless if whether it's in this area or any other area, the crunch comes in making decisions. We will not make decisions, as I've said time and time again, without gathering the best possible material in the period of time that is allotted to us.

Now if you give us this limitation, all we're doing is just opening it a bit and we don't agree with that. We want the potential of getting involved in new ventures that have a tracing paper connection with the possibility of bringing good returns. Certainly this is going to be where 80 per cent of our interest is, or even 90 per cent. In the first year, I'd say it would be 100 per cent. But maybe not.

We've got to have some room in our opinion. That's why we're rejecting the amendment. But the debate itself? Fantastic. And it's given us a lot to think about, I have to admit, even from one Social Crediter, because none of…

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

[ Page 2710 ]

HON. MR. BARRETT: Well that's true, and none of it related to the A plus B theorem, incidentally.

No, that's true. It's Conservative, Liberal, socialist discussion. But it's all bucks and it's all the people's bucks; that's really what's involved. When the people elect a government they entrust them to spend their bucks. That's what we're all concerned today about equally, but from different philosophical bases.

I can't convince you of the validity, as I know it to be, of my socialist base. But neither are you going to convince me of the validity of your base. So there shouldn't be the presumption that someone has the absolute in terms of what's right or wrong. We have to make a judgment. We've listened, we're making a judgment. We don't claim any kind of absolute.

Interjection by an Hon. Member.

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

MR. GARDOM: After the loss.

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

Interjection by an Hon. Member.

HON. MR. BARRETT: Well, trustees have been known to lose too. All right, then don't say that you've got an absolute over there in terms of protecting potential loss. We've listened. We're going in that direction; you guys are going up that way; the Tories are going that way. The only thing is, we've got 38, so that's the way it goes. So, Mr. Chairman, for the time being we cannot accept the amendment proposed by the Liberals.

MR. CHAIRMAN: I recognize the Hon. Second Member for Vancouver–Point Grey.

MR. GARDOM: Mr. Chairman, I'm going to be short. I obviously completely anticipated what the Premier would make in his reply when I opened this debate this morning because I talked about trust, I talked about human frailty, I talked about the need to have some kind of legislative parameters which were not here. I talked about the great check and balance of the openness of debate.

I'm not going to repeat the remarks that I did make earlier. I'd ask the Hon. Members to take that which I earlier said today as delivered now and accepted — mutatis mutandis is the dear old Latin phrase — in support of this…I beg your pardon?

Interjection by an Hon. Member.

MR. GARDOM: …in support of this very fine, well-reasoned and thoroughly practical amendment of the leader of the Liberal Party (Mr. D.A. Anderson).

I would mention this as it was stressed by myself earlier, and was also stressed by the leader when he proposed it and by the Member for West Vancouver-Howe Sound (Mr. Williams). This amendment is one that is based upon years and years of financial, economic and trust experience. Indeed, it is one that is based upon those who have experience in these fields with literally millions of people and billions and billions of dollars and pounds and francs and yen and all of those things.

I certainly do support the amendment.

Amendment negatived on the following division:

YEAS — 5

NAYS — 39

PAIRED

MR. D.A. ANDERSON: I would ask you, Mr. Chairman, to have the division on this amendment to section 15 reported to the Speaker. I would request that you ask leave to have it recorded in the Journals.

MR. CHAIRMAN: Shall section 15 pass?

Section 15 approved on the following division:

YEAS — 29

[ Page 2711 ]

NAYS — 15

PAIRED

MR. J.R. CHABOT (Columbia River): Mr. Chairman, I would ask if you could notify the House that a division took place on Section 15 and we'd like a recording of the results.

Sections 16 to 46 inclusive approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports three divisions on amendments to section 15 and asks leave that they be recorded in the Journals.

Leave granted.

Bill No. 159, An Act to Amend the Civil Service Superannuation Act, reported complete without amendment, read a third time and passed.

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

AN ACT TO AMEND THE

COLLEGE PENSION ACT

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

Sections 1 to 13 inclusive approved.

On section 14.

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

MR. R.H. McCLELLAND (Langley): Mr. Chairman, I would move the amendment standing in my name on the order paper.

I would just briefly like to say that the reasons are those that have been enunciated very clearly by so many Members in the House.

The comments that we've heard from the other side of the House have not eased my fear about the investment knowledge or prudence of the government at this point. The Premier has indicated by his comments about brand new corporations that there is a possibility that the government will take flyers on corporations for which there is no real guarantee.

We agree on this side of the House that the government has the responsibility to govern, as the Premier said this morning, but I would just ask that the government doesn't let its philosophy cloud its judgment when it comes to investing the money of the people of British Columbia, because there is a difference, Mr. Chairman, between a private corporation and a government. The government does have a responsibility to a far wider range of people. Those people are the taxpayers of this province.

I really think, Mr. Chairman, that under the terms, without that power to invest in a company, any company, there is scope enough for good, sound investment, good protection to the people who are involved in these pension funds.

MR. CHAIRMAN: Shall the amendment standing in the name of the Hon. Member for Langley pass?

Amendment negatived on the following division:

YEAS — 14

NAYS — 30

[ Page 2712 ]

PAIRED

MR. CHABOT: I move that the committee ask leave to have the Journals record the division that took place on section 14 of Bill No. 160, An Act to Amend the College Pension Act.

Leave granted.

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

MR. H.A. CURTIS (Saanich and the Islands): Mr. Chairman, I move the amendment to section 14 of this particular bill standing in my name on the order paper.

I realize that a number of points which are covered in the first portion of the amendment were made in the debate on the earlier bill last evening and again this morning, but I would like to point out that this provincial government and its predecessor made much over the years with respect to a provincial guarantee for parity bonds. This undoubtedly instilled investor confidence in those parities and encouraged purchase of them time and time again.

Surely if that kind of reassurance, that type of guarantee, was felt essential for individual purchasers of parities, then the same assurance or reassurance should be given to the various civil servants or public employees, in particular those who are covered by the College Pension Act, but obviously the remarks apply to the other public employees dealt with in the neighbouring bills.

It's an important matter of principle and I would urge the government to give the most serious consideration to this amendment, which is made in a constructive manner.

Secondly, Mr. Chairman, there is a strange inconsistency — I would like to think it is simply an oversight, but if it is an oversight, it is the kind of little slip which I think has worried Members of the opposition in the debate last night and again today. Is it a slip? Is it sloppy legislation? Or did someone just forget to make the final check? Because we see that Bill 160 makes no provision whatsoever for the investing committee, for the Minister of Finance, for anyone associated with the investing of these funds, to invest in the Municipal Finance Authority of British Columbia.

This isn't some private company which may or may not have a good couple of years. This is not some wild scheme which might go down the tube as others have commented and expressed concern about.

This is a charge against all property in the Province of British Columbia. As I have attempted to point out, and as indeed Members on both sides of the House have pointed out previously, this is an extremely fine investment.

Picture if you will, Mr. Chairman, particularly the paradox in British Columbia, in eastern Canada, or wherever the debentures of the Municipal Finance Authority may be offered for sale. The prospective investor is examining this, and he's giving very serious consideration to MFA debentures going into a particular portfolio to round out British Columbia or western Canada investments.

But he sees suddenly that even these provincially managed funds, raised through local and provincial taxes and administered by people at the provincial level, these funds cannot be invested in the Municipal Finance Authority of British Columbia.

Mr. Chairman, I'll conclude my remarks. I know the debate last night and today has been very lengthy. The Hon. Provincial Secretary (Hon. Mr. Hall) alluded, I believe, to one section of this amendment. If he is prepared to give the strongest possible assurance that this inconsistency will be corrected at the earliest possible time, then I'll be most satisfied and I will encourage the opposition not to call division on this particular amendment.

HON. MR. HALL: You're quite correct in assuming that this amendment is the one I was referring to. It's not an oversight. The policy of the previous government was a good one insofar, as I understand it, that they wanted to make sure that this particular fund, this municipal financing authority did develop its own market and should not be "greenhoused" or "hothoused" along. That was their view three years ago.

Currently, the Municipal Finance Authority figures, series 1120, as you know, being its chairman for a while, yielding 8.18 per cent — that's about half a percentage point better than Hydro — it's a good investment.

However, we've got Bill 120 on the order paper. We want to make sure that this is right. We want to discuss it with the consolidated committees that have been encouraged to form in the last months; the committees that are meeting with my commissioner of pensions all the time.

I have had a number of proposals by wire already that perhaps we should do it now. I don't think that is correct. I think we need to discuss it together with some of the exciting plans that are going on via municipal affairs and also with the present Bill 120 on the order paper.

I want to give you the assurance that you've asked for. We'll be looking into it.

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

[ Page 2713 ]

MR. D.A. ANDERSON: Briefly, Mr. Chairman, we also support the amendment, particularly the second part of it. We feel that it would be unwise for the government, through legislation such as this, to indicate that the Municipal Finance Authority is somehow excluded from government pension funds or in this case, college pension funds. Therefore, we will be supporting the amendment of the Member for Saanich and the Islands (Mr. Curtis).

Amendment negatived on the following division:

YEAS — 5

NAYS — 39

PAIRED

MR. CURTIS: Mr. Chairman, I ask that you report to the Speaker that a division took place on Bill 160 in committee and that this be reported in the Journals.

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

MR. D.A. ANDERSON: Mr. Chairman, this section quite obviously has the same problem as the one we discussed earlier today. We in actual fact were planning to put forward the same amendment. I am not going to do it at this time because quite clearly from what the Premier said and what the Hon. Provincial Secretary (Hon. Mr. Hall) has said, there is no way the government will accept it.

But we would like to at least go on record as saying that exactly the same arguments apply. We don't want to let this go by without having our views recorded to that effect. However, in light of the manpower that stood up against us earlier, it's pretty clear that we have no chance of having our point accepted. Therefore, to cut down on the procedural time that this would take, we would simply like our views on this recorded and not put the amendment forward.

MR. CHAIRMAN: I recognize the Hon. Premier.

HON. MR. BARRETT: Mr. Chairman, if the Member would read the bill, he'd find that the same arguments do not apply; that there are trustees, and they do not apply.

Let's get the record straight. Since we are reading statements into the record: the same arguments do not apply. There are trustees.

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

MR. D.A. ANDERSON: Mr. Chairman, I can certainly put the amendment forward if the House would like us to debate the very point. In actual fact on section 14(b)(2) the words are there: "in the capital stock of any corporation." Now we're trying hard to be as reasonable as we can in this whole debate to cut down on…

HON. MR. BARRETT: The arguments are different.

MR. D.A. ANDERSON: …any waste of time by us or the government. But in actual fact where it states "in the capital stock of any corporation," I believe the difference was the last time it was a corporation; this one's any corporation, which is not a major difference.

We feel that under those circumstances, an amendment to the effect which would restrict this to a company which has had at least a five-year track record of earning 5 per cent per year, which is hardly an outstanding track record, would not be too much.

The Premier's remarks, I find, are just not applicable to this particular point. They're right off it. We would just like again to point out to him that in bills such as this and for the reasons given by him and the Provincial Secretary, it's quite obvious they're not going to accept amendments. But in our view amendments would be desirable along the nature of the one we proposed earlier.

MR. CHAIRMAN: Shall section 14 pass?

Section 14 approved on the following division:

[ Page 2714 ]

YEAS — 29

NAYS — 14

PAIRED

MR. CHABOT: Mr. Chairman, I would ask you to notify the House that a division took place on section 14, and that this be recorded in the Journals.

Section 15 approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

Bill No. 160, An Act to Amend the College Pension Act, reported complete without amendment, read a third time and passed.

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

AN ACT TO AMEND THE TEACHERS'

PENSIONS ACT, 1961

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

Sections 1 to 16 inclusive approved.

On section 17.

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

MR. McCLELLAND: Mr. Chairman, I move the amendment standing in my name on the order paper. I would just like to say since we are putting things on the record: the official opposition does not agree with government investment in any private corporation whether it be these pension funds or whether it be funds from the insurance corporation or whether it be included in the Revenue Act. We just want to make that very, very clear. From that point of view the arguments for all of these are exactly the same.

MR. CHAIRMAN: Shall the amendment pass?

Amendment negatived on the following division:

YEAS — 14

NAYS — 29

PAIRED

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

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

MR. D.A. ANDERSON: Mr. Speaker, in this bill in section 17 the words come up, the fatal words in 17(b)(2), "in the capital stock in any corporation."

[ Page 2715 ]

When I rose in my place the last time, I spoke on an earlier bill and I pointed out that it was virtually the same as the previous bill, and we had gone on record at that time as opposing the unrestricted power of investing in any corporation and putting that power to invest into the hands of one man to act entirely at his discretion.

At that stage the point was disputed by the Hon. Minister of Finance. Therefore, Mr. Speaker, as apparently our point was not understood, I would like to move an amendment at this time which I have in my hand here.

The purpose of this amendment, Mr. Speaker, and again I'll be as brief as I can, is to restrict the unfettered power of the Minister of Finance so that he can invest in any private corporation, provided that that corporation has had five years of reasonably profitable performance and that is judged as to whether or not it has paid or is capable of paying or would have been capable of paying 5 per cent per year in the five-year period preceding the investment.

The provision is very similar. It is a restriction first in terms of the preferred shares, insisting that the company either pay them or pay an average equivalent to its annual rate. In common shares we are dealing with the company either paying a minimum of 5 per cent or having earned enough during that period and added to its capital stock account enough to pay out a 5 per cent provision.

The provision, Mr. Speaker, occurs in every major jurisdiction in the world, protecting the funds of those people who are in the position of beneficiaries of insurance policies or situations such as this where we are dealing with pension funds. It is a protection against over-enthusiastic investment in new ventures which might lead to loss.

It is a protection which has been shown to be extremely valuable over the years. Therefore I move putting this amendment in, which once again is parallel to the federal insurance Act when dealing with the moneys the people pay in by way of premiums so that they can be protected in the future in case of any loss.

Again, the arguments are the same. The principle is the same. There is no difference in wording between this and the first bill I put in, except the change from the words "a corporation" to "any corporation" which I don't believe is of major significance.

I only raise this and put in the amendment once more, because apparently the Minister of Finance misunderstood the arguments made in the first bill where we presented a similar amendment. As he apparently misunderstood it, I trust he's had time to reconsider it, and perhaps this time we can have a vote in favour of such an amendment.

MR. CHAIRMAN: I recognize the Hon. Minister of Health Services and Hospital Insurance.

HON. MR. COCKE: Mr. Chairman, I just wanted to draw the attention of the House — I won't go very much further than that — but I would like to draw the attention of the House to the fact that this section talks about the trustees investing, not the Minister of Finance as that Member indicated — the trustees. The trustees will be governed by the federal Act. That's what I've been trying to talk about all day. The federal Act legislating pension funds which permits that kind of diversity for any other group. Why shouldn't we?

Thank you, Mr. Chairman.

MR. CHAIRMAN: Shall the amendment standing in the name of the Second Member for Victoria pass?

Amendment negatived.

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

MR. CURTIS: Mr. Chairman, I move the amendment to section 17, Bill 161, standing in my name on the order paper.

The answer given earlier by the Hon. Provincial Secretary (Hon. Mr. Hall) concerns me greatly because frankly I wonder if he really understands the importance of the second part of the amendment.

The Municipal Finance Authority provision in this amendment would not make it mandatory that the funds from this particular fund from this particular plan be invested in MFA, but rather that they be permitted to invest as and when they wish.

The amendment is permissive. It isn't mandatory. Those administering the fund would not be compelled to pick up something of every single MFA issue. Without the amendment they cannot. The Provincial Secretary has told the House that MFA issues are doing very well. They are.

If that is the case, then why should these funds, Mr. Chairman, not be permitted to take advantage of that good performance on behalf of the people whose retirement money is going into them?

MR. CHAIRMAN: Shall the amendment standing in the name of the Hon, Member for Saanich pass?

Amendment negatived on the following division:

YEAS — 5

NAYS — 139

[ Page 2716 ]

PAIRED

Section 17 approved on the following division:

YEAS — 29

NAYS — 15

PAIRED

Sections 18 to 20 inclusive approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports two divisions on the amendments to section 17 and one on section 17 and asks leave that they be recorded in the Journals.

Leave granted.

Bill No. 161, An Act to Amend the Teachers' Pensions Act, 1961, reported complete without amendment, read a third time and passed.

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

AN ACT TO AMEND THE

MUNICIPAL SUPERANNUATION ACT

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

Sections 1 to 26 inclusive approved.

On section 27.

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

MR. McCLELLAND: Mr. Chairman, I move the amendment standing in my name on the order paper.

Amendment negatived on the following division:

YEAS — 15

NAYS — 29

PAIRED

MR. CHAIRMAN: I recognize the Hon. Second

[ Page 2717 ]

Member for Victoria.

MR. D.A. ANDERSON: Mr. Chairman, in this section those words, "in the capital stock of any corporation," occur again.

"(b) the trustees shall not make any investment except (i) in the debentures or other securities of, or guaranteed by Canada, or any province of Canada;"

Nothing could be more sure than that; nothing could be more safe than that. Then: "(ii) in the capital stock of any corporation." Nothing could be more unsafe and unsure than that — "any corporation."

Interjection by an Hon. Member.

MR. D.A. ANDERSON: "Or in any of them." Right. So this particular section meets with our strong disapproval once more. We once more are dealing with a pension fund — a superannuation fund. We are once more dealing with the future security of people. Whether they are guaranteed by the government or not is really not relevant because if it's mismanaged they will get less regardless of the guarantee.

Mr. Chairman, the arguments and the principles that I have put forward before in the three times I have spoken on this type of section are true here. They are perhaps all the more important to be put forward because of the misunderstanding displayed by the Minister of Health (Hon. Mr. Cocke). Funnily enough, I thought it was the Hon. Provincial Secretary (Hon. Mr. Hall) handling this bill but apparently it's the Minister of Finance and the Minister of Health.

The fact of the matter is that in this section it says flatly that investments can take place by the trustees in any corporation. Now if that doesn't mean what it says, the Hon. Provincial Secretary (Hon. Mr. Hall) had better suggest to his colleague that it be amended, because he's tried to tell us that the Hon. Provincial Secretary, in putting forward this bill somehow or another has concealed the true meaning of this bill through some other system of revelation or something.

Now it's just not a fact, Mr. Speaker, that the trustees in this section are governed in the same way as under the Dominion of Canada Act. It states here flatly that it's in the capital stock of any corporation. I repeat this and repeat this and repeat this because every time I've said it apparently another Minister gets up and shows his lack of appreciation of what we've been talking about.

I thought when I first heard the Premier's words on the first bill that there had been some understanding and there had been a rejection of our views on the basis of a different point of view. I now find they've been rejected because of a misunderstanding as to what the section states and as to what our point was. I apologize if we didn't explain it fully enough the first time around. Sometimes we, in this party, make the mistake of assuming that you just have to say things once or you have to say them quickly and they'll be understood.

Perhaps the Member for South Peace River (Mr. Phillips) is more accurate in trying to force home his view hour after hour and perhaps that's what we should adopt. Because quite clearly the Minister misunderstood the points we made earlier as to the need for restriction. That's the very simple remark. This is the Minister who didn't even know what amendment he was on a short time ago, or what bill he was on.

Interjection by an Hon. Member.

MR. D.A. ANDERSON: Now, perhaps, he is waking up after a late night last night and he at least knows what bill we're on. I'm not sure that he's still aware as to what amendment he's on.

So, Mr. Speaker, in this particular bill, we want to put in an amendment and here it is, an amendment to the Municipal Superannuation Act. I'll read it out if people think it's unusual…

Interjection by an Hon. Member.

MR. D.A. ANDERSON: I wish to put it in the record because the fact of the matter is that all we're asking is that instead of having investment in any corporation, the trustees be restricted to corporations which have made a 5 per cent profit over five years, which is in no way an unreasonable restriction.

I trust that this would not rule out any more than a small percentage of the companies in British Columbia which are in the resource field. Those that they do rule out I'm quite sure should be ruled out because of the risk involved.

The thing that we're putting forward is this: First, in dealing with preferred shares the company must have paid in the preceding five years the equivalent of the preferred share rate. Secondly, if they go into and invest in common shares of a corporation then the company should have paid at an annual rate of 5 per cent per year or else the company should have kept retained earnings so they could, in other words, have paid that 5 per cent had they wished.

It's far from an onerous restriction. It's a very simple and straightforward protection against the enthusiasm of a new Minister, unaware of. the portfolios perhaps that he has because of his other responsibilities as House Leader, as Premier, as president of the B.C. Rail, that might lead him into a new venture which would be risky. Once again we can repeat the same example: Kaiser.

[ Page 2718 ]

Interjection by an Hon. Member.

MR. D.A. ANDERSON: We're dealing here with trustees — the Minister has corrected me on this ground. Nevertheless, we are trying to have the same type of protection so that there cannot be irresponsible decisions made on new companies.

Now, Mr. Speaker, we've divided on this once. The purpose of that was to record the points that we were trying to make, that this was a necessary and useful restriction to be placed on either trustees or on the Minister of Finance. We have no wish, unlike the other parties on our left and right — the Conservatives and the Social Credit — to delay the House by extra votes or…

Interjection by an Hon. Member.

MR. D.A. ANDERSON: Would you like us to have this recorded and take the time, Mr. Minister of Health…?

HON. MR. BARRETT: Do whatever you care to do.

AN HON. MEMBER: Just keep on reading.

MR. D.A. ANDERSON: Well, I'm telling you what I care to do, if you'll listen. The fact is that we have recorded it once, the principle is the same and therefore we will not be calling for a recorded vote in this instance. But we do feel that in this whole series of bills it becomes more and more important, as the government shows less and less understanding of the points we are trying to make, that this type of thing be accepted.

MR. CHAIRMAN: I recognize the Hon. Member for Columbia River.

MR. CHABOT: Mr. Chairman, I wouldn't call for a recorded vote on this kind of amendment either, because this is the type of amendment, in my opinion, that shows very clearly what the Liberals are attempting to do relative to the section which they are amending, and that is to walk the centre line, to be on neither side…

We are opposed to the investment of these funds in the capital stock of any corporation, but the Liberals say that it should be tolerated providing the company has had a five-year experience of paying dividends. It is a most dangerous point of view, and it's one which, in my opinion, amounts to the same position, basically, as the NDP has taken on this, because you can invest in basically any capital stock of any corporation.

MR. CHAIRMAN: Order. Would the Hon. Member address the chair.

Interjection by an Hon. Member.

MR. CHABOT: You're just attempting to be on both sides of the issue which we are discussing right now. I can give you example after example of companies that have risen from being small companies. Their stock has come out at a $10 price and I've watched it go to $20-odd. I'm not going to mention the one I have in mind at the moment. It is a British Columbia company, and it's moved on to about $25. They paid dividends for many years. Then all of a sudden, because of over-extending themselves, they ran into bad times because of credit situations and the unavailability of ready cash.

I watched that stock move down from $25 to $2.50. This is the type — and I didn't have any of that stock. (Laughter).

Interjections by some Hon. Members.

MR. CHABOT: I watched the stock go down to $2.50. This is the type of investment which the Liberals are suggesting that these funds should be invested in.

AN HON. MEMBER: Oh, come off it!

MR. CHABOT: They say municipal superannuation funds should be invested because of a five-year performance. I say that a five-year performance means absolutely nothing, absolutely nothing — and that the stock can go down just as quickly as the stock that has no performance. This isn't the type of double-sided amendment that we can support.

MR. CHAIRMAN: I recognize the Hon. Second Member for Vancouver–Point Grey.

MR. GARDOM: Mr. Chairman, let's first of all appreciate one fact.

First, the Hon. Member who last spoke is not aware of the consistence of this amendment. Since this amendment does not appear in any printed form in the Journals I intend to read the amendment to make sure that it is properly recorded in the Hansard that we have for this purpose in the House.

The amendment strikes out the words "in the capital stock of any corporation" under section 27(b)(ii) and substitutes for those words the following…if the Member for Columbia River doesn't want to listen, would he at least be quiet so that maybe the other Members can hear what the amendment is? We substitute these words:

"in the preferred shares of a corporation, if the corporation has paid a dividend in each of the five years immediately preceding the date of investment at least equal to the specified annual rate upon all of its preferred shares, or" — b(iii) — "in the common shares of a corporation if, during a period of five years that ended one year before the date of investment, the corporation has either paid a dividend in each such year upon its common shares, or had earnings in each such year available for the payment of the dividend upon its common shares of at least 5 per cent of the average value at which the shares were carried in the capital stock account of the corporation during the year in which the dividend was paid or in which the corporation had earnings available for the payment of dividends as the case may be."

[ Page 2719 ]

That is the amendment. Now, trustees we have here — I appreciate that as do the Members in our party; we all appreciate that — but trustees are governed by the powers that are given to them. We find under the government section here that you give them a very restricted power to deal with gilt-edged securities under (a), to deal with investments and debentures or other securities of or guaranteed by Canada or any province of Canada and then you go 100 per cent the other way and fully open the door and give them totally unrestricted powers — totally unrestricted powers — to invest in the capital stock of any corporation.

My golly, there'd be just as good an investment in an unincorporated organization as in the capital stock of any corporation, or an investment in the shares of any individual as opposed to necessarily there.

It's a carte blanche, "open, Sesame" power. It's a blank cheque kind of a power and this is why we're criticizing it. This amendment has not come out of the thin air. There has been the most serious thought given to this amendment. (Laughter). There has and I'll tell you why…this is amusing to the ignorant. I'll tell you why. It is because the amendment comes from the Canada and British insurance companies Acts dealing with the powers of investment, and this concerns itself with corporate stock. This is universal across Canada. It's in Britain; it's in the United States; it's the type of thing that is utilized in every financial sector in the world. And the people can't understand these kinds of things. Under (a) we find a gilt-edged opportunity for investment, one that has records, has performance.

Under existing (2)(i) of the government's section here, "investing in the capital stock of any corporation," this could be a corporation without record; it could be one that had just been incorporated; it could be one without performance under the top part of it, "guarantees by Canada or any province."

Under (b) "any corporation," the "Philippines Fallaparts Corporation," or "Uncle Albert's Armchair Corporation" — it can be any kind of corporation and we say that's not good enough.

We say you should insist upon a record of performance and that's the purpose of the amendment. The purpose of the amendment is something that has been considered most seriously by the financial sector; otherwise this thing would not have been in existence the years and years that it has, and it would not have dealt with the billions and billions and billions of dollars that it has and with the millions and millions of people that it has.

MR. CHAIRMAN: I recognize the Hon. Member for West Vancouver–Howe Sound.

MR. WILLIAMS: Thank you, Mr. Chairman. It would appear from some of the comments made by way of interjection in the course of this debate that Members of this committee — some of them at least — seem to believe that because you categorize a group of individuals as trustees somehow or other there is some magic in that word. The fact of the matter is that a trustee has an obligation, but the obligations of that trustee are spelled out in the document which creates that capacity. In this case we are talking about a trustee created by legislation.

The entire limits of the obligations and responsibilities of the trustee must be spelled out in this statute. Trustees are created in other ways, by documents in the course of wills and so on and it is interesting to note — and I point out to the Hon. Member for Columbia River (Mr. Chabot), who saw fit to suggest that we were taking a middle course being neither one way or the other — that we have other statutes in this province which deal with the investment limitations imposed upon trustees who are created under a will or some other document. Two pages of limitations upon their investment authority. Included in those limitations is precisely the limitation which is proposed in this amendment.

I trust the Hon. Member for Columbia River is not suggesting that if he had the opportunity he would do away with these limitations and with these opportunities that are in existence under the Trustee Act of the Province of British Columbia. If the Member would just see fit to read the provisions of section 15 of the Trustee Act he would recognize that these same words — the same limitations that are proposed here — are the law of this province with regard to trustees' investments in those circumstances.

The Member obviously doesn't know what he is talking about when he suggests that this limitation is not an acceptable one, is not one which has been proven by long performance, and is not one which the Legislature of this province has deemed fit to impose upon trustees in other cases. All we are asking is that the trustees under this legislation have the same conditions imposed upon them.

MR. CHAIRMAN: Shall the amendment pass?

[ Page 2720 ]

Amendment negatived.

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

MR. CURTIS: Mr. Chairman, in this particular bill more than any other, An Act to Amend the Municipal Superannuation Act, the amendment standing in my name on the order paper, I suggest, has more relevance than ever. I move the amendment standing in my name in section 27.

The Municipal Superannuation Act, as I understand it, has some $250 million invested in its various funds at the present time receiving about $20 million annually. I simply cannot understand, if this Act has been given or if the amendment to this Act was given any kind of careful considered thought at all by the Members of the cabinet of this government, why they would inadvertently or by other means overlook the opportunity to invest municipal and regional district dollars in funds that are so designated under this particular Act.

It makes no sense whatsoever and again I find the remarks earlier by the Hon. Provincial Secretary (Hon. Mr. Hall) totally unacceptable and unsatisfactory in this respect.

MR. CHAIRMAN: Shall the amendment pass?

Amendment negatived on the following division:

YEAS — 5

NAYS — 39

PAIRED

AN HON. MEMBER: I request the division be recorded.

MR. CHAIRMAN: Shall section 27 pass?

Section 27 approved on the following division:

YEAS — 29

NAYS — 15

PAIRED

Sections 28 to 30 inclusive approved.

Title approved.

HON. MR. HALL: Mr. Chairman, I move the committee rise and report the bill complete without amendment.

Motion approved.

The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports a division on an amendment to section 27 and asks leave that it be recorded in the Journals.

Leave granted.

Bill No. 162, An Act to Amend the Municipal Superannuation Act, reported complete without amendment, read a third time and passed.

HON. MR. BARRETT: Mr. Speaker, the order of business will be finance, health, education, labour, municipal affairs…

MR. CHABOT: In that order?

[ Page 2721 ]

HON. MR. BARRETT: Yes.

Interjections by some Hon. Members.

HON. MR. BARRETT: Tonight.

In that order so far, Mr. Member. And industry — we may bring in the industrial bill before health.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 1:30 p.m.