[ Page 2901 ]

CONTENTS

Night sitting

Routine proceedings

Committee of Supply: Department of Lands, Forests and Water Resources estimates.

On vote 137.

Hon. R.A. Williams — 2901

Mr. Bennett — 2906

Mr. Phillips — 2919

The House met at 8:30 p.m.

Introduction of bills.

Orders of the day.

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

ESTIMATES DEPARTMENT OF
LANDS, FORESTS AND WATER RESOURCES
(continued)

On vote 137: Minister's office, $105,352.

HON. R.A. WILLIAMS (Minister of Lands, Forests and Water Resources): I really thought, Mr. Chairman, that this might be a pleasant occasion to go over the kinds of things they've been saying in northwestern British Columbia. We spent some 10 days in that part of this magnificent province, and it might be worth while to discuss the kind of dialogue we've been developing with the people of that part of the north. We have been offered....

AN HON. MEMBER: Dialogue or diatribe?

HON. R.A. WILLIAMS: Well, it varied, but with the thinning of the Socred strength in the region, it was primarily a dialogue, Mr. Chairman. We talked in the region stretching from Mackenzie to Vanderhoof, Fort St. James, Burns Lake, Smithers, Terrace, Kitimat, Prince Rupert and the various communities en route.

MR. A.V. FRASER (Cariboo): Running scared, aren't you?

HON. R.A. WILLIAMS: We discussed different kinds of goals for that part of British Columbia.

Interjections.

HON. R.A. WILLIAMS: Oh, no. We discussed the possibility of a greater diversity in that part of British Columbia; that we could do things with more local input than we've seen before; that we would have structures and ownership patterns that would be different than we'd seen before in the southern part of the province and during the 20 years of the former administration.

We said we wanted to strengthen the industrial sinews of a region that had been too long forgotten, and our tour is just the beginning of many. The Minister of Human Resources (Hon. Mr. Levi) will be moving through the region within a couple of weeks and will be discussing the strengthening of the human resources and the social institutions of the region, along with the other Minister.

I'm sure that after my estimates are over — within a day and a half — we might embark on a further tour of the east and the west Kootenays while the opposition carries on. I can think of a few other regions as well that would be productive.

MR. W.R. BENNETT (Leader of the Opposition): I'll be there.

HON. R.A. WILLIAMS: We didn't charge $10 a plate, but....

Interjections.

HON. R.A. WILLIAMS: No, no. Oh, I see.

MR. BENNETT: You didn't pay your own way like I did; you went on it under the government.

HON. R.A. WILLIAMS: Shocking, shocking, isn't it? Imagine, members of the Environment and Land Use Committee going out and talking to the people about their region, asking for their proposals. Imagine! Mackenzie, meeting with a citizens' committee; Mackenzie, meeting with the local council; Vanderhoof, meeting with the local council; Fort St. James, meeting with the local council; Kitimat, meeting with the local council; Terrace, meeting with the local council; Smithers, meeting with the local council — and Prince Rupert, meeting with all of the local councils of the northwest region.

But, you know, what was especially rewarding, Mr. Chairman, was the kind of turnout. With the establishment of an NDP government in British Columbia there is a deeper political interest of a genuine nature than we'd ever seen before in this province. I suggest that the kind of free-and-easy, three- or four-year-lease Cadillac caravans that we had in the past will be an inadequate dialogue with the people in the future.

Those kinds of patterns can't be repeated. We will have established, with the beginnings by this administration, the necessity to carry out discussions with the people with an openness and on a scale that we have never before seen in this province.

Interjections.

HON. R.A. WILLIAMS: The jump seat? Well, I prefer those in the helicopters, but....

AN HON. MEMBER: Alex, control yourself.

HON. R.A. WILLIAMS: At any rate, we discussed many of the things that we have discussed in this House before.

[ Page 2902 ]

Interjections.

MR. CHAIRMAN: Order, please.

HON. R.A. WILLIAMS: We discussed the need for acquiring Canadian Cellulose. And, heavens, we had to admit that the official opposition and the Liberal Party were opposed to acquiring Canadian Cellulose — that they had voted against it. It was new news up there in Prince Rupert and Terrace, in these communities whose lifeblood depended upon this company.

It was news that that many over there who normally, one would expect, would be very responsible and concerned about people's livelihoods and jobs in regions like the northwest.... It was a shock, a terrible shock for them. It was too bad that I had to convey that news, that the people of those two great parties did not really care about the livelihood of the individuals in that region.

It was nice to talk about the kinds of success that we've achieved in the short time that we have with this corporation: the kind of profit pattern last year and the profit pattern this year that is considerably improved over last year; the prospect of $300 million in capital expenditures of Canadian Cellulose over the next five to seven years for improving all of the operations both north and south; the prospect of spending, in capital sense, probably 50-50 between the north and south, so that the west Kootenays face the prospect of $150 million in capital expenditure over that time period, and the northwest can expect a similar application of capital in their region. So there is a basic strength for the regions and for the company.

It was pleasant to be able to tell them that at long last the local plants in places like Terrace and Kitwanga and the sawmills in fact could be upgraded, and that we could have collection systems built into the sawmills so that the wood waste that should have been going into the pulp mill for the last decade would at long last, with the expenditure of some $19 million this year — out of earnings within the company — be applied in the region to strengthen the company and improve the waste situation with respect to the resource. That will be done this soon, this year — some $19 million.

In addition, part of that $19 million will be used for workers' conditions in the plants and safety conditions in the plants. And the priority for those expenditures will be determined jointly between management and labour. That is the kind of precedent that we're establishing.

It was fascinating to meet with the rich and varied groups of the region — with respect to Col-Cel again — meeting with the executive of the Pulp and Paper Workers of Canada, meeting with the executive of the government employees union that now represents the white-collar workers in Can-Cel in Prince Rupert, and discussing the kinds of basic problems they face. So when we have our meetings with the management of Col-Cel, we can convey the kinds of gut reactions on the floors of the plants, and to begin to discuss in a very basic way how we might work towards establishing the beginning of industrial democracy in British Columbia.

The interesting thing, Mr. Chairman, is that the kind of thinking that we've been evolving down here in our own discussions are clearly the kind of thinking that's developing on the floor level of the plant as well. So it was really something to be able to see the kinds of parallel views that are developing here at the government level and there at the workers' level in the plant.

It appears that the fundamental problems in the plant are in the first band of management essentially. There's a need for adjustments at that level so that there is a decent response between the workers and the first level of management. That, in fact, is where the greatest level of frustration does exist among the workers of the province — according to our discussions and what we see at this stage in that operation.

So we'll have an opportunity to start changing and lifting the kinds of frustrating job activities that don't make sense, that may well in fact be unnecessary, so that the worker and the first level of management might develop a different and better relationship, so that we can avoid the kinds of problems that we've lived with so much in the past.

It was worthwhile to be able to discuss the rail agreement and what that would mean for the region. In addition, it was a chance to discuss developments such as the sawmill development proposals. The sawmill development proposals, as everyone is probably aware, began in the community of Burns Lake.

MR. FRASER: Tell us what the natives said about it.

HON. R.A. WILLIAMS: Oh, there are some representatives of the BCANSI group in the audience tonight and I am sure they would be happy to confirm most of what I have to say this evening.

It was fascinating to attend the meeting in Burns Lake, first with the local council and then with an audience of people from the town and the region, numbering about 350 people. If the NDP, with a couple of cabinet ministers, on half-hour notice, madam, can bring out an audience of 350, then we wouldn't have to cancel $10-a-plate dinners in the Peace, as some others have done.

In Burns Lake there was the chance to discuss these kinds of variations in ownership and management, as we did. It was most worthwhile.

[ Page 2903 ]

MR. FRASER: Tell us about the pie-throwing contest.

MR. D.E. SMITH (North Peace River): He didn't want to get egg all over his face.

HON. R.A. WILLIAMS: No, I think the point is that I think we are now on the threshold of a very worthwhile agreement with the Indian people of the region and the three companies that are involved.

We are establishing a different structure with a different ownership pattern to what we have seen before. We have a company like Can-Cel with 79 per cent ownership by the people of the province. We have a company like Babine with roughly 25 per cent ownership, with ownership also by the local Indians. That is a different structure.

But we were able to talk about other things. In Burns Lake we were able to talk about tree farm licences, for example, as well as the prospect of the municipality being able to share in the basic resources surrounding the community. We were able to talk about that prospect in Prince George as well, also in places like Quesnel and the Kootenays, I am sure, where the local community might have a say in how the immediate resources - the timberland resources — around their communities might be used.

MR. FRASER: Just ducking your responsibilities.

HON. R.A. WILLIAMS: I wonder if the Member for Cariboo is willing to say that in the Cariboo where they are very anxious to have a municipal tree farm.

MR. FRASER: You bet!

HON. R.A. WILLIAMS: Oh, I see. Well, I admit that the problems in the Cariboo are more difficult because of the mismanagement of the special sale area that we had for 20 years — the gross overcutting.

MR. FRASER: Phooey! Phooey to you.

HON. R.A. WILLIAMS: Would the Member say that there is not gross overcutting in the special sale area in his region?

AN HON. MEMBER: Come on Alex, speak up, speak up. (Laughter.)

HON. R.A. WILLIAMS: At any rate, the point was made, Mr. Chairman, that the first municipal tree farm licence in British Columbia was in Mission.

MR. FRASER: Yes, tell them which government it was that gave them that.

HON. R.A. WILLIAMS: It actually began with a small CCF group in Mission. (Laughter.) And the small CCF group was actually able to convince the coalition government. (Laughter.) The neophyte Socred government didn't have the guts to say no even though they would have wanted to.

At any rate, the Mission one is a genuine success story and one that generally has not been discussed in the last 20 years. We as a government were convinced that it made sense to transfer the success in Mission to the more northern communities where there was the resource base, where they might manage in a good way themselves. Frankly, we saw it as a lesson or a process in democracy in terms of the community putting its imprint on the landscape around it; it wouldn't just be the major company that was making its imprint on the landscape around the community, but the community itself might do so.

We are now very close to establishing municipal tree farm licence No. 2 in the Burns Lake wherein the community will determine the management and wherein the community will determine what areas should be preserved for recreational purposes, including most of the shoreline of Decker Lake to the west of Burns Lake, most of the shoreline of Burns Lake itself, and small beautiful lakes in the hills — Maude Lake, Crystal Lake and the like. They will determine how those areas should be protected. In the process, they will also determine what will be harnessed for industrial or local sawmill use.

MR. FRASER: They will make the decisions you should make.

HON. R.A. WILLIAMS: Oh, no. We think the communities themselves should have a say in the landscape around them. That has not been the case in the last 20 years.

Beyond that, there will be a sharing of the revenue from that land area. In Burns Lake there will be this large area on Burns and Decker Lakes and also to the northeast. There will be a sharing of the revenue from those municipal tree farms. That will mean that the resource can be used to improve the social and institutional base of the community as well.

We see the prospect for more municipal tree farms around the province. We have similarly discussed the possibility of a municipal tree farm in Smithers, but there the community backed off.

There was a prospect for a municipal tree farm at the base of Hudson Bay Mountain and in the valley to the west. There again there is the chance of them managing it in their own way. For those who are not aware, Hudson Bay Mountain is one of the most significant ski hills in northern British Columbia. It was developed by a community group just as the Red and Granite Mountain areas were developed in Nancy Greene's hometown area of Rossland. It is a local success story. They are concerned with how the land

[ Page 2904 ]

is used around that mountain, and that it might be abused, so they pulled back and we are still carrying on discussions regarding the tree farm licence there.

I think one of the purposes of the trip was to deal with the misinformation that existed in the region. I don't know how the misinformation developed; I suppose spokesmen for other groups might have somewhat twisted the provincial position somewhat. But I think we made it abundantly clear that these lands at Hudson Bay Mountain, for example, could be used in the way they wanted them to be used. If it is to be primarily related to skiing and recreation, then so be it. That could be the way the local community would manage.

We saw this as a means to strengthen attitudes regarding resource development provincially as well. We thought it made sense for the community to be involved in this process so that they could look at what this government or future governments might do in the resource management field, particularly in the wood industry. If they saw that the province was mismanaging, then they could readily blow the whistle and use their own experience as a baseline in relation to what the province was doing.

We see the building of municipal tree farm licences in the province as the means of building a stronger, more knowledgeable base of opinion throughout the province so that should we face the prospect of another Social Credit administration, for example, there will be people around the landscape of this province who know how and why things can be done better so that the kinds of abuses we have seen in the past, such as in the special sale area that the Member for Cariboo represents, will not, in fact, be tolerated by a knowledgeable public opinion throughout the province.

MR. FRASER: Phooey!

HON. R.A. WILLIAMS: There is an attitude abroad in relation to the environmental movement, Mr. Chairman, that is anti-growth. I think that deserves some discussion because it has certainly been raised with respect to the development of northwestern British Columbia.

It seems to me that the anti-growth point of view is a narrow one and one that really doesn't recognize the basic human needs that exist. In the northwest region we are talking about a population of some 85,000 people; it is a quarter of the province. Yet, this province is the size of the States of Washington, Oregon and California combined.

It seems to me that to say we have got to close the door, that 85,000 people is enough and that a doubling of that population is frightening and wrong, is to be selfish about the landscape of this province. It is our view, Mr. Chairman, that we should take a careful, modulated view of growth in a region like the northeast. It is my view that the consensus in the region supports that view. Nevertheless, there is a fairly broad minority view that says no growth at all.

It seems to me that if we want institutions in the region to develop, if we want community colleges to establish in the northwest, if we want better community medical facilities, if we want better institutions, doctors, dentists, and the like, then a reasonable amount of growth is necessary in order to (1) strengthen the basic economy, and (2) provide the kinds of services that most people in this province feel they should have the right to. The kind of modulated growth pattern that we see in the northwest would, we believe, provide that.

I think there is also concern regarding impact studies and environmental studies. I would simply say, Mr. Chairman, that in fact we have carried out, in the short time we have been in office, more environmental studies and analyses than the former administration carried out in 20 years — I would guess almost tenfold.

Interjection.

HON. R.A. WILLIAMS: No, that just isn't so. Well, I agree the number is correct, but I don't think we are starting out with the same amount.

The point is, Mr. Chairman, that impact studies have been carried out regarding the railway proposals, and they have been carried out by CN and their advisers. They have been carried out by the province and our advisers through the various departments.

We haven't just plugged in environmental attitudes in one agency; we have plugged them into several agencies. In the Department of Recreation and Conservation numerous people have been at it — ecologists, biologists, conservation officers. In the Environment and Land Use Secretariat ecologists and biologists have been plugged in. In the Lands department ecologists and biologists have been plugged in.

People who never had a say before are now within the various departments of government, and having an impact with regard to all of these proposals. A highway in the north, for example, isn't built without an environmental impact analysis. A railway isn't built without an analysis in terms of its impact on the environment. So there has been that kind of plugging in.

But there was a kind of misinformation abounding too, Mr. Chairman. In the Smithers area, to give an example, the local newspaper said that what we are proposing is a supermill for Smithers, and that a supermill would cause environmental destruction and would remove all of the forest from all the hilltops in the Bulkley Valley. In 12 years there would be no forest left, That is what The Interior News in Smithers said.

[ Page 2905 ]

So we thought we had better reduce the information that we had at hand to something that could answer that kind of commentary from the local press. We were able to check it out. The supermill? Well, the largest proposal we had, Mr. Chairman, was from Richmond Plywood. The capital amount was $3.6 million. Yet Canadian Cellulose is planning just basic improvements to their own system this fiscal year of $19 million.

Impact on the forest. There are 1.1 million acres of forest land in the Smithers area. Impact would be 0.25 per cent of that land area per annum. The 12-year tenure of life for the mill, when they had to amortize the capital, would be it. So it was 12 years times less, than 1 per cent. We are talking about a 3 per cent impact on the landscape in terms of cutting rights.

MR. FRASER: Did you get someone to write a counter proposal in The Interior News?

HON. R.A. WILLIAMS: I am sure that The Interior News will be doing that themselves this week. We had 20 per cent of the town out at the meeting. So if the newspaper twists what I said, 20 per cent of the town folk will know that the newspaper in fact was not reporting what I had to say at the town meeting. But that gives just one example.

We also see on the west coast the opportunity for doing something again. The town of Ocean Falls to date is not the success that Canadian Cellulose has been. We had no illusions about that when we acquired Ocean Falls. We are satisfied, however, that we now have a scheme that will in fact probably double the population of Ocean Falls, will in fact establish a sawmill in the community and will make use of the under-utilized timber resource in that part of the central coast. It will preserve and strengthen the settlement of Ocean Falls, and maybe at the same time develop Prince Rupert itself, so that we might have complementary development between Ocean Falls and Prince Rupert, and that in fact, having the supply of pulp provided for Ocean Falls, and then chips provided for Prince Rupert to supply pulp, we would have a viable proposition.

Now, the waste at the sawmill in turn would be an energy source. We have not been using this energy source in the province to the degree we should. Hog fuel could be a significant energy source. It will in fact be a significant energy source in Ocean Falls.

MR. FRASER: Why don't you get burners to burn hog fuel?

HON. R.A. WILLIAMS: Well, it is an interim problem again. That is a product over a period of time that I don't really want to go back into.

At any rate, it is clear now that there is opportunity to make Ocean Falls a viable enterprise. In fact, the latest analyses indicate that the kinds of payback are such that it is almost shocking to a naive NDPer to think that such a knowledgeable corporation as Crown Zellerbach would have let go of such a significant asset. But my faith in free enterprise of large multi-national corporations has been shaken occasionally during the 20 months we have been in office. This is, I guess, just part of the learning process for us all, here in the cabinet and all around.

Interjection.

HON. R.A. WILLIAMS: I might just say, for those who voted against the Can-Cel acquisition, that I remember the words of the leader of the Liberal Party (Mr. D.A. Anderson) only too clearly. I will be reminding him again and again in Prince Rupert, in a future election, that he said this was like.... What did he say it was like? He said: "Why, it is like buying the Titanic after it hit the iceberg." That is what he said. We only made $12 million last year, the prospect is much much more this year, and in the meantime we are able to put the basic economic underpinnings to that corporation in that region, so that they won't face the kind of problems they faced in the previous decade. That, and $19 million in capital expenditures, all the jobs preserved — that is like buying the Titanic after it hits the iceberg?

Interjections.

HON. R.A. WILLIAMS: I can understand the Liberal leader reflecting on the Titanic, because if I was in that group it would seem to me that being in that job was like playing musical chairs on the Titanic, or something like that. (Laughter.)

I will let you in on a secret, Mr. Member, and that is that one of our senior analysts, regarding the acquisition of Can-Cel, was an outstanding accountant and an extremely able person. He has now prepared an in-house document, circulated among the senior accountants of their major firm in Vancouver.

Interjections.

HON. R.A. WILLIAMS: I haven't seen it yet. I am looking forward to seeing it. With his permission I will share it with the House when I receive it.

I would like you to know what he has entitled it. He has entitled it: "The Acquisition of Columbia Cellulose: The Financial Coup of the Century in British Columbia." (Laughter.) That is the head of an accounting firm.

Interjection.

[ Page 2906 ]

HON. R.A. WILLIAMS: When I receive it, I will. I would just like also to say — I am sure it won't embarrass him — that he is also a former president of the Progressive Conservative Association of British Columbia.

I think that we have covered some of the points that we made along the trip. It was interesting to see communities like Mackenzie, single resource towns that are the product of the former administration, and a good reminder to us that we might in fact do something better than Mackenzie in the future.

MR. FRASER: There is nothing wrong with Mackenzie that you haven't fixed up.

HON. R.A. WILLIAMS: It is along the north line of the CN that we have the nucleus of towns — towns that are historic and have been established for some time. We have there, along this major railway that has been underutilized, the chance of building around existing, viable, interesting, communities, and it seems to me that that's a far better prospect than communities like Mackenzie.

There will be new towns built in the future but they will be carefully analysed. They will not be towns that are singly controlled by one company — where the land ownership is turned over to one company. That simply won't happen under this administration.

MR. FRASER: Let's hear about your land policies. Come on now; tell us about your land policies.

MR. CHAIRMAN: Order, please.

HON. R.A. WILLIAMS: We have an opportunity to build richer communities, more interesting communities, more varied communities with stronger social and cultural institutions than we've ever seen before. In addition, in this region we have the chance to have a strong, basic economy related to a rail system that no longer focuses just on the lower mainland, and related to a port system that isn't tied to the lower mainland either.

It's a golden opportunity. The dialogue with the people in the north was only a beginning. It will be a continuing discussion as the choices evolve. I am satisfied, however, that there's a basic, strong feeling throughout that region that the steps we've made to date make sense and will make for a better life for them.

MR. BENNETT: Mr. Chairman, I was very interested in the speech of the Minister of Lands, Forests and Water Resources, mainly because it's one of the few times I've heard him speak in the Legislature this session. I had hoped that many of the questions we'd asked during the question period that have been taken as notice might have been answered in his preliminary remarks to his estimates. Instead we got a travelogue of his trip to the north, just without the slides.

I hope that next time — because the narrative wasn't that good — the slides may be provided to provide some entertainment while he drones on through his trip. But it's nice to know that the Minister has finally discovered the north. While he travelled it with his team of apologists...

AN HON. MEMBER: He lived there last summer.

MR.BENNETT: ...and the Minister of Highways (Hon. Mr. Lea), trying to recoup some of the losses they've made in the north — losses that have developed because of their attitude towards the north — it was interesting to note his report of the meetings and what really happened up there, because I happened to go up to the north just after the Minister.

SOME HON. MEMBERS: Oh, oh!

Interjections.

MR. BENNETT: His reports of what he found there and what the people said to him certainly weren't what they told me...

AN HON. MEMBER: Oh, oh!

MR. BENNETT: ...about what they thought about the Minister.

HON. G.R. LEA (Minister of Highways): We weren't talking to the chamber of commerce.

MR. BENNETT: As a matter of fact, neither was I, Mr. Minister of Highways. It's easy to see why you didn't go in the pie contest. There's no room for the pie because you always have egg all over your face. It's nice to see you there.

But here they are. They go with their team and they all bombed out. Two of the MLAs on the official team, the Member for Omineca (Mr. Kelly) and the Member for Atlin (Mr. Calder) said they had to go to the northern seminars to hear what was happening.

Here they were travelling with the cabinet Ministers and finally, I think, one of them left because when he found out what was happening, he didn't want to be associated with them. That's what two of your own Members said. That's what they said. That was in the newspaper and the people told me, but I didn't hear the Minister mention it.

Now it's nice to know that they went to the north.

[ Page 2907 ]

As I said, I went to the north too. I didn't go by helicopter at $1,000 an hour. I went on the scheduled airlines. It's interesting to see the people, because that's who I talked to.

MR. CHAIRMAN: Before the Hon. Leader of the Opposition continues, I'd ask the Hon. Member for Cariboo to withdraw the remarks that he made.

MR. FRASER: Which remarks?

MR. CHAIRMAN: I think it's a reference to.... Order, please. It was a reference to an Hon. Member of the House. I think it's....

MR. FRASER: What was the remark?

MR. CHAIRMAN: Will the Hon, Leader of the Opposition continue, please? The Hon. Member for North Peace River.

MR. SMITH: If you ask any Member of this House to withdraw a remark, then it's incumbent upon you to say what that remark was. Who did he address it to?

MR. CHAIRMAN: Order, please. The Hon. Member referred to another Hon. Member as "the lippy..." something or other. He also referred to him by his proper name rather than by his proper title.

Interjection.

MR. CHAIRMAN: The Hon. Member has withdrawn. Would the Hon. Leader of the Opposition continue?

Interjection.

MR. CHAIRMAN: The Hon. Second Member for Vancouver-Point Grey.

MR. G.B. GARDOM (Vancouver–Point Grey): I'd like to know who he said it to. He may have been totally correct. (Laughter.)

MR. CHAIRMAN: I'm sure the Hon. Second Member for Vancouver-Point Grey (Mr. Gardom) would not have liked to have had this applied to himself, and I think that that's the standard.

MR. GARDOM: I'm not too sure whether it's even been applied to anybody yet, so I'd just like a few explanations, Mr. Chairman.

Interjections.

MR. CHAIRMAN: Would the Hon. Leader of the Opposition continue, please?

MR. BENNETT: Yes, Mr. Chairman. Thank you very much. The Hon. Minister mentioned Burns Lake. I'd like to mention that later in connection with the Woods proposals for Burns Lake because I'm concerned about its place in the scheme of things.

The Minister mentioned progressive forest management, and I say all Members of this House are in favour of progressive forest management. I know many of the fine Deputy Ministers that have been with British Columbia for many years, and many of the staff that have managed our forests well are still continuing with this department, and I think that their professionalism brings an air of stability to what may be erratic departures by this Minister.

This Minister said he was worried about some of the comments in newspapers in the north because they twisted the provincial position. I say: how can you twist the provincial position? Many of us have been waiting to hear just what it is from this Minister. It's wonderful, but part of the remarks later are going to be just what this Minister's plan is for the forest industry and what his attempt is.

Well, Mr. Chairman, in coming to this Minister's salary, we're not discussing just any ordinary Minister. This Minister just isn't the Minister of Lands, Forests and Water Resources. This is the super Minister.

AN HON. MEMBER: Right on.

MR. BENNETT: The super Minister. The Minister, out in the public where I've been speaking and even in this Legislature, is considered the grand architect for the government of all policies...

MR. J.R. CHABOT (Columbia River): Super planner.

MR. BENNETT: ...the architect of Bill 42 and its land control...

AN HON. MEMBER: Right on. Right on.

MR. BENNETT: ...the architect with the idea of the control of land through leasing in the housing department...

Interjections.

MR. BENNETT: ...the Minister responsible for the takeover of the PNE...

AN HON. MEMBER: You're right.

AN HON. MEMBER: We're making more money

[ Page 2908 ]

than ever.

AN HON. MEMBER: Who's making more money?

MR. BENNETT: ...the Minister who's probably responsible for some of the things in Municipal Affairs like the new Island Trust.

AN HON. MEMBER: What about the Labour Code?

MR. BENNETT: He's a director of Hydro. This, indeed, is no ordinary Minister. This is the super Minister that is responsible for most of the controversial policy of this government.

AN HON. MEMBER: Hear, hear!

MR. BENNETT: Now the only consolation we can take over here is that thank goodness the Minister of Health (Hon. Mr. Cocke) obviously isn't taking any advice from him, because his department seems to be working.

Here's the Minister who's really the Minister of what's happening to our resources, in the attack on the mining industry, through Bill 31, and on his own official department, Lands, Forests and Water Resources. This is the super Minister. This is the man that really could have been leader of this party.

MR. CHABOT: King-maker.

MR. BENNETT: He's the man that even the former leader, who is not with us tonight, in convention...

Interjection.

MR. BENNETT: ...realizing that he was the pick of the bunch, back at the leadership convention a few years ago.... But unfortunately for them, Tom Berger won. In the next leadership convention, of course, he chose to be away and they took second choice, but it hasn't hurt his ambition and it hasn't hurt his effectiveness.

This is the super Minister. This is the real premier of the Province. This is the man that calls the shots in that government.

HON. W.L. HARTLEY (Minister of Public Works): No shortage of leaders over here. (Laughter.)

MR. CHAIRMAN: Order, please. Would the Hon. Leader of the Opposition address himself to the responsibility of the...?

MR. BENNETT: Certainly, I'm talking about the Minister. And, Mr. Chairman, if I choose to attribute certain other controls to this Minister, certainly you'll allow me that latitude. We're discussing the Minister and his salary.

No, I admit that this Minister then has the control of the government. He and the Premier travel together as a team. They've been to New York together, rather like the old days of Bulganin and Kruschev as they tripped around the world — the pudgy little funny fellow and the cruel, calculating, beady-eyed companion. (Laughter.)

Interjections.

AN HON. MEMBER: Who was the funny fellow again?

MR. BENNETT: Well, I'm coming to that, because we're not sure. In fact, to bring it more to North American standards, they are maybe closer to the Abbott and Costello image. There again there was the pudgy little funny fellow that didn't mean to be funny and was always wrong and his aggressive, autocratic, mean friend who was always wrong but pushed him around.

MR. CHAIRMAN: Would the Hon. Member please apply his questions to the Minister?

MR. BENNETT: Yes, I'm sorry, Mr. Chairman.

Anyhow, I have been trying to point out, Mr. Chairman, that this is no ordinary Minister and this is no ordinary department.

Interjection.

MR. BENNETT: Well, frankly, the Minister of Highways (Hon. Mr. Lea) will still be with that government when we need him in the next election. You will be the best help we can get and I would like to thank you now while I've got the opportunity.

Anyhow, this is no ordinary department. This is the basis of over 50 per cent of the British Columbia economy. This is the forest industry — an industry built over many years of the pioneer and primitive logging and sawmill operations, through the cut-and-get-out operators who operated through the coasts of this province prior to 1947 and the first Sloan Commission, and before we brought forest management to this province, before we brought sustained yield, before we brought such things as reforestation, when Sloan and his first commission, and subsequent commissions in 1957, and indeed, the continuing development through technology and the sophistication of management that's made our forest industry what it is today, through all governments. It is something that has built the economy of B.C. and something we can all be proud of.

This is an important department. As I said, over 50

[ Page 2909 ]

per cent of the employment can be directly attributed to the forests in B.C. What we would like to know is: what is the future of this industry? It is something that hasn't been touched on by this Minister. What's the true intent of the future of this industry by this Minister? Is it going to be complete nationalization? Is it going to be complete provincialization?

This Minister seems to be bent on a takeover plan in all the economic regions of this province on a design that seems to be on a grand scale. He seems to be more concerned with taking over and running companies for the very heady fact of being the new H.R. MacMillan of the forest industry with the public's money than he is in actually considering the management of the resource from the government level for the benefit of all British Columbians.

We have to be concerned that maybe his intent, as I said, is the complete provincialization of the industry.

One of the things that has come out recently in the discussion of Bill 31 has been a letter by Martin Kierans, an engineer. While he deals with the mining industry, he refers to a background and point paper produced by this Minister at an NDP convention. In that point paper, I would suggest, is part of the plan for taking over the resource industry.

HON. A.B. MACDONALD (Attorney-General): Read it. It's a good quote.

MR. BENNETT: Yes. The whole paper?

In this background paper he suggests that the way to take over mining would be to allow the shares to drop before you take them over, to depress the industry.

The four-page paper has been summarized quite well by Mr. Martin Kierans in his letter. But what he suggests would apply to the mining industry applies equally well to the forest industry.

So I think the Minister should be honest with this Legislature and the people and tell us exactly what the true intent of this Minister is for the forest industry of British Columbia because we see developing a pattern of takeovers — like Ocean Falls, Columbia Cellulose, Plateau Mills, Kootenay Forest Products — and I believe it's part of a scheme to start complexes in each area.

What's in the future takeovers? Well, we can see that they need a complex in the Kamloops forest region, perhaps the further takeover in the Kootenays might be Crestbrook, who they can force to sell because of the allocation of timber. Perhaps the next takeover in the north will be Eurocan. It has already been suggested or discussion is already starting. That seems to be the pattern of takeovers: talk about the wounded companies, suggest they need aid, and move in.

HON. MR. MACDONALD: It's a terrible thing for the people to own anything.

MR. BENNETT: But we are concerned, Mr. Chairman. If the Minister was honest with us, and gave us his intent, we would appreciate that he would be willing to level with the people of the province and the Legislature. But what we are concerned about are the methods and the results of his intervention in the takeovers in the forestry industry.

We are concerned about the methods and I would like to just briefly, working backwards, talk about Kootenay Forest Products, and how it could have been taken over with little innuendoes about how they couldn't get certain wood, or blocked the sale. When the Minister killed the Kootenay Forest Products–Crestbrook Forest Industries deal, there was never any doubt that Kootenay Forest Products, an important part of the Kootenay-Slocan-Arrow Lakes district, couldn't survive — that Crestbrook wouldn't survive without additional timber.

If this Minister, when he blocked that sale, set up Crestbrook for a future takeover, and the Eddy Match Company, who were anxious to get out of B.C., were caught for a buyer on Kootenay Forest Products....

Indeed, because the government controls the allocation of timber and the rights to cut, and because of all of the allowances and controls that the government has, really no one in this province can sell out or sell their forest complex or their sawmill without the full co-operation of the government.

AN HON. MEMBER: Block the sale to the Kootenay?

MR. BENNETT: They blocked the sale to Crestbrook Forest Industries of Kootenay Forest Products.

HON. MR. MACDONALD: Who — the Japanese?

MR. BENNETT: I'll come to that, Mr. Attorney-General. Don't get excited.

Interjection.

MR. BENNETT: The longest travel the Attorney-General has is putting on his own clothes and going from Point Grey to Vancouver East at election time. (Laughter.)

HON. MR. MACDONALD: And I'll do it again, too.

MR. BENNETT: Instead of declaring his position to Kootenay Forest Products in an open manner, he hid behind the Purcell Range study prepared by Dr.

[ Page 2910 ]

Allen Chamber...

AN HON. MEMBER: He's still hiding behind it.

MR. BENNETT: ...with the help of Dr. Peter Pierce and eventually refused to transfer the K.F.P. Ltd. cutting rights. He gave as his reason that Crestbrook Forest Industries Ltd. was in foreign control by the Japanese.

HON. MR. MACDONALD: Are you in favour of that?

MR. BENNETT: I'll go further, because it seems strange to me, Mr. Attorney-General, that on one hand you can justify a sporting trip to Japan to get Japanese investment in a steel mill, and yet existing industry in this province you condemn on the other hand. What sort of schizophrenic behaviour is that? That's completely in keeping with your attitude.

To continue, finally, early in February, 1974, the Minister took over Kootenay Forest Products Ltd., which from the instant Crestbrook Forest Industries had firmed up their deal to buy the Nelson operation, was the inevitable result. And it is apparent that the Crestbrook Forest Industries also expanded to achieve an economic rate of production, and now they have no place to go.

The Minister has backed them into a corner, and they appear to be the next victim in what is a developing regional complex — a complex that eventually can economically control the forest industry in that area. Area by area we see this government developing throughout this province — the Kamloops area, the Cariboo area, the northern area and, of course, Ocean Falls on the lower mainland area.

AN HON. MEMBER: What is there in the Kamloops area?

MR. BENNETT: The Kamloops area is, I believe, the blockage of the sale of integrated wood, and it may be the next victim. Can you tell me which one isn't? Give me a hint.

HON. R.A. WILLIAMS: It's news to me.

MR. G.H. ANDERSON (Kamloops): I'd like to know myself.

MR. BENNETT: We have to concern ourselves with the amount of control any forest Minister has and the amount of conflict he may have in dealing even when the government doesn't own a forestry complex in an area. The allocation of timber and cutting rights and chips and all of the responsibilities of the Minister are complex enough and difficult enough without having a vested interest in the area where the intent of the Minister may become clouded in showing that they can manage and develop their own complex in competition with private enterprise. In the need to prove this to the public, because of their social-economic philosophy, they may work against the detriment of the industry.

Surely, Mr. Attorney-General, you can see the apparent conflict that may develop when you in fact have a need to prove your managerial skill and you are allocating the timber, and you also have one of the mills operating under your directorship. I know you see it, but does the Minister see it? That's what we say — how can the government, moving into area after area such as the Kootenays, with all fairness, on behalf of the people, allocate timber in a responsible manner?

The people of B.C. own the forests. The people of B.C. only allocate to their government the harvesting and cutting rights. We have the right of how they may harvest, the type of recovery, the type of pollution control. We have royalty, we have a stumpage. You can innovate on the stumpage as technological improvements, make the industry financially stronger as foreign markets get better, which has certainly helped this province last year and this year with forestry revenues.

Certainly the government has control of the industry and owns it. The only thing these forest complexes have is the right to harvest in our province, subject to the rules and subject to the direction of the government, under the direction of the Minister.

I'm only saying that the conflict of interest that Minister may have is when the government becomes preoccupied with making themselves look good with their own operation in the same area and forgets the bigger picture of managing the resources for the benefit of the province and the people.

Here we see on the one hand the Lands and Forests Minister (Hon. R.A. Williams) saying that they turned down the sale of this complex to Crestbrook because it's owned by the Japanese. On the other hand we have the Minister of Trade and Industry (Hon. Mr. Lauk) and the Premier in Japan just lately, seeking Japanese investment in a steel mill, further saying that they will accept Japanese investment in industries in this province. What sort of doubletalk is that?

MR. FRASER: It's socialist doubletalk.

MR. BENNETT: There's the Minister who can turn down a sale, take away the logical buyer, let them suddenly know that the only sale is to the government of British Columbia at their price. Is that using the responsibility of the office in the correct and proper manner? We've had takeovers like Plateau Mills, where the newspapers were full of charges like

[ Page 2911 ]

"Terror Tactics".

AN HON. MEMBER: They sure were!

MR. BENNETT: That's right, and I intended to read some of them today because I think it fits part of a pattern of the way power is used and abused by the Minister.

AN HON. MEMBER: Empty charges.

MR. BENNETT: Empty charges?

MRS. P.J. JORDAN (North Okanagan): Everybody's wrong but my John.

MR. BENNETT: Empty charges?

AN HON. MEMBER: That's what he says.

MR. BENNETT: We shall see.

HON. MR. LEA: Empty, empty.

MR. FRASER: Not used power, abused.

MR. BENNETT: Let's just talk about Plateau Mills because it could be the basis of the government's complex in the Cariboo area, Mr. Minister from Cariboo. It's at Vanderhoof; it employs about 300 people in three mills and another 100 in contract logging operations. The offer to purchase Plateau was made by Cinco Holdings Limited.

HON. R.A. WILLIAMS: And IT&T.

MR. BENNETT: Well, first of all IT&T and then Cinco Holdings.

MR. R.T. CUMMINGS (Vancouver-Little Mountain): That's your favourite company isn't it, IT&T?

HON. MR. MACDONALD: Let's hear it for the foreign interests.

MR. BENNETT: I'll tell you, Mr. Attorney-General, we're going to come to the foreign interests and their involvement with this department. We'll be discussing that in just a moment we'll be discussing the foreign interests in this government and this Minister. Just a moment, just be patient.

Interjections.

MR. BENNETT: Be patient, be patient, we'll discuss the foreign interests, Mr. Attorney-General. In fact, I would advise you to be here and listen closely.

The shareholders of Plateau were David Martins & Sons, Blue Mountain Sawmills, Cougar Enterprises, Beryl D. Goodwin.... In fact we had a company partially owned in the United States and partially owned by the people living in the area. The history of the transaction, of course, was that the original deal was with IT&T (International Telephone & Telegraph) who own a forest subsidiary.

HON. MR. MACDONALD: And Richard Nixon.

MR. CHABOT: There's the clown of the A-G's department.

MR. FRASER: He's got enough trouble without you helping.

MR. BENNETT: Right, right. Is there anyone else you would like to mention, Mr. Attorney-General, who is owned by the big corporations, while you have the chance?

HON. MR. MACDONALD: John Mitchell.

MR. BENNETT: Yes. Who else? Go ahead, I'd like to give you the opportunity... under the protection of the Legislature.

MR. CHAIRMAN: Order, please. Would the Hon. Leader of the Opposition address the Chair please?

MR. BENNETT: Yes, Mr. Chairman. Can you control the Attorney-General? I didn't hear your gavel when he was interrupting.

MR. CHAIRMAN: Order, please. I would ask the Hon. Members on both sides of the House to observe standing order 17, part 2, which requests that Hon. Members do not interrupt the person who has the floor.

MR. BENNETT: Anyhow, the history is that after the Minister turned down, because they were Americans, the sale by some Americans and some Canadians to a subsidiary of IT&T, it was suggested that they could sell to any other Canadian company. An offer was made by Cinco Holdings. The amount of Cinco Holdings Ltd. offer was $10 million, with a deposit and payments payable at $999,000, $3 million, $5 million, and $1 million in fully paid, non-assessable 6 per cent redeemable, convertible preferred shares of Cinco to Brigham Young University. Some of the money was to go to support a university, Mr. Attorney-General.

What did the government pay for Plateau? — $7,400,000. Now, why would a firm take a lesser amount? Why, indeed, if indeed they only had one choice?

[ Page 2912 ]

MR. D.M. PHILLIPS (South Peace River): You made them an offer they couldn't refuse.

AN HON. MEMBER: The godfather.

MR. BENNETT: The IT&T offer was about $7.4 million, the government was about the same. But what about the other offer that was higher? Why would these people settle for a lesser amount?

Let's take a look at some of the significant dates, because they're catalogued:

April 4, 1973, G.B. Phillips in the presence of Mr. Hartley Dent discussed with the Hon. Minister Cinco's proposal for the acquisition of Plateau.

April 6, G.B. Phillips wrote the Minister setting forth Cinco's proposal. Messrs. W. Martins and G. Froese, present Plateau minority shareholders, would join with Cinco in the acquisition.

April 10, the Minister acknowledged the letter and declared a decision would be forthcoming soon.

April 26, Hartley D. Dent, MLA, recently refrocked, wrote, to Phillips stating that Williams would be replying to Cinco's proposal.

Mid May, Cinco learned about the government's involvement and tried to get in touch with the Minister, but he remained silent. They couldn't get an answer.

June 1, Phillips wrote to the Minister complaining that Plateau's Canadian shareholders had informed Phillips that the government was talking to another Canadian group whose offer was in existence at the time of Cinco's meeting with Williams on April 4, — I mean the Hon. Minister on April 4 — but not mentioned at that time by the Minister. Phillips said further that he was still proceeding with his acquisition of Plateau.

June 7, Martins, a Plateau shareholder, said Cinco made its first serious offer to buy Plateau for $9 million.

Tuesday, June 26, Cinco made a $10 million offer to the Plateau shareholders.

Tuesday, June 26, Plateau shareholders signed a deal with the government for $7.4 million. Unusual.

June 29, Phillips wrote to the Premier asking that he intercede to prevent the Minister from continuing with this treatment of what was supposed to be a condition, an allowable condition, a purchase by Canadian citizens of this mill. He asked for 60 days further to complete the deal.

Now the question that we have is, first of all, in the Minister's letter to G.B. Phillips of Cinco, and his comment that "we shall give consideration to your proposal along with the other possibilities that are before us" — what were these other possibilities? Did the other possibilities include the government takeover? Did Cinco know at the time of the meeting that the government was considering taking over Plateau?

Thursday, June 28, in The Vancouver Sun, Phillips and Beech said: "Plateau shareholders have expressed fears that if they accepted the private offer, the government would make the sawmill operation unprofitable through its control over timber resources." The question I have is: was this statement of Phillips and Beech justified?

Thursday, June 28, The Vancouver Sun: "The Premier said he phoned Martins who backed up the government claim that no such terror tactics were used by the government." The question I have is: is it reasonable to expect Martins to speak up against his new partner and boss? He was going to continue in a minority capacity.

The mill had to work at the pleasure of the government. Would he dare to speak up?

On Thursday, June 28, the Hon. Minister of Lands, Forests and Water Resources said he was not aware of any offer made by Phillips and Beech for $10 million, although he admitted meeting the two Cinco men.

The question I have is: didn't Phillips write to the Minister on June 1, 1973, stating he had "found the necessary financing and competent management, coupled with the assistance and expertise of Messrs. Froese and Martins. The operation is secured continuing success." And he said that he is proceeding along with the original proposal.

Thursday, June 28, Vancouver Sun:

" 'We,' the Hon. Minister said, 'told the Plateau people at the start they could sell to any Canadian company they wanted to. They were not obligated in any way to accept the government's offer.'

"He said the government first indicated its interest in purchasing Plateau shortly after the government blocked a bid by IT&T."

Question: when Phillips met with Williams and Dent on April 4, did the Minister disclose to Phillips the government was considering the purchase of Plateau?

Thursday, June 28, again in the Vancouver Sun: "The government at no time used any pressure tactics during negotiations, the Minister said. All the shareholders in Plateau agreed it" — the government purchase — "was a fair deal."

Question: did all the shareholders agree it was a fair deal?

Thursday, June 28, Vancouver Sun:

"The Minister said, in announcing the government purchase, that it wanted to use the mill as an experimental unit and to protect the religious ethnic group and to protect Plateau from pressure put on by big business interests."

Question: did the Minister classify Cinco as big business? Did the Minister consider pressure put on by big government less onerous than that put on by

[ Page 2913 ]

big business? If the answer is in the affirmative, what are the benefits from big government benevolence? And is this government really interested in protecting these religious groups?

Thursday, June 28, Vancouver Sun:

"The Minister said he was not satisfied as to Cinco's financial capacity to handle the Plateau purchase."

Question: one minute they are big business, the next minute they don't have the financial capacity to handle the transaction. Which is the correct answer, and which definition did the Minister mean?

Thursday, June 28, Vancouver Sun:

" 'I think we were free to make a private deal,' said Goodwin, one of the vendors from the United States" — one of the American shareholders who sold out. " 'The government said we could sell to a private company but they did indicate we couldn't sell to a large corporation or any American company which diminished our possibilities of selling at all.' " The question is: is this statement correct, and does it not contradict the statement that they could sell to any Canadian company?

Friday, June 29, Vancouver Sun:

"He (Beech) and Phillips said the shareholders told them they were afraid the government would use its control over timber-cutting rights to hurt them financially if they do not accept the government's offer."

The question: was there any justification for the fear expressed by the shareholders? Did the Minister do anything to assure the Plateau shareholders that as free citizens they could sell to any Canadian company without any fear of reprisal from the government?

Friday, June 29, Vancouver Province:

"Three of the four American directors also said, with varying degrees of qualification, they were worried if the private deal fell through they would be in a difficult position because the government controlled the Plateau timber supply."

Question: wouldn't this indicate that the American shareholders were afraid to do anything but sell out to the government? Does a threat necessarily have to be that they will hit them with a club or use physical violence, or do intelligent men accept the subtle threat when the person who is threatening holds all the cards and all the power?

Friday, June 29, Vancouver Province:

"Said Dr. Claude Brown (one of the vendors), 'We discussed it at the board of directors meeting on Tuesday. Essentially we felt if something happened to their Cinco deal after they put a little money down, then the mill would come back to us and we would be in a bad position with the government, a vengeful government, unhappy that they chose to make a free choice in their original purchase-sale agreement.' "

Question: was anything said or done that would lead the directors of Plateau to fear anything from the government of B.C. If they were forced to take back their sawmill and run it as before? Is the government of B.C. anti-American, as contended by Dr. Claude Brown?

Interjection.

MR. BENNETT: One of the vendors.

AN HON. MEMBER: Identify him.

MR. BENNETT: I don't want to remind the Second Member for Vancouver-Little Mountain (Mr. Cummings) that he shouldn't speak unless he is in his correct seat.

Interjection.

MR. BENNETT: Yes, it's so rare you're in here it is hard to know where you belong.

Friday, June 29:

"He (Phillips or Beech) said when they learned about the government involvement in mid-May they tried to get in touch with Williams to see if they should proceed. The Minister didn't answer a telephone call or letter."

Question: was the government's refusal to answer Cinco's communications a means to stall the Cinco deal so the government could firm up their own competing deal?

All of these discussions, all of these statements from some of the purchasers involved, from some of the vendors that were involved indicate that threats were used. Those threats, whether they were shouted or whether they were used like they were going to kick the censored out of you, or whether they were whispers, are clearly just as improper when used by a Minister of a government. I don't believe that we know yet whether terror tactics were used, but I am convinced after talking to these gentlemen and going through these files that indeed threats were made and improper use of the office was made to get control of a timber company in a key area of this province.

Three: Columbia Cellulose, now Canadian Cellulose, the one that was voted against by this party and the one that the Minister, Mr. Chairman, took such pride in, with the same amount of pride he takes in not being involved with big multi-national corporations, without being involved with the large American corporations, without being involved with the large Japanese corporations — reasons he's used for taking over other companies. Here we have what is now called Can-Cel. Can-Cel was the second

[ Page 2914 ]

company taken over by this government, taken over in some sort of confusion, taken over over a period of time when the trading of the stock increased in volume, taken over over a three-month period, with unusual financial circumstances surrounding the takeover of this company. Very unusual. A rise unrelated to other stocks in the same industry on the market for the same type of increase, a rise that seemed to coincide with the first indication of discussion of a takeover....

AN HON. MEMBER: It sure went down under Social Credit.

MR. BENNETT: Very unusual circumstances. I wouldn't take pride in it until the committee that the Attorney-General... or the investigative staff has come in with their report.

HON. MR. MACDONALD: Or make any innuendos either, would you?

MR. BENNETT: The make-up of this company seems very strange indeed. It's a company that has four of the directors who are not Canadians, when we are concerned about Canadians in British Columbia not controlling their companies.

SOME HON. MEMBERS: Oh, oh!

MR. CHABOT: I wonder what the A-G is going to say about that.

MR. BENNETT: It's a company where, in fact, the weight of the experienced control is in directors who live in New York: Mr. Ira Wallach; E.B. Berkley, who manufactures envelopes in Kansas City; Max Litvine, from Brussels, Belgium; and the operating president of the company, R.M. Gross, formerly of New York, now Vancouver. In fact, there are very few British Columbians on this board of directors when....

Interjection.

MR. BENNETT: The Attorney-General flips and flops and says "you don't like the Americans" — flip-flop.

All we're trying to do is establish this government's position. The questions we are asking this Minister are: What are his intentions? Why is he developing this sort of attitude for the takeover of forest industry without coming clean to the people of British Columbia? Why does he use, as he is accused of using, terror tactics and threats and the misuse of the government's office in the allocation of timber to frighten people into selling to the government? Why does he use as an excuse the fact that he doesn't want the Americans or the Japanese? Yet, here in what he calls a financial coup, his greatest coup, I guess his second greatest coup is Ocean Falls.... The double-coup Minister living up to his reputation as the coup-coup Minister. (Laughter.)

Why does he have two or three different standards on foreign ownership and control? Here we have Can-Cel operated and controlled by directors not Canadian, not British Columbians, but from the international financial community.

Let's just take a look at the connection, because the Minister has also said he has a concern of large, multi-national corporations — worried about little Cinco in Vancouver, worried about the subsidiary of Rayonier. We have a chart here of the B.C. government: they own Can-Cel; B.C. Cellulose owns 79 per cent of Can-Cel.

HON. MR. MACDONALD: Not the government, the people of British Columbia.

MRS. JORDAN: If I owned the CBC, what good would that do me?

MR. BENNETT: Mr. Chairman, would you control the Attorney-General?

That's 79 per cent.

One of the questions I have is why was 21 per cent left? Was it left for people to make a profit on, the usual thing in a takeover? Especially when Columbia Cellulose was controlled 90 per cent by the company it was taken over from — why was 21 per cent left to trade? An unusual amount, coinciding with an unusual trading pattern.

What I'd like to point out is: here we have B.C. Cellulose that owns 79 per cent of Can-Cel, which owns 50 per cent of Haseldonckx, a Brussels paper distributor that owns 43 per cent of Les Papeteries de Gastouche in Brussels. Fine. Now, who controls the other part? Well, we have the 62nd largest American corporation of which Weldwood is a subsidiary, Champion International, a company with annual sales similar in size to the record-breaking provincial budget, sales of around $2 billion. And what do they do? They own-control 57 per cent of Intermills in Brussels. Now we're into the European financial community. Intermills owns 57 per cent of Les Papeteries de Gastouche.

There we have the British Columbia government, through a series of foreign subsidiaries, in bed with Champion International, the 62nd largest company in the United States.

But wait, that's not all — Champion International has more in B.C. Champion International owns 73.6 per cent of Weldwood. Who's going to get the new mill in for Babine Forest Products? Weldwood just happens to own 48 per cent of Babine.

Here we have Champion International in partnership by mysterious connection in Brussels,

[ Page 2915 ]

Belgium, through interlocking companies. Champion International again getting a new allocation in Burns Lake. And who's the partnership there in Burns Lake? Why, they're partners again. Can-Cel will have a percentage, and I presume that Eurocan will have a percentage.

Here's the projected percentage — 26 per cent for Can-Cel and 26 percent for Eurocan. If I was Eurocan, I'd watch out because if you add them together, that gives 52 per cent — a logical control situation for Can-Cel in their continuing marriage with Champion International.

There's nothing wrong, except for a government, a hypocritical government, that blasts multi-national corporations on one hand and then goes to bed with them on the other. Both with companies under other names — in one area through mysterious Belgium companies.

But there's a further connection of Champion International. The former president, Mr. Scrimshaw, worked for Champion from 1964 to 1968. The present — a director, Mr. Groves, worked for Champion in 1962 to 1968. Directors — Mr. Litvine was a director of Intermills, which is a subsidiary of Champion, in 1973. All of these people oriented to Champion, all of them directors of Can-Cel, all of them part of a web that reaches as far as Belgium and Europe, part of a web that sees Weldwood get the latest participation in the latest major concession at Burns Lake from a government that hypocritically says that they're against large multi-national corporations, that says they're against foreign control. What sort of nonsense when we have a situation like this in Can-Cel, the financial coup of the century? What's the connection where these people had a connection before this government became financially involved with Columbia Cellulose and Can-Cel?

Interjections.

MR. BENNETT: And who else do we have as a director of Can-Cel?

AN HON. MEMBER: Who?

MR. BENNETT: Mr. Ira Wallach. Who is Mr. Ira Wallach? Well, he's the director appointed by the British Columbia government, by that cabinet, by that Minister, as a director of Can-Cel. And what other further connection has he got with the Government of British Columbia and their forest complexes? Well, it just so happens that he's the president of Gottesman & Co. of New York.

AN HON. MEMBER: What do they do?

MR. BENNETT: They are world-wide sellers of pulp, liner board and newsprint.

Interjections.

MR. BENNETT: The Minister of Public Works (Hon. Mr. Hartley) says that we're making money. The same way you figured out ICBC, the same calculations that led your party into running those $25 ads.

Just a minute. I'd like you to stand up and say how B.C. is making money on this agreement. I'd like you to support it, because I'd like to go from there. I have more on Can-Cel, but I don't think I'll bring it up tonight.

I think I'd like to go to Mr. Wallach, and the sales arrangement with Ocean Falls. The first company that was taken over.

Now for some time in this House we've been trying to get answers to the sales agreement between Gottesman and Ocean Falls. There was a question in the House October 15, 1973, to the Hon. Premier about Mr. Wallach's connection and the fact that he's a director. And the Premier said:

It is correct that it is the same man, but there is no conflict of interest. The sale of newsprint of course is something separate from Can-Cel's products.

The reason for the change in the Wallach contract is that the price is much higher now, I'm sure that with this move we will be returning even greater funds to the corporation on behalf of the people of British Columbia.

October 25, the Hon. Member for Langley (Mr. McClelland);

My question is to the Minister of Lands, Forests and Water Resources. On October 15, the Premier told this House that he would consult the Minister about tabling the new newsprint sales agreement with Gottesman-Central National Organization. I would like to ask if that consultation has taken place with you and whether you would now agree to table this agreement as public business.

HON. R.A. WILLIAMS (Minister of Lands, Forests, and Water Resources): The answer, Mr. Speaker — and I indicated that on a previous occasion — is no.

Again on October 25, and again the answer is no.

MR. FRASER: Open government.

MR. BENNETT: Again on October 23, and the answer is no. No answers for a contract that the people of British Columbia are starting to question.

I'd like to go back to Ocean Falls, and just through some of the history of Ocean Falls before it got involved in this contract, and how pulp and newsprint is priced in the Canadian market.

Based on information from the Canadian Pulp and

[ Page 2916 ]

Paper Association, and Statistics Canada, the total production of newsprint in B.C. for 1973 was 1,471,000 short tons. All of this newsprint was produced by MacMillan Bloedel, B.C. Forest Products, Crown Zellerbach and Ocean Falls. Of course, Ocean Falls was taken over by the B.C. government from Crown Zellerbach on April 1, 1973, an ongoing sales agreement to market the newsprint and to supply part of the pulp and chips for the manufacture of newsprint.

The actual tonnage of newsprint produced at Ocean Falls for 1973 is difficult to find. It is difficult to find because we know that Ocean Falls has not operated to capacity. The rated capacity is 300 short tons per day. If you operate it for 340 days it would be 102,000 tons per year.

E.E. Vesak, manager in Vancouver, in the Sun of March 19, 1974, said that production was still at the rate of 150 or 160 tons per day — about half of normal capacity at that time. We know we have had curtailed production at Ocean Falls. The statement about the present curtailed production due to lack of rainfall of 150 or 160 tons per day.... Mr. Vesack implies that last year, before the water shortage, the production was higher — thereby making the informed estimate for 1973 of 157 to 200 tons per day seem more reasonable.

Because we cannot get any information about this company I would like to estimate further, Mr. Chairman, about just how much tonnage is being produced at Ocean Falls and what that production is. The exact tonnage for 1973 newsprint by each of the four manufacturers is not readily available, not even from the government-owned Ocean Falls. However, as all the newsprint mills except for Ocean Falls are running at full capacity, a very close approximation for each of the three major suppliers can be obtained by deducting from the 1973 B.C. total of 1,471,000 tons the 1973 estimate of 51,000 tons for Ocean Falls and breaking down the remaining 1,420,000 tons in proportion to the rated capacities of these three companies. This would give us the figures of capacity for MacMillan-Bloedel of about 1,000,000; for B.C. Forest Products, 255,000; and for Crown Zellerbach, 238,000. But the figure to watch is Ocean Falls because that is what we are concerned with in this Legislature.

The latest figures available for all of Canada are for 1972. They show that 73.3 per cent of the newsprint went to the United States. The Canadian Pulp and Paper Association and Statistics Canada do not provide separate figures for the tonnage of B.C. newsprint shipped to the various markets but the bulk of it certainly goes to the United States.

The Vancouver Sun, on March 19, 1974, when reporting the interview with Mr. E.E. Vesack, manager, stated that the Ocean Falls newsprint production was sold through the Gottesman-Central National Corporation under a new agreement. Here we have the government in the Ocean Falls Corporation, when they took over Ocean Falls, signing an ongoing agreement with Crown Zellerbach for supply and then cancelling that agreement. They cancelled an agreement for sale and gave it to a director of Can-Cel, another government-owned company, through one of his companies — Gottesman International, a large American corporation — to sell on behalf of the province.

Where does Mr. Vesack suggest that this newsprint is going to? He suggests that it is going to Argentina, Brazil, India, Japan, Thailand and Burma. Apart from Japan all of these countries could be considered part of the Third World; certainly all but Japan can be classified as emerging countries, particularly India, Thailand and Burma. The estimate of 51,000 tons of newsprint produced at Ocean Falls in 1973 represents 9.6 per cent of the 532,983 tons of newsprint from all of Canada shipped in 1972 to South America, the Indian area, the Orient and the Pacific, excluding Australia.

Conventional marketing of pulp and newsprint is that it is generally sold directly to the consumer by the newsprint manufacturer. This is the normal way to market newsprint. The amount, in terms of total world production, that is sold through New York brokerage houses is extremely small. Any small amount that does go through a broker is almost always on an agency basis, Mr. Chairman. It is on an agency basis with a commission to the broker of 2 or 3 per cent of the net price to the manufacturer. It is most unusual for newsprint to be sold outright to a broker or newsprint trader, particularly for a term of years at the U.S. conventional newsprint marketing price with the mark-up in the ultimate sale to a market other than the U.S. retained by the broker or newsprint trader.

Here is the situation that is developing, Mr. Chairman. Ocean Falls, owned by the British Columbia government, had a sales agreement with Crown Zellerbach to market all of their newsprint through the regular channels. That agreement was cancelled. Would Crown Zellerbach dare not cancel an agreement with the government who control their security in the forestry in British Columbia?

HON. R.A. WILLIAMS: There was a clause in the contract that covered it.

MR. BENNETT: That is fine. These are some of the questions that haven't been answered.

AN HON. MEMBER: Ask for the contract.

MR. BENNETT: It was terminated. We can't get contracts developed. We have to develop what we have.

[ Page 2917 ]

The standard Canadian newsprint contract gives the newsprint manufacturer the right to raise the price at any time. The consumer can accept the increased price or give notice of cancellation as described above and look elsewhere for supply.

As the newsprint mills are generally more or less in step regarding price, and as the lead time to bring a new plant into production is several years away, it is a very difficult task for a newsprint consumer to locate a new source of supply.

How is newsprint priced? Prices are expressed in U.S. funds for short tons — 2,000 pounds — at the newsprint mill. The price includes the freight to the destination, which is to the account of the seller. Thus a newsprint sales price of say, $213.50 in U.S. funds per short ton includes the newsprint mill cost and freight costs to the destination. This puts the onus on the newsprint mill to make advantageous freighting arrangements and to sell as close as possible to home. That is conventional newsprint marketing.

There is another newsprint market. It is called the dump market or the black market. If newsprint is not sold by the manufacturer (1) direct to the consumer under a term contract, or (2) through a commission agent on a continuing basis, it finds its way in times of oversupply on to what is called the dump market or, in times of shortage, on to what is called the black market.

The obvious time for a newsprint merchant to firm up a fixed-price purchase contract for a two- or three-year period of the then-going U.S. newsprint price is just when a world newsprint shortage looms ahead. When the time for a cancellation notice approaches two or three years later and a tight newsprint supply appears to be easing, it would be advantageous for the newsprint broker or merchant to give notice of cancellation, effective when the original contract period runs out. However, Mr. Chairman, if he doesn't terminate the contract and allows the contract to automatically continue on a year-to-year basis, his maximum period of exposure to the possibility of a dump market is only 12 months. On the other hand, when the date for giving notice of cancellation approaches and newsprint is still in short supply, the manufacturer who is party to such a one-sided contract, unless there is some obscure benefit, would find it advantageous to give notice to get out of the contract at the end of the first term.

Exchange rates as they affect newsprint. Newsprint prices are quoted in U.S. dollars. On April 10, 1974, the Royal Bank was buying sight drafts on New York for amounts in excess of $10 million at the rate of 97.02 cents Canadian. When converting U.S. to Canadian deduct 2.9 per cent and we find that newsprint, in U.S. funds when converted to Canadian funds, drops from $213.50 per short ton to $207.14. If we take off the freight to California, basing it on the California market, the freight rate relating to Canadian funds would be $18.92, the newsprint mill would receive $188.22 a short ton for their newsprint.

That is how newsprint is marketed on the various markets. The basic amount per ton that the newsprint mill receives from the other conventional export markets is much the same as received from the large conventional U.S. market.

The freight charge however, to a destination such as Burma is much larger than to California. As a result, the price in the U.S. dollars per ton tends to bear some relationship to the freight charges. However, the present conventional newsprint price in Southeast Asia is about from $225 U.S. per ton to about $255.

It has been announced that these prices have risen today, and I have not made adjustments. But these figures represent the figures as they would be available within the last month. If we were selling in Southeast Asia for $225 less freight, we would be getting $193 a short ton. To convert the funds to U.S. funds, we would be getting $195 per ton. This is the way that conventional newsprint marketing is done.

But what about the black market? A very reliable newsprint marketing source with first-hand knowledge from a recent trip to Southeast Asia indicates the black market price for newsprint in that area is in excess of $350 per U.S. ton. In some sales the price has gone from $500 per U.S. ton and, just recently this last week, newsprint has sold as high as $640 per ton.

It is most unlikely that newsprint traders selling in the black market would have arranged for a long-term freight contract from the Pacific northwest to Southeast Asia at low freight rates and thus would pay the current freight rate on each black market sale. The current freight rate of about $60 U.S. per ton and $194 U.S. per ton yield from California are used in the following table to indicate the extent of the black market profit. If we take it to $500, black market price, less $60 freight, less the California conventional marketing yield, there can be an excessive ripoff, black market profit of $246 a ton.

What we see is that for the emerging nations of the world which have never been in a position to firm up long-term contracts for newsprint and aren't on a most-favoured-nation basis like Japan and the U.S. where they've had an economy that can develop long-term contracts, they are subject to the black market. These are the countries which can least afford it that would be buying newsprint on the black market, countries that are getting ripped off by a society which helps them with one hand and rips them off on the other for excessive profits in newsprint and commodities, something no British Columbian or Canadian would want to be part of.

[ Page 2918 ]

MR. PHILLIPS: Who gets the profit?

MR. BENNETT: Well, I'd like to question the deal the Minister has with Gottesman which sells our newsprint from Ocean Falls at a firm price, something done nowhere else. Indeed, if that price is $213 Vancouver, and, indeed, if Gottesman International is turning around and selling that newsprint — newsprint owned, as the Minister said, by the people of British Columbia — on the black market into the emerging nations, the third-world nations, the people of the world who have no chance, having difficulty coming into this century, people whom we help with dribbles and drabs of aid to salve our conscience.... In this Legislature I've seen the Ministers get up and talk about a fund to distribute $500,000 to the nations of the world.

Yet here we have, on the best of my information, this Minister, acting on behalf of Ocean Falls, making an agreement with the director of Can-Cel, another British Columbia company, who was appointed a director by that Minister, acting on behalf of a New York company, a large American company, cancelling the Crown Zellerbach normal newsprint contract and transferring it to his friend, Mr. Wallach, of Gottesman-Central at a fixed price of $213 a ton based on the California market — even when all experts predicted that newsprint would enjoy a favourable sale for a long and continuing basis in the world because it was in short supply and prices would continue. No time to sign an agreement which is reported to go to 1975. No time to sign an agreement at a fixed price. No time to sell to a corporation who will sell this British Columbia newsprint not on the regular market but rip off the emerging nations of the world.

MR. PHILLIPS: Who made the money? Who made the profits?

MR. BENNETT: Here we have Mr. Vesak, the manager of Ocean Falls, saying that newsprint from Ocean Falls was shipped to Argentina, Brazil, India, Japan, Thailand and Burma. These countries, Thailand and Burma, are considered part of the third world of the emerging nations. These people are probably buying Canadian newsprint, British Columbia newsprint, newsprint from the citizens of British Columbia at black market prices: $500 a ton, $600 a ton. What do you think they think of British Columbia? What do you think they think of Canada?

MR. PHILLIPS: We're not getting the profit off it.

MR. BENNETT: What do you think these people think when we distribute a paltry $500,000 to the world in some sort of benefits and rip them off for millions by dealing through the black marketers to them for newsprint, firms that sell in the black market of newsprint?

Interjection.

MR. BENNETT: The newsprint industry considers any newsprint that does not go through the conventional newsprint market in times of shortage as black market newsprint. That should answer the Minister of Health. That is the definition developed by the industry, an industry where most newsprint manufacturing plants and marketers choose to market in the normal manner through an agent.

Yet here we have British Columbia on an agreement which I think smacks of a conflict of interest. We have a director of one British Columbia company, appointed by that Minister, arranging a sales contract and a firm price for a period of time, in a time of rising newsprint prices, for his company, ripping off this Minister and taking this Minister — indeed, he was taking all British Columbians. This newsprint from Ocean Falls has been marketed in the area of the world that can least afford it.

Yet this Minister and that party makes a career of standing up and saying how they're for the little people, the poor, emerging nations of the world. The true socialist feeling for their fellow man is that they're there to help them. Who would be a part of such an ongoing arrangement as to rip off through a New York company these nations struggling to bring themselves into the 20th century? Who indeed?

Yet we have an agreement that I suggest does just that. This Minister has been taken by the sharpies of New York. This Minister, when he trotted down to New York and was wined and dined, and took the Premier with him....

HON. R.A. WILLIAMS: I've never been to New York.

MR. BENNETT: Didn't you go to New York? They didn't take you there either. I've got my facts right.

HON. R.A. WILLIAMS: I went to New York 15 years ago....

MR. BENNETT: That's fine. The Minister, in connection with his appointee from New York then, has been taken by the same type of international community that seems to be involved in Can-Cel: Champion International. Now, because of their close relationship with this Minister and this government — the relationship and the directorship of Can-Cel — they have made themselves a favourable arrangement to take the pulp from the newsprint to be made from Ocean Falls and to be marketed on the black market at an exorbitant price.

[ Page 2919 ]

Let's take a look at the type of profits they'll be talking about. If they're buying it at $213.50, based on the California market less freight, and if they sell it at $550 a ton, less the freight allowance to the third world, they would have a profit over and above the excess of the normal 3 per cent commission based on the Ocean Falls estimated production of 102,000 tons per year. That's a maximum of $28 million. If we reduce that to 200 tons a day, to 68,000 tons a year, it's a profit of $19 million over the normal price negotiated plus 3 per cent commission.

Interjections.

MR. BENNETT: And who is paying that? Who's paying that price to the people of New York? The people of Thailand and Burma, people who can least afford it. It's not even coming back to the people of B.C. This is the agreement that the Minister won't table in the House. He won't show it in the House.

MR. FRASER: No wonder.

MR. BENNETT: We wondered why the Premier chose to be away during this time. I could suggest that he didn't want to be here when this Minister's estimates came up. Why else would he take estimates out of context? Why else would we see the juggling of the legislation?

AN HON. MEMBER: Are you suggesting that it's going through an agreement?

MR. BENNETT: The Minister can stand at any time and tell me that this agreement I charge is wrong. You can stand now, Mr. Minister, and tell me that this is wrong. The Minister can stand. He can laugh. The Attorney-General can try and defend him with quips across the floor.

But I charge here tonight that this Minister has allowed the people of B.C. to be ripped off by the very person that he appointed to Can-Cel as a director in the Ocean Falls corporation on newsprint sales by some $8 million to $20 million a year, based on the black market price. That's a serious indictment of the inability to meet the commitment of the portfolio of any Minister.

AN HON. MEMBER: "Indictment" is the term.

MR. BENNETT: I read earlier that he is just a poor boy from Vancouver, and that's what he said up north when he was trying to be folksy. The only person that thinks he is folksy is Mr. Wallach from Gottesman International.

What I am saying is that here we have a Minister who is more concerned with developing his own complex around B.C. than he is for the concern of looking after the business of guarding the resources we have for the people of the province. He is a Minister who has been accused since he took office of terror tactics in taking over mills, who is now accused of signing an agreement that has Ocean Falls, British Columbia's newsprint mill that the government was so proud of, that lost $800,000.... But he has signed an agreement with, I believe, a government appointee to another corporation, that he would give him a favourable agreement to rip off that corporation for millions of dollars.

I believe for this reason that this Minister has not carried out the duties of his office, or his commitment to British Columbia, or his responsibilities in protecting the interests of the people of British Columbia in either good or fair management.

It is open to question the further complexities of the Can-Cel deal and the international connections with Champion International. The terror tactics at Plateau Mills and now the final cruncher of the millions of dollars lost to this province through Ocean Falls and their newsprint are direct responsibilities of this Minister, this super Minister — this strength of the government.

If the Premier were here I would ask him to ask for this Minister's resignation. The Minister of Labour (Hon. Mr. King) thinks it is funny, but because he is not here I think we will give his own backbenchers a chance to stand up and be counted in British Columbia. They would vote, perhaps, that they are British Columbians first before their fear of the Minister, or before their support of a party.

To give them that opportunity I move, seconded by the Member for South Peace River (Mr. Phillips), that the salary of the Hon. Minister of Lands, Forests and Water Resources, as provided for in vote 137 be reduced by $1.

Interjection.

MR. BENNETT: Mr. Minister, if you don't think there is something wrong with a sales agreement like that in Ocean Falls — you were taking a lot of pride a minute ago — stand up and explain it; explain it like you did ICBC. Ask the Minister to explain it, because I think that an agreement of this nature .... I believe that this agreement should be filed forthwith.

Mr. Chairman, I so move.

[Mr. Dent in the chair.]

MR. PHILLIPS: Mr. Chairman, I certainly think we have very serious charges laid here tonight, and I certainly think the amendment gives each and every backbencher from the silent back bench in the New Democratic Party a chance to stand up and be counted.

[ Page 2920 ]

You know, I would like to know whether the back bench truly supports the double standard, or if they are going to stand up for one ideology. Right here we are asking them to either endorse double-dealing or be against it. Mr. Chairman, we seem always to have double standard in this Legislature. On one hand the Attorney-General says: "Let the light shine in. Let the sun shine in."

What happens when we ask the Minister of Lands, Forests and Water Resources to reveal an agreement where there is a possibility that one of the directors of Can-Cel is making a side profit of some $8 million to $20 million? He doesn't want to reveal the agreement. He has been asked for it in this House three or four times.

It is all right for everybody else in private industry to let the light shine in, to let the sunshine shine in, but that government certainly doesn't want to let any sunshine in on their back-door dealings in their Crown corporations.

MR. FRASER: Open government! Phooey!

MR. PHILLIPS: The Minister of Lands, Forests and Water Resources seems to have an entirely different concept of a Crown corporation than does his Minister of Housing — an entirely different concept. Because I remember some time ago when the Minister of Housing (Hon. Mr. Nicolson) was purchasing a corporation known as Dunhill Corporation. The directors and owners of Dunhill Corporation owned some 80 per cent of that corporation.

I really and truly believe that it was the Minister of Lands, Forests and Water Resources who was truly the architect behind this takeover bill, but the Minister of Housing said: "We must have all of the shares of Dunhill Corporation." Why, Mr. Chairman? Why must we have all the shares? Why can we not allow little people in the community to retain that additional 20 per cent?

MR. CHAIRMAN: Order, please. Would the Hon. Member relate his remarks...?

MR. PHILLIPS: I am making a point, Mr. Chairman, that has to do with the Minister of Lands, Forests and Water Resources and with Can-Cel. This relates to a policy of the government of which I believe that Minister was the architect, Mr. Chairman.

The Minister of Housing said: "No, we cannot allow any little individuals or any minority shareholders throughout the province...." Now I would like you to pay particular attention to this, Mr. Chairman. "We cannot allow any of these minority shareholders throughout the province to reap a profit by holding shares in a Crown corporation where the Crown holds the majority; and in the case of Dunhill it would be 80 per cent." That was the stated policy of the Minister of Housing.

In other words, he said: "We shall use the force of government, if necessary, to force these minority shareholders to sell their shares in Dunhill Development Corporation so that the government can hold 100 per cent of the shares." That is the stated policy. That discussion has gone on in this House.

Now I want you to relate that policy, Mr. Chairman, to Can-Cel. Can-Cel is a British Columbia Crown corporation owned 79 per cent by the government of the Province of British Columbia. Unlike the stated policy in Dunhill, some 21 per cent of the shares owned by Can-Cel are allowed to remain in the hands of private individuals. So, as the Minister of Housing said, these private individuals will be able to rip off profits as the shares in that Crown corporation grow. All of a sudden we have one policy.

Now we have a different department and the Minister of Lands, Forests and Water Resources allows private individuals to retain 21 per cent of the shares in Can-Cel, a corporation which some of the shareholders and managers have said is going to grow to great heights in British Columbia, is going to become a forestry complex of great magnitude, one that the government by feeding it timber reserves, can make the shares increase.

I ask you, Mr. Chairman, what is going on? I'd like to know. Who owns these shares? Who, indeed, are the shareholders in Can-Cel? Who stands to profit by measures which this Minister might take in reducing stumpage rates, in reducing the price of chips from some of the other government sawmills? Who, indeed, are the shareholders?

Well, let's take a look. I'd like to refer to the Canadian Cellulose Company Ltd. notice of the annual general meeting. It doesn't list all of the shareholders, but we find in there that one of the directors, E. Bertram Berkley, chairman and president, holds 7,000 shares. Where is Mr. Berkley from? Mr. Berkley is from the United States of America.

AN HON. MEMBER: Good heavens!

MR. PHILLIPS: Yes, good heavens. He owns shares in a company which that Minister, through actions in the people's timber, can improve vastly the value of Mr. Berkley's shares.

HON. R.A. WILLIAMS: Would you think 79 per cent gives control?

MR. PHILLIPS: Well, now does 79 per cent give control? But the Minister of Housing (Hon. Mr. Nicolson) says we're going to own all of Dunhill because we are not going to allow any individual in

[ Page 2921 ]

the Province of British Columbia, who might own the minority shares of 20 per cent, to make a profit through things he might do through building up the assets of Dunhill.

HON. R.A. WILLIAMS: Do you want 21 per cent nationalized?

MR. PHILLIPS: No. I'll tell you...Well, the Minister of Lands, Forests and Water Resources is a little jumpy tonight.

AN HON. MEMBER: And well he should be!

MR. PHILLIPS: Ronald M. Gross, who is the president of the company... Mind you, Mr. Chairman, don't forget this is a British Columbia Crown corporation.

HON. R.A. WILLIAMS: No, it is not.

MR. PHILLIPS: Oh, it's not a Crown corporation at all?

HON. R.A. WILLIAMS: You're mixed up a bit.

MR. PHILLIPS: No, I'm not. I don't think I'm that mixed up at all. Mr. Ronald M. Gross, where did he come from? He came from New York. He's really a protege of Mr. Berkley.

HON. R.A. WILLIAMS: The Crown equals 100. Have you got it?

MR. PHILLIPS: So, what does he own? He owns 5,100 shares according to the latest company annual meeting report.

What about those other two out-of-British Columbia directors of this great British Columbia Crown corporation? — the people who really run the corporation. Well, Max Litvine doesn't own any, because he controls the bank in Brussels that controls another company that is owned by Can-Cel. But here's this name Ira D. Wallach again, president of Gottesman-Central National Organization, international marketers of pulp and paper. How many shares does he own, Mr. Chairman? Oh, just a mere 5,000. Not even a British Columbian, but yet a director of a British Columbia Crown corporation, and a man who stands to reap profits by owning partial shares in a British Columbia Crown corporation.

I ask you, Mr. Chairman, what is going on? This same Ira D. Wallach, president of Gotteman and Company also is the man who merchandises the paper from Ocean Falls. Can you wonder that we on this side of the House question the movements of the Minister of Lands, Forests and Water Resources?

A moment ago the Minister of Lands, Forests and Water Resources was on his feet and he was telling us how Can-Cel was going to make $12 million this year.

HON. R.A. WILLIAMS: How much?

MR. PHILLIPS: Twelve million.

HON. R.A. WILLIAMS: Last year.

MR. PHILLIPS: Last year — 1973, this Crown corporation was going to make $12 million.

HON. MR. WILLIAMS: Right. It is not a Crown corporation though, have you got that?

MR. PHILLIPS: Well, I suppose. It's owned by the people of British Columbia though.

HON. R.A. WILLIAMS: Seventy-nine per cent, remember, 79 per cent.

MR. PHILLIPS: Oh, I see. You just own 79 per cent of it. You're not going to....

HON. R.A. WILLIAMS: You've got it!

MR. PHILLIPS: For all intents and purposes if you own 79 per cent of it, it's a Crown corporation.

HON. R.A. WILLIAMS: No, it's not.

MR. PHILLIPS: Well, all right. Anyway, the point is that it is owned by some people, but who will benefit?

HON. R.A. WILLIAMS: Free enterprise....

MR. PHILLIPS: Oh, free enterprise. What I'm talking about, Mr. Chairman, is the double standard. Now I'll talk about free enterprise — at least they have a standard and they adhere to it. But here we have the Minister of Lands, Forests and Water Resources who told me and a lot of other people at a meeting in Terrace a year ago last spring that he bought this corporation to protect the investment of the little people so they wouldn't lose money. I wonder what little people he was referring to, Mr. Chairman? Was it the little people from Gottesman? Would you call Mr. Gross little people? Mr. Berkley, Mr. Wallach — are they the little people whom he was trying to protect?

Let's look at the $12 million that this corporation made. Now, they purchased last year approximately 500,000 b-d units of chips. A b-d unit is a bone-dry unit. What did they pay for them, Mr. Chairman? They paid $10 per bone-dry unit; $10 a bone-dry unit and ripped off their suppliers. What would have

[ Page 2922 ]

happened had they paid the regular price? Let's take a look at it.

Supposing they had paid the normal $52 price, which is the price of chips in the Puget Sound area.

HON. R.A. WILLIAMS: You're too good. You're just too good. (Laughter.)

MR. PHILLIPS: Well, all right. It's all right for the Minister of Lands, Forests and Water Resources to rip off the suppliers and rip off the people who were supplying him chips so that he can come up with a $12 million profit, but if he paid the market price he wouldn't have made any profit at all, he would have lost money. But he has the power to twist and bend elbows because of these sawmills that are selling chips to Can-Cel. If they don't sell at the price he wants them to, what happens? They won't get any more timber. This is the power magnate. This is the king who uses terror tactics. This is the man who wants to build up an empire for himself. He couldn't be Premier so he's going to build up his own forest empire. And he laughs because it tickles him right where he wants to be tickled. And he's going right where he wants to go.

HON. R.A. WILLIAMS: Oh, come on!

MR. PHILLIPS: Oh, come on? Well, let's take a look — if Can-Cel had paid the Vancouver price of $35 per b.d.u.....

HON. R.A. WILLIAMS: Or if Northwood had.

MR. PHILLIPS: Yes. What would have happened?

AN HON. MEMBER: Or if anybody did.

MR. PHILLIPS: Yes, what would happen? What would happen to this profit of over $12 million? This profit of $12 million would have been reduced to a $182,000 loss.

HON. R.A. WILLIAMS: What do you think Weyerhaeuser paid?

MR. PHILLIPS: This is what is going to happen as the government becomes entwined in pulp mills and sawmills — the whole deal. The Minister will do the dictating. And I'll guarantee you right here and now, Mr. Chairman, that if the Minister has his way, Can-Cel will become one of the biggest forest industries in the Province of British Columbia, and they will make untold profits unheard of before by any corporation of their size.

I'll tell you why: because there will be deals made. The Minister will make deals with the Minister. Under the table, over the table. Certainly. On the PGE (BCR); you name it.

HON. R.A. WILLIAMS: With CN.

MR. PHILLIPS: Certainly. Well, with CN.

This is why there will be conflict of interests; this is why this Minister should not have this power. He will go throughout the province, telling the people everywhere what a great Minister he is, what a great businessman he is; while all the time who is really paying these would-be false prophets?

HON. R.A. WILLIAMS: Author! Author!

MR. PHILLIPS: Who's really paying?

HON. R.A. WILLIAMS: Is the council giving you this....

MR. PHILLIPS: The taxpayers of British Columbia.

HON. R.A. WILLIAMS: ...been giving you this material?

MR. PHILLIPS: It doesn't matter who is giving me material. If I don't have material, you say I haven't done my research. That's the way you are, Mr. Minister.

I would like to know the real reason for Mr. Wallach being appointed to the board of directors of Can-Cel. Was it because he was a shareholder already? Did it have something to do with this sweetheart deal of selling the pulp for Ocean Falls?

I would like to know, further, why this Minister absolutely refuses, when asked in this House, to give any information whatsoever about his dealings. The Attorney-General says, "Let the light shine in, let there be sunlight. Let it be open to day. It must stand up to scrutiny."

Why won't the Minister file with this Legislature his sales agreement? Why won't the Minister table his feasibility studies he recently had done on Ocean Falls? And I understand, Mr. Chairman, that Ocean Falls lost approximately $800,000 last year.

HON. R.A. WILLIAMS: $850,000.

MR. PHILLIPS: $850,000. Just think, had the paper from Ocean Falls been sold on the open market at the going price, Ocean Falls might have come up with a profit of $10 to $15 million. But no. The paper from Ocean Falls was sold on a pre-determined agreement which we can't even have the chance to look at in this Legislature.

This is one of the things that seems to be wrong with Crown corporations and powers vested in the Minister where he doesn't have to answer to this Legislature. One of the things this opposition has been talking about in the last 18 months, the very

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thing we warned about when these bills were going through this Legislature, was that the Ministers would not have to return answers to this Legislature. That's happening already; it is exactly what's happening.

HON. R.A. WILLIAMS: Just to the people.

MR. PHILLIPS: Oh, you answer to the people. The people can't go in and find out about your international deals with some of the directors on this corporation, but I certainly intend to tell them. You go north? You'll be going south; you will be going down the drain, my friend, that's where you'll be going. Down the drain.

I would like to know why Mr. Wallach has had any opportunity to sell on the black market at upwards of $400 with only a guarantee of $195 to Ocean Falls. Why? I think that the Provincial Secretary realizes the errors and pitfalls of some of this legislation.

AN HON. MEMBER: I think you had better do some homework.

MR. PHILLIPS: Well, I have done some homework and I will be doing a lot more. I certainly intend to get to the bottom of this whole stinking mess. I certainly will let the people of British Columbia know exactly what is going on in their affairs.

How did the president, Mr. Gross, of Can-Cel know before the government took over Kootenay Forest Products that the government would have additional timber in the Kootenays? How did he know? He made the release in a press statement that Can-Cel would be getting additional timber in the Kootenays. How did he know?

Interjection.

MR. PHILLIPS: Yes, but he made the statement before you owned it. How did he know?

HON. R.A. WILLIAMS: They have been under-utilizing it.

MR. PHILLIPS: Oh, I see. On this chart we have here, we wonder who is being "Championized." The Minister? Eurocan? Is Crestbrook next? The Minister intends to move through Can-Cel to take over timber in various areas of the province so that eventually he can squeeze out the forest complex that is well established.

When that Minister took over his portfolio, he took over one of the best operated forest industries of anywhere in the world. That is why he wants to get his fingers into it. He thinks he can run it as well as private enterprise can run it.

But I do hope that when this comes to a vote, the silent backbench of the NDP, if they don't believe the facts that have been presented here tonight, will do some research on their own. I hope they will have the fortitude to stand up and be counted; to stand on a principle.

Tell us why — and ask themselves the question — why were foreign directors allowed to retain shares in this Crown corporation when individual British Columbians were not allowed to retain any shares in Dunhill? It is a double standard. Why were the trading patterns before this company was purchased by the government so weird?

This department should be scrutinized by an independent group of auditors who would be responsible only to this Legislature. The Department of Lands, Forests and Water Resources and his Crown corporations, Ocean Falls, Can-Cel, the Kootenays.

Interjection.

MR. PHILLIPS: Make it a Crown corporation? What? Mainly the Crown corporations. And they will be Crown corporations as soon as these people have had an opportunity to increase the value of their shares enough to rip off the people of British Columbia, profits which are duly due to the people of British Columbia.

HON. R.A. WILLIAMS: Would you sort that out again?

MR. PHILLIPS: Profits which are due to the people of British Columbia.

HON. R.A. WILLIAMS: Which profits?

MR. PHILLIPS: Profits of your corporation, Mr. Chairman.

HON. R.A. WILLIAMS: Do you think that we should nationalize the entire operation?

Interjections.

MR. PHILLIPS: You wonder why we have to bring up these questions of trustworthiness in government; but when we don't get the answers and the evidence is there, we have no alternative. We don't know what's going on in many of these areas or what will happen when these other corporations and the other Ministers start using their similar powers. In this department there are a lot of questions that should be answered. Maybe the evidence is today circumstantial, Mr. Chairman, but there is evidence.

I hope that the backbench, when it comes to the vote on this amendment, will give it some really serious consideration, because they may live to regret the day if they don't do their own homework.

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The House resumed; Mr. Speaker in the chair.

MR. CHAIRMAN: Mr. Speaker, the committee reports progress and asks leave to sit again.

Leave granted.

Hon. Mrs. Dailly moves adjournment of the House.

Motion approved.

The House adjourned at 10:58 p.m.