[ Page 2857 ]

CONTENTS

Morning sitting

Statement Death of Hon. George Gregory. Mr. Speaker — 2857

Routine proceedings

An Act to Amend the Constitution Act (Bill No. 180). Second reading.

Mr. Chabot — 2857

Mr. D.A. Anderson — 2857

Mobile Home Tax Act (Bill No. 181). Second reading.

Mrs. Jordan — 2857

Mr. D.A. Anderson — 2857

Mr. Smith — 2857

Mr. Brousson — 2858

Mr. Wallace — 2858

Hon. Mr. Lorimer — 2859

British Columbia Cellulose Company Act (Bill No. 179). Second reading.

Hon. Mr. Williams — 2859

Mr. Smith — 2862

Mr. D.A. Anderson — 2862

Mr. Dent — 2864

Mr. Wallace — 2865

Mr. McGeer — 2867

Mr. D'Arcy — 2871

Mr. Brousson — 2872

Hon. Mr. Williams — 2873

Division on second reading — 2875

The House met at 10 a.m.

Prayers.

MR. SPEAKER: Hon. Members, before embarking on the orders of the day, I want to express my sorrow and regret at the passing of a very distinguished jurist who was a Member of this Legislature for many years, the Hon. George Gregory. I'm sure it would be the feeling of the whole House that it would be proper for me to express on behalf of the House our condolences and sympathy to his grieving family. Agreed?

HON. D. BARRETT (Premier): Mr. Speaker, just a brief personal comment. In the House today is the man who was my first supervisor as a social worker. You can blame him or credit him, depending on your point of view, for me staying on in social work. I'd like the House to welcome Mr. Jack Sanders.

Introduction of bills.

Orders of the day.

HON. D. BARRETT (Premier): Mr. Speaker, I move that we proceed to public bills and orders.

Motion approved.

HON. MR. BARRETT: Adjourned debate on Bill 180, Mr. Speaker.

AN ACT TO AMEND THE

CONSTITUTION ACT

(continued)

MR. SPEAKER: The Hon. Member for Columbia River adjourned the debate.

MR. J.R. CHABOT (Columbia River): I won't speak on the principle of the Act because, in my opinion, it's a bill that can best be discussed in committee. It's in bits and pieces and so there's nothing further to say on second reading.

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

MR. D.A. ANDERSON (Victoria): Mr. Speaker, this party will take the same position. The principle of this bill is fairly long established, namely paying Members of the Legislature. We feel that it would best be dealt with clause by clause.

MR. SPEAKER: The Hon. Provincial Secretary closes the debate.

HON. E. Hall (Provincial Secretary): I call the question, Mr. Speaker.

Motion approved.

Bill No. 180 referred to a committee of the whole House at the next sitting after today.

HON. MR. BARRETT: Adjourned debate on second reading of Bill No. 181, Mr. Speaker.

MOBILE HOME TAX ACT

(continued)

MR. SPEAKER: The Hon. Member for North Okanagan adjourned the debate.

MRS. P.J. JORDAN (North Okanagan): Mr. Speaker, in our party this bill is called the Smith bill. I think the Hon. Minister of Finance (Hon. Mr. Barrett) referred to it as the Smith bill. We support the bill, and I'm sure the Hon. Member who is vitally interested in this area would wish to speak to it. We do support it.

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

MR. D.A. ANDERSON: Mr. Speaker, the number of mobile homes which are now being sold indicates that there is a great need to put the so-called mobile home more on the same footing with regular housing in terms of taxation and treatment by the provincial and other governments, the municipal government in particular.

I believe that the numbers now are that approximately one out of every five new homes established is a mobile home. I should say "so-called" mobile home because so often these homes are taken to a site and are not moved again.

We appreciate the fact that the government is taking steps along this line to treat the mobile home more in the same way as regular land and housing. We will be supporting this bill in principle.

MR. SPEAKER: The Hon. Member for North Peace River.

MR. D.E. SMITH (North Peace River): Thank you, Mr. Speaker. In speaking to the principle of the bill, it is an Act that we originally had before the House as the Mobile Home Park Fee Act. You're repealing that and replacing it with this new Mobile Home Tax Act.

Interjection by an Hon. Member.

MRS. JORDAN: Wakey, wakey, it's Monday morning.

MR. SMITH: The principle of the bill is very much

[ Page 2858 ]

in line with the thoughts that we expressed when we originally put the bill before the House at the fall session and again at the start of this session. We're happy to see that the Minister saw the wisdom of the suggestion that we made, that you do listen occasionally to what the opposition have to say. We would only hope that we will see legislation come before this House in future bills that will recognize the help that we try to give you in providing for types of legislation which we think are good.

This puts the owner of a mobile home upon the same basis as any other homeowner in the province with respect to financing and with respect to the home acquisition grant and the homeowner grant.

Certainly it is a way of life with a great many people today, that they will be for many years to come using mobile homes as their private accommodation. I think this bill recognizes that fact now and puts them on the same basis as everyone else.

There is only one thing that I would ask the Minister to comment on when he's closing the debate; and that is that this bill provide, for the control of mobile homes within trailer parks so that we have any home in a registered trailer park subject to the same rules and regulations regarding assessment and so on as any other home, regardless of location.

Many mobile homes, of course, are located outside of mobile home parks on individual pieces of property or individual subdivided lots. Will the Minister comment on their position? Are they going to be discriminated against just because they happen to choose to locate their home, mobile home, on a serviced lot within a municipality rather than move the home into a mobile home park?

I know some of the municipalities now do tax these homes as an improvement. It's sort of a dicey situation as to whether they are actually classified as an improvement under the assessment Act or not. I'm sure that if they are to be taxed on individual lots, then the privilege and the right of extending the homeowner grant to those people who live on individual lots as well as those people who have their homes in a mobile home park should be one and the same. The principle should apply to all mobile homes regardless of their location.

The other thing is that we know a number of mobile homes are located either within the municipal boundaries or outside the municipal boundaries on subdivided property — small acreages and small holdings. So I would hope that the Minister would comment on the position with respect to the homes that are not located in a mobile park, and whether or not they will qualify on the same basis as every home within the park as pointed out in and classified under this Act.

MR. SPEAKER: The Hon. Member for North

Vancouver-Capilano.

MR. D.M. BROUSSON (North Vancouver–Capilano): I would certainly like to echo the question that the last speaker raised, and I hope that the Minister will comment on this.

The main comment I want to make, however, is to point out that the former Act, the Mobile Home Park Fee Act, which is being repealed by this Act — and which was a creature of the former government — was one that was very, very unfair to almost everybody concerned in the mobile home field.

It was unfair to the park operators, the mobile home park operators. It was unfair in terms of encouraging the use of mobile homes in the applications where they do help so greatly to reduce the cost of housing for certain classes and kinds of people. The whole thing became a regulatory mess that was just a "dog's breakfast" that was impossible to work one's way out of. I'm delighted to see the present government amending it — I'm sorry, not amending it but replacing it.

However, I want to point out to the Minister that there are– still some very serious problems in developing the regulations that are going to make this bill work. Unless there — are good, practical, and carefully-thought-out regulations, it's still going to be a very difficult thing to administer because of the conflicting interests of a variety of kinds of people.

I would urge the Minister to consult with the people who use mobile homes, the municipalities, the park operators and the mobile homeowners' association, in developing the regulations to make this Act work for a very good purpose.

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

MR. G.S. WALLACE (Oak Bay): Thank you, Mr. Speaker. The Conservative Party supports this bill. I think the interesting thing is that we are not really dealing with mobile homes at all. The legislation is necessary because the purpose for which they are originally manufactured then is changed to make them fixed homes, in fact. The bill certainly excludes or tries to differentiate between what remains a truly mobile home and what, in effect, is a fixed residence.

I think the other point worth mentioning is that the reason this market is so much an increasing market — the whole problem that we have discussed many times — is because of the cost of housing in this country, and particularly in British Columbia. If one in every five is a mobile home, this very much exemplifies the problem of housing per se in this province.

The increasing number of mobile homes means that we should have fair and just legislation. People who choose to buy their mobile home and then fix it in a certain place — I think beyond 60 days is the

[ Page 2859 ]

limiting factor in the legislation — that they should indeed be entitled to all the provisions and also the responsibilities of any other homeowner. So we appreciate the provision of the homeowner grant and the acquisition grant to people owning these homes.

We think it is a bill which has cleaned up a lot of the unfairness which previously existed, and we hope that it's a step in the right direction for the whole housing policy of this government.

MR. SPEAKER: The Hon. Minister closes the debate.

HON. J.G. LORIMER (Minister of Municipal Affairs): Well, I'm pleased to close the debate on this Mobile Homes Tax Act. It is another one of our election promises which is coming to fulfilment.

I appreciate the remarks made by the Hon. Members across the way. I might point out that the Mobile Home Park Fee Act which was brought in a few years back was an Act which this party did not support. I'm glad to see that the Hon. Member for North Peace River (Mr. Smith) has had second thoughts about that particular bill, and it shows that there are some good ideas that do come from the other side of the House.

As I say again, this was to fulfil the promises that we previously made.

Mobile homes on private property are entitled now to receive the homeowner's grant. If they own their own lot and they're in a separate lot, they can get their homeowner's grant.

I now move second reading.

Motion approved; second reading of the bill.

Bill No. 181 referred to a committee of the whole House at the next sitting after today.

HON. MR. BARRETT: Second reading of Bill No. 179, Mr. Speaker.

BRITISH COLUMBIA CELLULOSE

COMPANY ACT

MR. SPEAKER: The Hon. Minister of Lands, Forests and Water Resources.

HON. R.A. WILLIAMS (Minister of Lands, Forests and Water Resources): Mr. Speaker, it's a pleasure to move second reading of this bill. I think it might be worthwhile to first summarize the agreement. I think that was done before the Press after the previous announcement in the House, but that hasn't taken place in the House. The Statute essentially establishes a Crown corporation, British Columbia Cellulose Company Limited, which will be a holding company with respect to the proposed breakdown of ownership of the operating company, which would be 79 per cent in the hands of British Columbia Cellulose, the remainder being in the minority shareholders.

All of the assets of Columbia Cellulose would be transferred and that would include the tree farm licences, the various cutting rights, the existing plants and sawmills, the leased companies, the paper company in Belgium and all of the various assets of the Columbia Cellulose operation.

The minority shareholders, in addition to obtaining a position with respect to the assets of the company — a position they presently don't have — would be paid dividends and rearages that are owing to them, or were owing to them prior to the agreement. So each of the holders of preferred shares would receive $1.08 in cash under the agreement.

In addition, the Crown would guarantee the liabilities with respect to the two major mortgages held by Prudential and Metropolitan Assurance Corporations as well as the debts of Celtran, which is the leasing company which leases most of the equipment to Columbia Cellulose. That would total approximately $73 million.

In addition, Celanese, the American parent, would be required to increase the level of working capital within that company to $16.2 million, and I think that probably covers the main elements of the agreement itself, Mr. Speaker.

It does seem to me that when we consider this statute it's interesting to look at it in relation to the decision already made in this House with respect to second reading of the Ocean Falls statute. There, a small town in the mid-coast region was affected. Here, we're talking about two major regions of British Columbia; both the north-west part of the province and the towns of Prince Rupert and Terrace are the major ones affected by this decision. In addition, in the south-east — in the west Kootenays — there, the town of Revelstoke, the town of Nakusp and the town of Castlegar are greatly affected by this decision as well.

The decision that was made with respect to Ocean Falls, Mr. Speaker, indicated, I think, a change of attitude on the part of the older line parties in British Columbia, that is the Liberals and Tories. And I welcome that because it was an indication that they agreed that the governments should step in where there were major economic, human or regional problems and where the multi-nationals will not look after those problems or serve the interests of the people of the regions that are affected. That is a major departure on their part and I for one, welcome it. I'm sure the government welcomes it as well.

It does seem to me that if one makes that decision with respect to Ocean Falls and maintaining the life-blood of that small community, then one has

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really no choice but to endorse the kind of action this government is taking with respect to the future of north-western British Columbia as well, because the future of Prince Rupert as a port, as an important northern city, as a regional centre, as a town with an industrial base is indelibly tied to this statute.

If those on the opposition side decide to vote against this statute, I suggest they're saying that they are not concerned with the future of the north-west because, I suggest, there really is no alternative to the proposal and the bill we have before us today.

I indicated at the Council of Forest Industries meeting last Friday that the problems of the north-west of this province were indelibly intertwined with the operations of Columbia Cellulose. If we want to achieve rational, integrated resource management in north-western British Columbia, then we have to be able to operate the Columbia Cellulose Company in a rational way in relation to all of the other decisions that have to be made.

This is a chance to rationalize the tenure systems of the north-west, a residue of the past, a residue of the problems that were created along the way by the former administration.

There are problems in terms of railways in the north-west the likes of which probably haven't been faced since the early rail building days of the CPR and they are indelibly tied to this corporation as well. There are problems of freight rates along the national railway in that region that are indelibly tied to this corporation and the other major one, Eurocan and Kitimat. There are problems with respect to port development that again are indelibly tied to the forest base of north-western British Columbia. We really need to be able to work with the various elements of the problem in the north-west to solve the problem in a reasonable way.

I would suggest, Mr. Speaker, that in the past, the former government tended to accept a twisted development pattern in this part of the province, tended to concentrate their efforts more in the north central part of the province and more in the lower mainland — in effect leaving the north-west separate. I suggest that part of the reason was the continuing antagonism between the federal government and the former provincial administration. They would try and bypass the federal administration at almost any cost.

I would suggest much of the rail line built in north-western B.C. in recent years has been a costly duplication of what the federal government had already done many decades ago. But, it is now a fact; and the choices we face there are the decisions to be made in the future. We have to deal with that fact. But, we have an opportunity to rationalize the rail system of that region; we have an opportunity to maximize the returns to the public of British Columbia and the people of that region. This statute will provide us with that opportunity.

We've tended to concentrate on the north-west because it's such a fascinating problem, Mr. Speaker. But beyond that, there's the question of the Arrow Lakes which are also greatly affected by this statute. The Arrow Lakes, as I mentioned earlier, and the communities of Revelstoke, Nakusp and Castlegar again have futures that to a very great extent are tied to this corporation.

This corporation — American Celanese Corporation — as parent-owners based in New York in the past have received a return — there's always been a profit from the Castlegar operation. But there hasn't been the input of capital into that region or that plant that was deserved, partly because of the problems in the north-west. As a result, that part of the west Kootenay has become a static region when it needn't have been a static region at all. It was a static region because the resource, in effect, was enclosed.

I suggest, Mr. Speaker, it is not all that different from the early enclosures in Great Britain — the enclosures of the commons. The enclosure of these great common lands, the forest lands of British Columbia in this manner — in effect, absentee landlords — has been a cost to this province, and certainly a cost to that region and to the north-west.

The enclosure of the commons — that is, the Arrow Lakes north of Castlegar and up into the Big Bend, has meant that the trees, the basic resource of that region, have been grossly under-used for decades. There is a need to apply more capital in the west Kootenay; and there's a need to apply more labour in the west Kootenay, and this multi-national proved unable to bring that about.

We have the resource; we can do the job in the west Kootenay, as we can in the north-west. This statute will provide us with the opportunity of doing so.

Rather than having another decade of an under-used resource, a lack of application of labour where it's needed, a lack of application of capital where it's needed, we can provide a major spurt to the growth of the west Kootenay as well as north-western British Columbia. The people of that region, the towns of that region, the region itself has suffered under the situation they've had to live with. This is an opportunity to change that.

The enclosure that I've talked about in the west Kootenay is even more massive in the north-west. The northerly part of the tree farm licence in the north-west has never been touched — never been touched and yet allocated. An allocated resource for over 20 years; sitting there enclosed, but never touched — never the application of labour, never the application of capital. And we need all that in order to develop these regions in B.C.

This is no small enclosure, Mr. Speaker. We're talking about 9.1 million acres. That's 1 1/2 times the state of Switzerland. That kind of enclosure, that

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kind of withdrawal of the landscape from the people of this province is what we've lived with for the last 20 years. Those regions can be opened up. They can be developed; they can be used productively and in perpetuity and it will be a great opportunity for this quasi-public corporation to take on.

Now the question of the minority shareholders. I think in view of the history of the former administration, we should talk about the position of the small shareholders in the Canadian economy, because the history of the former administration is not all that good. Let's not forget Commonwealth Trust and the kind of position that former administration took with respect to those small shareholders here in British Columbia.

We've carried on discussions in a responsible manner, Mr. Speaker. We've met with Merrill Lynch and the great people in this kind of business in Toronto, in Boston, in New York. We've had discussions with them regarding the position of the minority shareholders, and we've had various advisers in this regard.

It has become abundantly clear though, as we initially analyzed the problems of this company that those minority shareholders, essentially Canadians, had no call whatsoever on the assets of the company. The debts that the company had with respect to the parent — the Celanese Corporation — were such that there was absolutely no way that the Canadian shareholders could have any future whatsoever.

This concerned us, Mr. Speaker, because many of these minority Canadian shareholders are people who work in the plants themselves — people who work at the plant at Castlegar, people who work in the plants at Prince Rupert. To ignore them, as I suggest might well have happened otherwise, would have been totally irresponsible.

I would suggest that the deal that the former government was looking at, that is the severance of the southern operations of this company, allowing the acquisition of the southern operation by Weyerhaeuser, would have meant the end for the minority shareholders within the company. The annual reports of the Celanese corporation in New York actually spelled that out: that, in effect, there would be no assets whatsoever that the small minority of essentially Canadian shareholders could call upon with respect to the deal that was underway.

I suggest that the former administration was prepared to accept that kind of deal, Mr. Speaker; that is, the severing of the company's profitable operation. It's very difficult to understand the company carrying on to the extent they had with a virtually completed deal as of August 30, the time of the last provincial election. It may seem ironic to some, Mr. Speaker, that it takes a left-wing administration in this part of the world to protect the position of the minority Canadian investors, but apparently it does.

I think that the Columbia Cellulose problems and the problems of an absentee-managed corporation, as it was to some extent, should be a lesson to us all. These are our trees that we're talking about. It's our land we're talking about. Frequently, it's our savings that we're talking about. And it's our people that we're talking about. Do we really believe that we can't do the job here at home that the absentee owner could not do? I think not.

One can't help but compare it with the situation in the Maritimes with respect to the steel corporation that had to be acquired as a public corporation. This is one of the success stories in Crown corporations in Canada in recent years. The absentee owner in that case, a British absentee owner, decided to pack it up. The people of that area decided they could do the job and they could make it work profitably for them and their region. They proved to be right.

Mr. Speaker, I suggest that the people of British Columbia can do the job that needs to be done, both in north-western British Columbia and in the west Kootenays.

As a result of this whole exercise, we might reflect on the role of absentee multi-national corporations and their responsibility in our society. Mr. Speaker, I'm convinced that this is a problem of a major scale. But more than that, it's a grand opportunity to change the future for both the north-west of British Columbia and the west Kootenays at the same time.

I'm pleased to move second reading of this bill.

MR. SPEAKER: The Hon. Member for North Peace River.

MR. SMITH: Mr. Speaker, commenting on second reading regarding Bill 179, an Act to establish the British Columbia Cellulose Company, a Crown corporation, it's just one more indication of the direction the NDP wish to take in this province.

It is blank cheque authority similar in nature to the blank cheque authority that the government has seen fit to place in its hands with many other bills that were before this House and have been debated. The final results of the entry of this government into the private sector, I suggest, Mr. Minister, will not be known for some time to come. You can have a field day today, expounding the virtues of the government going into the private sector of business, and no one can say positively whether you made a correct decision or not.

But the time will come, and I suggest that it's not very far down the road, when we'll all be able to look at the business deal of the Minister of Lands, Forests and Water Resources on a much broader basis than we can right now and in a much more critical manner. This deal has been put together on the basis that we were going to repatriate 9.1 million acres to the

[ Page 2862 ]

Crown, as if somehow 9.1 million acres of forest land resources had disappeared forever out of the control of the people of British Columbia. What nonsense.

The Minister himself realizes that the Legislative Assembly and the government always had control of those 9.1 million acres. While it was leased out on the basis of a TFL licence (Tree Farm Licence), rearrangements would and could be made for any land under the TFLs in this province. So the idea that this had to be put together and that somehow you had to use the credit of the Province of British Columbia to purchase 79 per cent control of a corporation just to repatriate 9.1 million acres of forest lands is, in my opinion, nonsense.

The only way that this will be put together in a manner which will make it economic will be to provide transportation facilities for those areas of forest lands presently not serviced. I suggest that the transportation facility that will be built to service that area will be an extension of the B.C. Railway at a cost of some $200 million at least — that that will come directly out of the taxpayers of this province — that the Minister has been very careful not to say anything about the amount of money that will be required to update plant and equipment in the areas to bring them up to pollution control standards that we would like to see in this province; that the total cost before we even know whether this will be an economic venture or not, could exceed $500 million, directly out of the taxpayers of the Province of British Columbia.

Yes, Mr. Speaker, the full ramifications of this particular bill will not be known for a year or two. But we do know this: that it is the same type of blank cheque legislation that the government has repeatedly put before this House in this session. We do know that the government is determined to move into an equity field not only in the forest industry but in many other sectors of private and individual enterprise in the Province of British Columbia.

It's a takeover government. It's a takeover bill. It's blank cheque legislation. We don't accept it.

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

MR. D.A. ANDERSON: Thank you, Mr. Speaker. I think the proposal in the principle of this bill was well-explained by the Minister. There are a number of things that I would like to comment upon at this stage.

I did listen with surprise to his statement that if one supports any public ownership, one must therefore virtually support all. At that time he was referring specifically to the two old-line parties which presumably includes myself. He stated that we had accepted public ownership in another bill. Therefore, we were honour-bound to follow suit and support him in this.

HON. MR. WILLIAMS: Well, I thought you might be consistent.

MR. D.A. ANDERSON: Perhaps I should point out to the Minister that his knowledge of history is a trifle weak. Old-line parties, both Conservative and Liberal — I won't speak for the Tories but I will speak for ourselves — have consistently in the past gone in through Crown corporations where it was required in the public interest or where there was no alternative by way of other private facilities. Federally, there are at least 30 examples of this. Provincially, the PGE was the first example of old-line parties getting involved in an area where the private company was in difficulty. B.C. Power Corporation was another. Federally, we have Polymer and Pan-Arctic, which have been mentioned in recent days in this House.

So to suggest, as the Minister did, that this is the first time that we have ever become involved in the question of public ownership in a Crown corporation is fallacious.

HON. MR. WILLIAMS: You're in favour of Pan-Arctic?

MR. D.A. ANDERSON: We'll discuss Pan-Arctic in the forum where Pan-Arctic is discussed. I have discussed Pan-Arctic there. But if you're putting in a bill on Pan-Arctic, Mr. Minister, I'd be delighted to discuss it with you.

HON. MR. WILLIAMS: You're not sure.

MR. D.A. ANDERSON: The fact of the matter is that here we have a difference in point of view and philosophy which is shown up very clearly. We don't think it is good for the government to be in business. We think it's preferable to keep private industry in its area and for government to restrict itself to where it has many things to do.

So the distinction I make there is important when dealing with this bill, because the Minister has suggested, without giving proof, that somehow or another a Crown corporation is the only thing that could work in this area and could help the north or the north-west.

He shakes his head and I can take him as being firmly convinced of this, because of his philosophy that he's expressed over the years in favour of public enterprise as opposed to private.

Yet the facts on this particular problem of transportation and the cost factors of the forest industry in the north-west are not quite as simple as the Minister made out.

Back in July of last year proposals were released dealing with transportation in the north-west by the

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federal and provincial governments. At that time it was the Social Credit government which was in power, of course, and they were discussing with the federal government improvements to transportation, which was described then as the key to making operations in the north-west successful. Indeed, I gathered from the Minister's statement today that he believes that to be the case as well, when he talked about rationalization and other things.

We have no quarrel there. The Hedlin Menzies report, which I will quote in a few moments, makes the same point. It is really rationalization of transportation and lowering of transportation costs which give the opportunity to the north-west to flourish — not Crown ownership or public ownership or private ownership, for that matter. It is an improvement of transportation facilities which is the key in this area and not simply the creation of a Crown corporation.

HON. MR. BARRETT: Who owns the railroads?

MR. D.A. ANDERSON: Governments own them. I pointed this out earlier, Mr. Premier — perhaps you missed the point. I mentioned the PGE which, of course, became the BCR shortly prior to your taking the presidency.

So, we are in an area where transportation is probably the key factor. As I said earlier, Mr. Premier, providing infrastructure is one of the functions of government; we certainly have always believed that. This goes back with the old-line parties, the Conservative Party in particular, to the building of the CPR.

AN HON. MEMBER: We have the CPR now. We know your policies.

MR. D.A. ANDERSON: Well, sometimes we wish we knew yours a little better.

MR. SPEAKER: Order, please. Would the Hon. Members please address the Chair?

MR. D.A. ANDERSON: The proposals that were put forward last July, Mr. Speaker, were recorded in the Vancouver Sun of July 4. They talked about construction of three new railway lines to serve the forest area in the Prince Rupert-Nass River-Babine Lake area, and this was considered to be the key in terms of lowering the costs of raw materials. Reducing costs of transportation was considered the key to making the operations of the forest industry in the north-west profitable.

There were other proposals put forward, not all of which are applicable to this particular industry in that particular part of the province, but the spur lines were considered to be critical, and they were put forward by the then Minister of Transport, Mr. Jamieson, and commented upon by the then government.

I think it is important at this stage to go back and have a look at some of the things that were said about the north-west and its potential in the Hedlin Menzies report, which I have in my hands, dated November 1970, when dealing with transportation in the area. May I point out at this stage that he's not talking about a Crown corporation in the area. He's simply talking about — or the report simply talks about improved transportation facilities. It says, Mr. Speaker, in paragraph 17:

"A major benefit created by new rail facilities would be to assist directly the development of the mining and forest resources in the Canadian north-west. Resource net benefits estimated to result from this resource development range from a low of $96 million to a high of $366.1 million (at 7.5 per cent discount rates)."

Paragraph 26:

"Employment in the region's forestry and mining industries could be increased by 18,500 jobs during the next two decades, creating a total increase in the regional employment of approximately 37,000 jobs. Major new rail facilities would in themselves generate resource development responsible for approximately one-quarter of this employment growth."

It goes on to talk about population, which would increase by some 129,000 people in that particular area.

So we have a situation where a report was done in 1970, released last year, which talks about the development and the improvement of existing economic conditions in the north-west. It talks in glowing terms about the returns that can come from improved transportation facilities, and it in no way suggests that a Crown corporation is necessary to achieve either that growth in population or that growth in employment.

This point I felt would have occupied the Minister for some time in his introduction of this bill, because if the Crown corporation is to do all the things he said it was, something is seriously wrong with the Hedlin Menzies report, which indicated that it could come regardless of whether a Crown corporation was set up or not. Indeed, the report was written with no thought, apparently, as far as I can see, of the establishment of a Crown Corporation.

So once more we are in the problem area. What will create improvements in the area in terms of jobs and in terms of economic conditions? It certainly, from what the Minister has said, is not dependent on a Crown corporation.

What is important, and that is utterly clear to us all, is that transportation be improved, I'm delighted that the Minister talked about the now successful

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negotiations that he is having with the federal government with regard to the north — a position which contrasts sharply with the statements of the Premier, but contrasts sharply in terms of making a great deal more sense than the statements of the Premier on this particular issue.

So what we have, then, is a proposal for a Crown corporation to enter into the forest industry which is not, and has not been, supported by the facts of the case or by the economic studies done in the area.

AN HON. MEMBER: Oh, go on!

MR. D.A. ANDERSON: It is not a case of having to have a Crown corporation in this area to achieve the increases in jobs and productivity which the Minister talked about.

. He knows, and I know, and anyone who has read the Hedlin Menzies report knows as well …

HON. MR. WILLIAMS: Do you have to be fed with a silver spoon?

MR. D-A. ANDERSON: Your own backbench can't find that funny, either. Tell them when you want them to laugh, in future.

The fact is that we just don't need a Crown corporation in this area, and there has been no proof, or at least no evidence produced by the Minister, that it is needed.

Sure, there have been mistakes in judgment and bad management by Colcel — there's no question about that. The same mistakes and the same errors occur in Kaiser and in other major international corporations he talked about, including Sydney Steel in Nova Scotia, where better management was the key to improving its financial fortunes and not the Crown corporation structure which was set up.

HON. MR. WILLIAMS: They provided it.

MR. D.A. ANDERSON: True, it did. And in many cases Crown corporations, Mr. Minister, have provided bad management as well.

You're perfectly right in stating that foreign corporations are not always best in judging local conditions. You're perfectly right in saying that they often have bad management, and we've had plenty of examples of that in this province. But that is no excuse for suggesting that therefore you must have public Crown corporations taking over in the private sector.

You are, I am sure, intelligent enough to understand that. Good management does not necessarily follow in Crown corporations and bad management does not necessarily follow in private corporations.

You know that and I know it, but please don't argue that because there are successes in Crown corporations, many Crown corporations set up by this party …

HON. MR. WILLIAMS: I promise.

MR. D.A. ANDERSON:…that somehow or another a Crown corporation is necessary to have good management.

We think that had the government done more in terms of the tree farm licences in allowing perhaps more of the smaller operators, had they done more in terms of rational transportation, we could have achieved, or we would achieve and will achieve, the growth of the area, protection of the existing jobs, development of new jobs, without getting involved at the government level in ownership of this particular corporation.

We realize that the reasons for it are of course the ideological position of your party, and we respect that — you believe in public ownership of private corporations and in the private sector. But to suggest, as you have done, that first, good management always follows Crown corporations, and secondly, that the key problem is not transportation, but is ownership, is fallacious, and we reject that. In rejecting it we will reject this bill in principle.

MR. SPEAKER: The Hon. Member for Skeena.

MR. H.D. DENT (Skeena): Mr. Speaker, it is with a great sense of pride that I support Bill 179, a bill to create the British Columbia Cellulose Company. I want to begin by saying that there is a new sense of security in the whole of the north-west of the province as a result of the action of this government.

It's an action similar to that in regard to the Ocean Falls situation, but it is of far greater significance and with far greater ramifications than the actions regarding Ocean Falls and the Kitwanga area and in other parts of the riding.

There are the employees of Pohle Lumber in Terrace, a company that traces its history right back practically to the beginning of the Town of Terrace. There is the Kitwanga Lumber Company at Kitwanga. There is also the Twin River Lumber Company in Terrace, another significant lumber-producing operation in the north-west.

The direct employees involved in these operations number in the hundreds. As I said, these men and their families enjoy a new sense of security today as a result of the action of this government. There was a serious possibility that their jobs might be in jeopardy had the original plans been carried through by Celanese of the United States. They would have sold out all of their southern operations and possibly closed down, either temporarily or permanently, some of their northern operations. Or they may have

[ Page 2865 ]

sold them on a piecemeal basis. There was a great undercurrent of uncertainty which has now been removed.

But it's not just the direct employees and their families who enjoy this new sense of security. It's all of the subcontractors and contractors who service these Colcel operations as well. Then there's the business community. The small businessmen through the whole area, and especially in Terrace, again enjoy this sense of security that has come as a result of government action.

It doesn't really need to be explained that thoroughly — I think people understand — but the infrastructure of small business depends on a viable economy. That is true for those involved in the tourist trade as well. There are large hotels, such as the Terrace Hotel, the Lakelse Hotel and many others, that depend on the year-round business of the full-time employees living in Terrace and their families who may go to the local pub or whatever. They maintain the viability of these businesses.

If these operations close down, it's very likely that places like the Terrace Hotel and Lakelse Hotel and many other businesses would no longer be able to operate. They would also have been in jeopardy. They too enjoy a new sense of security as a result of this government action.

Then there is transportation, which has already been touched on. In the Skeena area we have hopes of moving ahead with the development of new transportation facilities — with a railway to the north and with a highway ultimately to Stewart. We're not certain what the route will be. Perhaps it will be through the Kispiox Valley. Perhaps it will be Kitwanga. Maybe it will be another route. But some day this is coming. It may be a surprise to many people down here to know that there is still no first-class road or highway connecting Highway 16 to the Stewart-Cassiar road. We have hopes of that coming soon.

All of these hopes for improved transportation facilities — whether rail, highways or whatever — would depend on having continued stability in the forest operations now existent in that area, namely the Colcel operations. Had they got into serious trouble, it could have put back improvements to the transportation network there for some time. That would have affected development in mining and many other industries in the future. So again the prospects for improved transportation facilities, and the security that is necessary to maintain the present facilities and other government operations in the area, have been greatly enhanced by the action of the government in establishing this Crown corporation.

We've already talked about the humanitarian concern shown in regard to Ocean Falls. I repeat that what happened at Ocean Falls was just a small thing compared to the humanitarian considerations in the actions of the government in establishing this Crown corporation in the north-west of the province.

The formation of this Crown corporation is a tremendously human Act. It was done for the purposes of benefiting people, giving them security, and ensuring that they have jobs, that they have a future and that they can get proper transportation facilities. It's a human consideration, not merely an economic one. However, I am confident — and the average worker who works for Columbia Cellulose or any of its subsidiaries in the north-west is convinced — that it can be made economic by our government.

In fact, many men who work for Colcel operations have come to me and given me suggestions as to what could be done in practical ways to help make this company a success. They want it to succeed and they're willing to help the government make it succeed.

The crises of uncertainty for the north-west of the province is over. The people are happy. They're confident that we have done the right thing in forming this corporation and they're now looking forward to an era of great progress in the future.

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

MR. WALLACE: Thank you, Mr. Speaker. In opening the comments for the Conservative Party, I would say that this is perhaps the most difficult bill of this whole session for me to reach a decision about.

Interjection by an Hon. Member.

MR. WALLACE: I'm speaking as to what I think, Mr. Member. I always will in this House.

While many of the considerations are similar to the Ocean Falls situation, on this bill one has to take into account the very much wider ramifications of attempting to bolster a whole area, as the Minister has pointed out. In the case of Ocean Falls we were trying to prevent the death of one town, where many of the considerations were somewhat unique in relation to its geographical location and its isolation. We needn't go over all that again.

In the case of the Colcel bill we're dealing with vast sums of money. With respect, I think that for the Minister to talk about the replacement value of $200 million is really not nearly as relevant as the possibility of the project functioning profitably once it is resuscitated. I read a very appropriate comment somewhere that to talk about a replacement value of $200 million was like saying that you could get a good deal on the Maginot Line.

I think that what is so central to this question is the judgment of the government as to whether the action it is taking can result in a profitable enterprise providing more jobs. It's as simple as that.

[ Page 2866 ]

I think that one point should be made clear. As a party, we are eager to stimulate and support the private sector of the economy of this province. To me, the history of Colcel makes staggering reading. When you read some of the mistakes which that company made in setting up the sulphite pulp mill at Prince Rupert, you have to wonder what kind of management was in charge at that time. We don't have to go into all the details, but I gather that up until that time Celanese had never built a pulp mill. This was their first venture. The consultant who was given the job had never been on the west coast to build pulp mills either.

I also understand that their No. 1 woodshop was on the highest part of the island, so they had to use all kinds of power to drag the logs up to be processed. They neglected some local advice also and had some million board feet of lumber float out into the ocean, and things of this nature.

So to try to put this whole debate into context, it's not my contention that the private sector can always do things well. In the main they do, and this is why we believe in supporting them as far as possible. But it should not be blind support. There are exceptions to every general rule or principle. Although in principle and in general we encourage private industry and at all times would wish to encourage the industry rather than have government participation, the sad and sorry record of this particular private enterprise doesn't bear very close scrutiny.

Therefore, the question is whether or not government participation can make the whole industry in the north-west area both profitable and job-creating. In an earlier debate I quoted the Premier, who was interviewed by the Financial Post. He stated that of course the government wasn't going to be taking over losing enterprises and small towns where there would be continuing losses. That would be exactly our policy if we were government. We wouldn't take over a series of losing enterprises either.

So that brings us back to the very central question in this bill: can the government convert what was a badly-managed money-loser into a well-managed, profitable enterprise?

The sums of money involved are considerable. We're assuming about $70 million of debt for starters. So much also seems to depend on the advantage which the government claims to have over any private corporation: namely the advantage of building a transportation strategy to take spur lines of the railway closer to the timber and mineral reserves and to negotiate agreements with the other national railways.

The claim, of course, is that no private corporation could establish that prerequisite in order to make the operation profitable. I think this is the other very contentious aspect of this bill. In humanitarian terms no one can question that if the government is convinced it can convert this into a profitable venture with wiser and better use of our resources and at the same time create jobs and prevent Prince Rupert from going the way that Ocean Falls was headed, then it's very difficult to argue against such a well-motivated and humanitarian goal.

The people of British Columbia, I think, in general are expressing concern at the first moves which this government is making in the area of trying to create jobs and revive industry; that they are taking over companies or towns that are in real financial difficulty.

But I think it is interesting, Mr. Speaker, that the letters I've received from people living in the Terrace-Prince Rupert area, some of them from members of the Conservative Party I might say, have chided me for the comments I've made already that we view with some apprehension the government moving into proven money-losing areas.

The letters that I have received point out to me that maybe I'm taking a rather tunnel-vision approach and looking too consistently at the whole question of profit and loss in terms of dollars only.

One or two of the letters from Prince Rupert say that the people up there are certainly very pleased at the government action, and that they faced what they considered a very uncertain and dim future if there was not some stimulus taken to save that industry.

Of course this is not the only way that it could've been done. The question really that we have to decide, each one of us for ourselves in the debate, is whether there were alternatives other than this very major step which government is taking with the taxpayers' money.

It's all very well to state that you have humanitarian aims of creating employment, and saving a town from withering on the vine; but if the government has miscalculated about the fate of their endeavours in this particular large segment of the province with such large sums of money involved, then the money that might be lost in the ultimate analysis could well be a great deal more than the money involved in rehabilitating Prince Rupert or providing alternative solutions to the unemployment problems in that town.

We recognize and agree with the government as to the obvious sense in developing Prince Rupert as a deep-sea port to a greater degree than has already been done.

Another factor which I would like the Minister to comment upon is the whole question of labour relations in that area. Could the Minister tell us to what degree there have been discussions with the labour unions concerned, and to what degree the government anticipates cooperation and harmony — as far as ever can be reached between employee and

[ Page 2867 ]

management in these days in which we live.

Because in fact the Minister is offering this project to save jobs and create jobs, has he had any sign or any promises or guarantees of labour peace to the degree that that could ever be established?

On the other hand, does he have any apprehension about the degree to which the labour unions will cooperate in this very far-reaching project? I would also like to ask the Minister to comment on the role that senior management will play and to what degree he is expecting that new blood will be brought in, or whether he can depend on those that are already there.

But we also appreciate the comments the Minister has made about protecting the minority shareholder. I think for this the government deserves credit.

But to reach the nub of the problem and to sum it up as far as I am concerned, I am apprehensive because of the very major involvement by the government financially in an operation which has been a money-loser, and in which the whole background to the problem, or the whole reason for the government taking this action, is predicated on the statement that they have advantages which private industry could not have in terms of transportation. Having supported the Ocean Falls concept, which was the same kind of thing on a small scale, I feel that it would be inconsistent of this party not to take the same attitude towards Colcel.

But for the other reasons I have also mentioned, and the massive nature of this project and the kind of sums of taxpayers' money which could be lost, I cannot in all conscience say I am as enthusiastic about this very large scale project as I was about Ocean Falls.

I suppose that will immediately bring remarks that I'm waffling. But I'm really not waffling in the sense that the two are comparable only in terms of humanitarian goals. But in financial terms they are really not comparable to a great degree because of the massive sums of money we are involved with here.

I often am teased about my ethnic background — but my concern for money I think is one that every politician should have. We are entrusted with handling the taxpayers' money and I'm sure nobody in this House or in this province would be reluctant to approve the kind of deal which would achieve these two goals that I mentioned — and I'm being repetitive — the goals of creating jobs and converting this into a profitable enterprise.

While I've also voiced my apprehension, in balance I feel that this project is one that will achieve these two goals. I'm afraid that other factors may crop up which could well put the project in jeopardy. We are certainly going on the Minister's word that he anticipates fruitful negotiations regarding the railways, and that with negotiation on freight rates we can have the advantage which the private sector did not have.

But on balance, we feel that the widespread effect which would have happened in a large part of the province had this company been allowed to go bankrupt justifies the action of the government. But we reserve our right in the years to come that if the government, in its management policy through this Crown corporation, is no more efficient than the Celanese Corporation was, then we'll bring all the wrath of' the taxpayers down on your head. We're telling you that right now.

The position that I take on this bill is based on — it probably should not be assumed — the hope and confidence that you, as government, in this enterprise will do a great deal better in simple planning and management than was demonstrated by this particular aspect of the private sector of the economy.

And therefore, for these various reasons, this party will support the bill.

MR. P.L. McGEER (Vancouver–Point Grey): It's a pleasure to be back in the House.

AN HON. MEMBER: Did you have a good trip?

MR. McGEER: Very nice, thank you.

It's a pleasure to discuss a bill with the Minister of Lands and Forests who is the real driver of the economy in British Columbia and, I suspect, the person who controls the economic destiny as far as the cabinet is concerned. It isn't just that this is the biggest deal as far as this session of the Legislature is concerned — and I hope it's the biggest deal of the tenure of the government because I would hate to think that the government was going to attempt to bite off boluses of this size at regular intervals — but mostly because the attitude towards the north and its development has undergone quite a transformation since the days when the Premier — I'm only going back to last fall now — expressed such a disinterest in north-west British Columbia when we were having a debate about port development. At that time the Premier could think only of the need to develop Britannia and the Howe Sound region for industry.

Now that the real leader — as far as the economy is concerned — has taken an interest in things, we're back to heavy development in north-west British Columbia and particularly Prince Rupert. Well, that's fair enough. It's really quite a significant swing in emphasis and it tells us something about the personalities in the cabinet as well.

Unfortunately, Mr. Speaker, we can't support this move. I want to outline to the Minister and to the Legislature our reasons for doing so. They've been very well-covered by the Liberal leader, and he quite clearly indicated that we're a party that's prepared to examine any proposition on its merits.

[ Page 2868 ]

In the case of the Ocean Falls deal, we were into something that had high social value and limited economic consequences. The consultants' report indicated that, at least in the short run, that corporation could make money and it wouldn't require a heavy capital investment. Naturally, our party thinks in terms of phasing out that operation before we get hooked in too deeply. At least there's breathing time in which the Minister can think of good and imaginative alternatives for the future of that particular community.

Now, Mr. Speaker, when we come to north-west British Columbia, we're looking at something with fantastic potential and where the economy of that region can take off without the assistance of heavy capital investment from the public in the private sector, in the forest facilities themselves. What is required, Mr. Speaker, is the investment of public funds in the infrastructure.

Mr. Speaker, could I go back for just a moment to the key report? The key report was the Hedlin Menzies report tendered to the federal government in 1970. I'm sure that the update is an optimistic one, Mr. Minister, but even going back to 1970, the Hedlin Menzies report pointed out that the timber harvest could be increased by 446 million cubic feet. The way that I work that out, it is more than 2,000 per cent — twenty fold; that's a lot of per cent — without any need for the government itself to build the forest facilities.

As a dividend the report indicated that mineral production could go up by 560 million, an increase of almost 1,000 per cent, without any need for the government to invest in mining development. What was involved to bring the 2,000 per cent increase in timber production and the 1,000 per cent increase in mineral production was only to build the railroad facilities.

HON. MR. WILLIAMS: Only!

MR. McGEER: Now, Mr. Speaker, I want to come to that. The Minister says, "Only." The whole reason why we oppose this entry is that it will take all the reasonable capital that this province can find to create that infrastructure. Our return, Mr. Speaker, on the infrastructure itself will be handsome. More than that; in those operations that are attracted into the area by this adequate infrastructure, we will be more than half-partners in all the profits that they make.

The provision of capital that those firms, whoever they might be, can supply, the profits that they make, the initiative that they show, the management skills that they assemble — all of these things, Mr. Speaker, we share in to considerably better than 50 per cent.

We're more than major partners to begin with because we get corporation tax, logging and mining tax, royalties and stumpage, local taxes, income taxes from the workers, sales taxes from all the equipment and machinery that's been brought in. This adds up to such a large percentage of the total of whatever is obtained that our task, Mr. Speaker, is to use the public capital to lever as much of this as is possible.

The Hedlin Menzies Report indicated that the number of jobs that could be produced in north-west British Columbia within two decades was more than 37,000. So what we're talking about, Mr. Speaker, is something very, very big; something we submit that the government and the people can profit more from in financial terms and benefits to every citizen of British Columbia by becoming partners rather than controllers.

Mr. Speaker, if this was the best way to go about things, every country in the world and every province in this nation would have a socialist government. The fact that these socialist governments are not common is because of their almost universal failure in endeavours of this kind.

Make no mistake about it, Mr. Speaker, this is not Swedish-style socialist government. It's more like what the British Labour Party did after the Second World War, moving into the private sphere at a time of great opportunity when other European countries were expanding rapidly to fulfill a void in supply of almost every conceivable kind of consumer good. The lesson for Britain was a grim one, as the Provincial Secretary (Hon. Mr. Hall) and the Minister of Social Rehabilitation (Hon. Mr. Levi) should realize. That country has been under-performing ever since the Second World War and is dragging behind the other nations of Europe despite an enormously talented people.

Similar arguments could be set forward with regard to Canada because in the Province of Saskatchewan there is the same enthusiasm to move into the private sphere that this government entertains.

Finally the great day has arrived when different values can be put forward from government; where we can do the right social thing and we can do the right economic thing for the workers.

HON. MR. WILLIAMS: You'd better believe it.

MR. McGEER: "You'd better believe it," says the Minister. Well, Mr. Speaker, what the public of British Columbia had better believe is that this brought disaster to the Province of Saskatchewan, and so many of the people from that delightful province moved out to British Columbia.

Interjection by an Hon. Member.

MR. McGEER: Let's hope, Mr. Speaker, that the

[ Page 2869 ]

current NDP government in Saskatchewan doesn't feel compelled to go into a box factory …

AN HON. MEMBER: They went into the meat-packing business.

MR. McGEER:…a shoe factory and into the meat-packing business. Because it was five corporations up, and five corporations down within a very short period of time after that Tommy Douglas government in Saskatchewan took over.

If one goes back and analyzes what was involved in those early and disastrous days, it was exactly the same kind of good Christian thinking that lies behind some of the decisions of the current NDP government. Mr. Speaker, I know that you will understand this particularly well. The need to save jobs, the need to look after communities — excellent motivations, Mr. Speaker, but done without sufficient attention being paid to the dictates of the marketplace and the overwhelming need in any enterprise to have management skills.

As with the new NDP government in British Columbia, that first socialist government of Tommy Douglas lacked capable industrialists with management skills. Nevertheless, they rushed in — I won't say "like fools," Mr. Speaker. But the results were not happy results for the government or for the people or for the individuals involved in those enterprises.

I must say, Mr. Speaker, that when decisions have been required on the part of the new government, there has been very, very little reluctance on the part of the cabinet to dash into the private sector of the economy. Certainly the Columbia Cellulose situation invited some kind of intervention.

Mr. Speaker, the Columbia Cellulose deal years ago was the first entry that the provincial government made into the tree farm licence field. It set a pattern. Mistakes were made — I think we're all aware of those mistakes. The corporation that moved in, the Celanese Corporation, wasn't interested in forestry. They were interested in a long-term supply of alpha cellulose as the basis for their fibre mills Because of that, they went about the business of looking after that tree farm licence in an unfortunate way. They built their pulp mill in the wrong location. They decided to use round wood for their pulp supply — clearly a waste of the good lumber in the trees.

The board of directors of that corporation had little interest in the forest industry. When other attractions appeared before that company, they began to neglect their investment in British Columbia. Mr. Speaker, the attractions for the Celanese Corporation were really twofold. One was that they had an alternative and cheaper long-term source of supply for their fibre. They didn't need the trees; they could get it from cotton. Secondly, they had other fibres that were of interest to them and which turned out to be more profitable for their operation.

Interjection by an Hon. Member.

MR. McGEER: But their primary interest was not in forestry. Their primary interest was in fibres. One of the fibres that the company went into was a competitor for one that I had worked on developing as an industrial chemist when I was with the Dupont company. Starting with the test tube, Mr. Speaker — which is what we did in our corporation — a product was developed which soon exceeded in sales value the total amount of fibre that could have been made from all the cellulose operations in British Columbia. Naturally, that corporation became more interested in investments that had greater consumer promise for them.

[Mr. Dent in the chair.]

I mention this little side issue to explain how vulnerable the economy of British Columbia is to changing inventions and consumer developments as a result of advanced technology, based so much as it is on a limited variety of natural resources. This is an aspect of industry that we don't participate in at all. But when the total output of a town, such as Woodfibre, is to supply a single mill with alpha cellulose, such as at Marcus Hook, Pennsylvania, and when the demand for that product is decreased because of competition from other fibres, then the town virtually shuts down. We had this happen a few years ago at Marcus Hook.

So, being a supplier of natural resources, British Columbia is very much at the mercy of technological developments in other countries. Certainly this sapped the will of the Celanese Corporation to develop the promise that is revealed in the Hedlin Menzies report.

What the departure of Celanese offered to the government and to the future of the province is a complete renegotiation of the tree farm licence concept.

In our view, Mr. Speaker, what the government should have done was to have committed itself to its traditional job, which is to supply the infrastructure to transportation; to use whatever capital we can get from the pensions funds and all the other captive sources of supply to build those railroad facilities. It should have then opened up that tremendous area of timber to a new type of forest management contract that would be attractive to any forest giant, but which would compensate for all of the ills that were built into the original contract and which were perpetuated and extended with the other tree farm

[ Page 2870 ]

licence agreements that were signed in subsequent years.

Interjection by an Hon. Member.

MR. McGEER: "Pipe dream," says the Member opposite, Mr. Speaker. That Member opposite, if he can't use more imaginative thinking than that, should not be sitting in this House at all.

Believe it or not, Mr. Speaker, the precedents that are set by the initial deals that a government makes, have a profound and lasting effect over a number of years with all of the subsequent negotiations that have to take place. Mr. Speaker, instead of the government supplying and guaranteeing the transportation infrastructure that would be attractive to any investment, what it has done is to see the investment crippled, try to take it over at bargain prices and run the whole operation itself. Mr. Speaker, a person would have to be blind not to see the damage that that will do the confidence in other operations.

The other aspect, Mr. Speaker, that everyone has to be able to see is that we have a new and senior partner sitting down now at the bargaining table with labour. The big question on the minds of everybody today in the private sphere of the forest industry is whether or not the B.C. Federation of Labour will be sitting down with the Ministers in Victoria to determine what the wage rates are or whether they will be sitting down with the bargaining agents of the industry.

Whether we like it or not, Mr. Speaker, there are any number of ways that governments can adjust the situation to make their own operation appear profitable while creating conditions that will kill off their competitors in the private sphere.

You can build the roads, you can be selective as to where you put your transportation facilities, you can adjust the stumpage rates, and I don't need to list the hundred different things a government can do to provide advantages to its own corporations without it being obvious that the deck has been stacked.

But, Mr. Speaker, if you are sitting on the side of an industry trying to compete and do its job well in competition with other private firms, you wonder where your future is going to lie with this sort of Damocles sword hanging over your head.

The philosophy of the government is to say, "Do it the best you can and if you are in trouble we'll review the situation on stumpage policy," or whatever it might be. What they will be sitting and doing, if past history is any example, is chuckling in the cabinet room and rubbing their hands with glee because this is another one they can get hold of at bargain basement prices.

So, Mr. Speaker, no matter how successful this operation might be — and I would submit that it will be successful. Any donkey could make it successful by building the transportation facilities. All you have to do is put the railroad in there and set an attractive rate per carload of chips. Anybody would want to build a sawmill along that right-of-way for attractive transportation facilities to deep water. It would be a breeze to be able to sell your chips in carload lots. Anybody with a sawmill can make money along that right-of-way.

Interjection by an Hon. Member.

MR. McGEER: No question that it can be successful. But you, Mr. Minister, through you Mr. Speaker, will control the success of all of these operations by providing the transportation facilities and setting the rates. Whether it is profitable or whether it is a loss depends entirely on those two factors.

Interjections by some Hon. Members.

MR. McGEER: No, not up north at Terrace. There isn't any railroad at all there, Mr. Speaker. I presume when the proposal is going to go ahead, the CNR and B.C. Railway will share 50 per cent in the construction of the new lines and that each will have free running rights along the trackage. Is that to be the deal, Mr. Minister, through you Mr. Speaker?

Don't say it is a national railway if that is what the deal is. What it is is an opportunity for the B.C. government to make an operation as profitable or as unprofitable as they like by the simple device of investing in the railway and controlling the rates.

Mr. Speaker, if it were possible to do better for the people of British Columbia by the technique of building the railway and controlling all of the forest lands and investing in all of the capital expansion that will go with that; if it were possible to do better for the people of British Columbia in that way, I personally would be in favour of it. But the reason why I am against it, Mr. Speaker, is that I don't believe this will be better for the people of British Columbia for these several reasons:

1. The government has limited capital. By putting that capital into the infrastructure first and accepting the private capital for the superstructure, more development can take place and more jobs can be provided. That is the first reason.

2. Down through history it has been established that the management skills are better in the hands of private enterprise than in the hands of government. People can go ahead and dispute this as a matter of philosophy but when it comes to performance that is what the record says.

3. The entry of the government in a major way into the forest development of British Columbia will place the competitors in the private sphere at a

[ Page 2871 ]

distinct disadvantage as far as labour negotiations are concerned. Make no mistake about it, the smart thing for the B.C. Federation of Labour to do now is to come and negotiate its next raise in the forest industry with the Minister and not with the council it normally deals with.

Interjection by an Hon. Member.

MR. McGEER: I'm sorry, Mr. Speaker, I missed that.

MS. P.F. YOUNG (Vancouver–Little Mountain): You don't belong to the federation.

MR. McGEER: Well, who knows what is going to happen in the future up there.

Interjections by some Hon. Members.

MR. McGEER: Pardon. I'm suggesting you shouldn't be in this operation, and if you had been listening in the last 20 minutes you would have gotten that.

4. The development of forest facilities by the government is going to leave an open question as to how far the government will or should go. It will have a depressing effect on investment in the forest industry in the private sector all over British Columbia.

The pattern of raising the stumpage, lowering advantages on transportation, squeezing the private sector of the industry in order to make the next grab, is going to become a fairly obvious one which is bound to deter and restrain what would otherwise be a normal development.

Already, Mr. Speaker, the people of British Columbia are the senior partners in every forest venture. They are the senior partners by virtue of control and ownership of the forest lands; by virtue of taxes in the form of royalties, stumpage, logging tax, corporation tax, local taxes, sales tax and personal income tax. All of these sources of funds take up considerably more than two-thirds of the operating profit of the forest companies.

That senior partnership, Mr. Speaker, costs us nothing in the way of capital investment, demands nothing in the way of management skills, and in many cases doesn't even make it necessary for us to provide the staff to collect the taxes. That is not a bad arrangement, and if that arrangement will lead to greater total productivity in the province in the future than we could get under any other system, then we should encourage it and see that it flourishes The government, Mr. Speaker, is using its options, its initiatives and its capital to do things that others can do. It will have to do this ultimately at the neglect of the responsibilities that only government can take on. In the end we are going to be a poorer and unhappier province because of this direction that the Minister of Lands and Forests has taken.

Mr. Speaker, whatever the short term virtues might be of this particular deal, in the long run it's going to prove to be a mistake. That's the reason why I and the other Members of my party oppose this legislation.

DEPUTY SPEAKER: I recognize the Hon. Member for Rossland-Trail.

MR. C. D'ARCY (Rossland-Trail): Thank you, Mr. Speaker. A few brief words. First of all to compliment the Minister on the arrangement that he made, the appointment of the negotiating team and the manner in which they discharged their duties as directed by the Minister. I think that we have some disagreement in the House as to the desirability of this sort of arrangement on philosophical grounds, which is all right because that's really what we're here for. But I think anyone who criticizes this arrangement on business terms is either very ignorant of the issues or they simply haven't looked at the industry at this time.

I'd like to mention, Mr. Speaker, how happy I am to see that there has been a change in direction of the standards of pollution control of the Social Credit Party. The Member for North Peace River (Mr. Smith) said about half an hour or 45 minutes ago that it's going to cost, "millions of dollars to bring the effluent standards of these two plants up to the level of which we would like to see."…"we would like to see," Mr. Speaker. Now we know the standards they liked to see before August 30; we know all about those standards. That's all right; they can have a second look, they can have a third look and they can upgrade their standards.

I'm glad they're with us because the standards that this party would like to see in the forest industry or any other industry are going to cost millions of dollars too. But I want to assure that Member and those Members in that party that the standards that will apply in this industry in the Province of British Columbia are going to be across the board. So when we talk about standards that apply to Colcel or B.C. Cel, we're also talking about standards that will apply to MacMillan-Bloedel, Rayonier, B.C. Forest Products, Crestbrook, Noranda, Weyerhaeuser and every other corporation operating in the province. It will cost a lot of money and I'm glad to know that they're going to be with us when we move in that direction, because we are going to move.

The other area on which I would like to say a few words is the matter of transportation costs. First, the Member for North Peace River (Mr. Smith), and in a slightly different approach, the Member for Vancouver–Point Grey (Mr. McGeer), talked about

[ Page 2872 ]

the need for better transportation facilities and how they felt this should perhaps be a charge against the operation. Well, this is not such a bad idea.

I've called in this House before for rationalized transportation costs. Now, if we want to follow that philosophy of saying, "O.K., new railroad facilities are going to be a charge against this corporation," that's fine. There'll also perhaps be a charge against Eurocan, Alcan, Granduc Mines, Bulkley Valley Timber. Let's be consistent; let's be equal about it.

There's a railroad to Pine Point which made those vast and rich ore deposits on Great Slave Lake so profitable. I've nothing against Pine Point Mines making money up there; but the fact is that if we are going to account for that, let's send them a bill for that railroad that was paid for by the taxpayers. Every time we have a development anywhere in B.C., let's send the mining company or the forestry company a bill for the schools and the roads and the hospitals and the hydro development. Let's get the taxpayer off the hook if that's what the Member wants.

He's got a double standard. It applies to Crown corporations but it doesn't apply to private corporations. There's nothing in this bill that suggests that the new corporation in the forest industry or that the Ocean Falls operation won't operate on competitive terms with private industry in an open and free market. They will make it on their own or they won't make it. I commend the Minister for his action.

DEPUTY SPEAKER: I recognize the Hon. Member for North Vancouver–Capilano.

MR. BROUSSON: Thank you, Mr. Speaker. Well, certainly it is difficult to speak and comment on this bill because of the lack of any real knowledge and any real financial depth, despite the comments of the last speaker. There is little of the depth of financial detail behind the scenes available to us on which to make these decisions. The negotiating people presumably had that information but the people in this House do not have it and I haven't seen those details tabled. Without that sort of information, Mr. Speaker, it seems to me that we have to resort to the first principles, the basic principles.

In those principles, I for one in our party oppose the creeping socialism that we are seeing take over more and more of British Columbia. This Legislature is encouraging and developing that theme day after day.

I'm convinced, Mr. Speaker, that government in general does not do a good job of running business. It certainly does not do a better job in most circumstances that I'm aware of and that I've observed. This applies especially wherever we're involved in the problems of marketing. In this particular industry we're discussing today, we're certainly going to be involved in the problems of marketing.

I appreciate the problem faced in Prince Rupert and the north-west and I very much agree, Mr. Speaker, as the Minister said earlier, that the profitable part of this particular corporation should not have been dealt off separately as was proposed last year. I support him in not having allowed that to happen. I approve of that.

But I would support, Mr. Speaker, or greatly prefer the changing of the ground rules and the conditions to force a better method of operation and better development in the Arrow Lakes and the west Kootenay country which could have been done without a takeover. That has been suggested by the two previous speakers from this party.

At the same time, I would support making it possible for the north-west part of the province to improve and eventually to make a profit. There's no question that that can be done. If the government can do it alone, Mr. Speaker, by taking certain actions, why could the government and the company not do it together as partners with a far greater incentive for both to succeed if they were working together?

In fact, Mr. Speaker, within the last six months the government and the Premier have actually been giving no encouragement in northern transportation. They've been discouraging it by putting all of the emphasis on the southern route — the development of Britannia, Squamish and Howe Sound — and downgrading every possible improvement to Prince Rupert. That's the very sort of thing we're talking about. All of sudden, because now this is a socialist takeover, we're getting excited about northern transportation, cooperation, developing new routes and new rates and so on.

Finally, Mr. Speaker, if the government is successful in this venture — and certainly it's a very big "if" and one that's very difficult to judge without the detailed, insider kind of knowledge — will the government make it possible in a year or two for the private citizen to buy into the company? Instead of this being big government running and owning this and more and more companies in British Columbia, will it let the little people, the citizens of the province, the investors, participate in the investment and the share structure of these companies, making it a truly public British Columbia company?

HON. MR. WILLIAMS: Twenty-one per cent already.

MR. BROUSSON: That's a pretty small part, Mr. Speaker. I'd like to let people buy in more if it is available to them. Will the government make this available?

Alternatively, at some point, perhaps sell the

[ Page 2873 ]

shares of this company to the development corporation and let the public buy shares in that as I suggested last week.

In other words, maybe there are times under certain conditions and certain situations, Mr. Speaker, for government to exercise its prerogatives of moving into certain areas to create the conditions it needs. But will the government state a long-run commitment to getting out of those areas, making it possible for private enterprise, for the private investor, for the small investor to buy shares directly in those corporations? Let them be truly public.

DEPUTY SPEAKER: The Hon. Minister closes the debate.

HON. MR. WILLIAMS: Well, Mr. Speaker, it's been fascinating to watch the Members of the Liberal opposition dig in in this debate. They certainly dug themselves in. It's fascinating also to have silence from the official opposition ranks. I'm not knocking it; it's a delightful change. (Laughter).

Interjection by an Hon. Member.

HON. MR. WILLIAMS: Well, bailing out the multi-nationals. Yes, they're walking away without the $73 million that was owed them. They're walking away paying the dividends that have never been paid to the private Canadian minority shareholders. They're walking away beefing up the working capital, leaving money on the table in British Columbia. They're walking away paying off the debts of the Belgian Paper Company that are part of the holdings. That's bail-out, my friend. If that's a bail-out, I'd like to be in that kind of boat.

But to watch the Liberals waltz around on this one is really something. What a performance. The leader says, "Well, it's all right for us to pump money into the infrastructure; it's all right for us to serve people; it's all right for us to pay out subsidies — it's all right for us to pay incentives. But only as a last resort should we have an equity position in the company that benefits. That's the position of the Liberal Party.

Interjection by an Hon, Member.

HON. MR. WILLIAMS: Good Lord! What the Liberal Party is saying is, if we dump public capital on a massive scale into a region, we should do it for the benefit of the multi-national corporations that can take the returns back to New York. That's what the leader of the Liberal Party is suggesting.

The real irony, and it seems to me that this hasn't got through to some of the Members of the opposition, is that this step by government will free these regions so that genuine private enterprise in fact can take place within the region.

He may smile, and he can shake his head — whatever he likes, but it's just one of the ironies of the economy, the kind of world we are in today, that by the acquisition of this corporation we can free the region so that there can be more individual entrepreneurs in the logging industry — that is, ones that aren't contracted — indentured loggers — to the major multi-nationals. There can be more genuine independent sawmills, independently financed, that aren't tied to the multi-nationals as well.

[Mr. Speaker in the chair.]

The question of the railway plans: again the Hon. Leader of the Liberal Party talked about the Hedlin Menzies report. Well, it was a major and important report and it was a major beginning in terms of looking at north-western British Columbia, but I suggest that it didn't maximize the return, that we can in fact increase the returns to the people of British Columbia and the people of Canada beyond what the Hedlin Menzies report suggested. I suggest that there is that opportunity; and by cooperation with Canada — with the national government and the B.C. government — we have the opportunity of maximizing returns on a scale probably unprecedented in this province. That is why this is all so important. That's why Colcel is important.

The question is once government decides to work in a region on this scale — to change the economy of a region — then to whom do the returns of that activity rightfully belong? I suggest they basically belong to the people who put up the funds — the people who put up the funds for the railways, for the highways, for the infrastructure you were talking about.

And the idea that we should do all these things — sell the family farm, give up our birthright if you will — that we should spend all this money, build these systems for multi-national corporations to have the main direct benefit, is the kind of mixed-up economics that has got this whole nation into the kind of situation that it is in today.

Interjection by an Hon. Member.

HON. MR. WILLIAMS: Yes, profits, tax write-offs — you name it, it's all in aid of the multi-nationals and sending the money across the border and out of Canada.

But what about the small investors, the kind of people that you've talked of in the past? What about them? By the decisions you are making today, you're saying "in the crunch we go along with ruthless corporate multi-national enterprise." That's what you're doing, because there was simply no position whatsoever for those people if we had not taken this action. None whatsoever. And I wouldn't happily live

[ Page 2874 ]

with that on my shoulder in this province.

We had a mess with Commonwealth Trust under the former government. Countless small investors — working people, middle class people — the average people of this province — invested in that outfit and thought they had something. It turned out they had nothing or very close to nothing.

In this situation, we have dealt with the best accountants available. We've dealt with the best investor advisers available on the continent. They advised us that there is simply no position for those private investors. And they advised us further that no private corporate commercial enterprise would have looked after them. None of them. That's the kind of ruthless game you're talking about. In the crunch, that party and that party are willing to go along with that ruthless game.

We won't live with that kind of ruthless game that will destroy the savings of the average people of this province.

You know, I was really fascinated by the various Members of the Liberal Party because I am not so sure that they've caucused on this one; the opinions seem to overlap and contradict one another. The interesting one is of the former leader of the party. The First Member for Vancouver–Point Grey (Mr. McGeer) said "Good Lord, in this kind of situation, if you look on it in a broad enough scale, why even donkeys could make it successful." Well, I don't really resent that, but what he failed to remember is that the new leader of the Liberal Party said "Why, it's like buying the 'titanic after it hit the iceberg."

Well, that's the problem when you belong to a party that is always super-glib. It finally catches up with you. And it can't be the Titanic after the iceberg one day and a money-maker the next day. That's the way you are trying to have it today.

Interjection by an Hon. Member.

MR. SPEAKER: Would the Hon. Member, if he has any comments, make them from his own seat.

HON. MR. WILLIAMS: The Hon. Member for North Vancouver–Capilano (Mr. Brousson) said "Well, the southern operation is profitable all right, so it should go to the private groups. Why, they're making money down there and we should turn that over to the private sector."

Interjection by an Hon. Member.

HON. MR. WILLIAMS: Well, that's the impression I got.

Interjection by an Hon. Member.

HON. MR. WILLIAMS: Well, then I take that back. I misread you. But there's no question anyway that the official opposition would take that position, because that was what was being set up on August 30.

Had that taken place, we would have had a southern corporation — for all that the Member for Point Grey says — would not have paid corporation income tax on what is in fact a profitable operation because they would have slid all of the tax losses from northern B.C. down to the south. Then we would have had another American multi-national residing in splendour in a profitable valley basin, and not paying taxes for some 15 years. That's the kind of situation we would have had had that former government remained in power and had we accepted the idea that we do get it all back in corporation tax in the end. It just isn't so. A tax deferred is a tax never paid. And that's the kind of game multi-nationals are in, and I think our national leader has made that abundantly clear in recent years.

The question of divesting: that's certainly a possibility in terms of further participation by the people of this province. We looked at what has been done with respect to KLM in Holland; we looked at what has been done with respect to Volkswagen, and with respect to Lufthansa — so that this is a possibility.

But the major problem is regional development and turn-around at this stage of the game. But the option is there and it's open.

I'm pleased to have heard the statements of the Hon. Member for Oak Bay (Mr. Wallace), because it strikes me that there is a certain consistency to them. I can't say that with respect to the Hon. Members in the Liberal opposition at all.

The Member for Oak Bay said that in humanitarian terms, if we do what we say then it is difficult to argue against it. Well, I would like to assure the Hon. Member that we intend to do what we say. We intend to develop that region. We intend to turn the company around, and we intend to see the people of British Columbia be the main group that benefits from all of that activity.

As to labour relations — I have had no formal meetings. I've had no meetings with labour leaders with respect to these questions. I expect there will be cooperation.

I would say, however, that in any formal contact with rank and file people that I've met from Castlegar and Prince Rupert, there is a genuine feeling of elation that we are repatriating our economy and that we are doing something to assure them of a job in the coming years, and we are taking the insecurity that was like a cloud over them away — insecurity that was bred by an American multi-national that didn't carry out its responsibilities in this province.

The Hon. Member for Point Grey (Mr. McGeer) suggests that the returns are in the infrastructure itself. Good heavens, why should we want returns directly

[ Page 2875 ]

from the company that is involved?

We are talking about hundreds of millions of dollars in public investment, and the returns aren't obtained from the railway company. The CNR is not a great money-maker, but it is necessary. B.C. Rail is not a great money-maker, but it is necessary. What we do when we build these infrastructures is increase the value of the resource that we hold; we in fact create a massive capital gain situation. And that's a party that's been willing to live with capital gains for a long time in this province, in this country.

There are huge capital gains to be made in north-western British Columbia. There are major capital gains to be made in the west Kootenays. We want to see that those huge capital gains, these huge unearned increments in fact are given to the people of the province in various ways in various benefits. This is the way to assure that the benefits of all of this government activity will flow to the people of British Columbia.

MR. D.M. PHILLIPS (South Peace River): You're filibustering your own bill.

HON. MR. WILLIAMS: Mr. Speaker, I think this may turn out to be one of the most exciting steps this government has taken. It assures the future of north-western British Columbia. It assures the future of the west Kootenays. It's with great pleasure that I move second reading now.

Motion approved on the following division:

YEAS — 34

NAYS — 14

PAIRED

Bill No. 179 referred to a committee of the whole House at the next sitting after today.

Hon. Mr. Barrett moves adjournment of the House.

Motion approved.

The House adjourned at 1:30 p.m.